Supports Determined Reasonable and Necessary Supports Cannot be Partially Funded – Part II

McGarrigle v National Disability Insurance Agency [2017] FCA 308 is a recent Federal Court of Australia case which provides instruction on the process an NDIA decision-maker must follow in deciding to approve a participant’s suggested reasonable and necessary supports.

This portion of the case asked whether, firstly, a two step-approach can be taken in deciding the validity of reasonable and necessary supports to allow partial funding. The second question asks whether the NDIA decision-maker can consider whether another person or persons in the participant’s life might be able to financially contribute to provision of such supports.

For the facts of the case, please follow this link.

Whether the Tribunal misconstrued or misapplied s 34(1) of the Act by finding that it could fund a proportion of the cost of a support which had been found to be “reasonable and necessary”

1. The Law

Under section 34(1) of the National Disability Insurance Scheme Act 2013 (Cth) (“NDIS Act”), a decision-maker must consider a number of factors when approving proposed general supports or reasonable or necessary supports for a Participant’s Plan.

The relevant consideration here is s 34(1)(e), which provides that in agreeing to grant funding the decision-maker must consider whether

(e)  the funding or provision of the support takes account of what it is reasonable to expect families, carers, informal networks and the community to provide

Under these sections, the Tribunal approved the NDIA’s decision to fund only 75% of the transport costs requested by Participant as being “reasonable and necessary”.

2. Section 34(1) Interpretation: full funding or partial funding allowed?

a. The Applicant’s Submissions

Mr McGarrigle argued that the NDIA and the Tribunal misconstrued section 34(1) of the NDIA by, firstly, finding that his requested supports were “reasonable and necessary”, but then secondly going on to find that only a proportion of these reasonable and necessary supports should be funded. This two-step approach (which resulted in partial funding), he argued, was inconsistent with, and not allowed under, the plain reading of s 34(1) of the NDIA Act.

Mr McGarrigle contended that on its plain and natural meaning, section 34(1) supports a view that once a support is found to be reasonable and necessary – by taking a number of factors and the legislative requirements into consideration – “there is no room for any suggestion that the funding of the support may be partial or limited” (emphasis added). The meaning of “funding”, rather, connotes conclusiveness to either grant funding wholly or to not grant funding at all. Therefore no partial funding is allowed.

Mr McGarrigle argued that the considerations which caused the Tribunal to reduce Mr McGarrigle’s funding (that Mr McGarrigle’s family members could contribute to “supports”) should have been taken into account when making the decision that the transport costs were “reasonable and necessary supports” in the first instance. They should not have been used after the first conclusion to then partially reduce Mr McGarrigle’s funding.

b. The Respondent’s Submissions

The NDIA contended that the Tribunal did not take a two-step approach in coming to its conclusion to only fund 75% of Mr McGarrigle’s travel costs. Instead the NDIA argued that

“…the Tribunal, guided by 34(1), considered it appropriate to asses the partial funding as part of determining whether the transport costs (fixed at 50%) were a reasonable and necessary support. It decided they were not, but decided that the transport costs (fixed at 75%) were a reasonable and necessary support.”

In this way the NDIA argued that the Tribunal did not split the process of determining reasonable and necessary supports into two steps of deciding, firstly, what type of support would be given and, secondly, what level of support should be issued. Instead, the NDIA submitted that the correct construction of 34(1) of deciding whether a support is reasonable and necessary is to take into account both the type and quantum of the support in one analysis, and consequentially make a determination as to what type and what quantum of support should be funded. For example, here the type of support was transport costs and the quantum required was fixed at 75%. Because of this, it was open for the Tribunal to award only partial funding.

c. The Court’s Decision

In agreeing with Mr McGarrigle, the Court concluded that the Tribunal misconstrued and misapplied s 34(1). This was because the Tribunal’s construction of s 34(1) meant that a CEO, after being satisfied that supports were reasonable and necessary, could then authorise the partial funding of the support because others could make up the funding difference. This two-step approach was wrong.

At [93] his honour held that “the text and context of s 33(5)(c), read with s 34(1) indicates that the CEO (or the delegate or Tribunal) must either be satisfied that a support has the character of being a reasonable and necessary support, or that it does not.” The scheme therefore contemplates that whatever support the decision-maker determines is reasonable and necessary is the support that will be fully funded.

While the Court did not expressly reject the type and quantum approach argued by the NDIA, the Court did hold that such an analysis was not undertaken by the Tribunal based on the facts.

The scope of section 34(1)(e): Does “support” mean contribution to funding?

Mr McGarrigle’s second argument in relation to the construction of section 34(1)(e) was that there is no scope within s 34(1), particularly 34(1)(e), to consider whether an individual’s family, carers, informal networks and the community should be reasonably expected to provide funding, or supplement funding. The correct reading of s 34(1)(e) is that it

“asks the decision-maker to look at the capacity of families, carer, networks and the community to provide a support, and if that is the case, that support would not be reasonable and necessary support for the NDIS to fund.”

The key here is the question of provision of support, or the provision of funding the support. Mr McGarrigle contended that if s 34(1)(e) is taken to assess the ability of the above persons to supply funding, it would introduce a “means testing” by a back door route into the NDIS. This is despite parliament making it clear that the NDIS is not supposed to be means tested.

The Court held that the Tribunal did in fact ask itself whether Mr McGarrigle’s family could be expected to make up the shortfall. Mortimer J held that this was “the wrong question, and an irrelevant question, under the legislative scheme.” The correct question to ask was whether any of Mr McGarrigle’s family could have provided the support itself – the driving of Mr McGarrigle to and from work – and not whether his family had the financial means to pay for the transport.

3. Take away Lessons

This aspect of the case has made two points clear when interpreting s 34(1) of the NDIA Act generally, as well as specifically s 34(1)(e).

Firstly, in deciding whether to grant general supports or reasonable and necessary supports, the NDIA must not take a two-step approach. The NDIA must weigh up all of the factors and then come to a conclusion that the supports are reasonable and necessary. Once this conclusion has been made, the funding cannot afterwards be partially funded due to other factors.

Secondly, section 34(1)(e) does not ask the NDIA to consider whether a participant might have others in his or her life which might be able to financially fund the supports requested. Rather, section 34(1)(e) asks the decision-maker to consider if another person or persons might be able to provide the support requested.

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