Moray & Agnew breaks down court ruling's impact on NDIS providers

Law firm Moray & Agnew has examined the implications of the Federal Court of Australia’s ruling in “Affinity Care Services as Trustee for the Balmerino Australia Trust v National Disability Insurance Agency [2024] FCA 1314.”

The case affirmed the National Disability Insurance Agency’s (NDIA) authority to investigate claims and withhold payments under the National Disability Insurance Scheme (NDIS) to address potential misuse of participant funds.

Case background 

The case concerned an unregistered NDIS provider that sought payment of $343,246.73 in invoices that the NDIA refused to process.

The agency had received complaints alleging overuse of participant plans and billing for services that were not provided. Acting on these concerns, the NDIA placed a payment lock on the provider’s claims and issued a Request for Information (RTP) to substantiate the invoices.

The provider challenged the NDIA’s actions, arguing that withholding payments and requesting additional documentation were beyond its legal authority under the NDIS Act. The provider also sought declarations that it was entitled to payment and that the RTP was invalid.

Key findings 

Justice Penelope Neskovcin ruled in favour of the NDIA, confirming its powers under the NDIS Act. The judgment addressed three critical areas:

• Payment validation: Under sections 45 and 45A of the NDIS Act, the NDIA CEO or their delegate must be satisfied that claims meet legal requirements before payments can be made. The court determined the provider had no automatic entitlement to payment.
• Investigatory authority: The court upheld the NDIA’s right to investigate claims and request documentation under sections 118(1)(h) and 119(1) of the NDIS Act. The provider’s argument that these powers were limited to specific sections of the act was dismissed.
• Restitution claims: The provider’s alternative claim for restitution under quantum meruit principles – asserting that it was entitled to payment for services rendered – was rejected. The court found no evidence of unjust enrichment, as the NDIA does not directly benefit from services delivered to participants.

The court concluded that the NDIA’s actions, including withholding payments and requiring additional information, were lawful and necessary to maintain the integrity of the scheme.

Implications for NDIS providers 

Moray & Agnew said that the ruling clarifies that the NDIA has significant discretion to scrutinise claims and request evidence from providers, particularly when concerns about compliance arise.

Payments under the NDIS are not guaranteed until claims meet the legislative standards, making accurate record-keeping critical for providers.

The law firm also reminded providers of the importance of transparency in their dealings with the NDIA. Failing to respond to requests for documentation could lead to delays in payments or potential legal challenges.

Fraud prevention and compliance 

The decision comes as the Australian government intensifies efforts to combat fraud within the NDIS.

The Fraud Fusion Taskforce (FFT), comprising multiple agencies, has conducted high-profile investigations targeting fraudulent activity, including misuse of funds by providers.

Recent operations have resulted in over 20 search warrants and the recovery of millions of dollars. In 2024, the NDIA reported preventing $200 million in improper payments and redirecting $400 million to compliant providers. Over 500 active investigations are ongoing, focusing on protecting participant funds and maintaining program integrity.