Federal Court orders NDIS provider to pay $500,000

Lifestyle Solutions is a registered NDIS provider that provides a range of supports and services to NDIS participants in several states and territories. As a registered provider it was subject to several conditions of registration including a condition that it comply with all applicable requirements relating to reportable incidents prescribed by the IMRI Rules (see sub-s 73F(2)(h)).

Those requirements included relevantly that Lifestyle Solutions notify the Commissioner of certain incidents that occur, or are alleged to have occurred, in connection with the provision of services or supports within 24 hours (s 20 of the IMRI Rules) and other incidents within 5 business days (s 21 of the IMRI Rules) after it becomes aware of the incidents.

The nature of the incidents required to be notified to the Commissioner are all serious incidents. However, the incidents that must be notified to the Commissioner within 24 hours are more serious than those incidents that must be notified within 5 business days. The 24 hour notification requirement applies to the following incidents:

1. The death of a person with disability.

2. The serious injury of a person with disability.

3. The abuse or neglect of a person with disability.

4. The unlawful sexual or physical contact with, or assault of, a person with disability.

5. Sexual misconduct committed against, or in the presence of, a person with disability, including grooming of the person for sexual activity.

The latter category includes the following incident: the use of a restrictive practice in relation to a person with disability, other than where the use is in accordance with an authorisation (however described) of a state or territory in relation to the person.

In this proceeding, the Commissioner alleged that:

• In the period from 23 November 2018 to 13 December 2023, Lifestyle Solutions failed to notify the Commissioner of 148 reportable incidents within 24 hours as required by s 20 of the IMRI Rules, which was a breach of a condition of its registration to comply with the IMRI Rules and a contravention of s 73J of the NDIS Act.

• By reason of s 93(2) of the Regulatory Powers (Standard Provisions) Act 2014 (Cth) (RP Act), Lifestyle Solutions contravened s 73J on a further 1,312 separate occasions for each day that it failed to make the requisite notification to the Commissioner.

• In the period 25 January 2019 to 1 November 2022, Lifestyle Solutions failed to notify the Commissioner of 49 reportable incidents within 5 business days as required by s 21 of the IMRI Rules and thereby s 73J of the NDIS Act.

• By reason of s 93(2) of the RP Act, Lifestyle Solutions contravened s 73J on a further 302 occasions for each day that it failed to make the requisite notification to the Commissioner.

Lifestyle Solutions admitted that (in summary):

• It failed to comply with a condition of its registration as a registered NDIS provider under sub-s 73F(2)(h) of the NDIS Act and contravened s 73J of the NDIS Act on each occasion that it failed to notify the Commissioner within the period prescribed by sections 20 and 21 of the IMRI Rules.

• It became aware of the incidents on the dates and at the times that it reported to the Commissioner that its key personnel were informed of the incidents.

• On each occasion that it failed to notify the Commissioner of an incident within the required time, it contravened sub-s 73F(2)(h) of the NDIS Act and by that conduct breached a condition of its registration and s 73J of the NDIS Act.

• Pursuant to sub-s 93(2) of the RP Act, it committed a separate contravention on each additional day that the required notification to the Commissioner was not made.

In making the declarations and orders sought by the Commissioner, the Court found that Lifestyle Solutions’ contraventions were serious because ([28]-[29]):

1. They impeded the Commissioner’s ability to give effect to the objects of the NDIS Act which included relevantly: to promote the provision of high quality and innovative supports that enable people with disability to maximise independent lifestyles and full inclusion in the community (s 3(1)(g)); and to protect and prevent people with disability from experiencing harm arising from poor quality or unsafe supports or services provided under the Scheme (s 3(1)(ga)).

2. Contraventions of statutory conditions imposed on NDIS providers are, by their nature, serious.

3. They occurred over a lengthy period.

The Court also found that the contraventions impacted the Commissioner’s ability to fulfill her statutory functions including her ability to review and respond to each incident at the earliest opportunity. In this regard, the Court noted that the Commissioner’s response may have included “prompt, adequate and necessary responses and/or remedial action for the harm impacted persons suffered” ([32]).

In addition, the Court found that the contravening conduct arose from a breakdown in the reporting processes that involved Lifestyle Solutions’ senior personnel and their statutory duty to “take all reasonable steps to ensure that reportable incidents…are notified to the Commissioner”. It held this view because there was no evidence that “all reasonable steps” were taken ([34]).

Further, the Court held that the number and extent of the contraventions, the geographic spread and the lengthy period in which the incidents occurred indicated that there was a “systemic problem within Lifestyle Solutions”, which reflected “poorly on its compliance culture” ([36]).

In ordering Lifestyle Solutions to pay a pecuniary penalty to the Commonwealth of Australia, the Court observed that:

• It was required to impose a penalty that was appropriate in all the circumstances and the principal purpose of imposing a civil penalty was deterrence.

• Lifestyle Solutions’ contravening conduct occurred over many years and, in some cases, the delay in notifying the Commissioner was “exceedingly long”.  Further, Lifestyle Solutions had repeatedly failed to fulfill its reporting obligations and the number of contraventions and the underlying nature of the incidents (in particular the s 20 contraventions) demonstrated that the contraventions were serious.

• Compliance by an NDIS provider with the obligations imposed on it are essential to the proper operation of the Scheme.

• Lifestyle Solutions’ contraventions deprived the Commissioner of timely information, which affected the Commissioner’s ability to exercise critical statutory functions that were necessary to protect NDIS participants and undermined the Commissioner’s ability to ensure the objects of the Scheme were fulfilled.