Civil Procedure – Case Law – NDIS Refunds – Luo and National Disability Insurance Agency [2024] AATA 3402 

In the recent matter of Luo and National Disability Insurance Agency [2024] AATA 3402, the application, Quanyu Luo, commenced proceedings against the respondent, the National Disability Insurance Agency, in the Administrative Appeal Tribunal in relation to NDIA/NDIS refund from a personal injury claim.  


The Applicant is a 46-year-old man who suffered an Acquired Brain Injury as a result of two strokes in 2011. He became a participant in the National Disability Insurance Scheme (NDIS) on 28 June 2017.    


The issue before the Tribunal is whether the funds available to the Applicant under the NDIS should be reduced, having regard to a very large amount paid to him in 2021 pursuant to the settlement of a personal injury action brought by him against three doctors he claimed negligently caused his strokes. In 2013 the Applicant commenced proceedings in the Supreme Court of Victoria against three doctors he alleged had negligently caused his strokes. Although the amount sought in the action was significantly larger, on 27 April 2017, the action was ultimately settled for $4 million plus reasonable costs and disbursements on the basis that liability was denied. 


As is ordinarily the case, various deductions were made from the settlement amount before the Applicant received it. These included costs charged by his solicitors which were not paid by the defendants in the action, ultimately allowed in the amount of $350,000.  In August 2021, the amount of $3,634,504.05 was paid into the Applicant’s bank account in satisfaction of the settlement reached. 


On 11 November 2022, the Applicant was advised that a total CRA amount of $1,662,366.76 had been determined under the Rules and this would be divided over 18 years. The Applicant was further advised an amount of $187,813.58 was to be reduced from his new plan, commencing on 11 November 2022. He was also advised on 10 November 2022 that his request to have the CRA reduced by reason of special circumstances had been unsuccessful. 


On 11 January 2023, a delegate of the Respondent decided to affirm an earlier decision to apply a ‘compensation reduction amount’ (CRA) to the Applicant’s current NDIS plan, pursuant to the applicable legal framework reducing the funding available in the Applicant’s plan by $187,813.58. On 6 February 2023, the Applicant applied to this Tribunal for review of that decision, giving rise to this application. 

In its consideration, the Administrative Appeal Tribunal noted as follows:

  • 17.With respect to calculation of the CRA amount, Ms He contends this was not done correctly as the Respondent failed to deduct legal costs from the settlement amount before applying the formula, as required by the Compensation Rules. However, I am not persuaded this contention is correct.
  • 18.As will be apparent from s 11(1) of the NDIS Act set out above, for the purpose of calculating the CRA, “compensation” is defined to include a payment made by way of settlement of a personal injury action which is “wholly or partly in respect of the costs of supports that may be provided to a participant”.
  • 19.As outlined above, Mr Luo’s action was settled for an amount of $4 million plus costs and disbursements. Correctly in my view, the applicable formula was applied only to the settlement amount of $4 million, excluding the amount subsequently paid by the defendants for legal costs. As often occurs, the amount ultimately paid by the defendants for Mr Luo’s legal costs did not fully cover his actual legal costs, and an amount of $350,000 was subsequently paid by him to his solicitors in satisfaction of the additional amount owing. As things transpired, this was paid out of his settlement funds before they were released to him, although it was not inevitable this would occur. It could have been paid from other funds if these had been available to Mr Luo.
 
  • 20.In these circumstances, I accept the Respondent’s submission that the Compensation Rules required the applicable formula be applied to the whole of Mr Luo’s settlement of $4 million. I note there is no provision of the Rules which allows for the exclusion from a compensation lump sum of an amount the participant later pays out of those funds for costs payable to their own solicitor.
 
  • 21.As I am also satisfied the CRA applied to Mr Luo’s plan was otherwise correctly calculated in accordance with the formula provided in the Rules, the only remaining issue is whether the CRA should be reduced by reason of special circumstances.

Ultimately, on 26 September 2024, the Administrative Appeal Tribunal ordered as follows:

  • For these reasons I have concluded Mr Luo has not established “special circumstances” and as I am satisfied the CRA amount applied to Mr Luo’s plan has been correctly calculated, the decision under review should be affirmed [at 49].For abundant clarity, I have also considered whether all the circumstances referred to by Ms He cumulatively could be considered “special”, but I am not persuaded this is the case. As I have explained, the current shortfall in Mr Luo’s NDIS plan and the absence of funding to meet his care and support needs is the direct result of the couple’s decision to use the vast bulk of Mr Luo’s settlement to purchase a house. This is not a circumstance which can be considered “special” in the relevant sense, either in isolation or in combination with the other matters put forward by Ms He [at 50]. The Tribunal affirms the decision under review pursuant to subsection 43(1)(a) of the Administrative Appeals Tribunal Act 1975 (Cth) [at 51].
 

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