Banned NDIS firm redirects clients to new provider with the same executives

The National Disability Insurance Scheme (NDIS) watchdog has issued a stern warning to suspended provider Cocoon SDA Care after it directed severely disabled clients to a related company, Crescent, sparking concerns over accountability and transparency in the disability sector.

Cocoon SDA Care, operated by parent company Horizon SolSolutions, was slapped with a 30-day suspension by the NDIS Quality and Safeguards Commission last week due to serious safety risks identified during targeted site visits.

The ban has left up to 438 vulnerable clients scrambling to find new providers, with some forced to relocate from Cocoon-run specialist disability accommodation.

In letters to clients, Cocoon described the transition to Crescent as a “change of management” aimed at improving “service efficiency”. However, the correspondence failed to disclose that Crescent’s new owner is Pranay Kumar, Cocoon’s executive director of operations until earlier this month.

Kumar acquired Crescent in April from the former personal assistant of Cocoon’s corporate strategist, Zaffar Khan, a controversial figure with a history of bankruptcy. Prior to this, Crescent’s shares were held by Horizon SolSolutions’ parent entity.

Ethical Tick, an NDIS certification body, condemned the move, stating it “exposes critical weaknesses in the NDIS framework, where banned providers can funnel participants to affiliated entities, undermining trust and oversight”.

The NDIS Commission is now investigating Cocoon and Horizon, with a focus on these restructuring tactics.

Cocoon’s troubles deepened following revelations from Tanya-Lee Quinn, who briefly served as the company’s CEO in August 2023. Quinn alleges she uncovered a “massive NDIS scam” involving financial and compliance irregularities.

She claims she reported her findings to then-NDIS Minister Bill Shorten’s office, the Australian Securities and Investments Commission, the Australian Taxation Office, and the NDIS Commission, only to be escorted off Cocoon’s premises after raising concerns.

“I refused to be complicit in what was essentially a cash-flow siphon masquerading as care,” Quinn said.

Despite her warnings, Cocoon continued operating for nearly two years. Quinn, a single mother, said she faced financial hardship after blowing the whistle, borrowing $25,000 from her parents due to a lack of support for whistleblowers.

The National Disability Insurance Agency (NDIA) has halted payments to Cocoon pending a manual review, leaving some staff unpaid for weeks. Horizon has taken the NDIA to the Federal Court to compel the release of funds, with a decision still pending.

Last year, Horizon faced a bankruptcy notice over a $10 million tax debt, which was resolved through a payment plan with the ATO.

Zaffar Khan defended Cocoon’s actions, insisting the company prioritises client choice and control. “Our letter to participants was transparent and made clear they were under no obligation to move to Crescent,” he said.

However, Khan’s personal website lists Crescent as part of the Cocoon group, further blurring the lines between the entities.

Muhammad Latif, Horizon’s sole director, expressed frustration at the suspension, claiming it has disrupted over 1200 staff and 200 clients. “We remain committed to the wellbeing of our participants,” he said.

The NDIA emphasised its collaboration with authorities to protect participants from “unscrupulous providers”. Acting deputy commissioner Mahashini Krishna reiterated the Commission’s stance: “We will not tolerate misconduct that endangers NDIS participants.”

As the investigation unfolds, advocates are calling for stronger regulations to prevent suspended providers from exploiting loopholes, ensuring the safety and rights of some of Australia’s most vulnerable people.