The new Aged Care Bill 2023: understanding its potential impact on governance and boards

Part 5 of Chapter 3 of the Aged Care Bill provides for proposed new statutory duties and compensation pathways.^[2]

As outlined in the public consultation paper A new model for regulating aged care - Consultation paper 2 - Details of the proposed new model, it is intended that the new statutory duty of care on registered providers will provide an open pathway, in certain circumstances, to seek compensation where an individual suffers injury or illness as a result of the breach of this duty (see section 127).^[3]

Of note, the intention is that the new duty would complement, not displace, existing Work, Health and Safety (WHS) and common law duties, as well as any existing duties under State and Territory legislation.

A registered provider must ensure, so far as is reasonably practicable, that the conduct of the provider does not cause adverse effects to the health and safety of individuals to whom the provider is delivering funded aged care services while the provider is delivering those services. It was stated in A New Aged Care Act: the foundations - Consultation paper No. 1 (Consultation Paper) that the intended duty will be modelled on section 19(1) of the Work Health and Safety Act 2011 (WHS Act).^[4]

‘Reasonably practicable’ is defined as meaning that which is, or was at a particular time reasonably able to be done, considering and weighing up all relevant matters including:

• the likelihood of the adverse effect concerned occurring;
• the likely degree of harm from the adverse effect;
• what the person concerned knows, or ought reasonably to know, about ways of preventing the adverse effect;
• the availability and suitability of ways to prevent the adverse effect; and
• the rights of individuals under the Statement of Rights.

It is a strict liability offence for serious failures.

If the provider has a duty under section 120(1) and the provider engages in conduct that does not comply with the duty and the conduct amounts to a serious failure by the provider to comply with the duty:

• in the case of an offence committed by a registered provider that is an individual 150 penalty units ($49,950, one Commonwealth penalty unit is currently $313); or
• in the case of an offence committed by a registered provider other than an individual - 1,000 penalty units ($313,000).

The conduct of a registered provider amounts to a serious failure to comply with the duty in subsection (1) if:

• the conduct exposes an individual to whom the duty is owed a risk of death or serious injury or illness; and
• the conduct:
  • involves a significant failure; and
  • is part of a systemic pattern of conduct.

Strict liability offence - death or serious injury or illness

A registered provider commits an offence of strict liability if:

• the provider has a duty under subsection (1);
• the provider engages in conduct; and
• the conduct amounts to a serious failure by the provider to illness of, an individual to whom the duty is owed.

Penalty:

• in the case of an offence committed by a registered provider that is an individual - 500 penalty units ($156,000); or
• in the case of an offence committed by a registered provider other than an individual - 4,800 penalty units ($1,502,400).

If the conduct results in the death of or serious injury to, or illness of an individual to whom the duty is owed, the penalty is:

• in the case of an offence committed by a registered provider that is an individual - 1000 penalty units ($313,000) or five years imprisonment, or both; or
• in the case of an offence committed by a registered provider other than an individual - 9,500 penalty units ($2,973,500).

There is a general defence if the registered provider has a reasonable excuse.

Who is a responsible person?

The definition of ‘responsible person’ is incredibly broad.

Each of the following is a responsible person of a registered provider:

• any person who is responsible for the executive decisions of the registered provider;
• any other person who has authority or responsibility for (or significant influence over) planning, directing or controlling the activities of the registered provider;
• if the registered provider delivers, or proposes to deliver, a funded aged care service:
  • any person who has responsibility for overall management of the nursing services delivered by the registered provider, or overall management of the nursing services delivered at an approved residential care home of the registered provider, and who is a registered nurse; and
  • any person who is responsible for the day-to-day operations of the registered provider.

Without limiting the foregoing, a person who is responsible for the executive decisions of a registered provider includes a member of the governing body of the provider.

Duty on responsible persons (section 121)

It is also proposed under the Aged Care Bill that a separate duty on responsible persons (and/or governing persons) to exercise due diligence through reasonable steps to ensure that the registered provider complies with the statutory duty discussed above.^[5] It is intended that the duty will be modelled on section 27 of the WHS Act. This would recognise the strong influence which responsible persons can have on culture and accountability, as well as on the resources made available to provide quality and safe care. Policies are developed to support compliance. (This approach would not go as far as introducing accessorial liability as recommended by the Royal Commission).

A responsible person of a registered provider must exercise due diligence, to ensure that the provider complies with the provider’s duty under section 120.

‘Due diligence’ includes taking reasonable steps:

• to acquire and maintain knowledge of requirements applying to registered providers under the Act;
• to gain an understanding of the nature of the funded aged care services the registered provider delivers and the potential adverse effects that can result to individuals when delivering those services;
• to ensure that the registered provider has available for use, and uses, appropriate resources and processes to manage adverse effects to health and safety of individuals accessing funded aged care services delivered by the provider;
• to ensure that the registered provider has appropriate processes for receiving and considering information regarding incidents and risks and responding in a timely way to that information; and
• to ensure that the registered provider has, and implements, processes for complying with any duty or requirement of the registered provider under the Act.

Therefore, we recommend education sessions for boards and senior managers of approved providers be held on an annual basis covering these areas.

A responsible person of a registered provider may be convicted or found guilty of an offence under the Act relating to a duty under this section whether the registered provider has been convicted or found guilty of an offence under section 120.

Strict liability offence - serious failures

A responsible person of a registered provider commits an offence of strict liability if:

• the person has a duty under subsection (1);
• the person engages in conduct that does not comply with the duty; and
• the conduct amounts to a serious failure by the responsible person to comply with the duty.

Penalty: 150 penalty units.

Conduct of a responsible person of a registered provider amounts to a serious failure to comply with the duty in subsection (1) if:

• the conduct exposes an individual to whom the duty is owed a risk of death or serious injury or illness; and
• the conduct:
  • involves a significant failure; or
  • is part of a systematic pattern of conduct.

Strict liability offence - death or serious injury or illness

A responsible person of a registered provider commits an offence of strict liability if:

• the person has a duty under subsection (1);
• the person engages in conduct;
• the conduct amounts to a serious failure by the responsible person to comply with the duty; and
• the conduct results in the death of, or serious injury to; or illness of, an individual to whom the duty in section 120 is owed by the registered provider.

Penalty: 500 penalty units ($156,500).

Fault-based offence - death or serious injury or illness

A responsible person of a registered provider commits an offence if:

• the person has a duty under subsection (1);
• the person engages in conduct; and
• the conduct amounts to a serious failure by the responsible person to comply with the duty.
• the conduct results in the death of, or serious injury to, or illness of, an individual to whom the duty in section 120 is owed by the registered provider.

Penalty: 1,000 penalty units or five years imprisonment or both.

General defence

There is a general defence of reasonable excuse.

Aged care workers and responsible persons are also required to comply with the provisions of the Code of Conduct for Aged Care (the Code) that apply to the person.^[6]

Section 127 of the Aged Care Bill provides for the proposed compensation pathway (orders). It is intended that a compensation pathway be available in certain circumstances where a registered provider breaches their statutory duty of care.

This new pathway would complement, not replace, existing compensation arrangements for personal injury.

The new compensation pathway would be limited to breaches by a registered provider of the criminal offence provisions, where the actions of the provider results in serious illness or injury to a person accessing funded aged care services.

In addition, consistent with Recommendation 102, it is expected that individuals who have a suffered serious illness or injury could seek a court order themselves. It is relevant to note that other pathways for an individual to be compensated may also be available under the new aged care system. As outlined in the public consultation paper, A new model for regulating aged care - Consultation paper 2 - Details of the proposed new model:

• compensation may be available where agreed to between the complainant and a registered provider, with the Commission to adopt a restorative approach to complaints resolution; and
• the Commission may accept and enforce an undertaking from a registered provider to comply with certain provisions under the new Act, which could include an undertaking to provide compensation to a person accessing funded aged care services who has been impacted by their non-compliance.

Banning orders on current and former registered providers (section 286)

Section 286 of the draft Aged Care Bill states that the Commissioner may, by written notice, make an order (a banning order) prohibiting or restricting either of the following by an entity that is or was a registered provider:

• delivery of funded aged care services generally; or
• delivery of funded aged care services in a specified service type.

Before making the banning order, the Commissioner needs to give the entity notice of the intention to make the order and allow the entity to comment, except in certain circumstances (see section 288).

However, the banning order cannot prohibit or restrict delivery of funded aged care services in a specified service type if the entity is a registered provider in a provider registration category because the entity intended to deliver funded aged care services in that service type.

Grounds for a banning order on a registered providers

The Commissioner may make an order under subsection (1) only if:

• the Commissioner has revoked the registration of the entity as a registered provider;
• the Commissioner reasonably believes that the entity has contravened, is contravening, or is likely to contravene the Act;
• the Commissioner reasonably believes that the entity has been involved in, or is likely to become involved in, a contravention of the Act by another entity;
• if the order is to prohibit or restrict the delivery of funded aged care services generally by the entity - the Commissioner reasonably believes that the entity is unsuitable to deliver funded aged care services generally;
• if the order is to prohibit or restrict the delivery of funded aged care services in a specified service type - the Commissioner reasonably believes that the entity is unsuitable to deliver funded aged care services in that service type;
• if the entity is a registered provider - there is a severe risk to the safety, health or wellbeing of an individual accessing funded aged care services if the entity continues to be a registered provider;
• the entity is convicted of an offence involving fraud or dishonesty; or
• the entity becomes an insolvent under administration.

Banning orders on individuals as aged care workers and responsible persons (section 287)

The Commissioner may make an order prohibiting or restricting the involvement of an individual, as either an aged care worker, or a responsible person, of a registered provider, in:

• delivery of funded aged care services generally;
• delivery of funded aged care services in a specified service type; or
• a specified activity of a registered provider.

Before making the banning order, the Commissioner needs to give the individual notice of the intention to make the order and allow the individual to comment, except in certain circumstances (see section 288).

Grounds for banning order against individuals

The Commissioner may make an order under subsection (1) affecting an individual (the affected individual) only if:

• if the order is to prohibit or restrict the involvement of the affected individual in the delivery of funded aged care services generally - the Commissioner reasonably believes that the individual is unsuitable to be involved in the delivery of funded aged care services generally;
• if the order is to prohibit or restrict the involvement of the affected individual in the delivery of funded aged care services in a specified service type - the Commissioner reasonably believes that the individual is unsuitable to be involved in the delivery of funded aged care services in that type;
• if the order is to prohibit or restrict the involvement of the affected individual in a specified activity of a registered provider - the Commissioner reasonably believes that the individual is unsuitable to be involved in the activity; or
• the affected individual is or was an aged care worker, or a responsible person, of a registered provider and any of the following applies:
  • the Commissioner reasonably believes that the affected individual did not comply, is not complying or is not likely to comply with a provision of the Code that applies or applied to the individual;
  • the Commissioner reasonably believes there is a severe risk to the safety, health or wellbeing of one or more individuals accessing funded aged care services if the affected individual is involved, or continues to be involved, in a matter to which the order is to relate;
  • the individual has at any time been convicted of an indictable offence involving fraud or dishonesty; or
  • the individual is an insolvent under administration.

Part 5 of Chapter 7 of the Aged Care Bill will also do more to protect whistle blowers (people who call out issues).^[7]

Who can made disclosures?

Disclosures can be made by:^[8]

• an officer or employee of a provider;
• member of a committee of management;
• person who has a contract for the supply of goods or services to or on behalf of a provider;
• is in a partnership with someone who has a contract for the supply of goods or services;
• is a volunteer, care recipient, carer, representative or nominee of the person receiving care;
• is a family member or significant other (or another person who is significant to the recipient) of the person receiving care; or
• an advocate (including an independent advocate) of the person receiving care.

Who can disclosures be made to (section 355)?

Disclosures can be made to:^[9]

• the Commissioner or a member of the staff of the Aged Care Quality and Safety Commission;
• the System Governor, or an official of the Department;
• a registered provider;
• a responsible person of the registered provider;
• an aged care worker of a registered provider; or
• a police officer.

The disclosure can be made orally or in writing (regardless of whether it is made anonymously or not).

The discloser must have reasonable grounds to suspect that the information indicates that an entity may have contravened a provision of the Act.

What protections will be made available?

Where a person makes a qualifying disclosure, they will be protected from consequences, including civil, criminal and administrative liability (including disciplinary action), as well as contractual or other remedies.^[10] This protects whistle blowers from any retribution from people who have contravened an aged care law.

The current protections against victimisation will be retained in the new Act. This means  any person (including people other than the whistle blower themselves) who is victimised due to the whistle blower disclosure will be protected.^[11] This covers, for example, where an older person’s family member makes a disclosure on their behalf, and it is the older person who is suffers consequences. This means it would be a civil offence to engage in conduct that causes detriment, or even threatens to cause detriment, to a person, because of a disclosure they or another person has made.

Like the Corporations Act, it would be an offence to disclose a whistle blower’s identity (or information that might lead to their identification) where they have made a qualifying disclosure.^[12]

However, to allow for information to be dealt with and investigated appropriately, it will be necessary to include some limited exceptions to disclosing the whistle blower's identity.

Who can disclosures be made to?

A disclosure is authorised in relation to clause 357(2) of the Aged Care Bill, if:

• the disclosure is made to the Commissioner or a member of the staff of the Commission;
• the disclosure is made to the System Governor, or an official of the Department;
• the disclosure is made to the Inspector-General of Aged Care;
• the disclosure is made to any of the following:
  • a member or special member of the Australian Federal Police;
  • a member of the police force or police service of a State or a Territory;
• the disclosure is made to a legal practitioner for the purpose of obtaining legal advice or legal representation in relation to the operation of this Part;
• the disclosure is made with the consent of the discloser;
• the disclosure is necessary to lessen or prevent a serious threat to the safety, health or wellbeing of one or more individuals; or
• the disclosure is made to a court, tribunal or a Royal 4 Commission (within the meaning of the Royal Commissions Act 1902).

A person is liable to a civil penalty if the person contravenes section 357(1) of the Aged Care Bill.^[13]

Civil penalty: 30 penalty units ($9,390).

Obligations of aged care providers

It is proposed that the new Act will include an obligation for registered aged care providers to have an internal whistle blower policy which provides guidance for both potential whistle blowers, and people authorised to receive disclosures.^[14]

It is intended this obligation may include requirements around:

• publicising the way in which a person can make a disclosure and how to do so in a way that meets the whistle blower protection requirements (discussed above);
• training and education requirements for staff of registered providers who may receive disclosures; and
• appropriate processes for handling disclosed information, including escalation to the Department or the Commission as appropriate.

There must be a transparent and consistent approach to compliance and prosecution activities.

Statutory duties

The drafters of the draft Aged Care Bill have chosen certain provisions from work health and safety legislation without also inserting the ‘fairness’ process and protections, including protections for volunteer directors.

For example, under the Work Health and Safety Act 2011 (NSW) for a person to commit a category 1 offence the person must engage in gross negligence or is reckless as to the risk of an individual of death or serious injury or illness, the penalty of which can be 3,465 NSW penalty units or five years imprisonment, or both.

As a result, work health and safety orders imposing imprisonment occur, but are rare.

The bar is significantly lower in the draft Aged Care Bill.

Under the draft Aged Care Bill there are personal obligations imposed upon ‘responsible persons’ which is defined very broadly. The Registered Nurse in charge of nursing at a residential aged care facility will not be able to access information concerning the entire organisation.

The definition of whether or not something is ‘reasonably practicable’ should also consider limitations on funding and force majeure events, including pandemics.

As with the WHS legislation, the penalties should be stated as maximum penalties. Legal professional privilege under common law should also be specifically preserved.

Compensation

There are several provisions in the civil liability legislation in relation to compensation which are not included in the Aged Care Bill, including the concepts of contributory negligence and proportionate liability and protection for volunteers. These types of concepts should apply to or be included in the new Aged Care Bill.

A plaintiff should not be able to recover the same damages twice under the new Aged Care Bill and under civil liability legislation.

Banning orders

The ACQSC has been opaque in its administrative decision-making banning orders. There are no published decisions or information about who is making those decisions (and their qualifications, for example - are qualified nurses reviewed by their peers or people without clinical qualifications?), let alone clear appeal routes based upon the merits (other than the administrative appeal route of natural justice and ultra vires).

By way of comparison, we refer to the processes under the Health Practitioner Regulation National Law dealing with disciplinary procedures for registered health practitioners, where there are stated rights of appeal and decisions and their reasons are published, although sometimes using de-identifying information. We recommend this be included in the draft Aged Care Bill.

There are serious concerns this opaqueness will flow into other administrative decisions under the Aged Care Bill, particularly in relation to the new offences, which have significant consequences to boards and senior managers of approved providers.

We strongly urge the government not to rush and to take the time to carefully consider these issues regarding the draft Aged Care Bill. Further, there should be a reasonable transition period to enable the approved providers to prepare for the amendments, including training staff and dealing with subcontractors such as nurse agency providers.