Federal Court of Australia

Tonakie v Director of Professional Services Review [2024] FCAFC 60

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the respondent’s costs as agreed or taxed.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

INTRODUCTION

1    This appeal concerns the correct construction of s 94(1)(b)(iii) of the Health Insurance Act 1973 (Cth). This provision is located within Part VAA of the Act which is concerned with protecting patients and the community in general from the risks associated with inappropriate practice by practitioners in relation to various medical and associated services, and also with protecting the Commonwealth from the cost of such inappropriate practice: s 79A.

2    Section 88A in Div 3A in Part VAA provides that, if the Chief Executive Medicare requests the Director of Professional Services Review to review the provision of services by a person, then the Director must decide whether to review the provision of services within one month after receiving the request, failing which the Director is taken to have decided to undertake a review.

3    After the review, the Director must make a decision under s 91 of the Act to take no further action in relation to the review or give the person under review a written report setting out the reasons why the Director has not made a decision under s 91 and inviting the person under review to make written submissions about the action the Director should take: s 89C(1). Div 3A contemplates three steps which the Director can take “following a review” – see: s 89C(2): The Director may:

(1)    take no further action under s 91;

(2)    enter into a written agreement with the person under review under s 92; or

(3)    set up a Committee and make a referral to the Committee under s 93.

4    Section 94(1)(b) deems the Director to have made a decision to take no further action in relation to the review if: (a) the Director has decided to conduct a review; but (b) has not, before the end of 12 months after making that decision, done one of the three things mentioned in s 94(1)(b), namely: (i) made a decision under s 91 to take no further action in relation to the review; or (ii) entered into an agreement with the person under s 92 (whether or not the agreement has been ratified by the Determining Authority); or (iii) referred the provision of one or more of the services to a Committee.

5    The critical facts underlying the present dispute can be stated briefly.

6    The Director decided to review the provision of services by Dr Tonakie on 2 July 2021. On 30 June 2022, the Director set up a Committee and referred the matter to the Committee. These actions took place within the 12 month period mandated by s 94(1)(b) of the Act.

7    Dr Tonakie sought judicial review in the original jurisdiction of this Court. He sought orders setting aside the “decisions” made under s 93 to set up the Committee and to refer the matter to the Committee on the basis that the Committee was not validly constituted. Dr Tonakie alleged that the Committee was not validly constituted by reason of s 95(4) of the Act. This was because one member of the Committee had to be, but none was, a specialist in nuclear medicine. On 10 February 2023, Rares J made consent orders which relevantly included:

1.    The decision of the first respondent dated 30 June 2022 to set up and refer to the second respondent the matters set out in Item 2 of the referral be set aside.

2.    The referral dated 30 June 2022 purportedly made under s 93 of the Health Insurance Act 1973 (Cth) be set aside.

8    The consent orders contained the following notation:

The third respondent (Commonwealth) accepts that the decision of the first respondent (Director) dated 30 June 2022 to set up and refer to the second respondent (Committee) the matters set out in Item 2 of the referral and the referral purportedly made under s 93 of the Health Insurance Act 1973 (Cth) (Act) are affected by jurisdictional error. The Commonwealth accepts that the Director did not set up the Committee in accordance with s 95(4) of the Act, and that that decision and the purported referral under s 93 of the Act were invalid for that reason.

9    On 16 February 2023, less than a week after the consent orders had been made, the Director executed an instrument which:

    set up a Committee which was called “Professional Services Review Committee No 1528” (the second respondent on the appeal); and

    referred to the Committee “the investigation about possible inappropriate practice” which was detailed in the instrument.

10    Dr Tonakie again sought judicial review in this Court. In summary, Dr Tonakie contended that the Director did not set up a Committee or refer the matter to a Committee before the end of 12 months after deciding to review the provision of services, with the result that the Director was taken to have made a decision to take no further action in relation to the review: s 94(1)(b).

11    The parties conducted the proceeding before the primary judge (and on appeal) on the basis that, if the appellant was correct, the 16 February 2023 referral was beyond jurisdiction because of the deeming effected by s 94(1)(b).

12    The primary judge dismissed the appellant’s application on the basis that the referral on 30 June 2022 was a referral sufficient “to interrupt the period of 12 months for such a referral, with the consequence that the deeming provision in … s 94(1) [was] not enlivened”: Tonakie v Director of Professional Services Review [2023] FCA 1365 at [45] (hereafter “J”).

THE APPEAL

13    Dr Tonakie appeals from the orders of the primary judge dismissing his application. There is one ground of appeal, which it is convenient to set out in full:

The Court erred in its construction of section 94(1) of the Health Insurance Act 1973 (Cth) (Act).

Particulars

i.    The Court misconstrued s 94(1)(b)(iii) of the Act (especially at [34] and [45]) by interpreting it to apply in circumstances where:

a.    the First Respondent purported to make a referral of the provision of services by a person to a Committee;

b.    the “Committee” the subject of the purported referral was not validly constituted (and so was not a “Committee” within the Act); and

c.    the purported referral was also invalid.

ii.    On its proper construction, s 94(1)(b)(iii) describes a situation where the Director has made a valid referral, or a purported referral, of the provision of services by a person to a Committee (being a validly constituted Committee) or, alternatively, it applies only where the Director has made a valid referral to a validly-constituted Committee.

14    The relevant passages of the primary judgment referred to in particular are as follows:

[34]    … There was a decision in fact to refer the review of the provision of services to a Committee, even though there was an error in the constitution of the Committee with the effect that it was not a Committee established under s 93. The incorrect constitution of the Committee does not change the fact of there having been a decision to refer the matter to a correctly constituted Committee – it would be absurd to suggest that the Director intended to refer the matter to an incorrectly constituted Committee.

…

[45]    … I am in respectful agreement with Griffiths J [in National Home Doctor Service Pty Ltd v Director of Professional Services Review [2020] FCA 1016; 276 FCR 382] – a legally invalid referral to a Committee, including an invalidly constituted Committee which is thus no Committee under the Act, is a referral under s 94(1)(b)(iii) such as to interrupt the period of 12 months for such a referral, with the consequence that the deeming provision in the tailpiece to s 94(1) is not enlivened.

15    The appellant’s case was, in summary:

(a)    As at 30 June 2022, there was no “Committee”. This is because a Committee is a “Professional Services Review Committee set up under section 93”: s 81(1). Section 93(1) authorises the Director to “set up a Committee in accordance with Division 4”. The Committee was not set up “in accordance with Division 4” because it was invalidly constituted.

(b)    The Director could not have “referred” the matter to a Committee for the purposes of s 94(1)(b)(iii), because there was no Committee within the meaning of ss 81(1), 93(1), 94(1)(b)(iii) or at all.

(c)    Section 94(1)(b) deems the Director to have made a decision not to take further action unless, relevantly for present purposes, he has – within the meaning of s 94(1)(b)(iii) - “referred” the services to a Committee within 12 months.

(d)    The exclusion from the deeming which s 94(1)(b) otherwise effects, provided by paragraph (iii), cannot be engaged by a referral if that referral is:

(i)    an invalid referral; or

(ii)    a referral to an invalidly constituted Committee.

16    Before addressing the appellant’s case, it is useful to refer to certain aspects of the statutory scheme established by Part VAA.

THE STATUTORY SCHEME

17    Part VAA of the Act is entitled “The Professional Services Review Scheme”. Division 1 of Part VAA is entitled “Preliminary”. Within Div 1, s 79A states the express statutory object of the Part in the following way:

79A    Object of this Part

The object of this Part is to protect the integrity of the Commonwealth medicare benefits, dental benefits and pharmaceutical benefits programs and, in doing so:

(a)    protect patients and the community in general from the risks associated with inappropriate practice; and

(b)    protect the Commonwealth from having to meet the cost of services provided as a result of inappropriate practice.

18    The main features of the scheme are described in s 80 in Div 1 in the following way:

80    Main features of the Professional Services Review Scheme

(1)    This section summarises the main features of the Professional Services Review Scheme established by this Part.

(2)    The Professional Services Review Scheme is a scheme for reviewing and investigating the provision of services by a person to determine whether the person has engaged in inappropriate practice.

(3)    The Chief Executive Medicare can request the Director to review the provision of services by a person and the Director must decide whether to undertake a review.

(4)    Following a review, the Director must:

(a)    decide to take no further action in relation to the review; or

(b)    enter into an agreement with the person under review; or

(c)    make a referral to a Committee.

(5)    If the Director enters into an agreement with the person under review, the agreement must be ratified by the Determining Authority before it takes effect. Having an agreement ratified avoids a Committee investigation.

(6)    A referral to a Committee initiates an investigation by the Committee into the provision of the services specified in the referral. The Committee can investigate any aspect of the provision of the referred services and its investigation is not limited by any reasons given in a request for review or a Director’s report following a review.

(7)    Committee members must belong to professions or specialities relevant to the investigation.

(8)    Committees can hold hearings and require the person under review to attend and give evidence. Committees also have the power to require the production of documents (including clinical records).

(9)    Committees can base findings on investigations of samples of services.

(10)    If a Committee finds that the person under review has engaged in inappropriate practice, the finding will be reported to the Determining Authority. The Determining Authority decides what action to take.

(11)    Provision is made throughout the scheme for the person under review to make submissions before key decisions are made or final reports are given.

(12)    A Committee cannot make a finding of inappropriate practice unless it has given the person under review:

(a)    notice of its intention to do so; and

(b)    the reasons for the finding; and

(c)    an opportunity to respond.

19    Section 81 contains definitions. It includes:

81    Definitions

(1)    In this Part, unless the contrary intention appears:

…

Committee means a Professional Services Review Committee set up under section 93.

…

referral means a referral to a Committee under section 93.

…

20    Division 3A of Part VAA is entitled “Review by Director”. It includes:

88    Director may request further information

(1)    If the Chief Executive Medicare requests the Director to review the provision of services by a person, the Director may request the Chief Executive Medicare to provide further information in relation to the provision of those services.

…

88A    Director must decide whether to review

(1)    If the Chief Executive Medicare requests the Director to review the provision of services by a person, the Director must, within 1 month after receiving the request, decide whether or not to undertake the review.

(2)    The Director must decide to undertake the review if, after considering the request and any other relevant information the Director has obtained, it appears to the Director that there is a possibility that the person has engaged in inappropriate practice in providing services during the review period.

(3)    If the Director does not make a decision under subsection (1) within the period of 1 month specified in that subsection, the Director is taken to have decided, at the end of that period, to undertake the review.

…

89C    Director’s action following review

(1)     Following a review of the provision of services by a person, the Director must either:

(a)     make a decision under section 91 to take no further action in relation to the review; or

(b)     give the person under review:

(i)     a written report setting out the reasons why the Director has not made a decision under section 91; and

(ii)     an invitation to make written submissions to the Director, within 1 month, about the action the Director should take in relation to the review.

(2)     If the Director gives the person under review a report and invitation under paragraph (1)(b), the Director must, as soon as practicable after taking into account any submissions made as mentioned in subparagraph (1)(b)(ii):

(a)     decide to take no further action in relation to the review in accordance with section 91; or

(b)     enter into an agreement with the person under review under section 92; or

(c)     make a referral to a Committee under section 93.

21    As can be seen from s 89C(2), Div 3A contemplates three steps which the Director can take “following a review”: The Director may:

(1)    make a decision to take no further action under s 91;

(2)    enter into a written agreement with the person under review under s 92; or

(3)    set up a Committee and make a referral to the Committee under s 93.

22    Section 91 provides:

91    Decision to take no further action

(1)    The Director may decide to take no further action in relation to a review if he or she is satisfied that:

(a)    there are insufficient grounds on which a Committee could reasonably find that the person under review has engaged in inappropriate practice in providing services during the review period; or

(b)    circumstances exist that would make a proper investigation by a Committee impossible.

(2)    Within 7 days after making a decision to take no further action in relation to a review, the Director must give the Chief Executive Medicare and the person under review:

(a)    written notice of the decision; and

(b)    a written report setting out the grounds for the decision.

23    Section 92 includes:

92    Agreement entered into between Director and person under review

(1)    A person under review and the Director may enter into a written agreement under which:

(a)    the person under review acknowledges that the person engaged in inappropriate practice in connection with the provision of specified services during the review period (whether rendered or initiated by the person or an associated person); and

(b)    specified action in relation to the person under review (being action of a kind mentioned in subsection (2)) is to take effect.

…

(3)    An agreement entered into between the Director and the person under review under subsection (1) does not take effect unless it is ratified by the Determining Authority.

…

(5)    A refusal of the Determining Authority to ratify the agreement does not prevent the Director and the person under review from entering into a further agreement under subsection (1).

24    Section 92A addresses the consequences if the Determining Authority refuses to ratify an agreement. It provides:

92A    If agreement is not ratified

If:

(a)     the Director enters into an agreement with the person under review; and

(b)    the Determining Authority refuses to ratify the agreement; and

(c)    before the end of the period of 3 months after the refusal:

 (i)     the Director has not made a decision under section 91 to take no further action in relation to the review; or

 (ii)    the Determining Authority has not ratified a further agreement between the Director and the person under review; or

 (iii)     the Director has not made a referral to a Committee to investigate whether the person under review engaged in inappropriate practice in providing services during the review period;

then, the Director must make such a referral.

Note: Subsection 92(5) provides for the making of further agreements following a refusal by the Determining Authority to ratify an agreement.

25    Section 93 includes:

93    Referral to a Committee

…

(1)    The Director may, by writing, set up a Committee in accordance with Division 4, and make a referral to the Committee to investigate whether the person under review engaged in inappropriate practice in providing the services specified in the referral.

…

26    Section 94(1) provides:

94     Director taken to have made a decision after 12 months

(1)     If:

(a)     the Director decides to review the provision of services by a person; and

(b)     before the end of the period of 12 months after making the decision, the Director has not:

(i)     made a decision under section 91 to take no further action in relation to the review; or

(ii)     entered into an agreement with the person under section 92 (whether or not the agreement has been ratified by the Determining Authority); or

(iii)     referred the provision of one or more of the services to a Committee;

then, the Director is taken to have made a decision at the end of that period to take no further action in relation to the review.

Note:     Sections 92A and 106R set out time limits for the ratification of agreements made under section 92.

27    In light of the arguments on appeal, it is relevant to observe at this point that the condition in s 94(1)(a) is engaged where the Director “decides” to review the provision of services. The exclusion from the deeming for which s 94(1)(b)(iii) otherwise provides is engaged where the Director has not “referred” the provision of one or more of the services to a Committee.

28    Section 94(1)(b) is a deeming provision, pursuant to which the Director is “taken to have made a decision at the end of that period to take no further action in relation to the review” if the Director has decided to conduct a review (s 94(1)(a)) but has not, before the end of 12 months after making the decision, done one of the three things mentioned in s 94(1)(b), namely: (i) made a decision under s 91 to take no further action in relation to the review; or (ii) entered into an agreement with the person under s 92 (whether or not the agreement has been ratified by the Determining Authority); or (iii) referred the provision of one or more of the services to a Committee. In Amir v Director of Professional Services Review [2022] FCAFC 44; 290 FCR 355, the Full Court stated:

[24]    The purpose of s 94(1) is to encourage the Director, having decided to undertake a review, not to be dilatory in completing the review and taking one of the actions referred to in s 94(1)(b): National Home Doctor Service Pty Ltd v Director of Professional Services Review (2020) 276 FCR 382 (NHDS No 2) at [56].

29    Division 4 of Part VAA is entitled “Professional Services Review Committees”. Subdivision A is entitled “Constitution of Committees”, as is s 95, which includes:

(1)    A Committee set up under section 93 in connection with a referral consists of the following members appointed by the Director:

(a)    a Chairperson who is a Deputy Director; and

(b)    2 other Panel members; and

(c)    if subsection (6) applies—not more than 2 additional Panel members.

…

(2)    If the person under review is the practitioner who rendered or initiated all of the referred services, the Chairperson, and the other Panel members referred to in paragraph (1)(b), must be practitioners who belong to the profession in which the practitioner was practising when the services were rendered or initiated.

CONSIDERATION

30    The appellant’s argument on appeal commenced with the proposition that one must read the definitions of the words “referral” and “Committee” in s 81(1) into ss 93(1) and 94(1)(b)(iii) in order to properly construe those provisions, referring to R v Kelly [2004] HCA 12; 218 CLR 216 at [103] (McHugh J).

31    The approach of reading a defined word into a substantive provision, in the manner described by McHugh J, works where the definition of a particular word is complete of itself, but it is difficult to apply (at least literally) where the definition is incomplete and requires reference to a substantive provision. Here:

(a)    The term “Committee” is defined to mean “a Professional Services Review Committee set up under section 93”. The definition of the word “Committee” in s 81(1) refers to s 93 and the word is only capable of being understood by reference to s 93(1) where it is made clear that a Committee must be set up “in accordance with Division 4”.

(b)    The word “referral” is defined in s 81(1), for the purposes of Part VAA, to mean “a referral to a Committee under section 93”. The definition of “referral” in s 81(1) itself refers to a “referral”, and the “referral” to which it refers is one made under s 93, such that the real meaning of the word is supplied by s 93(1).

32    Sections 81(1) and 93 are intended to be read together, given it is only possible to understand the meaning of the definition in s 81(1) by looking to s 93. A “referral” in s 93(1) is a referral to a “Committee” which has been set up “in accordance with Division 4”.

33    If the Director set up a Committee which was not constituted in the way authorised by Division 4, the Committee would not be a Committee set up “in accordance with Division 4”. It would lack jurisdiction and it would not be a Committee to which a referral could be made with legal effect for the purposes of s 93(1).

34    Turning to s 94(1)(b)(iii), the first thing to observe is that the word “referral” is not used. Section 94(1)(b)(iii) uses the word “referred”. This is clearly a reference to a referral to a Committee set up under s 93(1).

35    It goes without saying that the legislature intended that referrals under s 93(1) be valid and that Committees be validly set up in accordance with Division 4. Section 94(1)(b)(iii) disengages the deeming where the Director has, within 12 months, “referred the provision of one or more of the services to a Committee”. This plainly includes a reference to the Director, under s 93(1), “making a referral” to a Committee set up “in accordance with Division 4”. The Director emphasised that s 81(1) supplies definitions for the purposes of Part VAA “unless the contrary intention appears”. The Director contended that the legislature should be taken as having intended that s 94(1)(b)(iii) is engaged by a “referral” to an invalidly constituted Committee or a “referral” affected by jurisdictional error and that, to the extent this offended the definitions in s 81(1), a “contrary intention appears”.

36    Another way of looking at the issue is to ask whether the legislature should be taken as having intended that, where jurisdictional error affects the setting up of a Committee or the making of a referral under s 93(1), the consequences of invalidity are not only that the actions are invalid for the purposes of s 93(1), but also that the actions are incapable of engaging of s 94(1)(b)(iii). That is, does the referral to an invalidly constituted Committee still have a status sufficient to trigger s 94(1)(b)(iii), notwithstanding its invalidity under s 93(1)?

37    However the issue is framed, the question is: if the Director sets up an invalidly constituted Committee and makes a (purported) referral to it, does the fact that the referral was to an invalidly constituted Committee (or was a referral affected by jurisdictional error) have the consequence that the Director has not “referred the provision of one or more of the services to a Committee” so as to prevent the deeming which s 94(1)(b) would otherwise have effected?

38    For the reasons that follow, s 94(1)(b)(iii) is engaged where the Director has “referred” the provision of services to a Committee, including one which was invalidly constituted.

39    If it were otherwise, the scheme would contain a significant flaw which directly contradicts the express statutory protective objects of Part VAA: s 79A.

40    Assume, for example, that:

(a)    the Director decided under s 88A(1) to conduct a review, thereby engaging s 94(1)(a);

(b)    towards the end of the review, say 11 months after the decision to review, the Director set up a Committee and referred the matter to it under s 93(1);

(c)    the Committee finalised its report within 2 months, finding that the person under review had engaged in inappropriate practice; and

(d)    it was then discovered that there was non-compliance with a statutory condition such that the Committee was not one set up “in accordance with Division 4”.

41    The consequence would be that the action taken by the Committee would be of no effect, it having no jurisdiction. On the appellant’s construction of s 94(1)(b)(iii), it would not then be possible to refer a matter to a properly constituted Committee because it would no longer be possible to make a referral within 12 months.

42    The appellant submitted that, properly understood, s 94(1)(b) was protective of the rights of persons under review and was part of a statutory balancing of competing interests. This proposition is partly true, but cannot be accepted at the level of generality with which it was put. Section 94(1) is, as has been mentioned, concerned with ensuring that the Director is not dilatory. It is also concerned with putting the person under review in a position that the person knows, within 12 months, whether further action is being taken (because a step under ss 92 or 93 had been taken) or might be taken (because the Director has extended the 12 month period under ss 94(2) or (3)).

43    However, s 94(1) of the Act is still a part of a scheme, the overall object of which is to protect the public and the Commonwealth from “inappropriate practice” as defined in s 82. The scenario posited earlier poses a real impediment to the achievement of the express objects of Part VAA if the appellant’s construction is correct.

44    The appellant criticised the primary judge’s reasoning at J[34] for focussing on “decisions”. The primary judge stated:

… There was a decision in fact to refer the review of the provision of services to a Committee, even though there was an error in the constitution of the Committee with the effect that it was not a Committee established under s 93. The incorrect constitution of the Committee does not change the fact of there having been a decision to refer the matter to a correctly constituted Committee – it would be absurd to suggest that the Director intended to refer the matter to an incorrectly constituted Committee.

45    The appellant submitted that:

(a)    it was not to the point that the Director made a “decision in fact” to refer the matter to a Committee, because s 94(1)(b)(iii) “does not require a decision”;

(b)    rather, the provision requires the Director to have “referred the provision of … services to a Committee”, which the Director failed to do;

(c)    the primary judge, in stating that “[t]he incorrect constitution of the Committee does not change the fact of there having been a decision to refer the matter to a correctly constituted Committee – it would be absurd to suggest that the Director intended to refer the matter to an incorrectly constituted Committee”, was:

(i)    again substituting a “decision” for the statutory requirement of a “referral”; and

(ii)    focussing erroneously on the Director’s intention.

46    These criticisms ultimately lead nowhere. At least in the present case, the distinction between an action and a “decision” is slightly artificial: (i) the action of setting up a Committee; and (ii) the making of a referral to that Committee, are necessarily undertaken by making decisions to take the action.

47    Section 93(1) authorises the Director to “set up” a Committee and to “make a referral” to the Committee. The Director had to decide to do those things before doing them. Indeed, it was the “decisions” made on 30 June 2022 to set up the Committee and to make a referral to it which was the subject matter of the appellant’s first application for judicial review.

48    It is well-recognised that:

    an administrative decision affected by jurisdictional error is still in fact a decision: New South Wales v Kable [2013] HCA 26; 252 CLR 118 at [52]; Hossain v Minister for Immigration and Border Protection [2018] HCA 34; 264 CLR 123 at [24]; and

    such a decision may still have some status in law, and give rise to legal consequences, even though it is “a decision in fact which is properly to be regarded for the purposes of the law pursuant to which it was purported to be made as ‘no decision at all’”: Hossain at [24].

49    In the same way that an administrative decision affected by jurisdictional error is still a decision in fact which may have some status in law, and give rise to legal consequences, so too an administrative action affected by jurisdictional error is still in fact an action which may have legal consequences. The setting up of a Committee and the making of a referral, even if affected by jurisdictional error, are still events which have occurred which may have legal consequences in the way described in cases such as Hossain. The Director’s actions on 30 June 2022 were affected by jurisdictional error and insufficient validly to set up a Committee or make a referral to that Committee, yet the actions may still be sufficient to engage s 94(1)(b)(iii): Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [91]; Jadwan Pty Ltd v Secretary, Department of Health & Aged Care [2003] FCAFC 288; 145 FCR 1 at [42].

50    A part of the context for the determination of the question identified in [37] above is the practical operation of the scheme set up by the Act. The scheme contemplates lawful referrals to validly constituted Committees. However, mistakes will be made in constituting Committees, including mistakes of a jurisdictional kind. The question which arises is whether the legislature should be taken as having intended that s 94(1)(b)(iii) would not be engaged by such circumstances.

51    The appellant put forward a number of arguments in support of the proposition that it is improbable that the legislature contemplated that the Director might take action affected by jurisdictional error within the statutory time limit and may then have another opportunity to take action outside of the statutory time limits.

52    First, the appellant referred to the structure of s 94(1) and “its close textual connection with s 89C(2)”. The appellant observed that the Director is taken to have decided not to take further action under s 94(1) if the Director has not taken any of the steps provided for in ss 94(1)(b)(i), (ii) and (iii). Those steps, it was noted, reflect the three available courses of conduct, one of which the Director “must” take “as soon as practicable” under s 89C(2) after the period in s 89C(1)(b) has expired.

53    Each of these courses of conduct is described, in s 89C(2), in terms of the exercise of a statutory power: a decision (not to take further action) “in accordance with section 91”; an agreement (between the Director and a person under review) “under section 92”; or a referral to a Committee “under section 93”. Each contemplates the taking of valid administrative action.

54    The appellant observed that s 94(1)(b)(ii) refers to the entry into an agreement “under section 92” and that such an agreement only takes effect when ratified by the Determining Authority: s 92(3). The appellant noted that a valid agreement entered into pursuant to s 92(1) has statutory consequences, as it is a precondition to such ratification and also because it precludes the Director from being taken to have decided to take no further action under s 94(1)(b). If the Determining Authority refuses to ratify the agreement, the Director has a further three months to take certain action, failing which the Director is required to make a referral: s 92A.

55    The appellant submitted that the express provision for the time-limited consequences of the ultimately ineffective (but valid) administrative action of entering into an agreement which is not ratified makes it improbable that the legislature intended the consequence of invalid action to be that the Director has an unspecified time to act lawfully under s 89C(2).

56    Where the Director seeks to resolve the review by entering into a s 92(1) agreement and that process fails because ratification is refused, then – unless one of the matters in s 92A(c) occurs – there is a mandatory referral to a Committee. This supports a construction of s 94(1)(b) that one of its concerns is that one of the three steps identified in the provision is in fact taken within 12 months, so as to place the person under review in a position to know within 12 months one way or the other whether further action is to be taken. In the case of a s 92(1) agreement, if the agreement is not ratified, then there will be a review (including one initiated after the 12 month period) unless the Director decides under s 91 to take no action: s 92A(c)(i).

57    In this context, there is nothing particularly surprising in construing the s 94(1)(b)(iii) exception to the s 94(1)(b) deeming as being engaged where the making of the referral to the Committee under s 93(1) was affected by jurisdictional error.

58    As is noted later, this does not provide the Director carte blanche to set up a new Committee and make a new referral at any time. The Director’s various powers are conditioned by a statutory requirement that they be exercised reasonably.

59    Secondly, the appellant observed that the legislature had expressly contemplated the extension of the 12 month period referred to in s 94(1)(b) in other circumstances, providing for specific timeframes, referring to ss 94(2) and (3). The appellant also noted that s 94 was amended by the Health Insurance Amendment (Professional Services Review Scheme No 2) Act 2023 (Cth) to give the Director power to extend the review where court proceedings are commenced in relation to the review: s 94(2A).

60    The availability of these other mechanisms for extension, applicable in their particular circumstances, does not provide any great contextual support for a construction of s 94(1)(b)(iii) in which a referral to an invalidly constituted Committee is a referral which does not stop the deeming for which s 94(1)(b) provides. If the Director extends the time, then the person under review is placed in a position where the person knows, within 12 months, that further action remains a possibility within the time as extended.

61    Thirdly, it was submitted that it may be inferred from other provisions in Div 3A of Part VAA imposing time limits that the legislature intended the Director’s review to proceed expeditiously and did not intend the Director to have an unspecified timeframe in which to act after taking action infected by jurisdictional error, referring to ss 88A(3), 89C(1) and (2) and National Home Doctor Service Pty Ltd v Director of Professional Services Review [2020] FCA 1016; 276 FCR 382 (NHDS (No 2)) at [45]-[46]. A similar submission was put to the primary judge in the present case, recorded at J[39] in the following way:

[39]    … [I]t is said that on the construction adopted by Griffiths J, if the Director makes an invalid referral, the Director then has an unspecified timeframe in which to make a subsequent referral, albeit that it must be within a reasonable time (NHDS [No 2] at [53]). It is said that it could not have been intended by the Parliament, in light of the strict timeframes in Pt VAA of the Act, that a referral made by the Director after a reasonable time would be valid, or that the Director could have an unspecified amount of time to make a referral.

62    In NHDS (No 2), in circumstances where an earlier referral had been set aside, the applicant sought a declaration that the Director must be taken under s 94(1) to have decided to take no further action because more than 12 months had passed since the Director decided to review the provision of services by the applicant. Justice Griffiths concluded that the reference to the director not having “referred the provision of one or more of the services to a Committee” in s 94(1)(b)(iii) is to a referral in fact which need not be legally valid. Even if the referral was subsequently set aside, the fact of the referral was sufficient to interrupt time under s 94(1) with the result that the Director was not taken to have made a decision at the end of the 12 month period to take no further action in relation to the review – see, in particular: [39]-[64].

63    The primary judge acknowledged that the consequence of the construction found to be correct in NHDS (No 2) was that an invalid referral might permit a further referral beyond the 12 month period envisaged by s 94(1)(b)(iii). His Honour stated:

[40]    Whilst that unsatisfactory consequence of Griffiths J’s construction should be acknowledged, the reverse must also be acknowledged. That is, on the applicant’s construction a highly technical and innocent error which leads to the invalidity of the referral, such as in the present case, can readily have the result that possible “inappropriate practice” is not investigated and acted against. Such a consequence would be contrary to the objects stated in s 79A – a construction that has that consequence would not protect patients and the community in general from the risks associated with inappropriate practice, and it would not protect the Commonwealth from having to meet the cost of services provided as a result of inappropriate practice.

64    The consequences of Griffiths J’s construction in NHDS (No 2) are less unsatisfactory than the consequences if his Honour’s construction is incorrect. Section 89C(2) of the Act requires the Director, “as soon as is reasonably practicable after taking into account submissions made” in accordance with s 89C(1)(b)(ii), to take one of the three steps mentioned in that section: (a) decide to take no further action under s 91; (b) enter into an agreement under s 92; or (c) make a referral to a Committee under s 93. Like most statutory powers, the power to make a referral under s 93(1) is conditioned by an implied requirement that it be exercised reasonably. Where the issue is the time at which the power is exercised, what might be unreasonable is informed by the Act as a whole, including its objects and purposes, and specific provisions such as s 92A.

65    Section 94(1) requires the Director take one of the identified steps within 12 months, failing which the provision operates to deem there to be a decision not to take any action. Once a referral has been made, the person whose services have been referred is placed in the position that the person knows that there is to be further action. In light of the terms of s 94(1), and other provisions in the Act such as s 92A, it would be unreasonable to exercise the power in s 93(1) a long time after a referral made within 12 months was found to be invalid.

66    In the present case, Dr Tonakie knew that there had been a referral within 12 months, successfully challenged that referral, and was then faced with a new referral within a week after the original referral was set aside.

67    Fourthly, the appellant observed that the legislature had included fixed time limits throughout Part VAA, including at the stages of the Chief Executive Medicare’s request, the Committee’s investigation, and the Determining Authority’s determination.

68    For example, the appellant noted that the Committee’s Chairperson must convene a meeting within 14 days of the appointment of the Committee members (s 97(1)), the Committee has a duty to carry out its functions so that its final report is given to the Determining Authority within six months or a defined extended period (s 106G(2)), and the Determining Authority must make a final determination within a month of receiving submissions from the person under review (s 106TA). The appellant submitted that it may be inferred that the legislature intended every stage of the review to be attended by fixed time limits.

69    The fact that the Act contains fixed time limits in various respects does not lead to the conclusion that it was intended that a referral to an invalidly constituted Committee would not be sufficient to engage s 94(1)(b)(iii) so as to prevent the deeming which s 94(1)(b) would otherwise effect.

70    The appellant submitted that:

(a)    A decision affected by jurisdictional error “exceeds the limits of decision-making authority legislatively conferred on” the administrator and that it “lacks the authority of law” and is, therefore, “no decision at all”, referring to Stanley v Director of Public Prosecutions (DPP) (NSW) [2023] HCA 3; 97 ALJR 107 at [15]; Hossain at [24]; and Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; 209 CLR 597 at [51].

(b)    A statutory reference to administrative action (namely, setting up a Committee and making a referral to that Committee) should not readily be construed as comprising action in breach of a condition which the legislation treats as depriving the administrator of power, referring to Hossain at [67].

(c)    “[T]he need for Committees to be properly constituted is itself fundamental to the very administration of Part VAA”, because Committees comprise a practitioner’s own peers and may find that a practitioner has engaged in inappropriate practice, referring to Flick J’s reasons in Kutlu v Director of Professional Services Review [2011] FCAFC 94; 197 FCR 177 at [82].

(d)    The Director’s power in s 93(1) to “set up a Committee in accordance with Division 4” establishes a Commonwealth officer, who might be the subject of a constitutional writ.

(e)    It would be surprising if the legislature intended the words “referred … to a Committee” in s 94(1)(b)(iii) to encompass a referral to a body of persons who “were, unknowingly, usurping the public offices in which they purported to act”, referring to the joint reasons of Rares and Katzmann JJ in Kutlu at [48].

71    The first four propositions may be accepted. However, the last proposition is not self-evident. Section 94(1)(b)(iii) serves a limited and nuanced purpose. Its purpose is to disengage a statutory fiction that something has occurred when in fact it has not. The evident purposes of s 94(1)(b) include encouraging the Director not to be dilatory and giving the person under review a measure of certainty, as at 12 months after the Director has made the decision, if not before, as to whether further action is to be taken. In this context and having regard to the express statutory purposes mentioned earlier, the legislature should not be taken as having intended that a purported referral under s 93(1) to an invalidly constituted Committee was not to fall within the concept of having “referred the provision of one or more of the services to a Committee” within the meaning of s 94(1)(b)(iii).

72    The referral in the present case was affected by jurisdictional error, and was invalid as a referral for the purposes of s 93(1), but it nevertheless had the limited legal effect of engaging s 94(1)(b)(iii) such that the statutory fiction otherwise effected by s 94(1)(b) was disengaged. The better construction of s 94(1)(b)(iii) is that it is engaged even where the Director has “referred” services to an invalidly constituted Committee. To the extent this construction requires the word “Committee” in s 94(1)(b)(iii) also to encompass a Committee not set up “in accordance with Division 4”, such that the word might be said to mean something different in s 94(1)(b)(iii) than in s 93(1) (read with s 81(1)), it may be observed that “the presumption that a word is used with a uniform meaning in a statute, or even in the one section, readily yields to the context”: CTC Resources NL v Commissioner of Taxation [1994] FCA 76; 48 FCR 397 at 405 (Gummow J). The definition section, which applies “unless the contrary intention appears”, must also be considered in the context of the Act as a whole. “A contrary intention may be inferred from a particular provision if, were the definition to be applied, the provisions of or the procedure established by the section would not appropriately work”: Deputy Commissioner of Taxation (NSW) v Mutton (1988) 12 NSWLR 104 at 108 (Mahoney JA).

CONCLUSION

73    The appeal should be dismissed with costs.

Associate:

Dated:    24 May 2024