When a compensation claim is settled or a verdict is handed down from Court often Centrelink has a right of recovery over part of that settlement.
This only applies in cases where economic loss (wages) is claimed. This is because when a person has been injured and claims a Centrelink payment, such as a disability allowance, and also claims lost wages, this is effectively “double dipping”. To negate that, they must pay Centrelink back.
Why should Centrelink be allowed to take money from people’s compensation? First, the government gets to make the rules and this is the system. Second, it’s to avoid the potential for “double dipping” –after all, the person had the benefit of financial assistance when they were unable to make what they would have if not for the injury or illness. Since that loss has been recompensed, the assistance needs to be paid back.
It is a fairly significant undertaking for Centrelink to process a Notice of Charge or a Clearance and this will often add a month or two onto the time between a settlement and when the money arrives.
But what if there was no economic loss claim or the person never received any Centrelink anyway? Unfortunately, the insurance industry believes they must notify Centrelink of every settlement. In fact the only time they must do it is when they have been served with a preliminary notice that Centrelink is aware of a potential compensation claim and wishes to be repaid. This is especially unnecessary when a person has never received any Centrelink payments or there were no wages claimed. I should note that there are some insurers who do not seek a clearance in these circumstances but the majority do.
How is a Centrelink repayment calculated? Centrelink has a rigid formula that comes to a fair outcome most of the time. However, there are a few unfair situations I have come across:
- Bob had hurt himself at work but had returned to full-time hours. Just as he returned to work he had a heart attack and needed 2 months off work. He was able to claim a sickness allowance.
When he settled his substantive claim, Centrelink’s formula ate into the compensation but he only received that payment due to an unrelated condition.
- Kyle, a university student, stacked shelves at a supermarket and did work for one month after being knocked off his bike by a car. We calculated that, despite his fairly simple lost wage claim of a few hundred dollars, the Centrelink formula meant that he would have to pay back thousands of dollars of student allowance. This meant he instructed us not to claim for his lost wages at all, to avoid this unfair repayment.
- Jim received a part disability payment but also worked minimal hours when he was injured. His lost wages claim was for the time he was off work but Centrelink’s formula determined that he should have paid back a huge sum.
It cuts both ways. There are also times when under the formula somebody receives a Centrelink allowance but which doesn’t start until quite some time after the accident and, based on the calculations, in fact they don’t have to pay anything back.
Blumers are experts in calculating potential Centrelink repayments for our clients so we can give as accurate an in-hand figure as possible, based on potential payout.