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NDIS recipients are being sued by their service providers

There are calls for reform as evidence emerges of NDIS recipients facing harsh action over unpaid invoices.

person with disability looking at bills
Last updated: 17 January 2022
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Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • CHOICE has found evidence that NDIS recipients are being sued by their service providers
  • Advocates say recipients need more protection
  • Legal Aid NSW is calling for a binding dispute-resolution scheme to be built into the NDIS

The National Disability Insurance Scheme (NDIS) connects about 400,000 people who have a significant and permanent disability to government funding for support and services.

One such person is Joshua Sale, who is 21 years old and has cerebral palsy. He had a close relationship with his NDIS-funded carer, who bathed him and took him on walks every weekend. 

So Joshua's mother, Nicole Johnson, was shocked when that service provider sued both her and her son over an unpaid invoice. The invoice had gone unpaid by the government scheme because of an overspend on Joshua's NDIS plan. 

The ordeal has still left her out of pocket and with her credit rating in ruins

Nicole never even received a legal letter. She only found out about the legal action when nearly $18,000 was garnished from her bank account. ('Garnishing' means a debt collector has successfully sued to take the money from someone's account, which can be devastating for their credit rating.)

"I think it's shocking, it should never have been able to happen," she tells CHOICE.

The NDIS later refunded about $16,000, but she says the ordeal has still left her out of pocket and with her credit rating in ruins, meaning she's no longer even able to get a mobile phone plan.  

ndis case study

Nicole and her son Joshua were sued by their service provider.

Systemic problem with NDIS

Joshua and Nicole's case highlights a problem in the NDIS system where recipients of services end up taking on legal liability in the case of a dispute over payment. 

Nicole's bank account was garnished because she never received the documents telling her to attend court, which meant she couldn't dispute the service provider's claims.

This happened despite the fact that the service is paid for by the National Disability Insurance Agency (NDIA) and, in Nicole's case, the funds are managed by an NDIA plan manager.

The recipient is potentially liable if anything goes wrong with the payment

Although the services are paid for by the NDIA, the contract for the service is held between the NDIS recipient and the service provider, meaning the recipient is potentially liable if anything goes wrong with the payment.

Nicole wasn't aware of this liability, and nor are many others. The system does have some safeguards in place, say industry insiders, but recipients are largely left on their own if the NDIS decides not to pay a provider's whole bill because of an overspend on the provider's part.

Advocates: 'We need market regulation'

El Gibbs is a writer and advocate with a disability. She says cases like Nicole and Joshua's highlight the need for stronger protections of NDIS recipients from the NDIS Quality and Safeguards Commission, which oversees NDIS providers. 

"I think we need active market regulation that puts the needs of people with a disability and their families first, so that we're more than consumers," she says.

"We end up being the tin of beans passed around and sold to service providers, rather than [being] the person who does the purchasing of [services]". 

We need active market regulation that puts the needs of people with a disability and their families first

El Gibbs, writer and advocate

Dave Belcher from the Community Disability Alliance Hunter says the Commission lacks "teeth" and is not living up to its role of protecting NDIS recipients from service providers who overstep the bounds of their remit.

According to Belcher, a disproportionate number of people with disabilities are living below the poverty line, and access to the legal system to claim their rights or defend themselves is difficult at best.

"On the other hand, a large service provider, which brings in millions of dollars from people with disabilities every year, certainly has the resources to go in the legal direction," he says.

Liability falling on most marginalised

Jo Evans, a senior solicitor in the Consumer Law team at Legal Aid NSW, says she's more and more concerned about the number of cases she's seeing of NDIS recipients being sued or facing action from debt collectors over unpaid invoices.

Evans says many people are involved in the process of arranging services for an NDIS recipient, including the NDIA plan managers and support coordinators. But when things go wrong, the liability sits solely with the recipient.

"When you're dealing with debt collectors, or you're in court, it's just the plan participant and the service provider who are on their own to fight it out," she says.

"We don't think it's fair, because the NDIS participant is often the most vulnerable person in the whole situation."

Terrified of being made to pay

Amelia, who lives with a severe form of myalgic encephalomyelitis, was in hospital in early 2020 and needed extra around-the-clock care from a carer. There was an overspend on her NDIS plan, meaning the service provider is now chasing her for more than $10,000.

"I'm barely able to save $500 per year on my (disability support) pension let alone $10,000," she tells CHOICE.

She says she is terrified that she will be sued or face debt collectors over the bill, and that the situation has caused her stress and anxiety.

Want to share your story with CHOICE? Contact investigative journalist Jarni Blakkarly at jblakkarly@choice.com.au.

Who is responsible for overspend?

Rachael Thompson, NDIS appeals manager at the Rights Information and Advocacy Centre in Victoria, says the organisation has also seen NDIS recipients being hit with lawsuits. 

But she also sees things from the service providers' viewpoint. When there's an overspend on a NDIS plan, the service providers are often left unpaid for months. It's only out of the patience and good will of some, she says, that even more recipients aren't sued. 

Ultimately, she believes, the problem lies higher up.

In cases where it was not the recipient's fault, Thompson says, "the plan manager and the support coordinator have both sort of failed in their duties".

NDIA says responsibility should be shared

A spokesperson for the NDIA tells CHOICE that all service providers have to comply with the NDIS code of conduct, and that recipients are also responsible for making sure the provider doesn't supply services over and above what was bought.

"Participants and providers both have obligations to make sure any purchased NDIS supports align with a participant's NDIS plan," the spokesperson says.

Participants and providers both have obligations to make sure any purchased NDIS supports align with a participant's NDIS plan

NDIA spokesperson

"Depending on plan management type, participants, nominees and their families and carers have a level of responsibility to make sure they purchase support in line with their approved NDIS plan."

Dispute resolution scheme needed

Evans says cases such as these highlight the need for a binding dispute resolution scheme built into the NDIS. Any such scheme, she believes, should make plan managers, support coordinators, NDIS recipients, service providers and the NDIA itself equally responsible for resolving disputes between providers and recipients.

"There are multiple decision-makers involved in every service that's contracted for," she says. "So we would like to see a dispute resolution scheme that can bring all the parties to the table, including the NDIA, to resolve these disputes." 

Belcher agrees that a dispute resolution service would be a great improvement on the current system, as long as it didn't involve lawyers and was easily accessible to NDIS recipients.

Are you an NDIS recipient facing legal action? 

Seek legal assistance from Legal Aid in your state or territory.

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