Telcontar Holdings Pty Ltd (Valencia Private Nursing Home) [1999] AATA 96 (18 February 1999)

Last Updated: 28 February 1999

DECISION AND REASONS FOR DECISION [1999] AATA 96

ADMINISTRATIVE APPEALS TRIBUNAL )

) No W98/190

GENERAL ADMINISTRATIVE DIVISION )

Re Telcontar Holdings Pty Ltd (trading as VALENCIA PRIVATE NURSING HOME)

Applicant

And MINISTER FOR HEALTH AND AGED CARE

Respondent

DECISION

Tribunal Deputy President T E Barnett Dr P A Staer, Member Dr M C Wood, Member

Date 18 February 1999

Place Perth

Decision The Tribunal sets aside the decision under review and: (a) remits the matter to the respondent to correctly calculate the applicant's entitlement in accordance with these reasons; (b) grants liberty to each party to apply for further directions in relation to the implementation of this decision.

............(signed)......................

Deputy President

CATCHWORDS

HEALTH AND COMMUNITY SERVICES - Aged Care - validation of claims for nursing home allowances relating to Director of Nursing and Registered Nurses - evidence required to validate amounts claimed - whether time sheets required - oral evidence of duties undertaken and hours worked, together with relevant invoices or time sheets sufficient - Registered Nurses given title of Director of Nursing but performing Registered Nurse duties and claimed as Registered Nurses.

National Health Act 1953, ss.51, 46D, 48AB.

REASONS FOR DECISION

18 February 1999 Deputy President T E Barnett Dr P A Staer, Member Dr M C Wood, Member

1. On 23 December 1997 a determination was made by Mr John Sharp, Validation Program Manager, Aged and Community Care and delegate for the respondent that an overpayment of $102,017 in general care benefits had been made to Valencia Private Nursing Home for the periods 1993-94, 1994-95 and 1995-96 (T17 p.1). A delegate of the respondent affirmed the original determination and informed the applicant of this by letter dated 30 April 1998 (T6). The applicant sought a review by the Tribunal of this reconsideration on 15 May 1998.

2. The respondent had commenced recovering the overpayment from the applicant, but a stay order on recovering any further amounts was issued by the Tribunal pending the outcome of these proceedings.

3. At the hearing the applicant was represented by Mr Philip, a proprietor of the nursing home. The respondent was represented by Ms L Price, assisted by Mr T Carey, (both from the Office of the Australian Government Solicitor) and Mr John Sharp.

Background

4. The applicant runs an approved 45 bed nursing home. There is a hostel attached to the home which is not approved. Funding for approved nursing homes comes from both patient contributions and a Commonwealth benefit under the National Health Act 1953 ("the Act"). At the time under consideration, the Commonwealth benefit was paid in relation to three categories of costs:

the Care Aggregated Module ("CAM") which relates to the costs of nursing and personal care for patients. These costs are varied by the level of care needed by the residents;

the Standard Aggregated Module ("SAM"), which relates to the costs domestic duties, food provision, laundry, cleaning etc. and is a fixed amount per capita for the patients of the nursing home.

(a) the Other Costs Reimbursed Expenditure ("OCRE"), which includes costs relating to workers' compensation, insurance, payroll tax, long service leave and superannuation.

The only area under consideration in this claim is the nursing and personal care claim under CAM.

5. Under s.51 of the Act, a nursing home is required to submit, at the end of each month, a claim for Commonwealth benefit in relation to that month. Under s.48AB of the Act, the benefit does not actually become payable until 30 days after a notional scale of fees has been determined (this is outlined in the following paragraph). The Act therefore makes provision (see s.51A) for the benefit to be advanced to the nursing home proprietor pending the determination of the notional scale of fees.

6. Under s.46D, within 3 years of the end of an accounting period, a notional scale of fees is determined, taking into account both the actual expenditure of the applicant and the Principles established by the Secretary under the Act (which include, for example, a maximum number of hours permitted to be claimed in respect of certain nursing staff). A "validation" process is required by s.46D(4), under which an investigation must be carried out to find out the actual expenditure incurred by the proprietor. As part of this validation process, the applicant is required to provide information to the respondent via a form known as the "NH20" form.

7. If there is a difference between the amount advanced to the proprietor and the notional scale of fees, the Act provides for the payment or recovery of that amount (as the case may be) by the Commonwealth. Validation in the matter before this Tribunal for 1993/94, 1994/1995 and 1995/96 showed that there appeared to have been an overpayment in relation to the claim made for costs of the Director of Nursing ("DoN"). Prior to a stay order being made by the Tribunal, this amount was being recovered from the applicant by deduction from his current benefits. As a result of the stay order, the recovery of the overpayment has been stayed pending the outcome of the application.

Evidence

8. The Tribunal had before it the documents filed by the respondent pursuant to s. 37 of the Administrative Appeals Tribunal Act 1975 in addition to the following documents taken into evidence as Exhibits:

Exhibit A1 Statement of Ms Barbara Attree dated 19 August 1998;

Exhibit A2 Statement of Ms Lyn Phippard dated 23 September 1998;

Exhibit A3 Letter from Maxine Philip to Mr John Sharpe dated 24 February 1997;

Exhibit R1 Time records for Barbara Attree and Lyn Phippard for the fortnight ending 10 July 1994;

Exhibit R2 Extract from The Nursing Home Manual, Aged and Community Care Division, Commonwealth Department of Human Services and Health;

Exhibit R3 Extracts from NH20 form for 1993-94, 1994-95, and 1995-96 together with blank NH20 form;

Exhibit R4 Statement of Margaret Ruth MacKey dated 13 October 1998; and

Exhibit R5 Summary of evidence of Gillian Josephine O'Hara dated 13 October 1998.

9. Mr William Philip and Mrs Dorothy Maxine Philip (known as Maxine) gave oral evidence and were cross examined. Mr Alexander John Walter Sharp (Executive Officer - Validation of the Department of Health and Aged Care) gave brief evidence during submissions by the respondent.

10. The Tribunal accepted the evidence of Mr and Ms Philip as honest and reliable.

11. The Philip's purchased the Valencia Private Nursing Home in 1976 and ran the home as owner/proprietors. Mrs Philip, a registered nurse, is Director of Nursing at the home, and Mr Philip is the Administrator/Social Worker. In 1982 a Mr and Mrs Lillee bought into the proprietorship of the Valencia Nursing Home, through a proprietary company, Telcontar Holdings Pty Ltd. The Lillees were shareholders of Telcontar Holdings, and Mr Lillee was a director of that company. They were not involved in the day to day running of the home. One agreement made with the Lillees was that Mrs Philip would be paid 40 hours per week as a DoN. From 1982 onwards, Mrs Philip was paid on invoice from the Philip's family trust to the nursing home. All other staff were paid according to the hours they worked, which were recorded on timesheets. From 1982 until 1992, the respondent had, in validation, accepted the invoices submitted by the applicant for Mrs Philip's work as DoN.

12. In March 1986 the Philip's daughter, Erin, was tragically killed. In October 1992, their 16 year old son, Nathan, was also killed. By February 1993, their only surviving child had a major drug problem. These family tragedies put considerable stress on the Philips and Mrs Philip felt that she needed to "step back" from the day to day nursing floor administration as she had difficulty facing up to people. At no time did Mrs Philip relinquish the overall responsibility for the hospital, but to ease the pressure on her, two trusted Registered Nurses, Ms Barbara Attree and Ms Lyn Phippard were asked to accept further responsibility.

13. Ms Attree and Ms Phippard were given the title of DoN for part of the hours that they worked. This was more an "in house" title and at no stage did either of these ladies feel that they had taken over the responsibility for the nursing home. This is supported by their written evidence in Exhibits A1 and A2 respectively. Ms Attree in her statement said:

"Lyn Phippard and myself were able to assist Mrs Philip during this difficult time by taking over day by day nursing problems dealing with resident care, dealing with calls and correspondence addressed to the DON and to a certain extent protecting her from any minor staff problems identified. We were able to discuss day to day problems when we needed her and welcomed her input into finding a solution for said problems.

Personally, I always considered Mrs Philip the ultimate holder of responsibility and authority in all matters pertaining to the position of DON, especially in the area of staffing levels, rostering and significant changes in managerial policy. As owner/DON Mrs Philip also had the final say regarding any changes necessary to meet Outcome Standards, especially in regards to budgeting"

Ms Phippard, in her statement said:

"During the time I worked as Director of Nursing/Nurse Manager I was totally accountable to Mr and Mrs Philip.

...

I was not involved with assisting in annual capital and operating budgets for the nursing home. Nor was I involved with staffing levels and rostering. This was the duty of the owner/DON, Mrs Philip."

14. The Philips lived on the premises and the office for running the nursing home was in their home just off their kitchen. Mrs Phillip performed most of her duties from this office. She was available at all times, 7 days per week and 24 hours per day, for problems arising at the nursing home and at no time relinquished the overall responsibility for the nursing home. At the time of stress in 1993/94, she did not work significantly on the nursing floor, but was fully involved with staff management, staff meetings and rostering.

15. In her evidence, Ms Philip stated emphatically that she worked more than 40 hours per week and that both she and her husband "lived the job" as owner-proprietors. All of the patients at the Nursing Home were people with dementia, which in itself made the successful operation of the Home a significantly difficult undertaking. With 75 staff, a major task was the rostering. In order to maintain a happy and stable staff, it was necessary to put much time into rostering as the proprietors' policy was to comply with all requests for time off or variations in hours worked, as a means of alleviating the stress upon staff. Mrs Philip estimated that the completion and updating of rosters alone would have taken her 24 hours in each week.

16. While Ms Attree and Ms Phippard were working part of their time as DoN they were paid at over-award rates. This extra cost was covered by the Philips themselves and not charged against the Lillees. The over award payments were also subtracted from the claims made against the department (T9 p.13).

17. Mr Philip was responsible for the completion of the NH20 forms in respect of the applicant. At validation, evidence had to be produced to substantiate the claims and in relation to nursing and personal care staff hours, this needed to be supported by time sheets. In his evidence, Mr Philip pointed out that he saw his wife as DoN working on a contract and had always submitted invoices for her claims. Other "outside" professionals, such as physiotherapists, occupational therapists and social workers, were also paid after submission of invoices, on a contractual basis.

18. He said that the respondent had accepted invoices for Mrs Philip until 1992. He accepts that in a letter dated 13 December 1993, the respondent stated that it would no longer accept claims for Mrs Philip as Director of Nursing without corresponding time records as substantiation of the claim. He stated, and the Tribunal accepts, that he missed this point (in a letter dealing with many other matters) because of the family pressure they were under at the time. There was no follow up by the department to this letter, either verbally or by correspondence, until the determination of 1997.

19. The Tribunal accepts that Mrs Philip, Ms Attree and Ms Phippard worked the hours claimed and that allowing for some discrepancies in the claim process, the respondent was not asked to reimburse any hours which were not actually worked. On the evidence now before it, the Tribunal accepts that Mrs Philip worked at least 2080 hours and more as DoN in each of the three years under consideration. A nursing home of the size of the applicant is allowed to claim 40 hours per week or 2080 hours per year for a DoN.

20. The Tribunal finds that the failure to maintain timesheet records was an error but is understandable in the circumstances and an honest oversight. The situation (using the previously accepted method of invoices as a basis for substantiation) continued for so long because there was no follow-up communication after the previous validation and the letter of 12 December 1993. Nor was there a further audit for a period of 4 years.

21. The validator drew the false conclusion that during 1993/94 Mrs Philip was only working part time as DoN, even though there were no time sheets.

22. When the validation was carried out in 1997, Mr Sharp noted that no time sheets had been produced to substantiate the hours worked by Mrs Philip as DoN in 1993/94. He also noted that the two registered nurses had been titled DoN for many hours and that Mrs Philip had not been acting as DoN on the nursing floor during much of this period. He considered the hours claimed during which the registered nurses were shown as having been performing DoN duties (though no claim was made for hours performed in that role), being 1488.75 hours. He then added the 2340 hours claimed by Mrs Philip as DoN. From this he concluded that DoN hours claimed vastly exceeded the allowable 2080 hours and that reimbursement had been paid to the applicant for the excessive DoN hours. A total of 1473.75 of the registered nurses' hours were validated by reference to time sheets, and in the belief that he was acting beneficially to the applicant, he accepted these hours. The balance of the 2080 allowable hours (a total of 606.25 hours) he allocated to Mrs Philip to make up the full quota of 2080 hours for DoN. This left an apparent overpayment during 1993/94 of $21,724 (after other minor adjustments).

23. In taking this approach, the validator ignored the fact that the over award payments to the 2 registered nurses had been met from the Philps share of the profits and had not been claimed from nor reimbursed by the respondent. Those hours worked were properly allowable as registered nurses hours and reimbursible as such. The validator also overlooked the fact that each year Mrs Philips' actual hours worked as "live-in" DoN vastly exceeded the 2080 hours allowable for reimbursement purposes. Accordingly although she relinquished most of her on-floor DoN duties to the two trusted registered nurses in 1993/94, she continued to work a total of at least 2080 hours in other DoN duties. The result of the validator's approach is that the number of registered nurses hours worked and reimbursed in 1993/94 is atypically low, as those hours were reimbursed, wrongly, as DoN hours.

24. The applicant accepts that in any event there has been an overpayment of DoN hours in each of the 3 years in question of 286 hours as a result of Mr Philips' admitted error in claiming 2340 hours instead of the allowable 2080 hours per annum.

25. With regard to the continued failure of Mrs Philip to fill in time sheets for each of the 3 years in question, Mr Philip stated, and the Tribunal accepts, that if the validation process had been carried out more frequently and his 1993/94 claim had been found to be unacceptable, then he would have changed the 1994/95 and 1995/96 claims to meet the respondent's guidelines. He felt that the applicant was being penalised because of the delay in the respondent's validation process.

26. In looking at the NH20 claim forms submitted by the applicant in each of the years in question, the Tribunal finds there are discrepancies between the hours claimed on these forms and those found by the validating officer working from time sheets. As the Tribunal does not have these timesheets for the three years before it, it has made the following calculations on the basis of the NH20 forms submitted by the applicant, which comprise Exhibit R3.

27. In 1994/95, 2340 hours were claimed for DoN, this being 260 hours above the DoN limit. Mr Philip admits this was an over claim because he was under the false impression that a 45 bed nursing home such as Valencia could claim 45 hours per week for a DoN. He acknowledges that the claim should only be for 40 hours per week, and that the 260 hours is an excess claim. The same applies to the 1995/96 NH20 form.

28. The Tribunal finds that Mrs Philip performed and claimed the 2080 hours allowed as Director of Nursing. It accepts that her failure to maintain and produce time sheets to substantiate her claim for hours worked was in breach of policy. On the evidence however, there is no doubt that she worked the hours claimed and her failure to provide time sheets will be overlooked. The Tribunal also finds that the Registered Nurses were not performing full duties as Directors of Nursing in spite of their "in house" title of Director of Nursing. The over-award payments to Ms Attree and Ms Phippard for the DoN duties were carried by the applicants and were not claimed from or remunerated by the respondent except as detailed below:

(a) for the years under review, 1993/94, 1994/95 and 1995/96 there were 260 hours per year (5 hours per week) claimed above the 40 hours allowable for DoN. The applicant admits that this was an overclaim and will need to be reimbursed to the Department

(b) in the 1993/94 claim on the NH20 form, a total of 3648 hours were claimed as DoN (Exhibit R3). Only 2080 of these can be allowed as DoN. Two hundred and sixty hours needed to be subtracted as the over claim mentioned in (a). This leaves 1308 hours claimed as DoN which should have been claimed as registered nurse.

29. The Tribunal finds that the applicant was entitled to payment of the following amounts:

(a) For each of the 3 years under consideration, 2080 hours at the Director of Nursing rate;

(b) for the 1993/94 claim year, 13159 hours at the Registered Nurse rate;

(c) for the 1994/95 claim year, 14077 hours at the Registered Nurse rate;

(d) for the 1995/96 claim year, 13830 hours at the Registered Nurse rate.

Decision

30. For the reasons set out above, the Tribunal sets aside the decision under review and:

(a) remits the matter to the respondent to correctly calculate the applicant's entitlement in accordance with these reasons;

(b) grants liberty to each party to apply for further directions in relation to the implementation of this decision.

I certify that this and the 10 preceding pages are a true copy of the decision and reasons for decision herein of Deputy President T E Barnett; Dr P A Staer (Member) and Dr M C Wood (Member)

Signed: (signed) .....................................................................................

R Johnston Associate

Date/s of Hearing 2 December 1998

Date of Decision 18 February 1999

Counsel for the Applicant In Person

Solicitor for Applicant

Counsel for the Respondent Ms L Price, Office of the Australian Government

Solicitor

Solicitor for the Respondent Mr T Carey, Office of the Australian Government

Solicitor