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4.13.4.20 Factors to Consider When Determining Special Circumstance Provisions

This topic

This topic contains information on the factors for the delegate to consider when determining special circumstances.

 

Summary

The discretionary nature of the special circumstances provisions makes it impossible to give a precise list of factors that should be taken into account when considering whether the provisions should be applied.

 

There is usually not one factor which makes a situation unusual, unforeseen or exceptional, but a combination of factors applying to each individual.

 

The following table, which is not exhaustive, gives examples of:

  • some of the factors that could be taken into consideration by the delegate when determining special circumstances,
  • what to look for,
  • what may be of relevance to this determination, and
  • some general principles for delegates to follow when deciding whether special circumstances should be found and/or to what extent the discretion contained in section 1184K could be exercised.

 

If a compensation recipient requests a section 1184K review, all claims must be substantiated by evidence. Appropriate documentation and/or details of professional advice must be obtained by the delegate from a person qualified to comment, such as a health professional, financial adviser, etc.

 

It would be expected that documentation including bank account statements, invoices, receipts particularly for large purchases (cars, furniture) be produced by the person to substantiate expenditure.

Factors to consider

What to look for

General Principles

Ill health

- ill health that has a major bearing on the individual's circumstances

Example: Unforeseen and unexpected medical expenses for the person or immediate family member or dependant, which results in financial self-support plans being thwarted.

 

- state of ill health should be more severe than the majority of DSP recipients.

 

- injury that a person received compensation for cannot generally be regarded as a special circumstance.

 

- current medical reports should be provided of the conditions that the individual/family member has and the impact of these conditions should be outlined.

Emotional state

- has stress or some other personal circumstance influenced the person's emotional state to the point that it has become a significant factor in their behaviour, or on their health?

- if this is a part of the injury that the person received compensation for it cannot generally be regarded as a special circumstance.

 

- a current medical or other report to be provided outlining these circumstances and the impact this has on the individual.

Decision making capacity

- have poor education or limited life skills affected the person's capacity to make a rational decision?

 

- has the person's injury contributed to a loss in capacity to make rational decisions (such as behaviour common to those who have suffered a head injury)?

- a bad decision in any particular circumstance is not necessarily an irrational decision.

 

- a current medical or vocational report to be provided outlining the nature of the condition and the impact the person's injury has on decision making.

Straitened financial circumstances

- has the person deliberately deprived themselves of their means of support or recklessly or inappropriately spent their lump sum?

 

- did the person seek financial advice on the consequence of a particular course of action, and what was that advice?

 

- does the person have realisable asset/s that could be used to solve their current financial dilemma, ie to maintain them for the remainder of the preclusion period?

 

- does the realisation of the asset/s impact on other circumstances (e.g. medical evidence indicates that the loss of the asset/s would have an adverse impact on the person's health)?

 

- does the current state of the market mean that the person cannot readily sell the asset?

 

- is the person likely to face financial hardship in the near future?

 

- are there any other avenues of support, e.g. family/friends who are willing and able to provide the person with free board and lodging until the preclusion period expires?

- financial circumstances need to be severe and worse than the majority of social security recipients.

 

- the value of all cash and realisable assets should be taken into account by comparing this with the fortnightly rate of pension.

Example: If a person has a car worth $20,000 and their Newstart rate is $462.80 per fortnight, it could be seen that they have access to funds that would maintain them for the next 43 fortnights.

 

- it needs to be shown that there are truly compelling reasons why a person should not realise their assets.

Example: The person has separated since compensation settlement and children are living with ex-partner in family home which was purchased with compensation funds.

 

- documentation to support claims must be produced by a person. If they cannot produce this other avenues of verifying this information should be explored.

 

- where a person uses compensation proceeds to purchase a house or pay off the balance of a home loan, special circumstances would generally not be found.

Exception: The house has been substantially modified due to the person's disability and other similar suitable accommodation would be difficult to obtain.

 

- if a person only has $4,000 and a further 12 months preclusion period to serve, then special circumstances may be granted commencing at a future date if financial hardship is imminent.

 

- generally, where people choose to wantonly/irresponsibly spend all of their compensation proceeds and do not set aside sufficient funds to meet their living costs during the preclusion period, decision makers should NOT find special circumstances exist unless there are truly compelling reasons to do so.

Addictions

- is there evidence that the behaviour of the person was as the result of an addiction or mental health condition outside their control?

 

- is there an established pattern of compulsive behaviour over a significant period of time?

 

- if the case involves gambling, does the person control their gambling spending or do they gamble compulsively to 'strike it lucky' to the exclusion of all other life needs?

 

- if the case involves substance abuse, has the person been medically recognised as having a drug or alcohol problem?

 

- has the addiction occurred after the receipt of the compensation lump sum or is there an ongoing history of this abuse?

 

- has any help been sought regarding this addiction?

 

- has the circumstance that caused the hardship also contributed to the problem?

Example: Addiction as direct result of trying to manage their pain.

- a detailed spending history may provide evidence or a report from a doctor or treating psychiatrist/psychologist.

 

- current medical or other reports should be provided outlining the condition and the impact this has on the individual.

Incorrect or insufficient legal advice

- has the person had a telephone or face-to-face interview with Centrelink where the details of their preclusion period and the impacts their compensation payment will have on their income support payments or future entitlements to income support has been explained to them.

 

- the delegate should also check whether the person has signed the acknowledgement letter confirming they understand the implications of their compensation preclusion period.

 

- is there documentary evidence that the person has received incorrect or insufficient legal advice?

 

-has the legal advice been sought on any action in regard to this?

- depending on the individual circumstances of a person's compensation case, the person's claim that they have received incorrect or insufficient advice may be weakened if the person has had an interview with Centrelink where they have acknowledged that they understand that they will be precluded from income support for the duration of the compensation preclusion period.

 

- generally, if a person has been badly advised by their legal representative they may seek remedy through the courts, however:

  • - the person may not be, or is ever likely to be, in a financial position to take this action.
  • - the error may not be actionable.

Unjust operation of legislative amendment

- any legislative amendment may produce a result, when it interacts with social security legislation, that is unforeseen and inequitable.

Note: The explanatory memorandum for the legislative amendment generally describes the purpose of the legislation.

- the perceived fairness or otherwise of an intended consequence of the social security legislation, by itself, is not a special circumstance.

 

- where the only special circumstance is the perceived unfairness of the 50% rule, special circumstances should not be applied.

Changed circumstances

- have the circumstances of the person altered significantly since the preclusion period commenced due to circumstances wholly or partly outside of the person's control?

Examples:

- the compensation recipient has divorced since the settlement and their personal assets have reduced due to the property settlement.

- the compensation recipient has been successfully sued with the result that they must use part or all of their settlement to comply with the decision.

- natural disasters.

- sudden ill health of the person or member of their family.

- collapse or failure of a well considered investment/business which was meant to generate self-supporting income.

 

- documentation to support claims must be produced by the person.

Other

- has there been expenditure of compensation funds due to fraud by another person?

 

- has any legal action been taken to recover defrauded funds?

 

- is there an expected reduced life expectancy?

 

- excessive legal costs involved in the settling of a claim for compensation

 

- impact of significant increases to divisor due to legislative changes

- evidence to be provided to show the compensation recipient has been defrauded and evidence provided of any action taken to recover these funds.

- medical evidence to support reduced life expectancy to be provided.

- to what extent are the costs excessive. The delegate is to decide what excess cost (or part of) is to be treated as a special circumstance.

- where a person has received a settlement prior to the divisor increase they can be seen to be disadvantaged compared to a person that received their settlement after the increase.

Act reference: SSAct section 1184K Secretary may disregard some payments

Policy reference: SS Guide 4.13.4.10 Overview of the Application of the Special Circumstance Provisions

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Last reviewed: 6 September 2010


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Last Edited: 10/07/2012 11:47:45 AM


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