There are almost daily reports of fraudulent activity concerning the National Disability Insurance Scheme (NDIS), with a recent report indicating that three men will face court in relation to alleged fraud-related offences against the NDIS, totalling more than AU$3.3 million. This activity was identified through an investigation led by the Federal Government’s Fraud Fusion Taskforce.

This raises significant issues for disability service providers in how to best respond to and manage the prevalent risk of fraud against the NDIS.

In managing and responding to the increasing risk and reality of fraud-related offences committed in relation to the NDIS, there are a number of key matters that Disability Service Providers should be aware of. These include the following:

1. Review your risk register to include the risk of NDIS fraud

Regular reviews of your risk register are prudent in any event, and NDIS fraud needs to be captured as a key risk.

2. Implementing a policy

Consider implementing a policy for strategic monitoring and internal reporting of potentially fraudulent activity.

This is prudent to provide a framework for internally identifying and managing the risk of fraud as against your business and the NDIS.

3. Know what you are looking for

Knowing what to look out for is a key aspect of managing and responding to the risk of fraud. Fraudulent activity can take many forms of varying levels of sophistication. You should remain vigilant to and implement measures to protect against the following activities in particular:

1. unlawfully obtaining and using NDIA information or restricted data
2. providing false or misleading information
3. using fake documents and invoices
4. making claims for services or products that were not provided
5. misusing funds or theft
6. unlawful disclosure of official information
7. accounting fraud (e.g. false invoices, misappropriation)
8. fraudulently claiming leave, travel and other entitlements
9. misuse of assets, equipment or other facilities.

4. Be careful to ensure that you do not use the word 'fraud' in any internal communication whilst any investigation is on-going

Typically, there will be an exception for fraud in your insurance policies.

Accordingly, whilst any possible fraud or irregularities are under review or being investigated and reported, it is important to manage your internal communications to avoid triggering the exception and providing a basis for your insurer to decline coverage or indemnification.

5. Seek legal advice at an early stage

This is prudent and also enables you to claim the benefit of legal professional privilege when dealing with all subsequent communications, investigations and reports.

Additionally, you may be subject to various reporting obligations, both contractually and at law, including as a registered NDIS service provider, recipient of other governmental funding and/or otherwise. To ensure you comply with those obligations, you should seek the benefit of early legal advice to assist you in navigating these complex reporting duties.

6. Update your Board

Your Board will expect to be updated on any matters that may involve fraud.

Again, any report to your Board is best co-ordinated with the benefit of legal advice to preserve your right to legal professional privilege.

7. Consider prompt notification to the Regulators

There are various regulators who may expect that you would notify them of any incidence of potential fraud, and or you are otherwise required by law to notify.

Again, in any notification to regulators, it is best if this is done with the benefit of legal advice.

8. Deal with any staffing issues with careful regard to their terms of employment

It is necessary to take immediate action to deal with any staff that may be implicated in any possible fraud. If a staff member may be implicated in any possible fraud, employers should be aware of the ability to suspend the staff member's employment so that a thorough investigation can take place in their absence from the workplace.

Employers should be aware of their ability to review employee activity on the employer's systems, for example emails. In cases of possible fraud, it will be important to preserve evidence so employer's should take care with preserving the integrity of evidence and calling in computer forensic experts if necessary.

Any disciplinary action must be taken in a manner that is consistent with an employer's legal obligations, this means not taking action until you have given employees an opportunity to explain their conduct.

Moving forward

These ‘tips’ are only a high-level guide only, and should only be used where specifically advised by legal counsel in relation to your particular matter and circumstances.

If you would like any further information, please do not hesitate to contact us.