FEDERAL COURT OF AUSTRALIA
Pradhan v Holmes [2001] FCA 1560
HEALTH LAW – medical practitioners – Professional Services Review scheme under Part VAA of the Health Insurance Act 1973 (Cth) – effect of 1999 amendments to Part VAA – whether amendments alter requirement in s 86(1) of the Health Insurance Act 1973 to specify conduct – whether new s 93(1) prescribes similar requirement – whether wording of amendments evinces clear intention of Parliament to alter requirements.
HEALTH LAW – medical practitioners – Professional Services Review scheme under Part VAA of the Health Insurance Act 1973 (Cth) – investigative referral by Health Insurance Commission to Director of Professional Services Review – adjudicative referral by Director to Professional Services Review Committee – whether attached material constitutes part of referrals – whether referrals must specify conduct which may constitute “inappropriate practice” – effect of general referral of “conduct as such”.
ADMINISTRATIVE LAW – judicial review – medical practitioners – Professional Services Review scheme under Part VAA Health Insurance Act 1973 (Cth) – investigative referral by Health Insurance Commission to Director of Professional Services Review – adjudicative referral by Director to Professional Services Review Committee – jurisdiction of Director and Committee – whether failure to specify conduct in referrals constitutes non-compliance with ss 86(1) and 93(1) of the Health Insurance Act 1973 (Cth) – whether non-compliance entails invalidity of referrals.
Health Insurance Act 1973 (Cth), Part VAA, ss 3, 80, 81, 82, 83, 84, 86, 87, 88, 89, 89A, 89B, 90, 91, 92, 93, 93A, 95, 98, 101, 102, 103, 104, 105A, 106G, 106H, 106J, 106K, 106KC, 106KD, 106L, 106T, 106U, 106UA, 106V.
Judiciary Act 1903 (Cth), ss 39B(1), 39B(1A)
Administrative Decisions (Judicial Review) Act 1977 (Cth)
Health Insurance Commission Act 1973 (Cth) s 3A and Part IID
Health Insurance (Professional Services Review – Contents of Investigative Referrals) Guidelines 1999
Health Insurance (Professional Services Review – Contents and Form of Adjudicative Referrals) Guidelines 1999
Adams v Yung (1998) 83 FCR 248 referred to
Tang v Holmes (1998) 51 ALD 121 referred to
Retnaraja v Morauta (1999) 93 FCR 397 referred to
Mercado v Holmes [2000] FCA 620 referred to
Grey v Health Insurance Commission [2001] FCA 1257 referred to
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 referred to
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 referred to
Bateman’s Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 referred to
Forbes, Disciplinary Tribunals (2nd Ed, 1996)
DR JAGJIT SINGH PRADHAN v ALAN JOHN HOLMES (in his capacity as the Director of Professional Services Review), FRANK FRY, WILLIAM GILLIES, BRIAN GIBSON, HEALTH INSURANCE COMMISSION
S12 of 2001
FINN J
CANBERRA (HEARD IN ADELAIDE)
8 NOVEMBER 2001
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IN THE FEDERAL COURT OF AUSTRALIA |
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S12 OF 2001 |
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BETWEEN: |
DR JAGJIT SINGH PRADHAN APPLICANT
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AND: |
ALAN JOHN HOLMES (in his capacity as the Director of Professional Services Review) FIRST RESPONDENT
FRANK FRY SECOND RESPONDENT
WILLIAM GILLIES THIRD RESPONDENT
BRIAN GIBSON FOURTH RESPONDENT
HEALTH INSURANCE COMMISSION FIFTH RESPONDENT
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DATE OF ORDER: |
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WHERE MADE: |
THE COURT DIRECTS THAT:
1. The parties bring in minutes of order to give effect to these reasons.
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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S12 OF 2001 |
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JUDGE: |
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DATE: |
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PLACE: |
REASONS FOR JUDGMENT
1 The 1994 amendment to the Health Insurance Act 1973 (Cth) (“the HI Act”) introduced a new scheme – the Professional Services Review Scheme – for determining whether individual health practitioners had engaged in inappropriate professional practice in initiating or rendering services for which a medicare benefit was payable or in which a pharmaceutical benefit was prescribed. That scheme was in turn amended in 1999 “in the wake of criticism of some aspects from the Federal Court”: Second Reading Speech, Hansard, House of Representatives, 2 June 1999, p 4643: and see Adams v Yung (1998) 83 FCR 248. The present application is designed to expose the limitations of the amended scheme itself, or else deficiencies in the manner of its administration by those charged with that responsibility.
2 The applicant, Dr Jagjit Singh Pradhan, is a specialist ophthalmologist. His conduct in connection with rendering and initiating particular medical services is currently the subject of consideration by a Professional Services Review Committee (“the Committee”) consisting of the second, third and fourth respondents. The Committee was set up by the first respondent, the Director of Professional Services Review (“the Director”), under s 93 of the HI Act. That decision was made after an investigation of Dr Pradhan conducted by the Director at the instigation of the fifth respondent, the Health Insurance Commission (“the Commission”).
3 The application, brought under s 39B of the Judiciary Act 1903 (Cth), s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“the ADJR Act”) and in the Court’s accrued jurisdiction, impugns ten “decisions” of, variously, the Commission, the Director and the Committee. It seeks declaratory and injunctive relief, orders setting aside particular decisions and orders securing what is claimed to be necessary for procedural fairness to Dr Pradhan.
4 I will later refer to various of the grounds relied upon by Dr Pradhan in support of his claims. As an understanding of them presupposes a detailed knowledge of the HI Act – a more than averagely dense statute – it suffices for present purposes to say that the principal (though not the only) allegations are of decisions taken without jurisdiction and/or of failures to accord Dr Pradhan procedural fairness.
The Statutory Context
5 Part VAA of the HI Act establishes the Professional Services Review Scheme (“the PSR Scheme”). That Scheme is conveniently described in s 80(1) of the HI Act as follows:
“This Part creates a scheme under which a person’s conduct can be examined to ascertain whether inappropriate practice (see section 82) is involved. It also provides for action that can be taken in response to inappropriate practice.”
See also Health Insurance Amendment (Professional Services Review) Bill 1999, Explanatory Memorandum, at 1.
6 The Scheme itself involves four tiers or steps. The first three relate to determining whether (inter alia) a medical practitioner has engaged in “inappropriate practice” in connection with the rendering or initiation of services for which a medicare benefit was payable. The fourth tier or step involves the imposition of a sanction on a practitioner who has been found to have engaged in “inappropriate practice”.
7 Before describing those various tiers it is appropriate to explain the concept of “inappropriate practice”. It is defined, insofar as presently relevant, in s 82(1):
“A practitioner engages in inappropriate practice if the practitioner’s conduct in connection with rendering or initiating services is such that a Committee could reasonably conclude that:
…
(b) if the practitioner rendered or initiated the referred services as a specialist (other than a consultant physician) in a particular specialty – the conduct would be unacceptable to the general body of specialists in that specialty.”
8 This definition was introduced into the HI Act in 1994 when the PSR Scheme was established. Previously the mechanism employed to protect public revenues was by policing “excessive servicing” by a practitioner. The change to concern with “inappropriate practice” was remarked on in the Second Reading Speech on the 1993 amending bill in the following terms (Hansard, House of Representatives, 30 September 1993, at 1551):
“A significant change in the bill is the replacement of the concept of excessive servicing with one of inappropriate practice. Whereas excessive servicing is currently defined as the rendering or initiation of services not reasonably necessary for the adequate care of the patient, the concept of inappropriate practice goes further. It covers a practitioner engaging in conduct in connection with the rendering or initiating of services that is unacceptable to his or her professional colleagues generally.”
The Four Tiers
Tier One: The Commission’s Own Examination
9 The formal statutory process of investigation into a practitioner under the PSR Scheme is initiated by the Commission making an “investigative referral” to the Director under s 86 of the HI Act. Both that section and the Guidelines made under it envisage that an investigative referral will be preceded by the Commission’s own inquiry into, and examination of, the conduct of the practitioner in question.
10 It was likewise envisaged by the architects of the PSR Scheme that a counselling process would be engaged in by the Commission with a practitioner in which he or she would be advised of the Commission’s concerns about his or her practice and would be given a chance to consider his or her position. Such a counselling system has in fact been instituted. It is unnecessary to enlarge upon it at this stage.
11 The matter to be noted about the Commission’s own examination is that, save in exceptional circumstances: see Health Insurance Commission Act 1973 (Cth) s 3A and Part IID; it has no investigative powers it can deploy to pursue and/or obtain information that may be relevant to its inquiry. Nonetheless, such examination as the Commission makes must be such as to lead the Commission to consider that “the person under review may have engaged in inappropriate practice”: s 86(4)(b) of the HI Act.
Tier Two: The Investigative Referral and the Director
12 The office of Director of Professional Services Review is created by s 83 of the HI Act. The office holder is a medical practitioner appointed by the Minister with the agreement of the Australian Medical Association. The Director’s functions, duties and powers are those prescribed in Part VAA and the regulations.
13 Section 86 of the Act, insofar as presently relevant provides:
“(1) The Commission may, in writing, refer to 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.
(2) An investigative referral in relation to the rendering of services may only relate to services rendered during the 2 year period immediately preceding the referral, whether or not any or all of the services were initiated before the start of that period.
(3) An investigative referral in relation to the initiation of services may only relate to services initiated during the 2 year period immediately preceding the referral.
(4) An investigative referral must:
(a) contain particulars of all services rendered or initiated during the referral period by:
(i) the person under review; or
(ii) a practitioner employed by the person under review; or
(iii) a practitioner employed by a body corporate of which the person under review is an officer; and
(b) set out the reasons why the Commission considers the person under review may have engaged in inappropriate practice.
(4A) After the Commission has made an investigative referral, the Director may request the Commission to give him or her further information relating to any services particulars of which are contained in the referral whether or not the services to which the request relates are dealt with in reasons given by the Commission under paragraph (4)(b).
(4B) If a request is made as mentioned in subsection (4A), the Commission must comply with the request so far as it is capable of doing so.”
14 As this section has loomed large in this proceeding, it warrants some elaboration at this point. First, and to illuminate the subject of the s 86(1) referral, it is appropriate to recast the terms of the sub-section by incorporating the definition of “inappropriate practice” in s 82(1)(b) of the HI Act. It could be rendered as follows:
The Commission may, in writing, refer to the Director the conduct of a person relating to one or both of the following:
(a) whether the person’s conduct in connection with rendering services is such that a Committee could reasonably conclude that the conduct would be unacceptable to the general body of specialists in that [person’s] specialty;
(b) whether the person’s conduct in connection with initiating services is such that a Committee could reasonably conclude that the conduct would be unacceptable to the general body of specialists in that [person’s] specialty.
15 Secondly, for the purposes of the investigative referral, s 81 defines “referred services” to mean “the services particulars of which are contained in the referral in accordance with paragraph 86(4)(a)”. I emphasise this definition for this reason. Section 86(4)(a) encompasses all services rendered or initiated by (for present purposes) the person under review during the referral period. And s 89(1) obliges the Director to “conduct an investigation, in such manner as he or she thinks appropriate, into the referred services”.
16 The investigative referral itself must set out the reasons why the Commission considers the person under review may have engaged in inappropriate practice: s 86(4)(b). But as s 86(4A) and s 89(1) make plain, the Director (a) can request information from the Commission concerning, and (b) is required to inquire into, services particulars of which are contained in the referral (ie all of the s 84(4)(a) services) whether or not they have been dealt with in the reasons given by the Commission under s 86(4)(b).
17 That right and that duty of the Director stand somewhat oddly beside the provisions of s 87(1) of the HI Act. It provides:
“An investigative 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.”
The specification so envisaged could clearly result in services being designated in the referral (eg “specified services”) that were different from the services that are statutorily defined to be the “referred services”: s 81; into which the Director “must conduct an investigation”: s 89(1).
18 Whatever the purpose served by differentiating between the specified services in s 87(1) and the referred services, the clear legislative intent in the 1999 amendment (which introduced both s 86(4A) and s 89(1) in its present form) was not to confine the Director in his or her investigation to the “specified services”. This involved a departure from what previously was the case as the Explanatory Memorandum to the 1999 amending bill acknowledged in its commentary on s 86(4A):
“This [sub-section] makes explicit that any subsequent investigations conducted by the Director, although confined to the referral period, are not limited to the scope of the matters set out in the investigative referral. This is an important change as previously the referral by the HIC set the boundaries within which a Committee could examine a practitioner’s professional conduct.”
19 I would note in passing that the “referral period” is defined in s 81 to be the applicable two year period specified in s 86(2) and (3).
20 Section 87 further makes provision for the content and form of an investigative referral. This matter will be considered separately below along with the required content and form of an “adjudicative referral”.
21 Having made an investigative referral to the Director, the Commission is required by s 88(1) to send a copy of the referral to the person under review. Section 88(2) provides that:
“The copy must be accompanied by a notice inviting the person under review to make written submissions to the Director, within 14 days, stating why the Director should dismiss the referral without setting up a Committee.”
A time limit is specified for the making of submissions: s 88(3).
22 In conducting an investigation the Director has statutory powers to require the provision of information about, or the production of, documents that are relevant to the investigation: s 89B. The Director, likewise, is given powers to consult with members of the Professional Services Review Panel (for which see s 84 of the HI Act) or any consultant or learned professional body: s 90.
23 Apart from situations where the Director is “unable to investigate, or complete an investigation into, the referred services”: s 93A; see also s 93B; the Director has three courses available to him or her. The first is dismissal of the referral. Section 91 provides that:
“The Director may dismiss the investigative referral if he or she 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 rendering or initiating the referred services.”
24 The second is to enter into an agreement with the practitioner concerned. Section 92(1) provides:
“If the person under review is a practitioner, the Director and the person may enter into a written agreement in respect of the matters referred under subsection 86(1) under which:
(a) the person acknowledges that conduct during the referral period by the person in connection with rendering or initiating specified services constituted engaging in inappropriate practice; and
(b) specified action in relation to the person (being action of a kind mentioned in subsection (2)) is to take effect; and
(c) the Director is to dismiss the referral.”
The “specified action” referred to in sub-paragraph (b) is the sanction or penalty to be imposed on the practitioner. Importantly, the agreement does not take effect unless it is ratified by the “Determining Authority”, a statutory office discussed below.
25 Thirdly, if neither of the above courses are taken, the Director mayset up a Committee and make what is described as an adjudicative referral to it: s 93 of the HI Act.
26 Importantly for present purposes, if the Director decides to make an adjudicative referral he or she must give written notice of the decision: s 94(1). That notice must be accompanied by (a) the instrument making the referral and (b) the Director’s own report (described below) which he or she is required by s 93(6)(b) to attach to the adjudicative referral: s 94(3).
Tier Three: The Adjudicative Referral and the Committee’s Inquiry
27 Division 4, Subdivision A of Part VAA of the HI Act provides for the constitution of Professional Services Review Committees. In a case such as that of Dr Pradhan, the Committee members appointed by the Director would be a Deputy Director (for which office see s 85) as chair and two specialists from the Professional Services Review Panel who are of the same specialty as Dr Pradhan: s 95. The Committee is required to meet in private: s 98.
28 The decision to set up a Committee, as previously noted, is the Director’s. Insofar as presently relevant, s 93 provides:
“(1) The Director may, by writing, set up a Committee in accordance with Division 4, and make an adjudicative referral to the Committee, to consider whether conduct by the person under review in connection with rendering or initiating services specified in the adjudicative referral in accordance with subsection (7) constituted engaging in inappropriate practice.
…
(3) Subject to this section, the content and form of an adjudicative referral must comply with any guidelines made under subsection (4).
(4) The Minister may, in writing, make guidelines about the content and form of adjudicative referrals.
…
(6) If the Director makes an adjudicative referral, the Director must:
(a) prepare a written report to the Committee, in respect of the services to which the referral relates, giving the reasons why the Director thinks that conduct by the person under review in connection with rendering or initiating the services may have constituted engaging in inappropriate practice; and
(b) attach the report to the adjudicative referral.
(7) The services that may be specified in the adjudicative referral in accordance with subsection (1) are any of the services particulars of which were contained in the investigative referral under paragraph 86(4)(a), whether or not the services were dealt with in the reasons given by the Commission under paragraph 86(4)(b).”
29 Because of its importance to the matters in dispute in this proceeding, it is appropriate to elaborate at this stage on the above provisions.
30 First, unlike with an investigative referral, the services to be examined by the Committee are limited to those specified in the adjudicative referral itself: s 93(7) and s 81 “referred services”. The obvious contemplation of the scheme in this is that the Director will winnow out of all of the services referred to him or her in the investigative referral: s 86(4)(a); the rendering or initiating of which is considered not to warrant reference to the Committee for the purposes of its inquiry. This limitation on the scope of the Committee’s function is made explicit in s 106H(1) which provides that:
“The Committee is to make findings only in respect of services (the specified services) particulars of which are contained in the adjudicative referral.”
31 The Act, though, makes express provision for the possibility of subsequent inquiry into services not specified in the adjudicative referral. Section 106H(2) provides:
“Despite subsection (1), if it appears to the Committee that a practitioner’s conduct in connection with rendering or initiating services other than the specified services during the referral period may have constituted engaging in inappropriate practice, the Committee may refer the matter to the Director for investigation.”
Section 106H(3) equates such a Committee referral with an investigative referral and s 93(2) in turn gives the Director the option to make an adjudicative referral back to the same Committee that made the referral to him or her.
32 Secondly, and I merely draw attention to the following at this point, two issues in this proceeding relating to s 93 are (i) whether the conduct referred to the Committee by the Director can be of a type different to that referred to the Director by the Commission in the investigative referral; and (ii) whether the report required by s 93(6)(b) to be attached to the adjudicative referral is itself part of that referral.
33 Turning to the Committee’s investigation, if, after considering the matters 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 or initiating the referred services, it must hold a hearing: s 101. Notice of that hearing must be given to that person and it must give particulars of the matter to which the hearing relates: s 102. The notice, furthermore “must require the person under review to appear at the hearing and give evidence to the Committee”: s 104(1).
34 Section 103 prescribes the rights of a person under review at the hearing. It provides, insofar as presently relevant, that:
“(1) The person under review is entitled, subject to any reasonable limitations or restrictions that the Committee may impose:
(a) to attend the hearing; and
(b) to be accompanied by a lawyer or another adviser; and
(c) to call witnesses to give evidence (other than evidence as to his or her character); and
(d) to produce written statements as to his or her character; and
(e) to question a person giving evidence at the hearing; and
(f) to address the Committee on questions of law arising during the hearing; and
(g) after the conclusion of the taking of evidence, to make a final address to the Committee on questions of law, the conduct of the hearing and the merits of the matters to which the hearing relates.
(2) A lawyer accompanying the person under review is entitled, on behalf of the person under review, subject to any reasonable limitations or restrictions that the Committee may impose:
(a) to give advice to the person under review; and
(b) to address the Committee on questions of law arising during the hearing; and
(c) subject to subsection (4), after the conclusion of the taking of evidence, to make a final address to the Committee on questions of law, the conduct of the hearing and the merits of the matters to which the hearing relates.”
35 The Committee has powers similar to those of the Director to require the giving of information about, or the production of, documents that are relevant to the matters referred to it: s 105A.
36 In the investigation it undertakes, the Committee “ is not required to have regard to conduct in connection with rendering or initiating all of the referred services”, but may do so if it considers it appropriate in the circumstances: s 106J. Likewise the Committee is not required to investigate the conduct engaged in in each instance in which a specified service was rendered or initiated. It may have regard only to a sample of services included in a particular class of the referred services: s 106K.
37 Section 106KC deals with the appropriate treatment of matters of which the Committee becomes aware which are not related to the referral and which are not dealt with specifically in s 106H. The section provides:
“(1) If, in the course of the Committee’s consideration of the matters to which the adjudicative referral relates, the Committee becomes aware of any matter not related to the referral that the Committee considers to be of significant concern to the profession of which the practitioner who rendered or initiated the referred services is a member, the Committee may notify the Director in writing of that matter so that it may be considered by the Commission or another appropriate authority or body.
(2) If such a notification is made, the Director must give particulars of the matter to the Commission or another appropriate authority or body.”
38 Having conducted its inquiry, the Committee is required to prepare a written draft report of its preliminary findings: s 106KD(1). The person under review must be given a copy of the draft report; written submissions on it suggesting changes are to be invited: s 106KD(3); and if such submissions are made within the time prescribed, the Committee must take them into account when preparing its final report: s 106L(1). The final report must set out the findings made: s 106L(1); and copies of it must be given to the person under review, the Director and the Determining Authority.
Tier Four: The Determination by the Determining Authority
39 This final tier in the PSR Scheme is concerned primarily with the imposition of sanctions or penalties in the event of a Committee making a finding (unanimously or by majority) that inappropriate practice was engaged in by the person under review in connection with rendering or initiating some or all of the referred services.
40 The procedure to be followed by the Determining Authority in making a determination parallels that to be followed by the Committee in preparing its report. Before describing that procedure it should be noted that the determination itself must contain one or more of the “directions” set out in s 106U(1). These directions embody the various sanctions able to be imposed on the delinquent practitioner. They range from a reprimand by the Director to full disqualification for up to three years from providing services for which a medicare benefit is payable. I emphasise the possible severity of the latter of these.
41 In making its determination the Determining Authority is required first, to prepare a draft determination containing the proposed s 106U direction or directions: s 106T(1); secondly to provide a copy of it to the person under review inviting submissions suggesting changes to the proposed s 106U directions: s 106T(2) and (3); thirdly to take account of such submissions, if made, in making a final determination: s 106TA; and fourthly, to give copies of the final determination to the person under review and the Director: s 106UA. Section 106V specifies when final determinations take effect.
The Form and content of the Referrals
(a) Investigative Referrals
42 Section 86(1) of the HI Act prescribes, as I have noted, the subject of an investigative referral. To fuse the inelegant language of that sub-section and of s 82(1) (which defines “inappropriate practice”), it is the conduct of a person relating to whether that person’s conduct in connection with rendering and/or initiating the referred services is such that a Committee could reasonably conclude that the conduct would be unacceptable to the general body of specialists in that person’s specialty.
43 Both s 86 and s 87 prescribe matters that the investigative referral must contain or specify. These are (i) the particulars of all services rendered or initiated during the referral period of (for present purposes) the person under review; (ii) the reasons why the Commission considers the person under review may have engaged in inappropriate practice; and (iii) the s 87(1) specification of the services to which the referral relates.
44 Beyond the above, s 87(2) to (4) provide:
“(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 investigative referrals.
(4) Guidelines so made are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901.”
The Guidelines that have been made do not in fact specify the content and form of the referral. They merely indicate information and materials that may be included in an investigative referral: see Health Insurance (Professional Services Review – Contents of Investigative Referrals) Guidelines 1999, s 4.
(b) Adjudicative Referrals
45 Section 93(1) of the HI Act prescribes, as I also have noted, the subject of an adjudicative referral. It is whether conduct by the person under review constituted engaging in inappropriate practice, ie it was conduct in connection with rendering or initiating the specified services such that a Committee could reasonably conclude that it would be unacceptable to the general body of specialists in that person’s speciality.
46 The referral must specify the services that are referred to the Committee: s 93(1). The referral must have attached to it a report of the Director relating to the services referred, that gives the reasons why the Director thinks the conduct by the person under review in connection with rendering or initiating those services, may have constituted engaging in inappropriate practice: s 93(6).
47 Beyond the above, s 93 makes similar provision for Guidelines concerning the content and form of adjudicative referrals. Again the Guidelines so made do not in fact specify the content and form of the referral other than that it be in writing: Health Insurance (Professional Services Review – Contents and Form of Adjudicative Referrals) Guidelines 1999, s 4 and s 5.
48 I would note in passing that a central issue in this proceeding is whether both the Investigative Referral and the Adjudicative Referral concerning Dr Pradhan complied with the requirements of s 86 and s 93 respectively.
The Statutory Procedural Fairness Scheme
49 As both parties to the present proceeding acknowledge the statutory PSR Scheme contains staged natural justice requirements. In referring to them it is appropriate to relate them to the various tiers to which I have referred bearing in mind that only tiers two, three and four are statutorily prescribed.
Tier Two
50 1. A copy of the investigative referral (which must contain the matters specified in s 86(1) and (4) and s 87(1)) must be sent to the person under review within 48 hours of the referral being sent to the Director: s 88(1).
51 2. An accompanying notice must be sent inviting the person under review to make submissions “stating why the Director should dismiss the referral without setting up a Committee”: s 88(2).
Tier Three:
52 1. If the Director makes an adjudicative referral written notice of this must be given to the person under review: s 94(1).
53 2. Accompanying the notice must be copies (a) of the instrument making the adjudicative referral (which in turn must contain the matters specified in s 93(1)); and (b) of the Director’s report that is required to be attached to the referral: s 94(3).
54 3. The person under review may challenge the appointment of Committee members on bias related grounds: s 96.
55 4. If it appears to the Committee that the person under review may have engaged in inappropriate practice in connection with rendering or initiating the referred services, it must hold a hearing: s 101(2); and give notice thereof to the person under review, the notice itself giving particulars of the matter to which the hearing relates: s 102.
56 5. The person under review has the rights at the hearing that are set out fully earlier in these reasons.
57 6. The Committee can only make findings in respect of services specified in the adjudicative referral: s 106H.
58 7. The Committee must provide the person under review with a copy of its draft report of preliminary findings; invite that person’s written submissions suggesting changes to the draft report; and take such submissions made (if any) into account when preparing its final report: s 106KD; s 106L(1).
59 8. The Committee must provide the person under review, the Director and the Determining Authority with copies of its final report: s 106L(3) and (4).
Tier Four:
60 1. If the final report contains a finding of inappropriate practice, the Determining Authority must provide the person under review with a copy of its draft determination; invite submissions from that person suggesting any changes to the s 106U directions it contains; and take account of such submissions made (if any) in preparing its final report: s 106T; s 106TA.
61 2. A copy of the final determination must be provided to the person under review, but the determination does not take effect for a period specified in s 106V so as to allow time for the institution of legal proceedings in respect of the decision: s 106V.
Factual Setting
62 On 23 December 1999, a delegate of the Commission signed an investigative referral to the Director. It was in the following terms (formal parts omitted):
“Investigative Referral
Pursuant to subsection 86(1) of the Health Insurance Act 1973 (“the Act”), I, Janet Wendy Mould, 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 Jagjit Singh Pradhan 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 investigative referral relates to services rendered and initiated by Dr Jagjit Singh Pradhan that were rendered and initiated during the 2 year period immediately preceding the date of this investigative referral and are:
(i) all services provided within a specified location, namely
7th Floor
55 Gawler Place
Adelaide
South Australia 5000
(ii) all services provided within a specified period, namely on and from 1 January 1998 to and including 31 December 1998.
The attached material is provided for information only and is not intended in any way to limit the conduct referred.” Emphasis added.
63 The attached material ran to over 170 pages. Attachment A (3 pages) provided background to the referral including reference to prior counselling of Dr Pradhan and indicated in bold type the Commissions two concerns with Dr Pradhan’s practice profile. The first related to Dr Pradhan’s high volume of rendered services with high daily servicing – his total services rendered were above the 99th percentile of all active ophthalmologists in Australia – and was expressed as:
“The Health Insurance Commission is concerned that Dr Pradhan may not be able to provide an appropriate level of clinical input when consistently rendering a high volume of services on a regular and continuing basis.”
The second concern was that:
“The Health Insurance Commission believes that some of the services rendered by Dr Pradhan may not be reasonably medically necessary for the care of his patients.”
64 Amongst later attachments was a 12 page report of Professor Favilla, the Commission’s ophthalmologist consultant, entitled “Analysis of Appropriateness of Practice”. That report dealt with, and expressed opinions about the appropriateness of practice in relation to, six particular medicare service items. The report’s “Summary” was as follows:
“. The results of this analysis has shown that for most item numbers the services provided were excessive, were not evidence based and were not consistent with the incidence of the disorder in the population ie inappropriate practice.
. Dr Pradhan’s mode of practice showed a significantly greater likelihood of providing a service for specific conditions compared to other ophthalmologists. In particular for certain items the data suggest that services were provided for other than the item descriptor ie fraud.
. There is evidence that unnecessary services were provided for relatively minor disorders for which a simpler less invasive method was appropriate. A major concern is whether by unnecessarily exposing patients to a greater risk of adverse outcomes Dr Pradhan is failing to exercise an accepted degree of professional skill and learning ie malpractice.”
Dr Pradhan made submissions to the Director of seven volumes of material addressing the Commission’s concerns in the referral (including Professor Favilla’s report).
65 On 22 September 2000 the Director set up a Committee – PSRC No 158 – and made a written adjudicative referral. After referring by way of “Background” to the investigative referral, the present referral provided:
“ADJUDICATIVE REFERRAL
5. Pursuant to section 93(1) of the Act, I hereby make this adjudicative referral to PSRC No 158 to consider whether conduct by Dr Pradhan in connection with rendering and initiating the services listed below constituted engaging in inappropriate practice as defined in the Act:
. All Medicare Benefits Schedule Book (“MBS”) item 105, 42575, 42587, 42782 and 55055 services provided by Dr Pradhan from the practice location 7th Floor, 55 Gawler Place, Adelaide, South Australia 5000 during the period on and from 1 January 1998 to and including 31 December 1998 (“the referral period”).
6. The following material is attached for the information of PSRC No 158:
Attachment A: my report pursuant to section 93(6);
Attachment B: relevant extracts from Investigative Referral No 158;
Attachment C: lists provided by the Commission, containing:
. 40 randomly selected services for each MBS item 105, 42575, 42587 and 42782, rendered by Dr Pradhan during the referral period; and
. a list containing MBS item 55055 services rendered by Dr Pradhan during the referral period.
Attachment D: photocopies of medical records for the 40 patients appearing in each of the lists at Attachment C above to whom Dr Pradhan rendered services during the referral period;
Attachment E: calendar charts (“PIRT reports”) provided by the Commission for all services rendered to the patients appearing in the lists at Attachment C above during the referral period.”
66 Attachment A – the Director’s Report – outlined the investigation made; the resultant concerns entertained by the Director in connection with the particular services referred; and his decisions to refer those services. The approach taken and the methodology employed were described as follows:
“6. The material in the investigative referral indicated Dr Pradhan rendered a very high number of services, particularly MBS item 105 (subsequent specialist consultation) services. He also rendered a large number of procedural services. It was decided to investigate MBS item 105, 42575, 42587, 42782 and 55055 services.
7. The HIC were asked to provide lists of patients to whom a random sample of the above services had been provided. Some of the records of these patients were obtained and examined. I was assisted in this investigation by advice from a senior ophthalmologist, Dr Thomas Walker as authorised by section 90 of the Act (see paragraph 14 below).”
67 By way of illustration of the Director’s analysis of, and conclusions derived from his investigation of, the five referred services, I refer to the Report’s treatment of Item 105.
“MBS Item 105 (subsequent specialist consultation) – 14,361 services
8. The medical records examined indicated that one reason Dr Pradhan was rendering so many MBS item 105 services may have been that he considered only one problem or one aspect of a problem at each attendance. This made it necessary for the patient to return on multiple occasions. In many instances the records were hard to follow and the rationale for treatment was often not evident. The records suggested, having once seen a patient who had been referred either by a general practitioner or an optometrist, Dr Pradhan took over the management of the patient rather than sending him back to the referring practitioner. Having once seen Dr Pradhan, it seemed that a patient would later present directly to Dr Pradhan with any eye problem, however minor, rather than seeing a general practitioner or optometrist and having the necessity for specialist consultation considered. Many of the conditions treated appeared to be such that a general practitioner could manage satisfactorily. It also seemed that patients were seen on multiple occasions before definitive treatment of their problem was offered. Some patients with no or very minor visual problems were brought back several times a year for review.
…
Concerns after investigation
25. At the conclusion of the investigation I was concerned that in connection with the Services which are MBS item 105 services, Dr Pradhan may have:
· dealt with one problem or one aspect of a problem at each consultation rather than considering the patient’s ocular health as a whole;
· treated for minor eye conditions, without a suitable referral, patients who he had seen previously for apparently unrelated conditions;
· encouraged multiple reviews where this was not necessary;
· encouraged patients to attend on multiple occasions for tests where an item 105 was also charged;
· offered long term or repeated symptomatic treatment rather than definitive treatment of the presenting condition;
· failed to offer preventative counselling to patients with recurrent problems.
…
Decision to make an adjudicative referral
30. Following the investigation and having taken into account Dr Pradhan’s submissions, I concluded that Dr Pradhan may have engaged in inappropriate practice, as defined in section 82 of the Act, in relation to MBS item 105, 42575, 42587, 42782 and 55055 services.
31. Accordingly I decided to make an adjudicative referral to a Committee in accordance with section 93 of the Act for the Committee to consider whether Dr Pradhan’s conduct in connection with the Services did constitute engaging in inappropriate practice and, in particular:
a) in connection with the rendering of the MBS item 105 services, whether Dr Pradhan:
· dealt with one problem or one aspect of a problem at each consultation rather than considering the patient’s ocular health as a whole;
· acted as a general practitioner treating minor eye conditions in patients he had seen previously;
· encouraged multiple reviews where this was not necessary;
· encouraged patients to attend on multiple occasions for tests where an item 105 was also charged;
· offered long term or repeated symptomatic treatment rather than definitive treatment of the presenting condition;
· failed to offer preventative counselling to patients with recurrent problems;
or whether
· Dr Pradhan’s conduct in relation to the MBS item 105 services, otherwise constituted engaging in inappropriate practice.” Emphasis added.
68 I have emphasised the final words above for this reason. A like “catch all” concern is expressed in relation to all the remaining services referred notwithstanding that each, also, is particularised in like manner to Item 105. The “catch all” concern is one focal point of the applicant’s challenge to the referral.
69 On 19 December 2000, the secretary to the Committee forwarded a Notice of Hearing and a Notice to Produce Documents to Dr Pradhan. The Notice of Hearing indicated the particulars to which the hearing related (as required by s 102 of the HI Act). These were listed and replicated the matters contained in dot-point form in the Director’s Report (of which those set out above in relation to Item 105 are an example) including, I would emphasise, the “catch all” concern.
70 The Notice to Produce – to which objection has been taken in this proceeding – scheduled the documents required as follows:
“Complete and original relevant documents for the patients identified on the attached lists – these are patients to whom Dr Jagjit Singh Pradhan rendered MBS item 105, 42575, 42587, 42782 and 55055 services during the period, 1 January 1998 to and including 31 December 1998 (the “Referral Period”) within the practice location at:
7th Floor
55 Gawler Place
Adelaide SA 5000
Relevant documents include clinical records for each patient for the Referral Period together with the records covering the periods prior to and after the Referral Period.
Please note that “relevant” should be taken broadly and include such material as results of investigative tests, referral letters and correspondence from hospitals and consultants, etc.” Emphasis in original.
71 By letters of 21 December 2000 and 10 January 2001 the applicant’s solicitors sought further and better particulars of the various dot-point matters contained in the Notice of Hearing. The request was refused. That refusal is challenged in this proceeding.
A Preliminary Jurisdictional Point
72 The Amended Application challenges ten specific “decisions” of, variously, the Commission, the Director and the Committee. Insofar as these claims are based on the ADJR Act, the respondents object to the application on the bases that it is out of time and that the alleged decisions were not such final and conclusive decisions as could qualify as decisions reviewable under the ADJR Act. The application has as well been brought under s 39B(1) and (1A) of the Judiciary Act 1903, and in the Court’s accrued jurisdiction. In relation to the Director and the Committee members, as all are officers of the Commonwealth, this Court clearly has jurisdiction to entertain the application under s 39B(1). And in relation to all five respondents, as the matter arises under a law made by the Parliament, s 39B(1A)(c) founds the Court’s jurisdiction. In these circumstances, as is now conceded on all sides, it is unnecessary to decide the ADJR Act objections raised by the respondents: see Tang v Holmes (1998) 51 ALD 121 at 131.
The Matters of Contention
73 A very basic question about the scheme of the HI Act arises in this proceeding and off it hangs quite a number of issues concerned in the main with requirements of procedural fairness at various stages in the referral processes. That question can be put as follows:
Do the provisions of Part VAA governing investigative and adjudicative referrals require that each referral be of specified conduct that could amount to “inappropriate practice” in connection with rendering or initiating the services to which the respective referral relates?
Or do they only require that each referral be of the practitioner’s conduct as such in connection with rendering or initiating the services to which the respective referral relates?
74 If the answer is that the referral must be of specified conduct, the principal subordinate issue raised concerning the interpretation of Part VAA is whether the conduct specified in the adjudicative referral must be of the same species as that of the antecedent investigative referral.
75 Put shortly, Dr Pradhan’s case is that it is specified conduct that must be referred, and, further, that it must be the same species of conduct that is referred in each referral. It is then contended that, in his own case (i) the two referrals were of his conduct as such and were invalid for that reason; and (ii) even if the referrals were found to be of specified conduct, a new species of conduct was added to the adjudicative referral that was not referred in the investigative referral.
76 The respondents dispute both the construction of the Act proposed by Dr Pradhan and the factual assertions made concerning the referrals made in relation to him.
77 Before considering the construction question it is appropriate first to make findings as to whether the two referrals in question referred specified conduct or merely conduct as such.
The Conduct Referred: the Investigative Referral
78 The terms of the investigative referral have already been described. The documentation consisted of a one page signed document with over 170 pages of material attached to it. While the one page document purported to refer “the conduct of Dr Jagjit Singh Pradhan relating to whether he has engaged in inappropriate practice” etc, the attachments adverted to concerns with Dr Pradhan’s practice and highlighted two particular matters. In so doing the attachments clearly identified conduct which could found a belief that Dr Pradhan may have engaged in inappropriate practice: cf s 86(4)(b).
79 It was well settled in decisions of this Court prior to the 1999 amendment that, under the then HI Act scheme, the material attached to a referral to the Director constituted part of the referral itself: Retnaraja v Morauta (1999) 93 FCR 397; Mercado v Holmes [2000] FCA 620; Grey v Health Insurance Commission [2001] FCA 1257. There is, in my view, nothing in the 1999 amendments to the Act to suggest that a different view should be taken of attachments to investigative referrals made after the amendments came into force. On the contrary, the provisions of s 86(4) in referring to matters that the investigative referral must contain - and which in the present case were included in the attachments - seems to lend support to the view taken in the cases to which I have referred. The respondents have not submitted otherwise. In consequence I intend to treat the attached material as part of the referral.
80 The attachments, as I noted above, did specify two particular concerns relating to Dr Pradhan’s conduct. But the first page, in referring to the attachments, stated as follows:
“The attached material is provided for information only and is not intended in any way to limit the conduct referred.” Emphasis added.
81 In Mercado’s case it would appear that a like statement was made in the documents preceding the attachments: see Mercado, at [31]; which in turn, as in the present case, specified particular conduct as being of concern. The trial judge in that matter concluded that the conduct that had been referred was only the conduct specified in the attachments and that no other conduct could be inquired into. In reaching this conclusion His Honour made no mention of the statement referring to the attached material which I have quoted above. It is not apparent that any submission was put to His Honour that the referral itself was invalid, although His Honour did say it would have been if it had been confined to the first document without its attachments.
82 As I will later indicate, there is much in His Honour’s judgment with which I agree. On the question of construction of the investigative referral in the present case, though, I am unable to take a similar view of the conduct referred to that taken in Mercado. Full force, in my view, should be given to the statement I have quoted above. The Commission, while specifying conduct in the attachments, stated that it did not in any way intend to limit the conduct referred. That statement may have betrayed a complete misunderstanding of the requirements of the Act. It may even have proceeded on the premise that the trial judge in Mercado had, in effect, given a judicial imprimatur to the form of investigate referral employed there and here. But whatever the explanation, the statement is an unqualified one indicating both the significance to be attributed to the attached material – it was provided for information only (notwithstanding that parts of what was provided were required by s 86(4) to be provided) – and the effect to be given it insofar as it specified conduct that might be inquired into. There is no ambiguity in what is stated. Nor is it contradicted by other parts of the document. Rather it is consistent with the description of the “Investigative Referral” in the first paragraph of the same document which was “of the conduct of” Dr Pradhan etc.
83 I find, then, that while the Commission has specified two species of conduct that (a) have provided the stimulus to the referral and (b) are the subject of the s 86(4) reasons why the Commission considers Dr Pradhan may have engaged in inappropriate practice, the conduct referred is unspecified and unlimited.
84 Again as I will later indicate, the respondents have submitted in any event that the scheme of the HI Act does not require that conduct be particularised as a matter of jurisdiction. It is said that what is important for jurisdictional purposes, and particularly so at the adjudicative referral level, is the specification of the services referred. Inquiry into those services necessarily involves examining conduct. This view probably informs the oracular content of the one page “Investigative Referral” document to which I have referred.
The Conduct Referred: The Adjudicative Referral
85 As I earlier indicated, this referral in a two page document asked the Committee to consider whether “conduct by Dr Pradhan” in connection with rendering and initiation of five listed services constituted engaging in inappropriate practice. That document itself did not specify any particular conduct which could, if made out, amount to inappropriate practice. However, material was attached to the document “for the information of PSRC No 168”. The first attachment was the Director’s report, which s 93(6)(b) required the Director to “attach … to the adjudicative referral”.
86 That report (inter alia) identified in dot-point fashion concerns the Director had with Dr Pradhan’s provision of the five services referred. I have illustrated this earlier in relation to MBS item 105. Under the heading “Decision to make an adjudicative referral” is stated the Director’s decision to make a referral of Dr Pradhan’s conduct in connection with the five referred services to consider whether it constituted engaging in inappropriate practice and, “in particular” in connection with each of the five services the report specified the Director’s respective dot-point concerns, though adding in each case the “catch-all” concern. To reiterate, for item 105 that concern was whether:
“Dr Pradhan’s conduct in relation to the MBS item 105 services, otherwise constituted engaging in inappropriate practice.”
87 Dr Pradhan’s case in relation to this documentation is twofold. First it is said that the adjudicative referral is the first, signed two-page document and it only refers conduct (unspecified) in connection with the rendering or initiating of the five services. Unlike with the investigative referral, the attached material cannot be considered as part of the adjudicative referral. Attachment A, the Director’s report, is required by s 93(6) to be attached to the adjudicative referral as a separate document. Secondly, if the report is part of the referral, the conduct referred while limited to that in respect of the services referred, is otherwise unspecified and unlimited because of the five catch-all provisions.
88 The respondents’ primary contention is that what the Act requires to be specified in the adjudicative referral is the services referred and not conduct. It is unnecessary to consider this particular contention at this point. The respondents’ second contention is that as a matter of construction, s 93(6) should be read as describing the report as part of the referral; that report specifies the conduct referred; and the catch-all phrase is a proper one to be included in such a referral (consistent with the policy of peer review in the PSR scheme) as the Committee is comprised of Dr Pradhan’s peers.
89 My own view can be shortly put. First the s 93(6) issue. Giving a purposive construction to this provision, I do not consider that the attached Director’s report should be considered any less a part of the adjudicative referral than is the Commission’s s 86(4)(b) statement of reasons part of the investigative referral. Both the report and the statement of reasons necessarily require the identification of the conduct that may have constituted engaging in inappropriate practice. Both are to be provided to the person under review in informing him or her of the respective referral. Both in a practical sense are part of the composite of documentation that properly can be described as the investigative referral and the adjudicative referral respectively. Insofar as the language of s 93(6) is concerned, the use of the words “attached to” does not require generic differentiation between the referral and the report. It merely ensures that the information in the report is part of the material provided to the person under review. I do not consider that Parliament intended that the differing formulae of s 86(4)(b) (“[the referral must] … set out the reasons”) and s 93(6) (“the Director must … attach the report to”) were intended to have the dramatically different legal consequence as to what respectively constitutes the referral. Unsurprisingly, the Explanatory Memorandum for the proposed 1999 amendments described s 93(6) as providing that “an adjudicative referral … must include a written report …” (emphasis added). I would interpret “attach to” in this setting as meaning “attach to so as to become part of”.
90 I should further add that I do not consider that the provisions of s 94(3) concerning the documentation to be sent to the person under review necessitated a contrary conclusion. That provision is designed to ensure that procedural fairness is accorded that person. Explicit differentiating reference to the report for that purpose is understandable.
91 If I am incorrect in the view I take, it would in fact have no practical bearing on the actual outcome in this matter given my finding below as to the conduct actually referred in the composite of documents making up the adjudicative referral. It was the same in substance as that in the two page document.
92 Turning to the conduct actually referred, it is not limited to such conduct engaged in by Dr Pradhan as the Director thought “may have constituted engaging in inappropriate practice”: s 93(6). It extended beyond his concerns to any aspect of Dr Pradhan’s conduct in relation to the services rendered which the Committee, not the Director, might care to consider. Such was the effect of the catch-all reference. The Committee’s inquiry was constrained only by the services referred to which Dr Pradhan’s conduct related.
Does the Act Require that Conduct be Specified?
93 As I earlier noted, prior to the introduction of the PSR Scheme in 1994 only one species of conduct in the rendering or initiating of services was policed. This was “excessive servicing”. The 1994 amendments enlarged that concern to “inappropriate practice” – a concept, it was said in the Second Reading Speech, that went further than overservicing. It covered conduct in connection with the rendering or initiating of services that “is unacceptable to [a practitioner’s] professional colleagues generally”.
94 The referral scheme that existed from 1994 until the 1999 amendments was one, it has to be said, of greater coherence and simplicity than its successor. That scheme has been described in detail in some number of decisions of this Court, most notably by the Full Court in Adams v Yung,above. For present purposes, there is one matter of sharp differentiation between what I will call the 1994 scheme and the 1999 scheme that should be noted. In the 1994 scheme the only services that could be inquired into at all were those specified in the Commission’s referral in accordance with s 87(1) of the Act. In the 1999 scheme as I have indicated, notwithstanding s 87(1), the Director can inquire into all of the services rendered or initiated in the referral period (s 86(4A); s 89(1)), but in making an adjudicative referral must specify the services referred to the Committee (s 93(1)). The Committee can only make findings in respect of those services (s 106H).
95 In relation to the referral powers themselves, in the 1994 scheme the Commission’s power to make a referral to the Director was in the same s 86(1) terms as now obtain in the 1999 scheme. However the 1994 scheme did not contemplate an independent referral by the Director to a Committee. The four-corners of what the Director could refer to the Committee were set by the Commission’s referral to the Director. For this reason Burchett and Hill JJ in Adams v Yung (at 298) could state that “a referral is not merely the instrument which initiates the series of administrative inquiries … . It also provides the framework in which those inquiries are to be held”.
96 Turning to the significance of conduct as the subject-matter of a 1994 scheme referral, it should be noted that the s 82(1) definition of “inappropriate practice” in that scheme was for present purposes identical with that in the 1999 scheme. The definition was - and is - concerned with the making of a judgment about “conduct”. Case law on the 1994 scheme has consistently held or assumed that what was referred under s 86(1) was such conduct of the person under review as was identified and described in the referral.
97 In Adams v Yung, Burchett and Hill JJ explained this conclusion as follows (at 298-299):
“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.
This conclusion is reinforced by the legislative requirement that the practitioner conduct the hearing without real assistance from a legal adviser. Whilst 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).”
98 In Mercado v Holmes, above, in applying Adams v Yung, Heerey J commented (at [70]) that 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”: see also Tang v Holmes,above, at 127; Grey v Health Insurance Commission,above. Significantly for present purposes, His Honour also commented (at [66]) that a document similar in content to the one page “Investigative Referral” document used in the present case and which is set out at [61] above could not by itself “constitute a valid referral in accordance with the Act”. It would lack the requisite identification of the conduct referred and the inappropriate practice alleged.
99 Unless the 1999 amendments have altered the PSR Scheme in ways that make inapposite the construction placed on the Act in the cases to which I have referred, I would of course be obliged to follow them.
100 Apart from the change made which allowed the Director to select the services to be referred to the Committee irrespective of how the Commission specified for s 87(1) purposes the services referred to the Director, the other significant amendments for present purposes were (i) those which made the adjudicative referral a distinct referral with its own characteristics and requirements; and (ii) those which significantly enhanced the statutory procedural fairness requirements for the benefit of the person under review.
101 The respondents in their submissions have invited me to look anew at the PSR scheme in consequence of the 1999 amendments without bringing to it preconceptions born of the 1994 scheme and its characteristics. Because I am being asked to consider the scheme in its totality, it is appropriate that I first set out in full the respondents’ summary of argument on the PSR scheme generally. It is as follows:
“3. The respondents submit, in summary, that:
(a) the Professional Services Review (PSR) scheme is a disciplinary scheme designed to protect the integrity of the Commonwealth Medicare regime, thereby protecting patients, the community at large and Commonwealth revenue from the risk of inappropriate practice;
(b) the PSR Scheme is enabled through a staged process prescribed in Part VAA of the Health Insurance Act 1973 (the Act). In considering the meaning and intent of particular provisions, regard should also be had to the nature and intent of the overall scheme. Individual stages cannot be meaningfully interpreted in isolation, and should be examined within the context of their role within the entire process;
(c) the stages of the PSR process are linked by specified services rendered and/or initiated by a practitioner, rather than specified conduct. To restrict the process to specified conduct is to ignore the nature and intent of the overall scheme, and to deny the natural meaning of the individual provisions;
(d) the constant theme from the time of Investigative Referral by the HIC through to any reference by Adjudicative Referral to a Committee, is that the services must not be outside those services indicated in the Investigative Referral. The referrals and hearing before a Committee need not, however, be confined to the same conduct in respect to those services;
(e) the parameters of each level of investigation is governed by the services, not by the conduct. It is the services that are referred to in the Investigative Referral, the services that are referred in the Adjudicative Referral and the services which are considered by the Committee. Those services must be no greater than those referred to in the Investigative Referral and by the time it reaches the Committee the investigation cannot exceed the services in the Adjudicative Referral. The nature of the conduct is however not so confined;
(f) the reasons given by the Health Insurance Commission (HIC) and in turn by the Director of PSR gives [sic] some guidance at each level to matters which may point to inappropriate practice. They are not regarded as being the binding jurisdictional features;
(g) whilst services are intimately connected with conduct, that does not mean particular conduct. There are very many ways in which behaviour and actions of a practitioner take place in relation to services. For example, a particular procedure may be appropriate for a patient with a specific particular condition, with a particular level of gravity, it may be delivered in a particular way with particular instruments or levels of dosage or within a particular time frame. If each of these requirements are not carried out at all or are [sic] not carried out appropriately or render the service unnecessary or inappropriate treatment for a patient, the conduct may be regarded as inappropriate practice;
(h) if the practitioner does not modify conduct or practice patterns in accordance with HIC guidance, then the practitioner must expect that review of the services will take place. High servicing and high volume may be general indicators of underlying problems of delivery of professional services and an overt manifestation of a practice being appropriate in some way which can only later be identified with precision by the peer group itself in a PSR Committee;
(i) by statutory definition, and also as a matter of practice, the final determination of appropriate practice resides with the Committee. That is where the issue will be decided upon unless at some point along the way the HIC does not proceed, or the PSR Director dismisses the referral, or the practitioner makes admissions and an agreement is entered into. Unless it happens in that way, then it is for the Committee of peers to decide whether in fact the conduct of the practitioner with respect to the rendering of the service has been or amounts to inappropriate practice;
(j) the Act provides a complete and comprehensive code which has natural justice features built in at every stage. There is no warrant for implying additional natural justice requirements. The natural justice provisions even extend beyond the hearing as the Committee is obliged to provide a draft report on which the practitioner may make written submissions before a final report (section 106KD). Further, a draft determination by the Determining Authority is required to be sent to the practitioner and written submissions may again be made by the practitioner before a final determination is made (section 106T). Both of these procedures could quite appropriately be the subject of judicial review and give adequate protection to the practitioner.
(k) the practitioner therefore has 5 opportunities within the statutory scheme to be heard or make submissions as to whether of [sic] not he/she has been inappropriately practicing.
102 The respondents provided detailed textual submissions on the provisions in each of the second to fourth tiers of the PSR scheme to which I earlier referred. I will not set them out in full though I do acknowledge the assistance they provided in giving focus to the question of construction with which I am concerned. There are, though, four additional elements in the respondents’ submissions to which I should refer.
103 The first is to emphasise the contention that the inquiry into services necessarily involves an inquiry into conduct and in that sense conduct is integral to what is referred. Emphasis in this is placed on the interconnecting statutory definitions relating to Medicare benefits that are payable for professional services that are “clinically relevant services”, the latter being defined in s 3 to mean (inter alia):
“a service rendered by 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.”
What, though, is denied is that the specification of conduct is itself a “jurisdictional requirement” of an investigative or adjudicative reference.
104 The second matter is the respondents’ acceptance that, as the conduct being inquired into can change from the investigative referral through the adjudicative referral to the Committee hearing, the focus of the statutory natural justice requirements likewise will change correspondingly. In this sense there is a “rolling” requirement of procedural fairness.
105 The third matter relates to the significant new investigative powers given to the Director in the 1999 amendments: see s 89A, s 89B. In light of the related amendments allowing the Director to examine all of the services rendered or initiated during the referral period irrespective of whether or not dealt with in the Commission’s s 86(4)(b) reasons: s 89; it would be anomalous, it is said, to confine the Director in the conduct that he or she could inquire into by reference to what was specified in the investigative referral – the more so as now the Director, not the Commission, has the greater capacity to further identify conduct of the person under review that could constitute inappropriate practice.
106 The fourth matter relates to the powers of the Committee to “refer back” matters not related to the adjudicative referral made to it. Under s 106H(2), the Committee can refer to the Director for investigation conduct in connection with rendering or initiating services other than the specified services referred to it. Additionally, the Committee can notify the Director of any matter “not related to the referral” of which it becomes aware and considers to be of significant concern “to the profession” of which the practitioner is a member so that it may be considered by the Commission or another appropriate body: s 106KC(1). Together, it is said, these sections suggest that s 106H(2) (i) contemplates that conduct other than that specifically referred but which relates nonetheless to the services referred, can be inquired into by the Committee; but (ii) that conduct connected with rendering or initiating other services may not, though it may be referred to the Director for investigation.
107 The applicant’s submission is that the amendments have not altered the central element of the PSR scheme from its inception in 1994. What is referred in both investigative and adjudicative referrals is specified conduct in respect of referred services. I mean no disrespect in not outlining this submission in detail.
108 For my own part I would have to say by way of preface that, as is so often the case with the interpretation of statutes, reasoned and reasonable arguments can be advanced in support of rival constructions of the statutory provisions now in issue. This state of affairs has been exaggerated by the imposition of amendments upon an existing statutory scheme that, though effecting significant changes, have left to suggestion and inference the full dimensions of the changes intended.
109 It is a matter of no little significance that the PSR scheme is a disciplinary one that can lead to significant sanctions being imposed upon a practitioner who has been found to have engaged in inappropriate practice: s 106U; Adams v Yung, above, at 294; on disciplinary proceedings see generally Forbes, Disciplinary Tribunals (2nd Ed, 1996). The 1999 scheme, much more so than the 1994 scheme, evidences a heightened legislative appreciation of the implications of this in the significantly enhanced procedural fairness safeguards introduced in the 1999 amendments. Those safeguards are now part of the skeletal structure of the PSR scheme and are, as will be seen, useful for the light they throw on the proper construction of the referral processes of the scheme itself.
110 Considered against the background of the disciplinary nature of the scheme and of the decision in Adams v Yung, the principal difficulties I have in accepting the respondents’ submissions as to the effect of the 1999 amendments flow from (i) the explicit address of the question whether, in the investigative referral, the Director can address services beyond those specified by the Commission for s 87(1) purposes in its referral; (ii) the failure to amend the terms of the s 86(1) power enabling the Commission to make an investigative referral; and (iii) the terms used in amending s 93(1) to confer on the Director the power to make an adjudicative referral.
111 The present significance of Adams v Yung is this. The majority judgment of Burchett and Hill JJ characterised the referral made under s 86(1) in the 1993 scheme as being circumscribed in two ways: the one, by the services actually referred; the other, by the conduct specified in the referral. It was not open to the Committee to inquire into services not referred, nor conduct not so specified. As to the latter limitation, their Honours made plain that they were not merely considering how the “rules of natural justice” would impact on an inquiry into conduct that was in terms unlimited. Rather the limitation inhered in the statutory nature of a reference. What the statute contemplated was “that it be an inquiry into specified conduct as dealt with in the reference rather than conduct at large”: above, at 298; see also Mercado v Holmes, above, at [66]-[70].
112 The 1999 amendments did not alter the terms in which the power to make an investigative referral was conferred on the Commission by s 86(1). The power remained one to “refer … the conduct of a person” etc (emphasis added). Contrary to the respondents’ submission that this reference to conduct should be seen as no more than a generic description of conduct in respect of services, the Adams v Yung characterisation that what is referred under s 86(1) is specified conduct is, in my view, emphasised by the statutory imposition of a procedural fairness requirement on the Commission in making a referral. The referral must “set out the reasons why the Commission considers the person under review may have engaged in inappropriate practice”: s 86(4)(b). When regard is had to the definition of “inappropriate practice” in s 82(1), those reasons necessarily must relate to identified conduct in relation to which the prescribed judgment is made – albeit it may be identified in terms of some generality (eg “high volume of rendered services”: Mercado v Holmes, above).
113 The apparent curiosity created by this construction is that while the Director is to be confined as to the conduct into which he or she can inquire, the Director is not since the 1999 amendment confined as to the services in respect of which that conduct inquiry can be made. That inquiry can be into all services particularised in s 86(4)(a): see s 81 “referred services” and s 89(1); notwithstanding that the referral itself both specifies services for s 87(1) purposes and only provides s 86(4)(b) reasons in respect of those specified services: s 86(4A).
114 The respondents focus on this curiosity to suggest that s 86(4A) is indicative of a legislative intent not to limit the Director either in relation to the services, or in relation to the conduct, into which he or she may inquire. And they take comfort from the Explanatory Memorandum to the 1999 amendment which relevantly was in terms that:
“Subsection 86(4A) empowers the Director to request further information from the HIC. This makes explicit that any subsequent investigations conducted by the Director, although confined to the referral period, are not limited to the scope of the matters set out in the investigative referral. This is an important change as previously the referral by the HIC set the boundaries within which a Committee could examine a practitioner’s professional conduct.”
115 While the last sentence of this explanation may be taken as suggesting a wider legislative intent than merely enlarging the services that can be inquired into, such intent if such there was has not been realised in the language of the section considered as a whole. If the Parliament had intended to empower the Director to enquire at large into both services and conduct in the referral period it could readily and explicitly have done so. It has not in relation to conduct and there ought be no implication to that effect.
116 As it stands the s 86(4A) power even though limited to services does rather skew the statutory procedural fairness requirement of s 86(4)(b). The referral containing the s 86(4)(b) reasons is required to be sent to the person under review with the invitation that he or she make submissions stating why the Director should dismiss the referral: s 88. But notwithstanding the s 86(4)(b) reasons, the Director’s inquiry may, in part at least, be into services (though not into conduct) not covered by the reasons.
117 I do not consider this to be a matter of major moment in the statutory scheme. The person under review has to make his or her submissions within, in effect, 16 days of the making of the investigative referral. The Director has between 6 to 9 months to investigate or complete an investigation into the referred services. But he or she is not subjected to any further statutory procedural fairness requirement unless and until an adjudicative referral is made. It is from that latter stage that procedural fairness is writ large in the statutory scheme.
118 Apart from having the person under review put on notice by the s 86(4)(b) reasons – if not by prior non-statutory counselling – as to the form of conduct that has invited attention, the statutory procedural fairness scheme at this early investigative stage seems best described as provisional and preliminary. But its limitations do not disadvantage the person under review should an adjudicative referral be made given the far more explicit statutory requirements to be observed at that later stage. As has often been said of staged decision-making, in judging whether the requirements of natural justice are satisfied one must consider whether the decision-making process in its entirety entails procedural fairness: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 578.
119 More surprising in light of the respondents’ submission are the terms in which s 93 was recast in the 1999 amendments. The original s 93 required, subject to two provisos, that:
“[t]he Director must, by instrument in writing, set up a Committee to consider whether the person under review has engaged in inappropriate practice.”
Notably the section did not refer to conduct as such, the Adams v Yung limitation being carried forward into it by virtue of the s 86(1) referral which the Director was not permitted to go beyond.
120 The new s 93(1) stated in contrast:
“The Director may, by writing, set up a Committee in accordance with Division 4, and make an adjudicative referral to the Committee, to consider whether conduct by the person under review in connection with rendering or initiating services specified in the adjudicative referral in accordance with subsection (7) constituted engaging in inappropriate practice.” Emphasis added.
Save for the omission of the definite article before the word “conduct”, this subsection uses a relatively similar formula to that of s 86(1) to describe the subject (though not the purpose) of the referral.
121 Again, in my view, the section ought be interpreted as requiring that the referral be of specified conduct - a conclusion reinforced by the s 93(6) procedural fairness requirement that the Director prepare a written report giving reasons why the Director considers that “conduct by the person under review … may have constituted engaging in inappropriate practice”. Significantly the emphasis upon the requirement of specification at the level of an adjudicative referral is emphasised in the need to identify the particular services that are referred: s 93(1) and (7); and it is only in respect of these services that the Committee can make findings: s 106H(1). This is unsurprising. One is after all at the point in the disciplinary process where the boundaries of the case to be met by the person under review should be settled and fairly particularised: see Forbes, above, Ch 10. In saying this I do not overlook the powers of the Committee further to narrow the case to be met: see s 101(2) together with s 102(1) and (3); s 106J.
122 Even if I were incorrect in holding that s 86(1) requires the conduct referred to be specified, I would still be satisfied that s 93(1) requires such specification. I do not consider that the statutory procedural fairness scheme envisages that, on an adjudicative referral, the Committee will range at large over the conduct of the person under review in connection with rendering or initiating the particular services referred subject only to its according procedural fairness to that person as and when it raises concerns with him or her.
123 Substance and direction are given to an adjudicative referral by the dual requirements that the particular services referred be specified and that the Director’s report provide the reasons required by s 93(6). That report, in tying identified conduct to the particular services referred, is intended to reflect a judgment made in respect of the conduct of the person under review after an investigation in which significant investigative powers were available to be exercised.
124 The statutory natural justice scheme for the adjudicative referral stage proceeds, in my view, on the premise that an adjudicative referral has the same twin characteristics as a 1994 scheme referral. This is that a referral specifying both the conduct and services referred provides the framework in which the Committees’ inquiry is to be held: cf Adams v Yung, at 298. The referral so dually specified embodies the “matters that are the subject of the referral”: cf s 101(2); see also s 98(3); s 106G(1); s 106KC(1). The person under review is put on notice of what is referred: s 94; the referral providing in effect the statement of the case to be met in the disciplinary proceedings. The statutorily envisaged decisions then to be made and actions taken by the Committee relate to its consideration of the matters that are the subject of the referral and no other: see eg s 101(2); s 102(3); and s 106G.
125 Considered in this light, the scope of s 106H(2) and s 106KC(1) respectively, on which the respondents place some reliance, becomes the more apparent. Both relate to the manner in which the Committee is to deal with matters that might warrant further consideration, but which fall outside the matters referred. Section 106H(2) relates to conduct in respect of services not referred. The Committee can make what is in effect an investigative referral of that conduct and of those services to the Director. Any other matter not related to the referral falls to be dealt with under s 106KC(1). The apparent anomaly in this is that, if in the course of considering the referred services, the Committee considers that conduct other than that referred might constitute engaging in inappropriate practice, it cannot make an investigative referral of it under s 106H(2). It can only notify the Director of that matter under s 106KC(1). This anomaly, if anomaly it be, would expose a defect in the referring back provisions of the Act. It would be only one of several such anomalies that the 1999 amendments appear to have spawned: see eg the earlier consideration of s 86(4A); and not one that would raise any significant doubt as to the proper construction to be placed on s 93(1) of the HI Act.
126 Put shortly, in effectuating the legislative purpose enshrined in s 80(1) of the Act, the legislative scheme is one that refers, first, to the Director for investigation and, then, to the Committee for adjudication, identified conduct that the Commission and the Director respectively consider may have constituted engaging in inappropriate practice in connection with the rendering of the services the subject of the referral in question (ie investigative or adjudicative).
127 If Parliament had intended to mandate a roving commission into past service provision by medical and other practitioners (where those services attract Medicare benefits) circumscribed only by time limitations (2 years) and by the capacity of the Director to whittle down the services worthy of examination, it would - and should - have done so in language having far greater clarity and aptness for that purpose than that of the 1999 amendments. The respondents’ submission requires in effect the deletion of references to the referral of ‘conduct’ in s 86(1) and s 93(1) and the recasting of those provisions so as to stipulate that the referral is of services for the purpose of investigating or considering whether the person under review engaged in inappropriate practice in rendering or initiating those services. Parliament could have done this. It did not.
128 Having regard to the conduct I have found was referred in the cases both of the investigative referral and of the adjudicative referral, and the requirement of the statute that referred conduct be specified, I conclude that, in the case of each referral, there has been a non-compliance with the requirements of s 86(1) and s 93(1) respectively. Given that both referrals are framework documents for the respective processes they initiate, and given the disciplinary setting and purpose of the referrals, that non-compliance must necessarily entail the invalidity of the references made: cf Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 388ff. The referrals were incapable of enlivening the respective jurisdictions of the Director and of the Committee to embark upon the inquiries envisaged by the HI Act.
129 Insofar as the investigative referral is concerned, my jurisdiction to grant relief in respect of the Commission’s ultra vires act arises from s 39B(1A)(c) of the Judiciary Act. Dr Pradhan, as the person directly affected by that reference, has standing to complain of the non-observance by the Commission of the statutory limitations placed upon its power to make a referral and to seek at least declaratory relief: cf Bateman’s Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247.
130 Insofar as the adjudicative referral is concerned, my jurisdiction as it relates to the relevant respondents (the first to the fourth) arises by virtue of s 39B(1) of the Judiciary Act. The applicant is entitled to appropriate relief against them.
131 There is a significant number of issues raised in this proceeding that I need not address in consequence of the conclusion at which I have arrived on the primary issue raised. They relate in the main to the superimposition of procedural fairness requirements on the existing statutory scheme and to the validity of the notice to produce. I refrain from expressing any views on these questions.
132 I will direct the parties to bring in minutes of order to give effect to these reasons.
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I certify that the preceding one hundred and thirty-two (132) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. |
Associate:
Dated: 6 November 2001
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Counsel for the Applicant: |
Mr G Livermore & Mr T Jackson |
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Solicitor for the Applicant: |
Corsers |
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Counsel for the Respondent: |
Ms R Layton QC & Mr L Holcombe |
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Solicitor for the Respondent: |
Minter Ellison |
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Date of Hearing: |
3 & 4 May, 24 & 25 September 2001 |
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Date of Judgment: |
8 November 2001 |
