Chapter 2
Consideration of Schedule 2 of the bill
2.1
The committee received 21 submissions and two supplementary submissions.
The submissions were generally supportive of the proposed single appeal pathway
but raised three keys areas of concern:
-
the removal of claimant-initiated internal reconsideration (under
section 349) and the efficiency of the proposed single appeal pathway;
-
the costs of the appeal process and veterans' access to legal
representation, including the availability of legal aid; and
-
the expected budget saving of $2.2 million over four years.
Section 347 vs Section 349 and the proposed single pathway
2.2
Currently, there are two ways in which an internal reconsideration of an
original determination can occur: under section 347, the MRCC can initiate an
internal reconsideration; under section 349, a claimant can initiate an
internal reconsideration (provided that the claimant has not already applied to
the VRB for a review).
Schedule 2 removes the option for claimant-initiated internal reconsideration.
2.3
KCI Lawyers expressed concerns regarding the removal of claimant-initiated
internal reconsideration, noting that there is no legislated requirement that
an internal reconsideration will take place. Mr Greg Isolani of KCI Lawyers
stated:
What was uncertain to me in the proposed schedule of
amendments is whether that internal review will be undertaken...it appeared to be
discretionary, so it will not necessarily always be undertaken.[1]
2.4
DVA advised the committee that under the proposed single pathway, the MRCC
will initiate an internal reconsideration under section 347 for all claimants
who have submitted an original determination to be reviewed by the VRB.[2]
This claim was affirmed by the MRCC, who assured the committee that the
MRCC-initiated reviews would operate in the same way as the section 31 reviews
under the VEA:
I can advise that on 13 November 2013, the Military
Rehabilitation and Compensation Commission (MRCC) agreed to a DVA
recommendation that the MRCA be refined to a single pathway that progresses
from internal review to the VRB and then to the AAT. The MRCC further agreed
that the process for handling internal reviews should be modelled on the VEA
section 31 review powers. The MRCC reaffirmed this decision in September 2014.
This is the pathway reflected in Schedule 2 of the Veterans' Affairs
Legislation Amendment (2015 Budget Measures) Bill 2015.[3]
Efficiency of the proposed single
appeal pathway
2.5
Slater & Gordon Lawyers and KCI Lawyers questioned the efficiency of
the proposed single appeal pathway, asserting that it is faster for a claimant
to initiate an internal reconsideration under section 349 and appeal to the AAT
than it is to seek a review by the VRB:
The practical effect of removing the reconsideration appeal
path is to deny a Veteran a quicker system of review that is currently
available...[4]
In 2009, it took 418 days to hear an appeal [at the VRB] whereas
the internal review will take up to 127 days... you can go through the internal
review and get to the end of an AAT process faster than you can even get
through the VRB to begin with.[5]
We believe Schedule 2 will further weaken the DVA decision
making process and is likely to lengthen delays in processes that are already
delay ridden...Veterans would no longer have the right to request an internal
reconsideration of a poor DVA decision through the s 349 MRCC pathway. This is
the quicker of the two review pathways, has procedural and cost advantages for
Veterans, and since the inception of the dual appeal pathway is preferred by
Veterans more often.[6]
2.6
Slater & Gordon Lawyers and KCI Lawyers also advocated for the
introduction of timeframes within which decisions must be made, stressing the
importance of minimising the impact of the claims process on the physical and
mental health of veterans:
There need to be time frames. There need to be times within
which decisions need to be made because, as you know, there are so many
veterans that are essentially in limbo, waiting for decisions to be made. It is
during that time that their mental health significantly suffers. Veterans who may
well have physical conditions have the prospect of developing psychological
conditions as well because of the impact and the stress of not understanding
the time frames.[7]
2.7
DVA advised the committee that the proposed single appeals pathway will
be beneficial for veterans, as it will be more timely and more straightforward
than the current model:
The department's and the government's objective with this
amending legislation is a reform of the determining system to bring evidence
forward as early as possible and to have the appeal matters resolved in a
timely, less costly, less adversarial and more straightforward way.
Overwhelmingly the winners in this process are the veterans themselves.[8]
2.8
DVA assured the committee that the MRCC-initiated internal reconsideration
will be finalised before an appeal is processed by the VRB. Furthermore, if the
MRCC review delegate, after investigation of the evidence, decides that a
different decision should be made, then this new decision will replace the
original determination, saving the claimant from having to undertake the VRB
process, if they are satisfied with the new decision.[9]
2.9
DVA also highlighted the purpose of the VRB and the advantages that it
offers veterans:
The VRB...was introduced specifically to provide the veteran
community with a veteran-friendly, less adversarial, less formal external
review mechanism [than] the AAT. Importantly for veterans,
the MRCC is not represented at the Veterans' Review Board, providing the DVA
client with the opportunity to present their case without the other party, the
MRCC, present or involved, a practice specifically intended to make it a
non-adversarial forum for DVA clients to make their case before the board.
Lawyers cannot appear either.[10]
As part of this, DVA clients and their advocates can provide
additional evidence and can appear before the board in person at a hearing. In
addition, one member of the board panel of three members must be an ex-Defence
Force member. I should stress that the VRB is independent of the Repatriation
Commission and the Military Rehabilitation and Compensation Commission.[11]
2.10
The Returned & Services League of Australia (RSL) expressed its
support for the proposed single appeals pathway, noting the non-adversarial
nature of the VRB and its inclusion of a member with either service experience
or a strong understanding of service who has been recommended by the Ex-Service
Organisations (ESOs):
We support this current one because that is the way that we
feel is the best option for the veteran—he gets an independent review by a
senior delegate in the department, and he gets another independent review by
the Veterans' Review Board. You have to remember that the Veterans' Review
Board is normally made up of three members and one of them is a service member—either
an ex-serving member or someone that the ex-service organisations have
recommended to the minister to be placed on the board. That person, be they
Army, Navy or Air Force, should have knowledge of occurrences in all three
services. Normally they are at least commanders and above...the senior member
will say, 'We are here to give you your entitlements if we possibly can—we are
not here to block; we are here to give.' That is the beneficial nature of the
legislation...It does not say to investigate them—they are to award pensions
unless there are reasons why they cannot.[12]
2.11
The VRB informed the committee that over the last three financial years
the average time taken to resolve all types of applications, including those
made under MRCA, was approximately 50-51 weeks. The VRB noted that the primary
control of applications are with the parties, stating that over the last three
financial years:
-
57 per cent of outstanding applications were under the control of
claimants and their representatives;
-
15 per cent of outstanding applications were under the control of
DVA; and
-
28 per cent of outstanding applications were under the control of
the VRB.[13]
2.12
As the above statistics indicate, the delay in processing cases is often
within the control of claimants and their representatives.
Legal aid and awarding costs
2.13
Currently, if a claimant initiates an internal reconsideration of an
original determination under section 349 and the determination is varied or set
aside and remade by the AAT, the AAT may order that the costs of the
proceedings incurred by the claimant be paid by the Commonwealth.[14]
However, if a claimant chooses this pathway, he or she cannot access legal aid.[15]
2.14
If a claimant chooses to apply for a review by the VRB, and the
determination is varied or set aside and remade by the AAT, the AAT may not
order that the costs of the proceedings incurred by the claimant be paid by the
Commonwealth.[16]
However, the claimant can access legal aid, subject to the usual legal aid
eligibility criteria.[17]
2.15
Under Schedule 2, the proposed single pathway (see Figure 1.2) includes
review by the VRB; therefore, under section 359, the AAT may not order that the
costs of the proceedings incurred by the claimant be paid by the Commonwealth,
regardless of the outcome of the appeal.
Cost of medical reports
2.16
A number of stakeholders raised concerns regarding the expense of
medical reports needed by veterans throughout the appeals process, specifically
the matter of veterans paying the costs associated with obtaining medical
reports. Similar concerns were raised by a number of submitters.[18]
2.17
The RSL noted that, whilst medical reports can be quite expensive,
veterans can seek assistance from the Registrar of the VRB, who can arrange for
DVA to pay for any necessary medical reports or other relevant materials:
...if the claimant needs more medical evidence or the evidence
that he has for his condition is not full and complete – there are gaps missing
and he needs more or better medical evidence – then he can get that and the
department pays for it. He does not have to put his hand in his pocket to do it.[19]
2.18
DVA confirmed this, stating that the VRB can request that DVA obtain and
pay for medical reports required by the VRB. In addition, claimants can also
seek reimbursement for the costs of medical reports up to $467.50.[20]
Cost of appealing to the AAT
2.19
A number of submitters raised concerns regarding the AAT's ability to order
that the costs of proceedings, outlined in section 357, be paid by DVA in cases
where the AAT finds in favour of the claimant.[21]
The Defence Force Welfare Association described the retention of section 359,
which states that sections 356, 357 and 358 do not apply to reviews of
determinations of the VRB, as an 'oversight', commenting that:
We notice that the Bill contains no provision for removal of that
part of S359 which provides that S357 does not apply to review by the AAT of a
determination of the VRB. We feel sure that retention of this provision is an
oversight, and we think, a serious one. S357 provides for award of costs
against the Commonwealth in some circumstances, in the event of a decision by
the AAT in favour of the Veteran...we hold strongly to the view that just
treatment of Veterans' claims ought not to depend on their ability to meet the
costs of access to the ordinary processes that are put in place to deal with
those claims.[22]
2.20
The RSL expressed strong support for the proposed single pathway but
noted that it would not oppose an amendment to allow the awarding of costs:
The Returned & Services League of Australia (RSL), after
consultation with the RSL's National Veterans' Affairs Committee, would not
oppose an amendment to the Veterans' Affairs Legislation (2015 Budget Measures)
Bill 2015 to the awarding of costs by the Administrative Appeals Tribunal (AAT)
to a claimant when a claim had followed the single appeal path to the Veterans'
Review Board (VRB) and then to the AAT. This process should mirror Section 357
of the Military Rehabilitation and Compensation Act 2004.[23]
2.21
Legal firms and members of the legal community were critical of the
inability for veterans to be awarded costs, asserting that this would place
veterans at a disadvantage compared with the general community and may limit
their access to the AAT:
Even Veterans with very strong cases will not be able to
afford to appeal to the independent umpire as is currently their right. Win,
lose or draw Veterans cannot be awarded their costs at the AAT if this Bill is
passed...Injured civilian workers who come under Comcare, including DVA staff,
will continue to be awarded costs at the AAT when they win, whilst no injured Veteran
could be awarded costs against DVA under any circumstances.[24]
...the proposed changes would be at odds with the current costs
provisions in the civilian community and would plainly place military personnel
in a position of disadvantage and discrimination.[25]
The impact of this amendment limits a Veterans' ability to
access justice by proceeding to the Administrative Appeals Tribunal –
AAT as they will no longer have the right to payment for their legal costs and
disbursements.[26]
The Law Council is concerned that by restricting rights of
appeal in the AAT to reviewable decisions of the VRB, veterans will be forced
into a 'no-costs' jurisdiction with serious implications for access to
justice...unlike public servants under the Safety Rehabilitation and Compensation
Act 1988 (Cth), veterans will be required to meet their own legal costs, even
if they successfully appeal the Commonwealth's decision in the AAT.[27]
2.22
DVA responded to assertions that veterans might be disadvantaged by the
bill by emphasising the unique role of the VRB in the appeals process, and the
advantages that it provides veterans:
...it is important to note that public servants do not have the
advantage of an external review body like the Veterans' Review Board to
consider their appeals before they reach the AAT – they have to appeal directly
to the AAT following an unfavourable internal reconsideration by a Comcare
delegate. The VRB, on the other hand, was introduced specifically to provide
the veteran community with a veteran-friendly, less adversarial, less formal
external review mechanism than the AAT. Importantly for veterans, the MRCC is
not represented at the Veterans' Review Board, providing the DVA client with
the opportunity to present their case without the other party, the MRCC, present
or involved, a practice specifically intended to make it a non-adversarial
forum for DVA clients to make their case before the board...DVA clients and their
advocates can provide additional evidence and can appear before the board in
person at a hearing. In addition, one member of the board panel of three
members must be an ex-Defence Force member.[28]
2.23
DVA informed the committee that in 2014-15, of the 20,070 original
determinations made under MRCA, 585 applications were lodged with the VRB and
485 claimant-initiated internal reconsiderations were lodged.[29]
Furthermore, only 40 determinations were considered by the AAT, of which 13
(0.06 per cent of all MRCA original determinations) were set aside.[30]
Legal aid
2.24
Some submitters expressed concerns that legal aid may not provide
adequate support for veterans seeking to appeal to the AAT and that some
veterans may not be eligible for assistance from legal aid.[31]
Slater & Gordon Lawyers argued that:
...the provision of legal aid is a piece of fiction. The
government has suggested that legal aid will be available to veterans. This is
simply not the case. Legal aid is administered by state governments with
funding provided by the federal government. Legal aid services are already
under enormous pressure due to inadequate funding which has been declining year
on year. Legal aid is also means and merit tested, and each state and territory
applies different eligibility requirements. Consequently, the federal
government cannot promise that legal aid will be granted without agreement from
the states and territories.[32]
2.25
The RSL directed the committee to the National Partnership Agreement on
Legal Assistance Service from the Council of Australian Governments, which
commenced on 1 July 2015. The agreement provides that, 'applicants should be
exempt from legal aid commission means tests when seeking merits review of
decisions about eligibility for Commonwealth military entitlements or military
compensation payments'.[33]
2.26
DVA confirmed that this was the reasoning behind the decision not to
alter the current position in relation to costs, noting that 'the situation has
changed from that described in the 2011 report'. It stated that 'Legal aid is
now available irrespective of the type of service rendered by the veteran'.[34]
Inequity of access to legal
representation
2.27
Some submitters raised concerns regarding unequal access to legal advice
and representation between veterans and DVA.[35]
Slater & Gordon Lawyers asserted that DVA has access to internal and
external legal advice and representation, whilst veterans, if unable to recover
costs at the AAT, will not:
The DVA employs in-house lawyers and private-sector lawyers
chosen from a panel to defeat a veteran's claim, the latter alone to the tune
of some $6.2 million for external advice and $586,000 for barristers, as we
understand to be at the last count... If this bill passes, veterans who may wish
to be represented by a lawyer will not be able to afford such representation
because no costs will be awarded, even upon a successful outcome. A veteran with
no legal experience will be fitted against a [legal] expert.[36]
2.28
KCI Lawyers pointed to a case[37]
in which a highly experienced barrister was engaged to represent DVA against a
self-represented veteran:
DVA engaged a private law firm, Moray Agnew for the entire
AAT preliminary process leading up to the hearing and attended the AAT hearing
with 2 staff members. Moray Agnew used a barrister with over 20 years'
experience, with the DVA lawyers sitting opposite him to manage the case. Mr
Jensen [the veteran] sat there on his own and did the best he could to argue
technical points of law and pleaded his case for income support as he no longer
could work due to his injury.[38]
2.29
DVA confirmed that it has an in-house legal branch and a panel of
external legal providers assisting in the handing of MRCC matters, but noted
that veterans facing a government respondent at the AAT are 'no different to
other claimants in
non-veteran jurisdictions (for example, claimants in Comcare matters)'. It
stated that, 'However, veterans have better access to legal aid when compared
to non-veterans in any other jurisdictions.'[39]
Budget savings
2.30
A number of submitters raised concerns regarding the financial impact
statement for Schedule 2 of the bill, which estimates a saving of $2.2 million
over four years.[40]
Some submitters speculated that the decision not to alter the current position,
in relation to the awarding of costs by the AAT, would result in a saving for
the department at the expense of veterans. For example:
I can't help but think that this amendment that the
government wants to pursue is purely a cost cutting exercise.[41]
...the real savings are likely to accrue because DVA will be
less accountable for its decisions and veterans will not be able to access
their entitlements because they cannot afford the costs, including medical
evidence and representation, associated with challenging the DVA.[42]
2.31
DVA refuted these claims, explaining that the $2.2 million is a net
saving comprising:
-
reduced legal costs incurred by DVA($5 million);
-
reduced award of legal costs to applicants ($0.7 million);
-
increased costs for DVA and VRB staff to support VRB processes
($1.3 million); and
-
increased VRB hearing costs ($2.2 million).[43]
Committee view
2.32
The prospect of challenging an administrative decision may be intimidating
for a civilian but the prospect of challenging a decision made by DVA can be especially
daunting for former service personnel who have been wounded or injured,
mentally or physically, serving their country. The process for seeking
reconsideration of a decision under MRCA should be quick, simple,
non-adversarial, and inexpensive.
2.33
The committee acknowledges the concerns raised by stakeholders regarding
the costs associated with challenging a decision and the potential for these
costs to discourage or deny veterans the opportunity to appeal a decision made
under MRCA at the AAT. In particular, the committee recognises the need to
ensure that veterans will not be required to pay for costly medical reports or
legal representation in order to exercise their right to appeal a decision.
2.34
The committee is satisfied with DVA's assurance that internal
reconsiderations and screening will automatically take place before matters
proceed to the VRB. It appears that the Explanatory Memorandum, as currently
worded, has inadvertently given rise to confusion and misunderstanding by legal
firms as to how the proposed single review pathway will operate in practice.
2.35
The single appeals pathway provided by Schedule 2 of the bill, together
with further improvements relating to alternate dispute resolution, will
provide more opportunities for cases to be resolved before reaching the AAT. In
the initial stages of the proposed single appeals pathway, the VRB is able to
order DVA to pay for any medical reports necessary for a veteran's claim.
Furthermore, if the appeal continues through to review by the AAT, the National
Partnership Agreement on Legal Assistance Service's guarantees that veterans
are exempt from legal aid commission means tests.
2.36
However, the committee is of the view that due to the short timeframe in
which it was asked to conduct the inquiry, it has not been able to finalise its
position in relation to several of the contentious issues raised in evidence.
For this reason, the committee would benefit from having more time to re-visit
Schedule 2 of the bill.
2.37
The committee commends the efforts made by DVA to reduce the time taken
to settle and reduce claims made by veterans, and to promote non-adversarial
avenues of dispute resolution which saves time and money.
Recommendation 1
2.38
Subject to the satisfactory completion of the alternate dispute
resolution (ADR) trial in NSW and the ACT, the committee recommends that ADR be
extended to all other states and territories.
Recommendation 2
2.39
The committee recommends that the Explanatory Memorandum be amended to
remove any confusion or misunderstanding as to how the single review pathway
will function.
Recommendation 3
2.40
The committee recommends that Schedule 2 of the bill be re-referred to
the committee for further consideration.
Senator Chris Back
Chair
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