Unfortunately for some of our clients, and injured people in general, by the time they receive a lump sum settlement in their claim, they have had their weekly payments terminated by the TAC or by WorkCover.

In those cases, the injured person will most likely end up on a Newstart allowance or a disability support pension. The question then arises as to what happens when you receive a lump sum and you are also in receipt of Centrelink. This blog will cover the most common scenarios in this area.

Impairment benefit lump sums

Both WorkCover and TAC claims generally allow the injured person to make an “impairment benefit” claim. While the methods between the TAC and WorkCover differ slightly, the general principles are the same. An injured person can apply for a lump sum regardless of who is at fault for an accident or even if there is no one at fault for an accident. They are assessed by doctors and receive a modest lump sum payment if they reach a threshold level of injury.

Any payment from Centrelink is not affected by an impairment benefit. This means that your Centrelink payment would not cease if you receive an impairment benefit, nor would you be required to repay any funds to Centrelink for any past payments from them.

The only possible time that you could be penalised for receiving an impairment benefit is if your particular Centrelink payment is means tested and the payment you receive takes you over the asset level threshold required to obtain the Centrelink payment.

WorkCover and TAC pain and suffering only common-law payments

If there is negligence on behalf of another party in your claim you may well be entitled to pursue common law damages if your injury is bad enough. In these circumstances, common law claims can be for pain and suffering only, or for both pain and suffering and economic loss (loss of earnings).

In some matters, pain and suffering damages are the only damages available to the person. In these circumstances, Centrelink will generally accept that no preclusion period (where you are not entitled to Centrelink for a period of time in the future) would apply.

The only potential time where a preclusion could apply is where the parties attempt to “dress up” a settlement for pain and suffering and economic loss as a pain and suffering only settlement. For example, a settlement for $600,000 for a moderate lower back injury is not going to be accepted by Centrelink as being for pain and suffering only.

TAC and WorkCover common law claims for both pain and suffering and loss of earnings

When someone is successful in claiming both pain and suffering and loss of earnings their entitlement to Centrelink will be affected upon settlement.

The persons entitlement to Centrelink in the future will be subject to a preclusion period. This is a period of time into the future from the date of settlement where the worker is not entitled to obtain Centrelink benefits. The period involved is worked out using a formula to get a period of weeks in which there is no entitlement to Centrelink. Often the period can be from one to three years and in larger cases, significantly longer.

TAC and WorkCover claims for reinstatement of weekly payments

When someone’s entitlement to weekly payments is terminated, the decision can be challenged in the Magistrates’ Court (WorkCover payments) or VCAT (TAC payments).

The outcome from such a case can be that you settle for, or are awarded an ‘arrears’ of weekly payments. For example, Steve’s payments are terminated on 12 October 2016. On 28 November 2017, an agreement is reached that WorkCover pays Steve weekly payments from 12 October 2016 to 28 November 2017.

Steve has also received a Centrelink Newstart allowance for the same period. Steve will have to repay Centrelink any money received from them during this period.

In all circumstances above, the repayment to Centrelink is managed by the WorkCover insurer or the TAC and the injured person will not need to take any action.

Note: certain payments from Centrelink are not affected by repayment of preclusion periods. This article focuses on Newstart and Disability Support Pensions, two of the most common payments received from Centrelink.