Advocates and legal practitioners are raising concerns about how Centrelink, Medicare, and private health insurers recover past benefits from civil compensation payouts, saying current processes can be opaque and difficult for survivors to navigate.
According to ABC’s report, Melbourne survivor Richard Turner, 62, pursued civil compensation in the Victorian Supreme Court in 2023 against Beaumaris Primary School, Brighton Grammar School, and the State of Victoria in relation to abuse he says occurred in the 1970s. Turner said he was 10 when he was abused by his Beaumaris Primary School teacher and later convicted paedophile Darrell Ray, including incidents in the school library. “We were spending time in the library, either before or after lunchtimes, where the doors were locked and no-one else was in there. And ultimately, he raped me in about March of 1974,” Turner said, as reported by ABC.
Turner later attended Brighton Grammar, where he said he was mentored in singing by teacher Ian Bridge and also experienced further abuse. “He spent the next 12 months teaching me how to sing. But along with that, I was also groomed by him and physically and emotionally abused by him,” he said. Ray was later prosecuted following complaints from other survivors of his abuse as a teacher and football coach in Melbourne, but he died during criminal proceedings brought by Turner. Bridge died in 1982.
Turner then commenced civil proceedings, which were settled out of court after about two years. As part of the settlement process, past payments from government agencies and private health insurers related to his injuries were identified and deducted before he received the net amount. Turner said he had to repay more than $90,000 to his private health insurer for three admissions to a mental health clinic during his criminal and civil proceedings. “The view is that they have already compensated you enough in your settlement, but that’s a fallacy. This money represents my abuse; [it] made me feel sick. Knowing that they’d also taken money from me, surely I can’t be the only one that feels that way, and it needs to change,” Turner said. He said he understood that repayment obligations are considered when settlements are negotiated but wants clearer, earlier disclosure of how those deductions will operate. “The civil compensation journey is really quite long and arduous, to have a system where they also take another bite at the cherry; there’s no such word as closure,” he said.
Under Australian social security, health, and insurance law, agencies and insurers may recover certain past benefits when a person receives compensation for an injury or illness. Policymakers and insurers say the purpose is to avoid duplicate payments where both a scheme and a liable institution would otherwise fund the same loss. Michael Bradley, managing partner at Marque Lawyers and a board member of the Grace Tame Foundation, said the timing of recovery notices can add to the complexity for survivors. “Coming at the end of what has inevitably been a very traumatic process itself, it’s just sort of a bit of a final nail in the coffin,” he said, as reported by ABC. Bradley said the policy intent is to prevent double compensation. “The theory is if the Commonwealth has, through Medicare, paid you something towards that, then obviously that money should go back to the Commonwealth and back to the taxpayers. Otherwise, there’s a windfall gain,” he said. Advocates say, however, that calculating and confirming repayment figures from Centrelink, Medicare, and private health insurers can take months and may not be finalised until close to settlement, limiting certainty about net payouts.
Sexual Assault Services Victoria chief executive Kathleen Maltzahn said she supports changes to how recovery rules interact with abuse-related settlements. “This is not like a Tattslotto win. This is a tremendously difficult process where someone has to explain the worst thing that ever happened to them, every decision they’ve made subsequently and wait essentially, for the institution to haggle over the price of the loss to their life,” she said, as reported by ABC. Maltzahn said there are circumstances in which governments and insurers should consider not pursuing recovery. “If you’ve paid your insurance dues and they’ve been written off, often many years ago, too late for the insurer to come back. If you’ve received the disability support payment for years when you had no prospect of having compensation, the government should just wear it,” she said. She said she believes the responsibility for systemic changes rests with the federal government. “Governments increasingly are understanding the impact of historic institutional child abuse and doing everything, everything they can to improve things for survivors. This is absolutely fixable,” she said.
In a statement, the Department of Social Services said compensation recovery is a long-standing practice in Australia’s social security and health systems when a person receives compensation for a personal injury. The department said the federal government was deeply committed to ensuring the National Redress Scheme was reflective of the needs of survivors, while operating within existing compensation-recovery principles.
Private Healthcare Australia, the peak body for health insurers, said in a statement that, in accordance with the law, health insurers are entitled to be refunded for any benefits paid on behalf of members who later receive compensation for personal injuries. Industry bodies say these recovery provisions are designed to manage claims costs and ensure that expenses which can be recovered from liable institutions are not permanently borne by taxpayers or insurance pools.
Financial advisers who work with abuse survivors say many clients are not fully aware of repayment rules when they begin civil action or consider settlement offers. Andrew Reynolds, principal financial adviser of EFS Advice, which supports people receiving settlements, said some clients react strongly when they learn about recovery obligations. “It was quite disappointing for some of them. They felt like they’re receiving money from the government on the one hand, and then having it taken away on the other,” he said. Reynolds said early, basic financial advice can assist survivors to understand how a settlement may affect Centrelink, superannuation, and insurance arrangements. “I think every person receiving a settlement should get some initial minimal financial education to understand how their settlement works. If they’re on Centrelink, those payments might be impacted. There’s carve outs in the superannuation legislation that can allow people to implement certain unique financial strategies that can be really compelling,” he said.
The discussion about compensation recovery is occurring alongside ongoing child protection concerns that have implications for institutions and their insurers. The Australian Institute of Health and Welfare (AIHW) reported that 1 in 32 children – about 179,000 – came into contact with the child protection system in 2023-24. Emotional abuse was recorded as the primary type of abuse for 57% of children who were the subject of a substantiation of maltreatment over that period. Around two in three (65%, or 5,900) young people under youth justice supervision in 2022-23 had contact with the child protection system between July 1, 2013, and June 30, 2023. For insurers, scheme administrators, and policymakers, the numbers point to ongoing exposure to abuse-related claims and continued scrutiny of how compensation, recovery mechanisms, and survivor outcomes are managed within existing legal and policy frameworks.
