FEDERAL COURT OF AUSTRALIA
Mercado v Holmes [2000] FCA 620
HEALTH LAW – medical practitioners – review scheme under Part VAA Health Insurance Act 1973 (Cth) –“inappropriate practice” – referral by Health Insurance Commission to Director of Professional Services Review – content and form of referral – setting up of Professional Services Review Committee – referral purportedly limited to statement of practice addresses and period of services – substantial “attached material … by way of explanation and background” – whether part of referral – referral initially confined to high volume of services – whether allegation of overservicing can be considered by Committee – material in referral concerning alleged admissions as to high volume services outside period of specified services – whether reasonable apprehension of bias – whether jurisdiction to grant injunction– whether injunction premature
WORDS AND PHRASES – “inappropriate practice” – “referral”
Health Insurance Act 1973 (Cth) ss 81, 82(1)(a), 86(1), 87, 106L, 106V, 114(1), 124A
Judiciary Act 1903 (Cth) s 39B(1) and (1A)
Administrative Decision (Judicial Review) Act 1977 (Cth) s 5
Federal Court of Australia Act 1976 (Cth) s 23
Adams v Yung (1998) 83 FCR 248 applied
Tankey v Adams [1999] FCA 683 mentioned
Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293 applied
Webb v The Queen (1994) 181 CLR 41 at 74 applied
Secretary, Department of Social Security v Jordan (1998) 83 FCR 34 at 46 applied
Khadem v Barbour (1995) 21 AAR 555 at 561 applied
Century Metals and Mining NL v Yeomans (1991) 100 ALR 383 at 417 mentioned
Kaycliff Pty Ltd v Australian Broadcasting Tribunal (1989) 90 ALR 310 at 319 mentioned
Re Finance Sector Union of Australia; Ex parte Illaton Pty Ltd (1992) 107 ALR 581 at 582 applied
Re Judge Leckie; Ex parte Felman (1978) 52 ALJR 155 at 160 applied
Victoria v Australian Building Construction Employees’ and Builders Labourers’ Federation (1982) 152 CLR 25 at 102 applied
Amoe v Director of Public Prosecutions (Nauru) (1991) 66 ALJR 29 at 33-34 applied
Johns v Australian Securities Commission (1992) 35 FCR 16 at 37 applied
Bilgin v Minister for Immigration and Multicultural Affairs (1997) 149 ALR 281 and 292 mentioned
Police v Pereira [1977] 1 NZLR 547 at 557 mentioned
R v Kent Police Authority; Ex parte Godden [1971] 2 QB 662 at 673 mentioned
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 337 mentioned
Edelston v Health Insurance Commission (1990) 27 FCR 56 at 69-70 mentioned
Tang v Holmes (Sundberg J, unreported, 25 February 1998 at 10) followed
Federal Airports Corporation v Aerolineas Argentinas 1997) 76 FCR 582 mentioned
Boddington v British Transport Police [1998] 2 WLR 639 mentioned
DR MIGUELITO DEL FIERRO MERCADO v ALAN JOHN HOLMES (in his capacity as Director of Professional Services Review)
NO. V 162 OF 2000
HEEREY J
15 MAY 2000
MELBOURNE
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IN THE FEDERAL COURT OF AUSTRALIA |
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V162 OF 2000 |
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BETWEEN: |
DR MIGUELITO DEL FIERRO MERCADO Applicant
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AND: |
ALAN JOHN HOLMES (in his capacity as the Director of Professional Services Review) First Respondent
FRANK HAM Second Respondent
BRUCE INGRAM Third Respondent
GEOFFREY McFARLANE Fourth Respondent
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DATE OF ORDER: |
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WHERE MADE: |
THE COURT ORDERS THAT:
1. The second, third and fourth respondents are restrained from hearing any referral under the Health Insurance Commission Act 1973 (Cth) involving the applicant.
2. The first respondent pay the applicant’s costs of the application including reserved costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT OF AUSTRALIA |
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V162 OF 2000 |
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JUDGE: |
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DATE: |
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PLACE: |
REASONS FOR JUDGMENT
1 The applicant is a medical practitioner. He is the subject of a referral by the first respondent, the Director of Professional Services Review appointed under the Health Insurance Act 1973 (Cth) (“the Act”), to Professional Services Review Committee No. 143 (“the Committee”). The members of the Committee are the second, third and fourth respondents. The second respondent is its Chairman.
2 On 11 March 2000, on the ex parte application of the applicant, I granted an interim injunction restraining the Committee from continuing to hear the referral. On the return of the application for an interlocutory injunction the parties agreed that the application should be treated as a final hearing.
3 The applicant attacks the decisions of the first respondent to make the referral to the Committee and to include in the referral what is said to be irrelevant and prejudicial material. He also asserts that the Committee should be restrained from conducting further hearings because of a reasonable apprehension of bias arising from access to the same irrelevant and prejudicial material. Further, the applicant says the Committee failed to provide adequate particulars and refused to allow counsel to make submissions on his behalf. Finally, it is said the Committee failed to recognise the limits of its jurisdiction.
4 The members of the Committee have indicated that they will abide by any order of the Court. The defence to the application was conducted by the first respondent.
5 The first respondent disputes the applicant’s assertions and also submits that relief should be refused on various discretionary grounds.
The legislation
6 Under s 86(1) of the Act the Health Insurance Commission (“the Commission”) may, in writing, refer to the Director of Professional Services Review (“the Director”)
“…the conduct of a person relating to one or both of the following:
(a) whether the person has engaged in inappropriate practice in connection with rendering of services;
(b) whether the person has engaged in inappropriate practice in connection with initiation of services.”
7 The Director, who must be a medical practitioner, is appointed by the Minister under s 83.
8 “Service” is relevantly defined by s 81 as a service for which medicare benefit was payable.
9 Section 82(1)(a) provides that a practitioner engages in “inappropriate practice” if his or her conduct in connection with rendering or initiating services is such that a Committee could reasonably conclude that the conduct would be unacceptable to the general body of general practitioners. (Other parts of s 82(1) deal with practitioners who are specialists.)
10 Section 87 is important for the present case. It provides as follows:
“87. Content and form of referrals
(1) The referral must specify whether it relates to one or both of the following:
(a) specified services;
(b) services rendered or initiated by a practitioner that are one or more of the following:
(i) services of a specified class;
(ii) services provided to a specified class of persons;
(iii) services provided within a specified location;
(iv) services provided within a specified period.
(2) The content and form of the referral must comply with any guidelines made under subsection (3).
(3) The Minister may, in writing, make guidelines about the content and form of referrals.
(4) Guidelines so made are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901.”
11 The Minister made guidelines dated 9 May 1994 (“the Guidelines”). By cl 2(1) of the Guidelines, it is provided that “information” of a kind listed in Schedule 1 may be included in a referral.
12 The information specified in Schedule 1 contains 35 items including
· the number of patients for whom services were rendered
· the number of specialist referrals made
· the average number of services per patient or class of patient
· the average or distribution of medical benefits paid per patient for all services rendered or initiated or both
13 By cl 3 of the Guidelines, it is provided that “material” of a kind listed in Sch 2 may be included in a referral. That list of nine items includes the following:
14
· Reports of counselling given to the practitioner under review
· Correspondence between the practitioner under review and the Commission
· Records of interview with the practitioner under review, or with patients of that practitioner or with any other person concerned in the provision of the referred services
15 Within 48 hours of sending the referral to the Director the Commission is required to send a copy of the referral to the person under review, accompanied by a notice inviting the person under review to advance a submission to the Director stating why the Director should dismiss the referral without setting up a Committee: s 88(1) and (2). The person under review has 14 days in which to exercise the right to make submissions in support of dismissing the referral: s 88(3).
16 The Director has 28 days after receiving the referral within which to dismiss it or set up a Committee to consider whether the practitioner has engaged in inappropriate practice: s 89(1). If the Director is satisfied that there are insufficient grounds on which a Committee could reasonably find that the person under review has engaged in inappropriate practice in connection with the referred services, he or she must dismiss the referral: s 91.
17 The Director and the person under review may enter into a written arrangement under which he or she agrees to partial disqualification: s 92(2), in which case the Director must dismiss the referral: s 92(3).
18 Unless the Director is satisfied that there are insufficient grounds on which a Committee could reasonably find that the person under review has engaged in inappropriate practice in connection with the referred services, or has disqualified him or her under s 92, the Director must set up a Committee to consider whether the person under review has engaged in inappropriate practice: s 93. Within seven days after his decision on the referral, the Director must give written notice of the decision to the person under review and the Commission: s 94.
19 Members of the Committee are selected from a Professional Services Review Panel which includes, relevantly for present purposes, medical practitioners appointed by the Minister after consultation with the Australian Medical Association: s 84.
20 Subject to Subdiv B Div 4 of Pt VAA of the Act and the regulations, the Committee may regulate the proceedings of its meetings as it thinks fit: s 98(1). The meetings are held in private: s 98(2). Subject to Subdiv B, the Committee may, for the purposes of its inquiry into “a matter the subject of the referral”, inform itself in any manner which it thinks fit: s 98(3).
21 At any meeting the Committee may hold a hearing at which evidence is given or documents are produced to it: s 101(1). If, after considering “the matters that are the subject of the referral”, it appears to the Committee that the person under review may have engaged in inappropriate practice in connection with rendering the referred services, it must hold a hearing: s 101(2). If the Committee proposes to hold a hearing, it must give to the person under review at least fourteen days written notice of the time and place proposed for the hearing: s 102(1) and (2). The notice must give “particulars of the matter to which the hearing relates”: s 102(3).
22 The person under review has the right to attend the hearing and to be accompanied, although not represented, by a lawyer or another adviser: s 103(1). The person under review has the right to question anyone giving evidence at the hearing and to address the Committee: s 103(2). The Committee has the discretion to allow an adviser (other than a lawyer) of the person under review to question a person giving evidence at the hearing and to address it on behalf of the person under review: s 103(3).
23 As regards the conduct of meetings, the procedure is within the discretion of the Committee member presiding at the meeting: s 106(1). The Committee, not being bound by the rules of evidence, may inform itself on any matter in any way it thinks appropriate: s 106(2). Evidence at the hearing may be taken on oath or affirmation: s 106A(1).
24 The Committee must give to the Determining Officer (appointed by the Minister under s 106Q) a written report setting out its “findings on whether, in its opinion, the person under review engaged in inappropriate practice in connection with the referred services”: s 106L(1).
25 If the person under review is a practitioner, the report may, with the person’s written consent, include recommendations for his or her disqualification and about the nature and period of the disqualification: s 106L(3). The Committee must give its report to the Determining Officer within 120 days after the Committee was set up: s 106M(1). On application made to him before the time for reporting expires, the Director can extend the time for reporting: s 106M(2). As soon as practicable after making its report, the Committee must give a copy of it to the Director: s 106MA.
26 Within seven days after receiving a Committee’s report under s 106L the Determining Officer must give a copy of the report to the person under review: s 106R(1). If the report finds that the person under review has engaged in inappropriate practice in connection with rendering some or all of the referred services, the Determining Officer must make a draft determination in accordance with s 106U relating to the person under review and, within fourteen days after receiving the report, give copies of the draft to the person under review and to the Director: s 106S(1). The draft must be accompanied by a statement inviting the person under review to make written submissions, within fourteen days, suggesting changes thereto: s 106S(2). Within fourteen days of receiving a copy of the draft, the person under review may make written submissions to the Determining Officer: s 106S(3). After the end of the fourteen day period, and within thirty-five days after receiving the Committee’s report under s 106L, the Determining Officer must make a final determination under s 106U and 106T(1).
27 A determination must contain a direction that the Director reprimand or counsel the person under review and/or that the person under review repay to the Commonwealth all or part of the Medicare benefit that was paid in respect of services rendered by the person under review being services in connection with which he or she is stated in a s 106L report to have engaged in inappropriate practice and/or that any Medicare benefit that would otherwise be payable for the services cease to be payable and/or that the practitioner be disqualified partly or disqualified fully in respect of the provision of services: s 106U(1).
28 As soon as practicable after making a final determination, the Determining Officer must give copies of it to the person under review and the Director: s 106UA. Subject to review and appeal rights, the final determination takes effect twenty-eight days after the Determining Officer gives a copy of it to the person under review: s 106V(1).
29 The person to whom a determination relates may request the Minister to refer the determination for review by a Professional Services Review Tribunal (“PSRT”) which comprises a President (a person who holds or has held judicial office) and two other members: s 114(1).
30 An appeal lies from a decision of a PSRT on a question of law to the Federal Court: s 124A.
Reference to Committee
31 By a document dated 9 June 1999 the Commission by its delegate made a referral to the first respondent concerning the conduct of the applicant. Apart from a cover sheet and a sheet containing a table of contents, the first two pages of the document are as follows:
“Referral number 143 – Dr Mercado IN-CONFIDENCE
COMMONWEALTH OF AUSTRALIA
Health Insurance Act 1973
REFERRAL BY THE HEALTH INSURANCE COMMISSION
Referral
Pursuant to subsection 86(1) of the Health Insurance Act 1973 (“the Act”), I, Peter Laurence Charlton, Acting Manager, Professional Services Branch, of the Health Insurance Commission (“the Commission”) and a delegate of the Commission, hereby refer to the Director of Professional Services Review the conduct of Dr Miguelito del Fierro Mercado relating to whether he has engaged in inappropriate practice within the meaning of section 82 of the Act in connection with rendering and initiation of services.
Referred Services
Pursuant to subsection 87(1) of the Act, this referral relates to services rendered and initiated by Dr Miguelito del Fierro Mercado that were rendered and initiated during the 2 year period preceding the date of this referral and are:
(i) services provided within a specified location or specified locations, namely
1138 Mt Alexander Road
ESSENDON VIC 3040
Mercado Medical Services
11 Nicholson Street
ESSENDON VIC 3040
Centreway Medical Centre
234 Milleara Road
EAST KEILOR VIC 3033
423 Ballarat Road
SUNSHINE VIC 3020
Mercado Medical
819B Ballarat Road
DEER PARK VIC 3023
12A Little ELGIN Street
CARLTON VIC 3053
(ii) services provided within a specified period, namely 1 July 1997 to 30 June 1998.
The attached material is provided for information only and is not intended in any way to limit the conduct referred.
Dated this 9 day of June 1999.
………[Sgd]……………
Dr P L Charlton
Acting Manager, Professional Services Branch
and a delegate of the Health Insurance Commission”
32 Attached to the foregoing are 188 pages of documentation. Under the heading “A. Introduction” it is stated:
“The Heath Insurance Commission was concerned with the following aspects [sic] of Dr Mercado’s practice profile.
· Volume of services
Subsequently, the Health Insurance Commission on 6 June 1997 counselled Dr Mercado for the purpose of Professional Services Review Scheme (see C for report of interview)
Reviews of Dr Mercado’s practice following counselling revealed that the Health Insurance Commission has the following major concerns [sic]:
1. High Volume of Rendered Services”
33 There then follow some details of services in the period 1 July 1997 to 30 June 1998. It is stated that the applicant’s total services were “substantially above the 98th percentile when compared with all other medical practitioners in Australia”. It is stated that in “the referral period” the applicant rendered more than sixty services per day on ninety-three occasions and more than eighty services per day on nine occasions. It is said
“The Health Insurance Commission believes that the appropriate level of clinical input may not be able to be maintained at this servicing rate on a regular and continuing basis.”
34 Although the sub-heading “High Volume of Rendered Services” is numbered 1, no other sub-headings appear.
35 Under the heading “B. Background of Dr Mercado” there is some detail about the applicant’s professional career and then the following:
“6. On 6 June 1997, Dr T Hegarty, a Medical Adviser from the Health Insurance Commission, counselled Dr Mercado for the purposes of the Professional Services Review Scheme. It was demonstrated to Dr Mercado that he had provided 16,067 services to 7,130 patients at a rate of 2.25 services per patient during the period 1 April 1996 to 30 March 1997. It is noted that Dr Mercado’s workload has increased since counselling.
7. At the counselling interview on 6 June 1997 Dr Hegarty showed the PIRD report (daily servicing report) to Dr Mercado, which demonstrated Thursdays as being the most heavily serviced day. Dr Mercado stated that he had already taken steps to reduce his services and has recently left a high turnover practice where he worked until late on Thursday evenings. Dr Mercado agreed with Dr Hegarty that his peers still may find his long hours of work on consecutive days inappropriate.”
36 I was told by counsel for the applicant that the admission attributed to the applicant at the conclusion of par 7 above is disputed. Under the heading “C. Professional Services Review Counselling” there is a report by Dr Hegarty of a meeting with the applicant on 6 June 1997. It is stated that the visit was not taped. Again this document contains alleged admissions as to high volume of services which are disputed.
37 There follows a substantial amount of graphs and statistical material, including an analysis of services rendered by the applicant from 1 July 1995 to 31 December 1998 (p18), that is to say including services outside the referral period.
38 On 20 October 1999 the first respondent, by an instrument of that date, set up the Committee under ss 93 and 95 of the Act. On 22 October the first respondent wrote to the applicant advising of the appointment of the third respondent as a member of the Committee to replace one who had withdrawn “due to the possibility of a perception of bias”.
Correspondence
39 On 10 December 1999 the applicant’s solicitors Messrs Ebsworth & Ebsworth wrote to the Secretary of the Committee expressing concern as to the referral containing material the solicitors said was irrelevant. The solicitors referred to evidence of events outside the referral period of 1 July 1997 to 30 June 1998, an example of which was the record of the visit by Dr Hegarty.
40 The letter stated:
“None of this material should be put before the Committee. It is not relevant to the subject of the Referral (see Tankey v Adams [1999] FCA 683 at paragraphs 106-107 in particular).”
41 The Secretary to the Committee responded by a letter dated 16 December 1999. In relation to the solicitors’ complaint about irrelevant material, the Secretary stated:
“The Ministerial Guidelines as to Form and Content of Referrals to the Director of Professional Services Review (Director) list the type of information and material that may be included in a Referral. The matters you refer to as irrelevant are addressed in both the Ministerial Guidelines and the Explanatory Statement, both of which I have enclosed in an endeavour to assist you.”
42 The letter also referred to s 106 and stated:
“In the context of Dr Mercado’s overall treatment of patients, the Committee may consider matters other than the specific services referred, eg medical, social and family history, allergies and immunisation status etc. Such matters can be of importance in assessing the referred services. You may rest assured, however, that the Committee will restrict its findings to referred services.
Under this heading, you make further reference to material and information contained in the Referral which you considered to be ‘… irrelevant, confusing and potentially prejudicial material …’ As stated above, the Ministerial Guidelines as to Form and Content of Referrals clearly list the type of material and information that may be included in a Referral. I trust this will resolve your query.” (Emphasis in original)
43 On 21 December 1999 the Committee served on the applicant a notice of a hearing on 21 January 2000. The notice contains a schedule headed “Particulars of the matter [sic] to which this hearing relates”. The referral period is stated to be 1 July 1997 to 30 June 1998. The notice continues:
“This hearing concerns your conduct in relation to services rendered by you during the Referral Period, from your practice locations in the State of Victoria. The issue to be determined is whether you have engaged in inappropriate practice in connection with the rendering of some or all of these services.
Particulars of the Committee’s concerns as at the date of this notice are:
· whether you were able to provide an appropriate level of clinical input into the services rendered during the Referral Period, with particular reference to your rendering of the services identified on the attached lists; and
· whether the services that you rendered during the Referral Period were reasonably medically necessary for the care of the patients to whom they were rendered.
Further concerns may emerge during the hearing. You will be made aware of any other concerns that arise and will be given adequate opportunity to address the Committee.”
44 The notice was served under the cover of a letter of the same date, signed by the Secretary, which gave an overview of the proceedings. The letter contains the following passage:
“At this stage, the Committee’s concerns are set out in Schedule 1 of the Notice. The Committee will clearly advise you of any further concerns, should they arise throughout the hearing, and give you every opportunity to address those concerns. You will also be given the opportunity to comment on the draft report of the Committee before it is finalised and forwarded to the Determining Officer.”
45 There then follows a list of 140 randomly selected services, identified by patient name and date rendered during the referral period. There are 40 each for Items 53, 54 and 173 and 20 for Item 57. On 23 December 1999 Ebsworth & Ebsworth again wrote to the Committee as follows:
“We refer to your letter of 21 December 1999 and make the following comments:
1. We note that the Referral relates only to the “Volume of Services” rendered by Dr Mercado and an assertion that “The Health Insurance Commission believes that the appropriate level of clinical input may not be maintained at this servicing rate on a regular and continuing basis”. This allegation is reflected in the first particular in Schedule 1 attached to your letter. We are concerned at the second of the particulars contained in the Schedule and wonder if it has been included by mistake. Such a matter is not mentioned in the Referral and has never previously been raised. It seems that the Committee has no statutory basis or jurisdiction to purport to investigate this issue.
2. We are also troubled by the assertion in the final paragraph of the Schedule. It is not for the Committee to develop “further concerns … during the hearing”. The Committee has been established to consider the allegation contained in the Referral, that is, that Dr Mercado may have engaged in inappropriate practice because: “The Health Insurance Commission believes that the appropriate level of clinical input may not be able to be maintained at this servicing rate on a regular and continuing basis.” That is the limit of its power.
3. We continue to be concerned by the lack of the provision of proper particulars. We are attempting to assemble some evidence to answer the broad-based allegation contained in the Referral. Until we are advised with particularity as to how it is said Dr Mercado failed to supply “appropriate clinical input” we cannot particularise the evidence we will be seeking to lead. This is not to mention the second of the so called particulars in the Schedule, no particulars of which have been provided.
4. We again voice our concern as to irrelevant and prejudicial material being put before the Committee. A most obvious example is any material that refers to previous counselling and alleged conduct by Dr Mercado outside the Referral period. We have previously drawn your attention to the decision of Einfeld J in Tankey at paragraphs 106 and following where his Honour clearly sets out the prejudicial and irrelevant nature of this material. If any such material is to be put before the Committee the whole process will be irrevocably tarnished.”
46 On 24 December the Committee replied saying that the matters raised would be dealt with at the first sitting of the Committee.
47 On 21 January 2000 the Committee held its first hearing.
Hearing
48 At the outset of the hearing the Chairman referred to the correspondence between the applicant’s solicitors and the Secretary of the Committee. In relation to par 1 of the solicitors’ letter of 23 December the Chairman said that he wished to reassure the applicant that the Committee would “restrict its findings to the referred services; that is the services which were rendered during the referral period”. The Chairman then went on to refer to the definition of “clinically relevant service” in s 3 of the Act which meant a service rendered by, relevantly, a medical practitioner “that is generally accepted in the medical … profession … as being necessary for the appropriate treatment of the patient to whom it is rendered”. The Chairman said “this places the onus on the practitioner to determine the clinical relevance and necessity of the service. So you see that clinical relevance is a prerequisite for the payment of medical benefits”. With regard to par 2 of the letter the Chairman said:
“… the inquiry process is designed to enable the Committee to establish whether your conduct in connection with the referred services would be unacceptable to the general body of general practitioners … should further concerns arise as a result, in accordance with procedural fairness, the Committee will inform you of those concerns.”
49 As to par 4 the Chairman referred to the Tankey decision and quoted a passage from the judgment of Einfeld J where his Honour said that such information as to unsuccessful counselling “might assist the Determining Officer when considering the ultimate sanctions”.
50 After some debate and a short adjournment the Chairman permitted counsel on behalf of the applicant to tender a written submission and speak to it (notwithstanding s 103). Counsel repeated his submission as to the relevance of the Hegarty interview and proceeded to make a submission that inclusion of the material about prior counselling would give rise to an appearance of bias. After a brief adjournment the Chairman again reassured the applicant that the Committee would “only consider information in the referral which it considers relevant to your conduct”. The Chairman stated that the Committee’s legal advice was that the referral was valid and that the Committee would continue with the hearing. The Chairman said that the Committee would “consider again your continued objection” but it intended to continue with the hearing.
51 The remainder of the hearing was taken up with the Committee’s enquiries in relation to the referred services. On 7 February the Secretary wrote to the applicant giving notice of a hearing on 18 February.
52 On 16 February 2000 the Secretary of the Committee wrote to the applicant responding to the written and oral submissions presented at the first day of hearing. The letter states that in the Committee’s view “the referral” is that part of the material at pages 2 and 3 of Book 1 (i.e. the part concluding with the signature of the Commission’s delegate, see par 31 above). Its task, as defined by the referral, was to examine the applicant’s conduct in respect of all the services rendered by him from his various specified practice locations during the referral period. The Committee did not agree with the applicant’s submission that it was confined to consideration as to whether he could maintain the appropriate level of clinical input while providing a high volume of services on a regular and continuing basis. The task was to determine whether the applicant had in connection with the referred service “engaged in conduct which would be unacceptable to the general body of general practitioners”. The letter cites passages from the judgment of the Full Court in Adams v Yung (1998) 83 FCR 248 at 298 and 299 as follows:
“The referral while expressed to be of conduct is not conduct in isolation. It is conduct relating to the issue whether the person has engaged in inappropriate practice in connection with rendering of services. Section 80(1) makes clear the legislative scheme is to examine whether inappropriate practice as defined in s 82 is involved. That inappropriate practice is conduct in connection with specified services. They are called ‘the referred services’ – see ss 91, 93 and the definition in s 81(1). While those services may include all or some services within the referral period, the reference is not intended to open for consideration by a committee ultimately convened any aspect at all of the referred person’s conduct in the referral period. What is contemplated is that it be an inquiry into specified conduct as dealt with in the reference rather than conduct at large.
…
The function of the Committee therefore and the hearing it is required to undertake on the evidence given and documents produced, is limited to considering the matters that are the subject of the referral: s 101(2). The Committee’s report is confined to the referred services and the practitioner’s
conduct in connection with them: s 106L(1)(a).”
53 The letter continues:
“The form of the referral from the HIC has since changed. This was in response to this decision, prompted by the need to permit a Professional Services Review Committee (PSRC) to examine all aspects of a practitioner’s conduct in connection with the referred services. The material from the HIC is now divided into two parts as set out above – that material which constitutes ‘the referral’ and the attached or supporting material. As explained at the end of the referral on page 3, the attached material is not intended to limit the matters into which a PSRC may enquire, rather it is provided by way of explanation and background.”
54 The Committee’s view was that it was not confined to an examination of whether the applicant had engaged in inappropriate practice by virtue of any particular conduct. Its task was to examine all aspects of his conduct in connection with the referred services.
55 As to the reference to earlier counselling, the letter states that the Committee
“acknowledges that the counselling reports are not evidence before it. Therefore, it does not intend to make use of the report in conducting the inquiry.”
56 After referring to passages from Tankey v Adams [1999] FCA 683, the letter states that the Committee did not agree that the inclusion of the material in the HIC document was prejudicial. The Committee was aware that as a matter of practice, practitioners would not be referred to a PSRC without prior counselling. This had been stated by the Minister in the second reading speech. Any mention of counselling
“while it is irrelevant to the enquiry process, cannot be construed as prejudicial as it is a matter of common knowledge. It would not be possible to constitute a PSRC that did not have knowledge of the fact that counselling work occurred prior to referral.”
57 The Committee was of the view that the counselling reports were irrelevant but were not prejudicial because the Committee was ignoring them.
“The Committee is concerned with the evidence before them. The Committee is not concerned with irrelevant matters. The Committee is not influenced by
matters which are both irrelevant and unproved.”
58 On 18 February the Committee held its second hearing. The applicant attended under protest. His solicitors presented further written submissions in the form of a letter dated 17 February. The submissions were not responded to by the Committee apart from the Chairman saying that they did not raise any new objections and the points had been dealt with in the letter of 16 February. The applicant continued to answer questions under protest. On 10 March the Committee served upon the applicant a notice of hearing for 17 March. Counsel attended and attempted to make further legal submissions. Application for an adjournment to enable an application to be made to the Federal Court was refused. The applicant said he was feeling unwell. The hearing was adjourned to enable the applicant to consult his doctor. The matter was adjourned until 2.00 pm. In the meantime counsel sought and obtained the interim injunction already mentioned.
Issues
59 By the time of final submissions the issues that emerged can be identified as follows:
(i) Whether the referral is confined to the conduct of the applicant in relation to high volume of rendered services.
(ii) Whether the Committee’s knowledge of alleged high volume services by the applicant outside the referral period and alleged admissions by him gives rise to a reasonable apprehension of bias.
(iii) Whether this Court has jurisdiction to restrain the Committee from continuing with the hearing.
(iv) Whether as a matter of discretion the Court should exercise that jurisdiction.
(i) Extent of the referral
60 In his letter of 16 February 2000 the Secretary of the Committee cited two passages from the joint judgment of Burchett and Hill JJ in Adams (see par 52 above). Immediately before the first passage the following appears (at 298):
“However a referral is not merely the instrument which initiates the series of administrative inquiries which in the present case were undertaken. It also provides the framework in which those inquiries are to be held. While it is true that the legislation confers upon the Health Insurance Commission no enforceable investigatory powers, the legislation does not contemplate that the Health Insurance Commission will make a reference under s 86 without making some inquiry. It did so in the present case, both in the process of counselling it adopted and in the information technology application which identified what was thought by the Commission to involve too high a level of consultation.”
61 Between the two passages cited in the Commission’s letter the joint judgment states (at 298):
“This conclusion is reinforced by the legislative requirement that the practitioner conduct the hearing without real assistance from a legal adviser. While it is true that a legal practitioner may advise the practitioner, given the fact that the legislature has seen fit to exclude a legal practitioner from either examining witnesses or making submissions, it must follow that the intended subject matter of the procedure before a committee be manifest to the practitioner prior to the time the committee meets to consider it.
The conclusion follows also from the fact that the director receiving the referral must make various decisions on the referral from its contents. A director could hardly dismiss a referral if the possibility was that a committee could roam outside its terms. In making a decision to dismiss the referral the director has to form a view that there are insufficient grounds on which a committee could reasonably find that the person under review had engaged in inappropriate practice in connection with the referred services: see s 91. On the basis of the referral indeed the director may himself disqualify the practitioner although not for reasons presently relevant.”
62 Beaumont J, although differing in his conclusion from the majority, made some observations about the function of the referral and the Committee’s review of it. These appear to be consistent with the majority judgment. His Honour said (at 279):
“When Div 3 of Pt VAA is read as a whole, it appears, as s 80(1) has outlined, that a scheme is created under which a person’s conduct can be examined to ascertain whether ‘inappropriate practice’ is involved; and under which action can be taken in response. The subject of the Commission’s referral to the Director is the carriage of that examination. In other words, instead of carrying out that examination itself, the Commission refers it to the Director. Section 86(1) opens with the words ‘refer … the conduct …’. However, the language of pars (a) and (b) ‘whether the person has engaged in …’ makes it clear that what is referred to is not simply ‘the conduct’, but the question whether the conduct may be characterised as being engaged in ‘inappropriate practice’.” (Emphasis in original)
63 Later his Honour said (at 280):
The Committee gave Dr Yung notice of the hearing proposed to be held, as required by s 102(1). The notice ‘must give particulars of the matter to which the hearing relates’ (emphasis added). What is ‘the matter’ in this context? In my opinion, it can only be the subject matter of the Referral. The opening words of s 93, it will be recalled, are:
The Director must … set up a Committee to consider whether the person under review has engaged in inappropriate practice unless …
This review could only deal with the subject matter of the Referral. In other words, the inquiry was not at large. As has been said, s 87(1) required that the form and content of a referral be specific in certain respects.”
64 Adams was an appeal to this Court under s 124A. The matter had already passed through the stages of Committee hearing, determination and PSRT review. The instrument of referral in that case was a substantial document. It is summarised in the joint judgment of Burchett and Hill JJ at 289-290. It is apparent from this summary that the instrument expressed the concern of the Commission about the doctor working excessively long hours and as a consequence not being able to provide an appropriate level of clinical input. Figures were given of the average number of services and the days worked. It was noted that the doctor provided more services than 99 per cent of all general practitioners in Australia. Reference was made to the findings of a survey by the Royal Australian College of General Practitioners as to servicing rates in terms of time.
65 As the Secretary frankly stated in his letter of 16 February 2000, the format of the referral in the present case was adopted as a consequence of the decision in Adams. Presumably this was done because Adams was thought to be too restrictive.
66 In my opinion the referral, within the meaning of the Act, was the whole of the document dated 9 June 1999, including the 188 pages of “attached material”. That was what was put before the Director by the Commission. Conversely, the two pages concluding with the delegate’s signature could not by themselves constitute a valid referral in accordance with the Act.
67 The text of the statute points to this conclusion.
68 The Act clearly contemplates that the Commission will make a preliminary enquiry of its own before deciding to make any referral: Adams at 298. In the course of such enquiry it must generate some material relevant to the practitioner’s conduct. It is inconceivable that the Commission would only have in its possession, and would only refer to the Director, the bare fact of Dr X rendering services between dates Y and Z. If that was all the Commission knew about Dr X, there would be no point in the referral.
69 Section 87 indicates that the content and form of a referral will go beyond the specification of services or a class of services, the matters dealt with in sub-s (1). Sub-ss (2) and (3) provide for guidelines as to that content and form.
70 Other provisions in Div 3 of Pt VAA make it clear that the referral will contain matters of substance and detail. The person under review can make submissions on the referral: s 88. The Director may consult expert persons or bodies for assistance in making his or her decision: s 90. The Director is to dismiss the referral if satisfied there are insufficient grounds: s 91. All these rights, powers and obligations would be empty and meaningless if a referral contained no more than information of the kind contained in the first two pages of the document in the present case. The referral must identify the conduct being referred and the alleged inappropriate practice relevant to the specified services and contain sufficient detail to make the Committee review process workable.
71 It follows therefore that the whole of the document of 9 June 1999 provides the “framework” in which the Committee’s enquiry is to be held: Adams at 298. It is not legitimate to treat the referral as limited to the first two pages so that it operates as a kind of general warrant supporting a roaming examination of any aspect of the applicant’s conduct over the given period, subject only to giving him an appropriate opportunity to be heard in relation to new allegations.
72 The document identified high volume of rendered services as the subject matter of enquiry. This is a substantially different subject matter from what is colloquially referred to as overservicing – the rendering of medical services that are not reasonably medically necessary for the care of the patient. A practitioner can engage in overservicing without an excessive throughput of patients, and vice versa. As forms of conduct unacceptable to the general body of general practitioners they are quite distinct – albeit that a practitioner may engage in both. Moreover, overservicing would usually suggest ethical failing in a way that high volume servicing does not. Yet the notice of hearing of 21 December 1999 gave overservicing as one of the Committee’s “concerns” and also indicated that “(f)urther concerns may emerge during the hearing”. The validity of such an exercise was defended by Senior Counsel for the first respondent. He argued that in any event overservicing was within the referral because the Committee is charged with examining the “referred services” (s 106L), a “service” is “a service for which medical benefit was payable” (s 81(1)), only a “professional service” attracts a medicare benefit (s 10) and “professional service” means a “clinically relevant service” (s 3(1)) which in turn is a service “necessary for the appropriate treatment of the patient” (s 3(1)). This line of reasoning is said to support the “fundamental premise” of the enquiry that the referred services were “actual as opposed to purported services”.
73 The short answer is that it has never been suggested that the applicant has obtained Medicare benefit for non-existent services. The Act requires the Committee to examine conduct in relation to “inappropriate practice” as that term is defined in s 82(1)(a). For the reasons already mentioned, high volumes of service and overservicing are different forms of conduct. The notice of 21 December 1999 recognises this. If both are to be examined, that should be clearly stated in the referral.
74 I find that the reference is confined to high volume of services and that the Committee has failed to recognise the limits of its jurisdiction.
(ii) Reasonable apprehension of bias
75 In summary, the position of the Committee is that, as to counselling by Dr Hegarty, everyone connected with proceedings under Pt VAA would know that counselling occurs before any Committee review, that counselling is “material” referred to in the Guidelines and that insofar as there was any other material relating to services outside the specified period the Committee would not take such material into account.
76 At the outset it can be noted that having a general expectation that counselling may have occurred is by no means the same thing as an alleged admission to the counsellor of inappropriate practice of the very kind under review occurring outside the period the subject of the referral. Likewise, the fact that the Guidelines specify counselling as material that can be included in a referral does not mean that reports of any counselling, however unconnected with the specified services, can be included.
77 The law is not in dispute. In Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293 the High Court said that the principle is:
“… that a judge should not sit to hear a case if in all the circumstances the parties or the public might entertain a reasonable apprehension that he might not bring an impartial and unprejudiced mind to the resolution of the question involved in it.”
78 The Livesey principle is applicable to administrative tribunals: Webb v The Queen (1994) 181 CLR 41 at 47, Secretary, Department of Social Security v Jordan (1998) 83 FCR 34 at 46, Khadem v Barbour (1995) 21 AAR 555 at 561 563-565, at least where there is no policy function involved: Century Metals and Mining NL v Yeomans (1991) 100 ALR 383 at 417, Kaycliff Pty Ltd v Australian Broadcasting Tribunal (1989) 90 ALR 310 at 319. The precise practical requirements of the principle may vary from case to case, depending on the nature, function and composition of the tribunal: Re Finance Sector Union of Australia; Ex parte Illaton Pty Ltd (1992) 107 ALR 581 at 582.
79 A Professional Services Review Committee has no policy function. Any given committee, such as Committee No. 143 in the present case, is an ad hoc body established to consider particular conduct of a particular practitioner. Moreover, members of the Committee are not legally qualified and, as far as the evidence discloses and the Act requires, have had no training in the judicial function. The Committee’s decision can have drastic consequences for the individual involved. All these factors point to a conclusion that the Livesey principle applies. Indeed, the Act makes specific provision for challenge to the appointment of members of a Committee on the grounds of actual or apparent bias: s 96.
80 In the present case the relevant category of apprehended bias is that identified by Deane J in Webb at 74 as disqualification by extraneous information. His Honour said that this category
“… consists of cases where knowledge of some prejudicial but inadmissible fact or circumstance gives rise to the apprehension of bias.”
81 Where inadmissible and prejudicial information is received the cases draw a clear distinction between proceedings before a judge or legally qualified tribunal and proceedings before a jury or lay tribunal: Re Judge Leckie; Ex parte Felman (1978) 52 ALJR 155 at 160, Victoria v Australian Building Construction Employees’ and Builders Labourers’ Federation (1982) 152 CLR 25 at 102, Amoe v Director of Public Prosecutions (Nauru) (1991) 66 ALJR 29 at 33-34, Johns v Australian Securities Commission (1992) 35 FCR 16 at 37, Bilgin v Minister for Immigration and Multicultural Affairs (1997) 149 ALR 281 at 292. In the latter category the inference of a reasonable apprehension of bias will be more readily drawn.
82 In the present case, the (now) admittedly extraneous and irrelevant material is of a kind which has always attracted the law’s anxious scrutiny. If a jury or lay tribunal has to determine whether a person engaged in some form of wrongful conduct on a given occasion, evidence that the person engaged in similar conduct in other occasions is regarded axiomatically as prejudicial. Long established canons of fairness recognise the inherent danger involved in the mode of reasoning – common enough in everyday life – that X did the same thing on other occasions, that he or she is therefore the kind of person who engages in such conduct, that therefore X engaged in the alleged conduct under enquiry: see Police v Pereira [1977] 1 NZLR 547 at 557-558
83 In my opinion, both the applicant and the public might entertain a reasonable apprehension that the members of the Committee might reason in this way. This is the more so because the task of the Committee is not to make a finding as to the occurrence or otherwise of a specific event but, pursuant to s 106L, to express an opinion in generalised and conclusionary terms by reference to a subjective and value-laden criterion, namely what members think the general body of general practitioners would think about the conduct in question: s 82(1)(a).
84 There are further circumstances in this case which support a conclusion of reasonable apprehension of bias in the Livesey sense. First, there is the provenance of the material in question. It comes from the Commission itself. It has inherent credibility, being a report of a named medical practitioner and officer of the Commission who is said to have counselled the applicant on behalf of the Commission. Secondly, the information is detailed and specific. Thirdly, the Committee initially took a considered position that it was entitled to look at the material. A reasonable observer might think that, notwithstanding the Committee’s change in the face of the applicant’s objections, the material is not something the members can put out of their minds: see R v Kent Police Authority; Ex parte Godden [1971] 2 QB 662 at 673. Without impugning the sincerity of the Committee’s present statement of intention, an observer might think that this material, already highlighted in the way it has been, might well affect their decision, even if only at a subconscious level.
85 I therefore accept the applicant’s submission as to reasonable apprehension of bias.
(iii) Jurisdiction of the Court
86 The application was brought under s 39B(1) and (1A) of the Judiciary Act 1903 (Cth) and s 5 of the Administrative Decision (Judicial Review) Act 1977 (Cth), the accrued jurisdiction of the Court and s 23 of the Federal Court of Australia Act 1976 (Cth).
87 Senior Counsel argued that there was no “decision” for the purposes of the AD(JR) Act. Reliance was placed on Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 337 and Edelston v Health Insurance Commission (1990) 27 FCR 56 at 69-70.
88 However, whether or not that be so, both the first respondent and the Committee members are officers of the Commonwealth and thus relief is available under the Judiciary Act: Tang v Holmes (Sundberg J, unreported, 25 February 1998 at 10).
89 The same fundamental misconception as to what constitutes a referral for the purposes of the Act has resulted in jurisdictional error in the decision of the first respondent to set up the Committee with an artificially truncated referral and in the Committee’s definition of its jurisdiction.
(iv) Discretion
90 Senior Counsel for the first respondent argued that the Court should “decline early and premature intervention in the administrative process”. This argument necessarily assumes that there is a case of error (otherwise no question of discretion arises) but that the Court should allow the continuation of the Committee hearings intermittently for an indefinite period, then the determination process, then review by a PSRT, then finally appeal to this Court when the legal error will be recognised and set aside. I do not think such a course would be of benefit to anybody.
91 Senior Counsel argued that relief should be refused by reason of the applicant’s delay in seeking relief, which has been “great”. This argument does not sit well with the preceding argument as to prematurity. But in any case the applicant through his solicitors and counsel repeatedly and forcefully advanced detailed arguments as to the invalidity of proceedings, which arguments were in my opinion correct. (Again, the discretionary point necessarily assumes that the applicant’s arguments were correct.) It is not the fault of the applicant that the arguments advanced on his behalf were not accepted. It seems much preferable that persons in the position of the applicant do all they can by way of reasoned arguments before committing themselves, and others, to expensive litigation.
92 It was said, correctly, that the applicant has not deposed to any adverse impact on himself or his practice by reason of his participation in the enquiry. However it seems self-evident that the process under Pt VAA has the potential of having a devastating effect on the practice of any medical practitioner, both financially and professionally: see s 106V. The enquiry process itself must be stressful, and disruptive of a doctor’s practice.
93 Finally, it was argued that the Committee has not yet made findings and there are further avenues of review against any adverse findings. But these considerations should not prevail in circumstances where fundamental jurisdictional defects are identified at an early stage. In this context it might be noted that in Adams at 283 Beaumont J spoke of “the modern approach of widening the scope of permissible collateral administrative challenge both defensively and offensively”. The authorities cited by his Honour include cases where points as to the invalidity of administrative decisions were taken in civil proceedings (Federal Airports Corporation v Aerolineas Argentinas (1997) 76 FCR 582) and criminal proceedings (Boddington v British Transport Police [1998] 2 WLR 639). The present case is stronger in that the applicant seeks an administrative law remedy.
Orders
94 The initiating application sought a number of declarations and orders. But because of the course the litigation took the essential question became whether a permanent injunction should go to restrain further hearings. Therefore I think it will be sufficient if relief is granted in those terms. The first respondent did not raise as a possible outcome an injunction limiting the Committee to the high volume of services matter. But in any case, my findings as to reasonable apprehension of bias strengthen the case for a permanent injunction against any further hearings.
95 There will be an order that the second, third and fourth respondents be restrained from hearing any referral under the Health Insurance Commission Act 1976 (Cth) involving the applicant.
96 There will be an order that the first respondent pay the applicant’s costs, including reserved costs.
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I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey. |
Associate:
Dated: 15 May 2000
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Counsel for the Applicant: |
Mr G Livermore |
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Solicitor for the Applicant: |
Ebsworth & Ebsworth |
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Counsel for the first Respondent: |
Mr N J D Green QC with Mr P R D Gray |
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Solicitor for the first Respondent: |
Minter Ellison |
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Date of Hearing: |
10 April 2000 |
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Date of Judgment: |
15 May 2000 |
