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Cullen Deals With ACC Double Billing

ACC is putting a system in place to allow businesses that were double billed in the transition from payment of premiums in arrears to payment in advance to seek redress.

"Employers and the self-employed who changed the status of their business and were entitled to receive but have not received an adjustment already will be able to apply for what is essentially a "wash-up" of their premium payment," said Accident Insurance Minister Michael Cullen.

"I am keen to move quickly on this issue and to recognise premium payers' interests. Rather than a further case going through the courts, ACC will be guided by court decisions to date and the natural justice principle that people shouldn't pay twice for the same service."

Those people who may be affected:
* were employers in business on 31/3/80 or self-employed in business on 30/9/79 and
* changed the legal personality or business structure prior to June 30 1999 and
* have not received a premium refund or credit as a result of this change.

"The Transport and Industrial Relations select committee examined ACC's financial performance and asked the corporation to review this issue, known as the first/later scheme provisions, " Dr Cullen said.

"A review was already underway as the interpretation of two key aspects of the first/later provisions had already been tested in the Courts. ACC was weighing its stance in the light of these decisions and its preference to test the issue of timing was questioned.

"ACC's approach will now be to look at whether the business would have been entitled to a cessation adjustment if it had applied in time – essentially it will be disregarding the time limit."

The overall issue affects only some of the limited number of businesses operating prior to March 1980 and that later changed their structure. Prior to that time, employers paid their premiums in advance – so-called "first" schemers.

Some existing businesses restructuring after that date (for example, moving from sole trader to partnership) changed from first to later scheme status. Since 1985 employers who paid premiums in advance could apply for a cessation adjustment when they ceased business or restructured their business in a manner that created a new "employer".

This would normally result in a refund of overpaid premium. However, these applications were subject to a statutory time limit and a number of employers did not apply for an adjustment at time they ceased. In the past ACC has refused to consider application outside the prescribed time limit, believing this to be the legal requirement.

"What ACC is doing now is dealing with this particular issue of timing," Dr Cullen said.

"The corporation will look at the circumstances of each affected employer on a case by case basis with regard to what is fair and reasonable."

ACC will soon be advertising to set out who is affected by the change and the criteria for applying for the refund. A special unit is being set up to deal with these applications and queries and an 0800 has been established to handle inquiries.

"Employers who believe they should have made a claim for a cessation adjustment will need to go back to ACC with their supporting documents," Dr Cullen said. "The adjustments will be paid to the entity that existed prior to March 1980 at the appropriate rate when it ceased to be the employer. There will be a very limited number of cases where the repayment may be to the later scheme employer."

The cessation payments will be funded through the applicable premium classification group.

Ends

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