If you have received a Compensation Payout or Settlement you have to declare this to the NDIS and supply them with all the information upon which this was granted.

In some cases the NDIS will assist in the claiming for Compensation Payout or Settlement on behalf of the client.

Source:  https://www.ndis.gov.au/participants/compensation-and-your-plan/what-you-need-know-about-compensation

What do you need to tell us, give us, and why?

When you tell the NDIA about your injury, we may ask you to complete a form, called a Compensation Information Form (PDF 794KB). The form includes questions about your injury and compensation.

The NDIA may need your consent to collect and share your information with third parties. The NDIA will ask for this consent if it is needed. 

This information is collected by the NDIA in accordance with our Privacy Policy. We use the information to determine whether the payment you have received, or may be entitled to receive, will be assessed by the NDIA.

It is important to provide information about any compensation payment you have received, or may be entitled to receive, when you are making an access request or attending a planning meeting. 

If you would like more information, see – Information and Documents required for the NDIA to undertake its functions

Source:  https://teamdsc.com.au/resources/the-lowdown-on-compensation-ndis

If there is a party responsible for the injury, or it is covered by another insurance scheme such as car accidents, the NDIA may insist that the person pursues this action. 

The NDIA may help Participants to do this, and if ‘reasonable’ action isn’t taken, a Participant might not get all, or some, of their Plan funded. 

Where it may not be considered ‘reasonable’ is if the emotional or physical toll of litigation on the Participant is too great. 

However, if the action is ‘reasonable’ and isn’t taken, the NDIS can take the action to seek compensation on behalf of the Participant. 

An example of this may be if someone is injured at birth, and there is the possibility of successful litigation against a hospital, the NDIA could take action to make the litigation happen. 

Litigation is usually long, stressful, time consuming and emotionally demanding, so Participants may not want to pursue litigation. 

However,  the NDIA is obligated to ensure the Scheme is sustainable, and if a Participant could receive a multi-million dollar payout, the NDIS is  obliged to make sure that the Participant pursues it. 

During litigation, the Participant would receive their usual reasonable and necessary supports until the compensation is finalised, and then the NDIA would move to recover the cost of these supports from the successful compensation action.