Continuing fallout from 7.30 Report ‘rorting’ claims

A week after ABC TV’s 7.30 Report story claiming ‘rorting’ went to air, there remains anger, outrage and legal action; and concern for a general loss of confidence among aged care providers, in the government’s reforms.

By Keryn Curtis

Residential aged care providers remain angry and indignant, while a consultant is proceeding with legal action against the ABC’s flagship evening current affairs program, The 7.30 Report, following a report aired on the program last Thursday.

The program reported claims made by anonymous Commonwealth nursing officer ‘whistle-blowers’, alleging evidence of large scale rorting of government money on the part of aged care providers. [see transcript of story]. 

The 7.30 Report segment, which was previewed on ABC radio’s PM program earlier that evening, featured the voices of women who say they are nurses whose job it is to audit and validate aged care resident funding claims under the Aged Care Funding Instrument (ACFI).  They allege not only ‘deliberate over-claiming’ under the system by ‘corrupt’ providers, but that their managers at the Department of Health and Ageing didn’t want to know about the claiming irregularities, asking them to “look the other way, tick it all, let it go through.”

Aged care provider peak associations have responded with anger, umbrage and disappointment, defending the ethics and professionalism of their members and denying any wide-scale inappropriate behaviour.

Call for evidence

Since the initial response, Aged and Community Services Australia (ACSA) CEO, Adjunct Professor John Kelly, has written to the Minister for Mental Health and Ageing – who was interviewed on the program – calling on the government to provide evidence of this reported widespread ‘rorting’ and, if it is found, to explain why the Government has not undertaken inquiries into it – action that he says ACSA would certainly support.  

“The claims made in the program are unsubstantiated and you would not be surprised that there is a groundswell of anger from aged care providers around these “rorting” claims.  The unsubstantiated allegations and the unfair media attention that is being paid to this leads, I suggest, to a loss of public confidence in aged care,” the letter says.

“Perhaps more importantly, recent commentary impacts adversely on staff employed in aged care who are expressing dismay and disappointment about the negativity associated with the implied “rorting” activity.

Speaking later, Prof Kelly said he was deeply concerned that the incident had led to a significant loss of confidence among providers, in the Government’s commitment to aged care and the reform process.

“The vast majority of our aged care providers are responsible and ethical in the way they run their aged care services, which in the mission-based sector, look after those most disadvantaged in Australia.

“It will be difficult now to convince members that the Minister hasn’t used up all his credit points. After a really positive relationship with this Minister, in the space of the last 12 or 13 weeks, our members feel let down; and that he’s done little to support the provider component of the sector,” he said.

Angry and frustrated

From the 35 minute recorded interview he gave for the program, a total of 53 words spoken by CEO of Leading Age Services Australia (LASA), Gerard Mansour, made it to air. Mr Mansour says he is angry and frustrated with the story which he believes was not only unbalanced but failed to investigate and comprehend the way the ACFI system works.

“I categorically reject the hypothesis that there is an incentive to rort the system. I said that in the interview but it didn’t run in the piece. 

“We operate in one of the most highly regulated industries in Australia. Our aged care homes have one of the most stringent quality systems in the world. 

“Departmental officers cross-check the funding claims of aged care providers. There is also significant evidence required by providers to substantiate each and every claim. They work on a sample and if they see any variation or irregularity of any kind, any piece of documentation missing or incorrect, then they can go and check the claims of every single one,” said Mr Mansour.

“There is no incentive and, what’s more, there’s a penalty if you do make an incorrect claim, however inadvertently, and you have to pay the whole lot back. And then you lose the right to self-assessment. 

“With the changes coming in with the Living Longer. Living Better reforms, they have a third penalty where, if you are overtly inappropriately claiming, you can be sanctioned, so there’s an enormous weight of penalties,” he said.

“Aged providers claim funds so they can provide quality care to our residents. The real issue facing aged care is that funding levels do not properly match the care needs of frail older Australians.” Mr Mansour said. 

Legal action

Above: Recorded response from Nick Heywood-Smith

The other element from the report that has drawn an angry response is the story’s portrayal of ACFI consultants who work to maximise the funding levels of residents in an aged care facility.

The program singled out South Australian consultancy, Wellness & Lifestyles Australia, in particular, airing its advertising claims which promise to maximise ACFI funding for aged care providers.

Wellness & Lifestyles Australia’s Chief Executive Officer, Nicholas Heywood-Smith, was interviewed on the program, representing and defending the work his company does in this area.

Heywood-Smith has now initiated legal action against the ABC for defamation.  On Monday, Mr Heywood-Smith’s lawyers sent a letter to the ABC, accusing the program of false imputations, leading to damage of their client’s professional reputation and ‘unfair representation’ on the program.

The letter concludes: “You will no doubt give consideration to a response pursuant to s.15 of the Act [Defamation Act]. Inter alia, a full apology broadcast in a future edition of the 7.30 Report will be required. Mr Heywood-Smith necessarily would have to approve its contents. […] We invite you to remove the story from your website and any archive thereof forthwith.”

The story remains on the ABC website for now but Nick Heywood-Smith has taken his own swift action to address the issue, sending emails to clients and posting written and recorded video responses on the W&L Services website.

The email to clients reads:

“We would like to start by thanking all of our clients, suppliers […] who have shown their support for W&L and called us personally to see if we were okay. The segment was factually incorrect, and we have sent a concerns notice to the ABC today to proceed our legal action.

“Following last Thursday night’s broadcast, I have made a video-response and placed it on both websites – W&L Consultancy  (click here) and W&L Services (click here). Our General Manager and National Consultancy Manager have also responded.[…]”

In the program, Minister Butler said he had asked for detailed advice about the full range of options available, saying that, “where there was a case of fraud, obviously it would be incumbent upon us to refer that to the authorities.”

The Minister’s office has confirmed there is nothing further to add to this issue as this stage.

Confused reporting

The CEO of consumer association, COTA, Ian Yates, says he believes the 7.30 report confused the issue of ‘rorting’ with reports concerning recent changes made to elements of the funding instrument.”

“The ‘rorting’ argument – which may be true in a small number of cases and DOHA pursues these matters as vigilantly as they can – has been conflated with the other separate issue: that there are elements of the ACFI claiming process that are flawed and imperfect and need to be tightened up and that’s what the July 1 ACFI review and adjustment was about,” said Mr Yates.

“But that’s not an issue of rorting which is what the consultants have been accused of – and which they weren’t doing.  It’s all mixed up.

“We do need to monitor and review the funding and that’s why the Minister has agreed to an ACFI monitoring group, which had its first meeting last week,” said Mr Yates.  

Tags: 7.30-report, acfi-anger, cota, gerard-mansour, ian-yates, nick-heywood-smith, wellness-and-lifestyles-australia,

20 thoughts on “Continuing fallout from 7.30 Report ‘rorting’ claims

  1. Mr Nick Heywood-Smith should realise that there are many of us in the industry who disapprove of his work.

    Excerpt from Nick’s personal blog about his recent social jaunt to New York “The best thing was that we were able to claim the majority of the trip back through our Family Trust as we attended the New York Entrepreneur week at Columbia University. Even without having your own business, this is possible through structuring yourself and your assets correctly. This is why it is critical to have accountants and advisors on your team to help you with this.”

  2. The public need to know the whole story. The issue is not about “industry rorting” it is about chronic Govt. underfunding. The sad truth is –

    Public hospitals receive Govt funding of $967 a day per patient

    Aged Care providers receive $136 a day per resident.

    “It’s a real shame”.

  3. Little wonder that the 7.30 Report stirred up a hornets nest with these spurious allegations without any proof of evidence being produced. Maybe this is what the Minister desired, something to deflect the fact that he and the Dept of Health & Ageing have stuffed up big time and have been forced to claw back some $480 million through denying any price indexation and altering the ACFI scoring,therein shortchanging residential aged care providers all over the nation. So some department officers blew the whistle on some supposedly greedy providers and possibly some zealot consultants, notwithstanding the managers who told them to look the other way.
    Given that any ACFI audit should reveal just who has been rorting the system and the appropriate financial adjustments and penalties made, what action has been taken to remove the corrupt managers? Cronyism has flourished for far too long and the culture of the department urgently requires a major shake up and sort out.
    Meanwhile, isn’t it long overdue that the Minister commissions an independent body to undertake a comprehensive state by state, region by region “Cost of Care Study” then pay providers accordingly.

  4. The Minister should resign. If the rorting is true then the Department he is responsible for has been negligent, has covered the matter up (according to the DOHA whisle blowers), and is in breach of it’s own guidelines in being complicit in covering up fraud.According to the convention on Ministerial responsibility he is responsible. If he dose not resign the DOHA Departmental Head should.If the rorting is not true then the Minister has misled the Australian public, defamed all aged care providers by imputation and generisation and has lost the confidence of the industry and should resign.

  5. The Aged Care Industry is the most over regulated and policed industry. I know when we do our ACFIs we ur on the cautious side to ensure we do not over claim. Caring for our older Australians is vital and is not always an easy role. Such negativity is so demorilising for the 99% of us who try to care for our elderly for little return. Money is not the draw factor in Aged Care for it pays so poorly. We need so many more compassionate and caring people in the Aged Care Sector particularly with the increasing number of dementia suffers. However, the way Aged Care is portrayed not only by the media but by the very people/authorities who should be supporting us is disgusting. Who would want to come into Aged Care – poor conditions,poor wages and a difficult job.

  6. Thank you John Kelly and Gerard Mansour for standing up to these latest attempts by the government to discredit providers of aged care. It seems rather a coincidence that these ‘whistleblowers’ suddenly came out of the woodwork right at the time the pressure is on Minister Butler to over turn his terrible decision to cut aged care funding. To turn this on the provider and to label them rorters is a disgrace. We have said from the beginning, if there are rorters of funding in the system then you have the powers to know who they are and to impose heavy penalties on them, so why don’t you? It is so hard as a provider to keep positive when we are continuously battered.

    Ian Yates needs to also get his facts straight. There was a review undertaken of the ACFI tool by the Department of Health and Ageing in May 2011 and it confirmed the tool fitted its purpose to better match care needs to funding. Your comments that the cuts by the Minister were about getting the ‘flaws’ in the tool corrected is completely false. If I was a consumer I would be horrified that COTA could be content to support funding cuts to my care and for Mr Yates to be so ill informed.

    We need an independent cost of care study undertaken NOW so that our elders get the care they receive funded appropriately.

  7. The outrage that Minister Butler has created together with the DoHA and their ongoing blunders and cover ups is a disgrace. If there indeed has been any rorting or overclaiming, then what have the ACFI auditors been doing to identify and address the issue? More importantly, what has the DoHA management been doing with the reports received from those auditors?
    On the other hand hand, how do we know that this whole story is not a ploy initiated by the Minister’s spin doctors to deflect public attention away from the horrendous funding cut of nearly $500M announced on 21st June.
    Without adequate funding to address increasing costs, RACFs are now facing some incredible challenges in just surviving. Isn’t it time we had a government that actually supported older Australians and not just gave the impression that they might?

  8. Shame on the ABC. The 7.30 Report only did half the research required to air the program – the ultimate in lazy journalism.

  9. I am appalled at Minister Butler’s unsubstantiated claims about an industry which I have been involved in at every level for 25 years. How long do older Australians have to wait for justice and freedom from discrimination. Do the sums in regard to the fundign provided per day to hospitals and the highest option of funding per day for aged care and it is clear that equity of healthcare in this country is a joke. Why, also do the Media see aged care as any easy target – which is the only conclusion one can draw, given that the only media coverage even the ‘fair’ ABC can give it is sensational and overwhelmingly negative.
    I sincerely hope that the consultants who are engaged in legal processes for defamation with the ABC succeed. This might at least send messages that otherwise seem to fall on deaf ears. The message: aged care has historically been grossly underfunded; any gains the government falsely paints as ‘new money’ and ‘billions’ for aged care, is simply catch up and there is a long way to go.
    As for rorting, why is it that the funding system for aged care relies on mostly the written and analytical skills of a workforce that is low skilled and poorly paid and is the most complex funding system in healthcare????? It does not take a rocket scientist to understand why, in the first place, aged care providers need to engage specialists in the ACFI field!!! It could just be that along with the spin that the government sells to the public about their generosity to aged care, the system itself has been designed with a degree of difficulty that inhibits optimisation of revenue.

  10. ABC is crappy! Downright irresponsible report and is not comprehensive, fair and balanced. They singled-out one consultant only and put the bloke in a hotseat without any idea of what’s going on! It looks lke the CEO was asked for an interview thinking that it would give good media exposure to his business. I smell fish in this report. SOunds like the reporter got paid by someone. I hope the CEO succeeds in his legal action to teach ABC a lesson. Arrgh why did I watch your news video in the first place?!!!

  11. Rhetoric and indignation are not substitutes for verifiable information and objective measures of outcomes. The one thing that is absolutely clear is that there are two very different perceptions about what is happening in aged care and of the effectiveness of the regulations. This is because of the almost total lack of real transparency in the aged care system. The matter should not be confused by claims of underfunding. It is about the lack of transparency about where the funding goes and our inability to know if more funding is needed.

    I have spent the better part of 20 years studying exactly this sort of situation in multiple corporations in health and aged care. (see http://www.corpmedinfo.com) Whistle blowers do not expose themselves to the risk of threat, ridicule and retribution unless they are deeply disturbed. In the vast majority of cases there have been real grounds for concern. This occurs when corporate managers, in their omnipotence, have lost touch with what is happening at the coalface. As is well illustrated by the response they have no doubts. It occurs particularly where other parties involved are powerless and lack credibility, as in aged care in Australia.

    Aged care is a service provided by citizens, as a community, to those who are no longer able to protect or care for themselves. Those doing so are doing so on our behalf. The only way to resolve this situation is to make aged care directly accountable to the community in each region. The only way to ensure that this happens transparently is to make each local community part of the oversight process, with locally based assessors reporting directly to them.

    I suggested how this might be done in my submissions to the Productivity Commission. This solution was supported by Aged Care Crisis in their submissions. I believe that instead of resigning the minister should set in progress the steps necessary to put local communities in the driving seat and let them see what is happening.

  12. Shame on the Minister! Absolute disgrace that a Federal Govt Minister can make these outrageous claims and then not follow them up with substantiation. How long long does aged care have to battle with people who have absolutely no understanding of the needs of our seniors – our ‘living treasures’? How about Minister Butler facing up to supporting his claims – on the 7.30 Report. We as an industry should mount a campaign to challenge him to provide his ‘information’ and if it’s found to be legitimate, then a further challenge as to why he hasn’t done anything about it! This behaviour denigrates the whole aged care sector. Again – shame on him! What about a debate about how the Govt is so grassly underfunding our wonderful ‘oldies’!

  13. Of course it will be denied!
    What else would you expect?
    Govenment authorities are experts in covering up situations that will have consequences.
    As for the responses of those who work in Residential Aged Care – again, what else would they say?
    Very similiar to Stockholm syndrome – even though they harm you, you later agree with and support them.

  14. Yes, more transparency would be good for all parties involved. Yes, a comprehensive survey to determine cost of delivering care throughout Australia would be helpful, particularly if it was appropriately funded. Yes, it would be great if the Dept of Ageing actually did its job and ensured that everyone who was eligible and needed aged care could actually access it. Yes, it would be good to free up the public hospital beds from frail aged Australians waiting for placements to residential aged care. Yes, it would be helpful if the funding levels actually matched the care being delivered. Dream on, none of this is going to happen with the Gillard Government?

  15. To James who commented about the funding difference between public hospitals and aged care. That may be true but I imagine it’s justified considering that the range of care needed for a range of patients in public hospitals is a lot higher than aged care? In public hospitals we’re dealing with prem babies, children with chronic diseases, strokes, the usage of machines which cost millions of dollars, cancer treatments and many other things. I can understand and expect they would receive more care than aged care residents and probably need it more too.

  16. I work in aged care and have become disillusioned with the way the system is run. At the end of the day it is a business looking to make profit. I would agree that the extra funding claimed for residents through ACFI does not go towards more care for them, new equipment or higher staff levels, there are no significant changes to be seen. The system is a rort and residents are simply dollar signs making companies a profit.

  17. Blah.Blah.Blah. When the true cost of care is known to both the end user and the government bodies, we will see the parity in funding arrangements. The growing ageing population tsunami is coming fast and if we think the money now is not enough….wait untill the waves are so big we are all drowning. Service providers need better funding as the compliancy and regulation is already as strong as it can be. I dont agree with rorting being the issue, more like providers and staff fighting for the rights of clients services and entitlement the best way they can. This is very sad stuff to read.SHAME on the governemnt and SHAME on the community.

  18. The Minister makes all these spurious allegations, dumps on the industry then still after all this time, there is no sign of the Dept of H & A taking any action either upon the so called rorters on the managers who supposedly instructed the ACFI validators to look the other way. Where’s the transparency? Where’s the accountability? Both the Minister and the Deptl Secretary need to resign for failing so badly

  19. Sad but we are a throw away society, we need to learn from other countries where the old are look after by family.

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