4.13.2.50 Aggregation of Multiple Lump Sums

This topic

This topic contains information on the following:

• commencement of aggregation provisions,
• aggregation of multiple lump sums,
• aggregation of a judgement and a settlement,
• advance payments from settlements and judgements,
• multiple lump sums made on the same day,
• multiple lump sums made over a period of time, and
• assessment of lump sum settlements for multiple claims.

Summary

This topic explains what is the compensation part of a lump sum payment when more than one lump sum is received in respect of the same compensable event.

If lump sums are received in respect of DIFFERENT compensable events, then these are treated as separate matters and the payments are not aggregated. The amount paid for each compensable event should be ascertained and a preclusion period assessed separately for each compensable event where the amount has been paid wholly or partly in respect of lost earnings or lost capacity to earn in relation to that event.

Commencement of aggregation provisions

The amending legislation to enable lump sums to be aggregated received Royal Assent on 29 September 1995. The aggregation rules are applied where both lump sum payments for the same compensable event are received on or after 29 September 1995.

Aggregation of multiple lump sums

The compensation recipient is taken to have received one lump sum payment, the amount of the lump sum being the total of all the lump sum payments made in respect of that event or injury.

Note: Aggregation includes lump sums for both economic (e.g. lost wages) and non-economic loss (e.g. maims payment) made in respect of the same compensable event. Although the compensation provisions of SSAct Part 3.14 only commence from the first of the lump sums that includes an economic loss component, once that payment is made any earlier or subsequent lump sum in respect of non-economic loss is aggregated.

Aggregation of a judgement & a settlement

If 2 lump sums are received for the same compensable event but one is as a result of a judgement and the other is as a result of a settlement (not necessarily in that order), and no repayment of one from the other is required, the delegate needs to form an opinion in line with SSAct section 17(3)(b) as to the economic loss component of the aggregated settlement or if this is not clear the 50% rule may be the most appropriate to use.

The decision maker also needs to examine the terms of the judgement to see if the earlier settlements have been replaced by the judgement.

Advance payments from settlements & judgements

A lump sum preclusion period should be calculated when the advance is paid, rather than waiting for a possible further settlement in the future. When the preclusion period is calculated, a charge may be recovered from the insurer or compensation payer. It is important to remember that this is an interim preclusion period and that a final preclusion period and a charge amount can only be determined on full settlement of the claim.

If at a later time another advance (or the final payment) is made in relation to the same compensable event, the lump sums should be aggregated. A new preclusion period is calculated on the total gross lump sum amount every time an additional lump sum is paid, with the same date of commencement. The divisor to be used is the one applicable to the more recent lump sum.

Note: If periodic payments are awarded at a later time the date of commencement may need to be reviewed.

Multiple lump sums made over a period of time

Multiple lump sums are treated as being one lump sum in certain circumstances. The following table explains how a compensation recipient is taken to have received one lump sum payment even if multiple payments have been made over a period of time. This applies irrespective of how far apart in time the payments have been made.

Assessment of lump sum settlements for multiple claims

This section explains how to calculate a compensation recipient's compensation preclusion period where the compensation recipient has received more than one lump sum in respect of a single compensable injury or in respect of a number of compensable injuries.

Whether the compensation recipient has received a lump sum compensation payment in respect of a single injury or in respect of a number of injuries, it is critical to establish the date of injury (DOI) and then marry that DOI to the lump sum compensation received by the compensation recipient.

The preclusion period calculation provided by SSAct subsection 1170(4) still applies, with reference to be had to SSAct section 17(5A):

• For the purposes of subsection (2B) of this section and SSAct Part 3.14, the event that gives rise to a person's entitlement to compensation for a disease, injury or condition is:
  • if the disease, injury or condition was caused by an accident - the accident, or
  • in any other case - the disease, injury or condition first becoming apparent,

and is not, for example, the decision or settlement under which the compensation is payable.

If it is not clear from the terms of settlement of the compensation recipient's compensation claim what the actual DOI is, the information gathering power under SS(Admin)Act section 192 can be used to ascertain the DOI.

Note: If no information, from any source, is available regarding the amount of compensation given in relation to each compensable event, the total settlement is to be divided by the number of separate compensable events.