Cocoon SDA Care firm at centre of 32 NDIS tip-offs

Cocoon SDA Care has been the subject of 32 tip-offs over more than four years, and authorities are now concerned it may have been claiming for services that were never provided.

David MurrayNational Crime Correspondent

Dial A Local Doctor executive chairman Zaffar Khan.

3 min read

3:51PMMay 06, 2025.

Updated 10:25AMMay 07, 2025

Troubled NDIS firm Cocoon SDA Care has been the subject of 32 tip-offs over more than four years, and authorities are now concerned it may have been claiming for services that were never provided.

The company’s claims that it delivered disability care services for prisoners and people who had died are among those that have attracted scrutiny, the Federal Court was told on Tuesday. But despite being at the centre of the largest investigation of its kind, there have so far been no confirmed cases of fraud at the company, or of non-compliance with National Disability Insurance Agency rules.

Karen McDonald, the director of the NDIA’s serious and complex non-compliance team, said investigations were ongoing and the agency was awaiting responses from the company.

“There is a potential for fraud. We have got a current investigation under way at the moment. We haven’t come to a conclusion in this case,” Ms McDonald said.

The court case comes after The Australian last week revealed the firm, co-founded by former bankrupt businessman Zaffar Khan, is under investigation by agencies from a national fraud taskforce and is in turmoil after failing to pay staff.

Providing around-the-clock care to some of the nation’s most vulnerable people, the company claims it has 2400 workers, more than 200 houses and a further 700 homes under construction.

Parent company Horizon Solsolutions Australia Pty Ltd has now taken the NDIA to the Federal Court seeking the release of NDIS payments that have been held up for two months.

The court heard Ms McDonald’s team had launched an investigation in October. A separate NDIA team began reviewing all of the firm’s NDIS claims on March 7 this year. The company says the NDIA should not be able to continue to withhold the NDIS payments, which are usually made two to three days after providers submit their claims.

Jonathan Horton KC, representing Cocoon, said the NDIA’s initial decision to suspend payments was justifiable based on the concerns that existed at the time. However, he said the subsequent investigation had not delivered anything concrete against the company despite the significant time and resources invested, and it was unreasonable to continue delaying payments. But Ms McDonald said there was an allegation Cocoon had been “claiming for SDA (specialist disability accommodation) premises that haven’t been enrolled”.

Investigations were also under way into the company for potential false claims for services to people while they were in prison.

“We’ve given Horizon the opportunity to respond. We’ve received a 2200-page submission. We’re working through that now,” Ms McDonald said. “We believe that some of those services may not have been delivered. It’s very difficult to actually give services to a participant while they’re incarcerated in the correctional facility.”

Mr Horton suggested it was possible to provide services to prisoners by phone and video through an iPad. The iPad was available at Melbourne Assessment Prison, he said. Ms McDonald replied that she was unsure.

The court was also told there may have been concerns about Cocoon claiming for services provided to people who had died. However, NDIS providers can make claims for services for a period after a person’s death in certain circumstances.

There appeared to have been a “misunderstanding” in the NDIA about the provision of services to prisoners or the deceased, Mr Horton said. “You’re not presently suggesting that you’ve made a decision that my client’s been fraudulent?” he asked.

Ms McDonald: “We have made no decision.”

The first of 32 “tip-offs” about the company was made on November 29, 2020. Some of the tip-offs were “internal to the agency which may be from plan managers who are dealing with participants”, Ms McDonald said. “Some come through anonymously. We’ve had some from investors. We’ve also had some external … agencies which have done some tip-offs referrals to us, and from some ex-employees.”

Nicholas Winton, manager of the NDIA’s “scalable integrity responses branch”, said the manual review of payments began after the separate investigations team referred serious concerns about the company.

Mr Horton: “Have you found … any fraud by my client?”

Mr Winton: “No.”

The hearing is continuing.

Do you know more about this story? Contact David Murray at murrayd@theaustralian.com.au

Read related topics:NDIS

David MurrayNational Crime Correspondent

David Murray is The Australian's National Crime Correspondent. He was previously Crime Editor at The Courier-Mail and prior to that was News Corp's London-based Europe Correspondent. He is behind investigative podcasts The Lighthouse and Searching for Rachel Antonio and is the author of The Murder of Allison Baden-Clay.

Cocoon SDA Care firm at centre of 32 NDIS tip-offs

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