Albanese government spending led to cottage industry fleecing veterans, says government department

The Albanese government’s half-a-billion dollar investment into slashing waiting times for Diggers who have made compensation claims has unintentionally fuelled a parasitic industry of dodgy advocates who are ripping off veterans.

Veterans' Affairs Minister Matt Keogh. Picture: NewsWire / Martin Ollman

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The Albanese government’s half-a-billion dollar investment into slashing waiting times for veterans who have made compensation claims has unintentionally fuelled a parasitic industry of dodgy advocates who are ripping off veterans and milking taxpayer funds, its own department has revealed.

In an extraordinary submission to a Senate inquiry on veterans’ advocacy services, the Department of Veterans’ Affairs laid bare how the $477m in funding had inadvertently encouraged “behaviours of concern”, including an influx of “unmeritorious claims”, the exploitation of Diggers, and “how-to guides on social media designed to manipulate ­diagnoses and test results … to maximise financial outcomes”.

As part of its response to damning findings contained in the royal commission into defence and veteran suicide, the Albanese government vowed to wipe the backlog of veterans’ claims through the extra $477m in funding that allowed for the hiring of more than 600 ­additional staff.

However, while Labor lauded its eradication of the claims backlog by early 2024 and an increase in the number of claims being processed at a time, the Department of Veterans’ Affairs this week blew the whistle on the perverse side-effects of the reforms.

“Unfortunately, this increase in DVA’s processing capacity has to some extent encouraged the ­development of advocacy business models and behaviours of concern,” the department ­revealed in its submission.

“Some of these behaviours include lodging claims for excessive numbers of conditions (and) withdrawing claims following natural justice indications of a likely ­refusal – but after testing and ­report writing has occurred and been paid for.”

The submission also highlighted the “development of … corporate structures, including advocates and medical professionals”, and “sensitive personal data – including from serving members of the Australian Defence Force – being accessed or worked on from offshore”. It also noted the “charging of very significant commission-based fees, and aggressive behaviour towards DVA staff”.

The DVA said of particular concern was the use of “fee schedules based on a percentage of the veterans’ compensation, misleading advertising targeting potentially vulnerable veterans, and business models designed to ­manipulate and exploit the claims process to maximise corporate profits”.

“DVA is aware of percentage commission rates as high as 29 per cent of the veteran’s statutory compensation payment,” it said.

According to its submission, the number of claims have risen by 35.8 per cent since before the government’s injection of funding, and the average complexity of claims had increased from 2.6 conditions per claim to nearly five.

“While DVA does not assert that any of these activities are necessarily illegal, they do raise concerns in relation to program integrity and overall cost, an influx of unmeritorious claims clogging processing systems, and impacts on long-term veteran wellbeing,” the department submission read.

Veterans’ Affairs Minister Matt Keogh said he was alarmed by the emerging behaviour of some advocacy bodies, but defended the government’s investment into wiping the claims backlog, which had reached more than 42,000 by the time the previous Coalition government left office. The royal commission said the complex and overburdened claims system had contributed to unacceptably high suicide risks. “I’m deeply concerned to see unscrupulous advocates seemingly looking to make a quick buck from our veterans and that’s why government supported the establishment of the Senate ­inquiry,” he said.

“Veterans who are seeking assistance with submitting a claim are encouraged to work with a trained advocate, these can be referred through an ex-service organisation or alternatively, free, trained advocates can be located through the advocacy register.”

Opposition veterans’ affairs spokesman Darren Chester said the DVA had delivered the Albanese government a “clear warning” and demanded the introduction of new laws to protect veterans from “cowboy advocates chasing a quick dollar”.

Separately, the Defence Department said it too had seen an “increasing number of personnel supported by commercial advocates who are seeking retrospective medical separations”.

“Defence is aware of, and concerned by, a number of instances where individuals have suffered significant financial detriment after entering contracts with ­profit-based commercial advocacy businesses,” its submission to the Senate inquiry read.

The DVA said it was “becoming increasingly concerned” about “aggressive and irregular” behaviour in the sector, including false advertising to veterans with inflated promises, instances of “how-to guides on social media designed to manipulate diagnoses and test results”, and changing business names or modifying business structures to “make it difficult for DVA to identify and link entities where irregular behaviour is detected”.

It said some business models had been “designed to manipulate and exploit the claims process to maximise corporate profits”.

There are currently no industry regulation or oversight and DVA noted this was “at odds with many other professional sectors” such as migration or tax agents.

The department said it was also “aware of commercial advocacy providers who operate from overseas premises”.

“This corporate structure poses potential challenges for the Australian government to act where illegal conduct is identified, such as breaches of relevant Australian laws, including in relation to privacy and data security.

“In addition, DVA clients provide sensitive personal information to their advocates and in some instances to obtain assistance from DVA, they may disclose sensitive information about Australian military engagements to their advocates, particularly those DVA claimants that are still in service or have only recently transitioned out of the ADF.”

RSL Australia, which provides free advocacy services for veterans, said the continued operation of itself and other fee-free advocacy providers was “vital to the provision of ongoing services and guidance to veterans and their families”.

But the organisation was “very aware of the increasing number of fee-for service advocacy providers operating in the veteran community” and said some of those operators had “scant regard for the overall needs and wellbeing of a veteran or the veterans’ family”.

“These providers are unregulated and have no existing requirement to adhere to any regulatory standards relating to ethical behaviour and transparent practice,” its submission to the Senate inquiry read. “Some rely on accessing a percentage of lump sum payments made to veterans.”

Mr Chester said it was “alarming that DVA has seen an influx of unmeritorious claims”, which were evidently part of a “deliberate strategy” by unscrupulous advocates. “The minister needs to bring legislation to the federal parliament to protect veterans from dodgy operators,” he said.