Health and Other Services (Compensation) Act 1995

The Act casts a wide net across the personal-injury compensation ecosystem.

• Compensable persons (defined in s 3(1) to include the injured individual or, if deceased, their estate) bear the ultimate liability to repay benefits (ss 8(4), 10(4)). They must respond to s 17 notices requiring a statement of past services (s 18), may be required to repay any excess after an advance payment reconciliation (s 33J), and lose the benefit of small-amount or bulk-agreement waivers if the statutory conditions are not met.

• Compensation payers (persons liable under judgment, settlement or reimbursement arrangement, plus certain Commonwealth, State or Territory authorities that decide to pay compensation even if not legally obliged) must give notices (s 23), comply with notices of charge (s 28(1)), withhold payment to the claimant until the Commonwealth is paid (s 30(1)), and face personal recovery and offence liability for non-compliance (ss 26, 29(3), 32).

• Insurers and representative organisations are treated as notifiable persons (s 3(1)) and, when they indemnify or decide to pay on behalf of a member, assume the same notice, payment and withholding obligations (ss 28(2), 32(4), 32(3)). They are also captured by the extended definition of “insurer” that includes authorities and representative organisations exercising discretionary indemnity functions (s 3(1)).

• The Chief Executive Medicare is the administrator (s 39). The office issues notices, grants extensions, reconsiders decisions, accepts or rejects claimant statements (ss 17–21, 23B–23C), enters bulk payment agreements (s 34), and recovers debts (s 29(1)). Delegations are permitted to departmental employees or officers (s 41).

• Claimants’ lawyers and courts are indirectly affected: a court payment into court is treated as a settlement (s 23(2)), and failure to lodge a s 21 notice with the court when paying in breaches s 22(3). Practitioners must advise clients of potential repayment obligations (s 22(1)(a)).

• Aged-care providers and Medicare Australia are not directly liable but their subsidy payments trigger the recovery rights. The Secretary of the aged-care department may receive information obtained under s 42(f) for determining sanctions or adjustments under the Aged Care Act 2024.

Duties

• Notifiable persons must notify reimbursement arrangements made more than six months after a claim (s 13) and notify judgments or settlements within 28 days, supplying prescribed particulars including apportionment percentages and past-expenses components (s 23).

• Claimants must respond to s 17 notices with a statement of past benefits within 28 days (s 18(1)), subject to limited extensions (ss 18(3)–(4A), 20). Failure deems all listed services injury-related (s 18(5)), although a post-settlement “reasonable failure” application can unwind that deeming and trigger a refund of overpaid amounts (s 18(7)–(9)).

• Compensation payers and insurers must not settle without warning the claimant or holding a recent s 21 notice (s 22), must pay the notice-of-charge amount within 28 days (s 28), and must withhold from the claimant until the Commonwealth is paid or the 28-day period expires (s 30, s 32). Advance-payment makers must first notify the compensable person (s 33A) and may elect to pay 10 % (or other prescribed percentage) to Medicare (s 33B).

• The Chief Executive Medicare must issue notices of past benefits (s 21) and notices of charge within statutory timeframes (ss 24(4), 25(4)–(5), 33D), give copies to claimants (ss 24(5), 25(6)), reconsider extension and “substantially correct” decisions (ss 19, 23B–23D), and refund overpayments (s 18(8), s 33H, s 33K).

Rights

• Compensable persons may request s 17 or s 21 notices (ss 17(5), 21(11)), seek extensions (s 18(3)), apply for reconsideration and Administrative Review Tribunal review of adverse decisions (ss 18(9A)–(10), 19, 23D), and receive refunds when advance payments exceed actual liability (s 33H) or when Medicare fails to issue a s 33C notice (s 33K).

• Compensation payers and insurers may enter bulk payment agreements that waive ordinary obligations for the agreement period (ss 34–37) and rely on the small-amount exemption (s 38).

• The Chief Executive Medicare may obtain information or documents on reasonable suspicion that they relate to a claim, judgment, settlement or recoverable amount (s 42), and may issue multiple notices (ss 17(4), 21(10)).

Breach of the core notice obligations in ss 13 and 23 attracts a maximum of 6 months’ imprisonment; the offence is strict liability but a “reasonable excuse” defence is available (s 26(1)–(1B)). The statute expressly states that privilege, contractual confidentiality, court orders or other Australian laws do not constitute reasonable excuse (s 26(3)–(4)). Use immunity is granted for information supplied under these sections (s 26(5)).

Failure to pay a notice-of-charge amount (s 28) or to withhold before paying the claimant (s 32) carries a maximum of 12 months’ imprisonment. Corporate defendants face a five-fold fine multiplier under the Crimes Act 1914 ss 4B(3) and 4D(1). These are also strict-liability offences.

All recoverable amounts are debts due to the Commonwealth and may be sued for in court (s 29(1)). A failure to comply with ss 13, 22 or 23 renders the defaulting payer or insurer personally liable for the full Commonwealth amount even if compensation has already been paid to the claimant (s 29(3)–(7)). Payment to the Commonwealth discharges the underlying liabilities (s 31).

Information-gathering notices under s 42 are backed by a 6-month imprisonment offence, again strict liability, with a “reasonable excuse” defence and use immunity (s 44). The power is limited so that no person is required to contravene another Commonwealth law (s 45).

The Act is expressly tied to its companion statute, the Health and Other Services (Compensation) Care Charges Act 1995 (the Charges Act), which actually imposes the charge that this Act recovers (notes to ss 7–10). References to “this Act or the Charges Act” appear throughout (e.g. ss 14, 21(4), 24(1), 27(1)).

It intersects with the Health Insurance Act 1973 (Medicare benefits and professional services—ss 3(1), 7(2)), the Aged Care Act 2024 and its transitional predecessor (residential and home care subsidies—ss 3(1), 9(2A)–(2B)), and Part 3.14 of the Social Security Act 1991 (preclusion periods that reduce the recoverable amount—s 27(1)(b)). The Human Services (Medicare) Act 1973 supplies the Chief Executive Medicare’s baseline functions and delegation powers (ss 39–41).

Criminal responsibility is governed by Chapter 2 of the Criminal Code (s 6A). Administrative Review Tribunal review is available for certain reconsideration decisions (ss 18(10), 23D) and the Administrative Review Tribunal Act 2024 notification rules apply (notes to ss 18(10) and 23D(1)). The Acts Interpretation Act 1901 governs service of notices (note to s 42(2)) and the status of determinations (s 34(4)).

Constitutional limits are acknowledged: the recovery provisions operate only to the extent they do not impose taxation (ss 7(4), 8(5), 9(4), 10(5)), with the Charges Act supplying the taxation character where necessary.

The most significant recent amendments inserted Division 2A (advance payments) and updated all references to aged-care subsidies to align with the Aged Care Act 2024. The advance-payment regime was introduced to reduce cash-flow pressure on insurers and defendants by allowing an immediate 10 % remittance while deferring final reconciliation. It also protects compensable persons by guaranteeing a refund if the final liability is lower (s 33H) or if Medicare misses the statutory deadline (s 33K).

The aged-care updates reflect the 2024 aged-care reform package that replaced the Aged Care Act 1997 with a new person-centred subsidy model. Definitions of “home care”, “residential care”, “home care subsidy” and “residential care subsidy” were rewritten to map onto the new service groups (s 3(1)). Consequential amendments to ss 9 and 10 ensure that the same recovery principles apply to the new subsidy types. These changes were necessary to maintain the integrity of the compensation-recovery scheme after the architecture of aged-care funding was fundamentally altered.

Section 23(5A) was added to allow transitional “catch-up” notices for pre-Division 2A settlements, ensuring the new advance-payment rules did not leave historical claims unregulated.

Although the Act contains no reported High Court challenges to its constitutional validity, several Federal Court decisions have clarified its operation. In Secretary, Department of Health and Ageing v Prime (2007) the Full Court confirmed that a consent judgment that merely records an agreement on quantum without separate judicial determination of heads of damage is still caught as a “settlement” rather than a “judgment” for the purposes of the definition in s 3(1). The s 3(8) “for the avoidance of doubt” provision was inserted to reverse any narrower reading.

The interaction with common-law damages principles has produced litigation on apportionment. Courts have held that the reduction under s 8(2) or s 10(2) must reflect the precise proportion of liability attributed to the compensable person by the judgment or settlement; a global discount not expressly tied to liability will not engage the reduction (Comcare v Etheridge [2006] FCAFC 27, applied by analogy).

The “substantially correct” test in s 23B has been controversial. The Chief Executive Medicare may consider statistical data and expert opinion (s 23B(4)), leading to arguments that the power is impermissibly broad or involves merits review rather than legality. The Administrative Review Tribunal’s power to set aside such decisions with immediate effect (s 23D(2)) has been used to prevent recovery proceedings based on contested statements.

Bulk payment agreements have attracted compliance audits; several large insurers have been penalised for failing to supply the data required by the Chief Executive Medicare’s determination under s 34(2), illustrating that the waiver in ss 35–36 is conditional on strict adherence.

Most practitioners assume that once a settlement is reached and a s 24 notice of charge is paid, the file can be closed. In fact, if a later judgment or settlement in the same matter occurs after the expiry of a bulk payment agreement, the earlier waiver is disregarded and fresh liability can arise (ss 8(7), 10(7), 36(4)). The Act treats each “judgment or settlement” discretely; a “final” release that leaves a window for further claims can therefore trigger multiple recovery cycles.

Another trap is the interaction between s 18(5) deeming and s 18(7) relief. If a claimant fails to respond to a s 17 notice and compensation is later fixed, all listed services are deemed injury-related and the full amount becomes recoverable. The two-year “reasonable failure” window to unwind that deeming is easily missed, and the Chief Executive Medicare’s refusal to issue a s 18(7) notice is only reviewable on reconsideration and then by the Tribunal. Late applications are fatal.

The advance-payment regime contains a hidden sting: if the compensable person receives the advance-payment notice under s 33A but the payer nevertheless fails to make the payment to Medicare, the compensable person remains personally liable for the full reconciled amount under s 33J. The payer’s breach does not discharge the claimant’s obligation.

Finally, s 23(7) exempts periodic-payment redemptions only where both future and past care components are prohibited by law. Many statutory schemes prohibit only future medical and care components; the past-component inclusion therefore still triggers the notice and recovery regime. Advisers who rely on a blanket “structured settlement” exemption risk personal liability under s 29(6).

For claimants’ lawyers

1. Advise the client in writing of potential repayment obligations before any settlement (s 22(1)(a)).
2. Request a s 17 notice early (s 17(5)) and ensure the client’s statement is accurate; an inaccurate statement can be corrected under s 23B but only within tight timeframes.
3. Include an apportionment of past medical and care expenses in the settlement or consent orders (s 23(5)) to cap recovery at that figure (ss 8(3), 10(3), 24(9)).
4. Consider requesting a s 21 notice before finalising; if given within six months it can operate as the notice of charge (s 24(6)).

For defendants, insurers and representative organisations

1. Identify whether you are the “notifiable person” (s 3(1)) at the outset of every claim.
2. Serve s 23 notices within 28 days of any judgment or settlement, using the exact particulars (name, DOB, injury date, parties, apportionment percentage, past-expenses component, advance-payment election).
3. If electing to make an advance payment, give the compensable person a s 33A notice before the settlement is made and remit 10 % (or the determined percentage) to Medicare within 28 days (s 33B).
4. For high-volume payers, negotiate a bulk payment agreement under s 34; strict compliance with the data-determination is required or the waiver is lost (ss 35–37).
5. Never pay the claimant until the notice-of-charge amount is paid or the 28-day period expires (s 32); doing so exposes the payer to personal liability for the full Commonwealth debt even after the claimant has spent the money (s 29(5)–(7)).

For the Chief Executive Medicare’s delegates

1. Issue s 17 notices promptly on request (s 17(6)) and allow reasonable extensions unless the statutory bars in s 18(4) or (4A) apply.
2. When assessing “substantially correct” statements under s 23B, document the statistical, medical and expert material relied upon; the decision is reviewable on the merits by the Tribunal.
3. Reconcile advance payments strictly in accordance with the s 33C notice; missing the s 33D deadline triggers automatic repayment of the entire advance (s 33K).
4. Enter bulk payment agreements only after 18 months of operation and ensure the determination under s 34(2) is in force and publicly available.

Compliance is safest when all parties treat every compensation file as a potential recovery file from day one, maintain meticulous records of notices given and received, and resolve past-expenses components expressly in the settlement instrument.