Recent Federal Court decisions have highlighted how the NDIA exercises its powers over provider payments, sparking debate about where legitimate oversight ends and overreach begins. For NDIS providers — registered and unregistered alike — these cases are both a warning and a reminder of the importance of robust compliance practices.
The rulings in Affinity Care Services Pty Ltd v NDIA and Northern Disability Services Pty Ltd v NDIA reaffirmed a key point: providers are not automatically entitled to payments; claims must comply with the NDIS Act and be substantiated with accurate records.
However, while the NDIA has the right to scrutinise claims, as a matter of administrative law, this power does have limits — it must act reasonably and in connection with the claims under review.
In the Northern Disability Services case, the Court found the NDIA’s delay in making a decision as to over $500,000 in payment claims 'unreasonable', ordering the agency to act “forthwith”.
Interestingly, the Northern Disability Services case also shed light on broader NDIA practices re payment claims: as of 1 August 2024, there were more than 1,000 active payment holds across providers, involving some 9,000 documents. The median review time for a payment hold was approximately 60 days, though some cases stretched much longer. These figures show payment holds by the NDIA are far from isolated occurrences.
In Affinity Care, the Court rejected an unregistered provider’s attempt to recover payments on a quantum meruit basis (for services rendered), finding the NDIA was neither ‘unjustly enriched’ nor retained a benefit. Whilst much has been made of this by commentators, providers should not assume that this leaves them without remedy from the Courts. In fact, the more important takeaway from the AffinityCare case is that the Courts would be prepared to entertain a number of other arguments relating to payment holds. For example, the Court in AffinityCare elected not to make a determination on whether the NDIA breached natural justice by halting automatic payments without notice, not because it was considered to be without merit, but because the claim had been made too late in the proceedings. There were a number of other similar examples.
Payment holds by the NDIA are becoming an increasingly common feature in the NDIS. Delayed payments disrupt cash flow and can hinder service delivery to participants. For providers, the message is clear: preparation is your best defence. Maintain detailed records of supports provided (in a form which is able to be produced easily), understand your rights under the NDIS Act and to procedural fairness, and respond promptly to NDIA requests. If payment delays occur, seek specialised advice promptly (and well before insolvency comes knocking).
For legal guidance or general discussion, contact Amber Crosthwaite at 9288 6931 or amber.crosthwaite@lavan.com.au.
