FEDERAL COURT OF AUSTRALIA

Doan v Health Insurance Commission [2002] FCA 1160

ADMINISTRATIVE LAW – judicial review – Professional Services Review Scheme created by Part VAA of the Health Insurance Act 1973 (Cth) – 1999 amendments to Part VAA – medical practitioner - investigative referral – whether an investigation instigated by the Director, Professional Services Review under s 89(1) following an investigative referral is a “decision” to which the Administrative Decisions (Judicial Review) Act 1977 (Cth) applies - whether the investigative referral made by the first respondent referring the conduct of the applicant to the second respondent contains reasons in accordance with s 86(4)(b) – whether the investigative referral specifies conduct in accordance with s 86 – whether non-compliance with the statutory requirements for investigative referrals entails invalidity of a referral - whether the first respondent had power to make the investigative referral in circumstances where an earlier referral had been made – whether the first respondent was estopped from making the investigative referral – abuse of power.

Health Insurance Commission Act 1973 (Cth)

Health Insurance Act 1973 (Cth) ss 3,10, 81, 82, 86,87, 88, 89, 89A, 89B, 90, 91, 92, 93, 93A, 93B, 94

Judiciary Act 1903 (Cth) s 39B

Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5,6

Health Insurance Amendment (Professional Services Review) Act 1999 (Cth)

Health Insurance (Professional Services Review – Contents of Investigative Referrals) Guidelines 1999

Adams v Yung (1998) 83 FCR 248, referred to

Pradhan v Holmes [2001] FCA 1560, distinguished

Health Insurance Commission v Grey [2002] FCAFC 130, applied

Grey v Health Insurance Commission [2001] FCA 1257, referred to

Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193, referred to

Edwards v Guidice (1999) 95 FCR 561, 573, referred to

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, cited

Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, applied

DR TUAN NGOC DOAN V HEALTH INSURANCE COMMISSION & ANOR

V 202 of 2002

MARSHALL J

18 SEPTEMBER 2002

MELBOURNE

THE COURT ORDERS THAT:

1.                  The application be dismissed.

2.                  The applicant pay the respondents’ costs of the application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     There are three parties to this proceeding. The applicant, Dr Tuan Ngoc Doan, is a medical practitionerin general practice in Springvale, Victoria. The first respondent, the Health Insurance Commission, is an administrative body established by the Health Insurance Commission Act 1973 (Cth). The second respondent is Dr Alan John Holmes in his capacity as the Director of Professional Services Review, an office established under Part VAA of the Health Insurance Act 1973 (Cth) (“the HI Act”).

2                     Part VAA of the HI Act creates the Professional Services Review Scheme (“the PSR Scheme”). The PSR Scheme is a national administrative scheme of professional conduct review, in respect of the rendering or initiating of services which attract payment of Commonwealth moneys under the Medicare system, or in respect of the prescription of medication under the Pharmaceutical Benefits Scheme.

3                     Both respondents have particular responsibilities in the administration of the PSR Scheme. The first respondent has the role of monitoring the conduct of health professionals and where it has concerns that an individual practitioner may have engaged in “inappropriate practice” in the rendering or initiating of services and the prescription of medication within the meaning of the HI Act, it may refer that practitioner’s conduct for investigation by the second respondent. Upon investigation, the second respondent is vested with a number of powers, including the power to establish a committee of the practitioner’s peers to determine whether she or he has engaged in “inappropriate practice”. Where an individual practitioner is found to have engaged in “inappropriate practice”, disciplinary orders and sanctions may be imposed against her or him.

4                     Dr Doan claims that he is aggrieved by particular actions of both respondents under the PSR Scheme – the first respondent’s action of referring Dr Doan’s conduct for investigation into whether he has engaged in “inappropriate practice” in his professional capacity as a medical practitioner, and the second respondent’s instigation of an investigation on that referral, and issue of a notice to produce documents or information pursuant to that investigation. Dr Doan has applied under s 39B of the Judiciary Act 1903 (Cth) and s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“AD(JR) Act”),seeking the constitutional writ of mandamus to quash the actions of the second respondent in respect of the investigation. Dr Doan also seeks declaratory and injunctive relief in respect of actions of the both respondents concerning the investigation.

Summary of the PSR Scheme

5                     As outlined in [2] above, the PSR Scheme provides for an administrative system of peer review of the conduct of health professionals in respect of the provision or initiation of services which attract payment of Commonwealth moneys under the Medicare system, or in respect of the prescription of medication under the Pharmaceutical Benefits Scheme. Amendments were made in 1999 to the PSR Scheme by the Health Insurance Amendment (Professional Services Review) Act 1999 (Cth) (“the 1999 amendments”), following the judgment of the Full Court in Adams v Yung (1998) 83 FCR 248. The 1999 amendments introduced new procedures, in particular, increasing the powers and responsibilities of the second respondent under the PSR Scheme.

6                     The formal statutory process of review commences with the making by the first respondent of an “investigative referral” of a practitioner’s conduct to the second respondent. It is implicit in the grant of power to the first respondent to make such a referral that an investigative referral will necessarily be preceded by the first respondent’s own inquiry, albeit limited, into the practitioner. It is also so implicit in the categories of material and information which may be included in an investigative referral pursuant to the Health Insurance (Professional Services Review – Contents of Investigative Referrals) Guidelines 1999 (“the Guidelines”). In this way, the first respondent has assumed the role and responsibility of monitoring patterns of practice and identifying practitioners whose servicing, or prescribing appears abnormal – for example, too voluminous – when compared with their peers. An array of statistical data in respect of the individual practitioner’s servicing patterns, and of other practitioners’ servicing patterns is generated for the purpose of analysis and comparison.

7                     In each State, a Case Management Committee regularly undertakes the review of the patterns of practice. If the relevant Case Management Committee has concerns about a particular practitioner, officers of the first respondent will discuss those concerns with the practitioner. This stage of review is termed “counselling”. Counselling is not a formal statutory function under the PSR Scheme, but is undertaken as a matter of practice by the first respondent as a precondition to making an investigative referral.

8                     If the concerns remain following counselling, the practitioner will be given a period of time, a minimum of three months, to address the concerns of the Case Management Committee (“the probationary period”). The practitioner’s patterns of practice will then again be reviewed following the probationary period.

9                     Upon the second review, if the practitioner’s servicing remains a concern, the Case Management Committee may recommend that the Medical Director of the first respondent refer to the second respondent the conduct of the practitioner, concerning whether that practitioner may have engaged in “inappropriate practice” in connection with the rendering or initiation of services within the meaning of Part VAA of the HI Act. This is called an investigative referral.

10                  In contrast to the PSR Scheme as it stood prior to the 1999 amendments, the second respondent now has substantial powers and responsibilities upon an investigative referral. For example, having commenced the investigation pursuant to s 89(1), the second respondent may decide to dismiss the investigative referral or to enter into an agreement with the practitioner to, for example, repay Medicare benefits, or to establish a Professional Services Review Committee (“PSRC”) constituted by the practitioner’s peers and make an “adjudicative referral” to that PSRC to determine whether the practitioner has engaged in “inappropriate practice”.

11                  In the event that the second respondent refers the practitioner to a PSRC and the final report of the relevant PSRC contains a unanimous or majority finding of “inappropriate practice” against the practitioner, the Determining Authority, also established under Pt VAA of the HI Act, will make draft determinations. Those determinations may include reprimand, counselling, repayment of Medicare benefits and complete or partial disqualification of the provision of services for which a Medicare benefit is payable (in the case of complete or partial disqualification, the practical ramifications may be that the practitioner will be inhibited in attracting patients). Once the draft determinations have been submitted to the relevant practitioner and the practitioner has been afforded an opportunity to make submissions on the draft determinations, the Determining Authority will give its final determination.

Factual background

12                  Dr Doan commenced practice as a medical practitioner in general practice in Victoria in November 1994. Since that time, he has been in continuous practice as a solo practitioner.

13                  In July 2000, Dr Peter Karlik, a general practitioner employed by the first respondent as a Medical Adviser, contacted Dr Doan, and advised him that he and another officer of the first respondent would approach him for counselling for the purposes of the PSR Scheme. The counselling meeting was scheduled for 2 August 2000. In the letter to Dr Doan, dated 24 July 2000, which confirmed the interview set for 2 August, Dr Karlik said:

“As discussed on the telephone the purpose of the meeting is to discuss the pattern of your Medicare statistics and to provide information about the Professional Services Review Scheme.…

Specifically the [first respondent] requested us to provide feedback regarding:

·        Clarification of your practice

·        Volume of services (annual and daily)

·        Average Services per Patient/year

·        Acupuncture

·        PBS prescribing

…”

14                  In preparation for the meeting with Dr Doan, Dr Karlik obtained a copy of the first respondent’s file of Dr Doan’s Medicare profile and statistics. The file included a report of interview dated 16 August 1996 between Dr Doan and a Dr Mak, an officer of the first respondent. At the meeting, the first respondent’s concerns in relation to Dr Doan’s high volume of services and high services per patient had been discussed. The file also contained a letter to Dr Doan, dated 18 October 1999, from the first respondent’s then Medical Director of the Professional Review Division, in relation to Dr Doan’s practice profile for the year 1998. In addition, Dr Karlik obtained the first respondent’s Medicare services profile in relation to Dr Doan for a twelve-month period, 1 April 1999 to 31 March 2000.

15                  On 2 August 2000, Dr Karlik and Mr Broadbent, a Pharmaceutical Adviser, attended the counselling meeting with Dr Doan. In relation to the counselling meeting, Dr Karlik gave evidence that:

“I am unable to remember the precise words used in this meeting but the substance of our discussions during that counselling interview were the possible concerns that [the first respondent] had identified based on Dr Doan’s Medicare services profile which were atypical when compared to other general practitioners in Australia. In my presence, Mr Broadbent discussed issues of a PBS prescribing nature with Dr Doan.”

16                  During the counselling meeting, Dr Karlik further informed Dr Doan that if the concerns of the first respondent were not allayed, Dr Doan’s continued atypical statistics could lead to his practice ultimately being examined under the PSR Scheme. Dr Karlik gave evidence that it was not his role in counselling to make any assurance to practitioners that a reduction in their level of services would see the avoidance of a referral under the PSR Scheme. The decision on referral to the second respondent rests with Dr Janet Mould, Medical Director of the first respondent and Manager, Professional Services Branch. 

17                  During the counselling visit, Dr Doan was provided with a number of documents, including an information document concerning the PSR Scheme, published July 2000 (“the July 2000 publication”). In particular, the July 2000 publication stated that:

“The meeting, which is also referred to as counselling, provides the opportunity for the practitioner to discuss particular issues with the adviser. This may help to explain why the practitioner’s pattern of practice is different from that of their peers.

The adviser will prepare a report of the meeting and a copy of the report will be forwarded to the practitioner with an invitation to comment.

Following the meeting, the concerns will again be considered by the Case Management Committee. The majority of providers interviewed require no further action after the review period. If concerns remain, the practitioner will be given the opportunity to demonstrate a willingness to change. The practitioner’s statistics will be reviewed after a minimum of three months.

If, after this review, the practitioner’s servicing remains a concern to the HIC, the practitioner’s conduct will be referred to the Director of Professional Services Review.”

18                  Following the counselling meeting, and in accordance with the PSR Scheme Procedures Manual, Dr Karlik prepared a report of interview (“Dr Karlik’s Report”). Dr Karlik’s report, which is undated, outlines the issues that were discussed with Dr Doan. In particular, Dr Karlik’s Report states as follows:

“The Health Insurance Commission requested that Dr. Doan be visited by a Medical Adviser on the basis that analysis of his Medicare statistics indicated that he was in the upper range for the following statistical parameters (in comparison to the group ‘VR General Practitioners’):

·        Volume of services (annual and daily)

·        Average Services per Patient/year

·        Acupuncture

·        PBS prescribing

…

Dr. Doan is aware that:

·        all providers’ Medicare and PBS statistics are reviewed and monitored on a regular basis by the Health Insurance Commission as part of the Commission’s role in the appropriate payment of benefits

·        One of the foundation principles of the Medicare system is that Medicare Benefits are payable for professional services rendered or requested in the treatment of a patient that would be supported as “medically necessary” and “clinically appropriate” to the “general body of opinion of the medical profession”.

As part of its statutory role in monitoring the appropriate payment of Medicare benefits, in situations where the Health Insurance Commission has concerns regarding a provider’s atypical Medicare and/or PBS profile, the Commission will refer the doctor to the Director, PSR. The PSR process can give an independent peer group adjudication as to whether the Medicare services provided represent inappropriate medical practice. The content and quality of clinical records will have a major influence on the determination of a PSR peer committee should one be set up to assess the appropriateness of a practice.

In Dr. Doan’s case his Medicare profile is atypical in the following areas:

·        Annual Volume of Total Services (upper 1% of peer group)

·        Annual Volume of Level B Services (upper 1% of peer group)

·        Daily Volume of Services greater than 70

·        Services per Patient

·        PBS prescribing

We discussed the Professional Services Review Scheme (page 12-13, MBS 1999) and Dr. Doan is awrae of the deeming rule (80 or more consultation services on 20 or more days in a 12-month period) applying to General Practice (para 8.1.8).

      …

Dr. Doan will receive a copy of this report and is invited to comment (in writing) within 14 days if he wishes to make any clarifications or changes.

The report will then be submitted to the Health Insurance Commission who will correspond with him directly.”

19                  Under cover of letter dated 30 August 2000, Dr Karlik enclosed a copy of his report to Dr Doan. A copy of Mr Broadbent’s report of interview was also enclosed. The covering letter stated that the first respondent would consider the two reports following the receipt of any written submissions made by Dr Doan in relation to either report. Dr Doan would then be informed of “the decision made”.

20                  By letter dated 28 September 2002, the Manager, Professional Review Branch (Victoria/Tasmania), Dr David Wilson, notified Dr Doan that it had been decided that his “practice profile” would be reviewed in “approximately three to six months to determine if the [first respondent’s] concerns have been addressed”. The letter further stated that if the review showed that the first respondent’s concerns had not been allayed, then the first respondent may recommend to the Medical Director that Dr Doan be referred to the second respondent.

21                  On 9 January 2001, a report entitled “Post PSR Counselling Review” was prepared by R J Brierly on behalf of the Professional Review Branch Victoria. The last paragraph of the report is titled “Summary” and states as follows:

“A decline in total servicing followed by a return to the previously recorded levels in the subsequent quarter has been main impact of counselling over the review period…. Little positive change is evident with the itemisation of the services raised for discussion during the visit and [Dr Doan’s] requesting of pathology reduced temporarily but returned to previous levels shortly afterwards. One improvement was the discontinuation of his high daily servicing as only one date when this was evident was recorded over the review period. Potential for improvement with some of our itemisation concerns is evident but a longer review period will be needed to confirm this eventuality.”

22                  On 17 January 2001, Dr Karlik prepared a Post PSR Review Recommendation Report in relation to Dr Doan that reviewed his Medicare services profile between 3 August 2000 and 31 December 2000.

23                  By letter dated 2 March 2001 (“the 2 March letter”), Dr Wilson wrote to Dr Doan referring to the letter of 28 September 2000 which had advised of a further review of his practice profile. The 2 March letter stated that a further review had been completed and the first respondent’s original concerns had not been adequately addressed and the matter would therefore be forwarded to the Manager, Professional Services Branch (Dr Mould) for consideration of referral to the second respondent.

24                  The matter was so forwarded to Dr Mould by correspondence dated 6 March 2002 from Dr Wilson:

“Please find attached a matter for your consideration for referral to the Director of Professional Services Review. The case was considered by the Victorian Case Management Committee on 28 February 2001 and a decision was made to accept the recommendation that this matter be referred for your consideration.

For the purposes of the Professional Services Review Scheme, Dr Doan was identified by the artificial neural net. An examination of data detected the following concerns:

o       High volume of services

o       High volume of daily services

o       High average services per patient (SPP)

o       Acupuncture itemisation

o       High PBS prescribing.

…”

25                  By letter dated 30 March 2001, Dr Mould notified Dr Doan that a review of his practice statistics and all relevant documentation revealed that the concerns of the first respondent in relation to rendered services, daily servicing and prescribing of items under the PBS remained. Dr Mould had therefore decided to refer Dr Doan’s “conduct” to the second respondent for the second respondent’s consideration as to whether Dr Doan had engaged in “inappropriate practice” under the PSR Scheme.

26                  By letter dated 10 April 2001 to Dr Mould, Dr Doan expressed concern that the matter had been referred to the second respondent, as he had anticipated that he would be asked for “an explanation in relation to the [first respondent’s] concerns before the matter was referred to the [second respondent]”. The letter further stated that Dr Doan wished to advise the second respondent of the changes which he had implemented to meet the concerns which had been expressed to him at the time of the counselling visit.

27                  On 9 October 2001, the first respondent referred Dr Doan’s conduct to the second respondent by Investigative Referral 277. Investigative Referral 277 concerned services rendered by Dr Doan for the calendar year 2000.

28                  Subsequently, on 22 October 2001, Dr Doan’s solicitors wrote directly to the second respondent seeking that Investigative Referral 277 should not proceed and making submissions in this regard.

29                  On 8 November 2001, Finn J gave judgment in the matter Pradhan v Holmes [2001] FCA 1560, finding invalid an investigative referral made under the PSR Scheme as it stood following the 1999 amendments. The finding of invalidity occurred because the conduct referred was “unspecified and unlimited”: see Pradhan at [83]. In this way, the investigative referral in Pradhan included a statement that “(t)he attached material is provided for information only and is not intended to limit the conduct referred”: see Pradhan at [62]. The same wording was included in Investigative Referral 277.

30                  Subsequently, by letter dated 7 December 2001, the second respondent advised Dr Doan as follows:

“Following the recent Federal Court decision in Pradhan v Holmes & Ors I have to inform you that, because of the possibility that Investigative Referral 277 may be invalid, I am unable to complete my investigation into the referred services.

Accordingly, under the provisions of subsection 93A(1) of the Health Insurance Act I have decided to take no further action in respect of Investigative Referral No 277 from the Health Insurance Commission. I have advised the Health Insurance Commission of this decision.”

31                  By a written referral dated 18 December 2001, the first respondent again referred to the second respondent for investigation, all services rendered by Dr Doan at specific locations within a specified period, 1 January 2000 to and including 31 December 2000, to the second respondent (“Investigative Referral 312”). Investigative Referral 312 therefore concerned the same calendar year of services as Investigative Referral 277.

32                  At p 3, Book 1 of Investigative Referral 312, it is stated that the first respondent is concerned that Dr Doan’s conduct in connection with the rendering or initiation of rendered services, daily servicing and prescribing under the Pharmaceutical Benefits Scheme may constitute “inappropriate practice” within the meaning of the HI Act. At p 5, Book 1, the first respondent set out the reasons why it considered that Dr Doan may have engaged in inappropriate practice:

“In accordance with subsection 86(4)(b) of the Act, set out below are the reasons why the HIC considers Dr Doan may have engaged in inappropriate practice.

 Within the scope of Dr Doan’s conduct in connection with the rendering or initiating of the above services, the HIC is concerned that, as indicated by his practice profile, Dr Doan may have:

·        rendered or initiated services that were not necessary;

·        not provided an appropriate level of clinical input to the services;

·        not provided appropriate ‘professional services’ to his patients; or

·        not satisfied the requirements of the relevant items in the Medicare Benefits Schedule Book and the Schedule of Pharmaceutical Benefits.

The concerns of the HIC have been identified and analysed by:

·        a review of Dr Doan’s practice statistics;

·        a comparison of those statistics with the data concerning the practice of all active general practitioners in Australia;

·        a counselling meeting between a HIC Medical Adviser and Dr Doan where the above referred conduct was discussed (see Chronological Record of this Investigative Referral);

·        a report of that meeting between the HIC Medical Adviser and Dr Doan (see attached); and

·        a review of Dr Doan’s practice statistics since counselling.

The HIC determined there had been insufficient change to remove overall concerns about the referred conduct above.”

33                  By letter also dated 18 December 2001, the first respondent invited Dr Doan to make written submissions to the second respondent within 14 days as to why the second respondent should dismiss Investigative Referral 312 without setting up a PSRC.

34                  On 14 February 2002, Dr Doan’s solicitors provided a written submission in response. At p 2 of the letter it is stated that:

“The three month minimum time period is important. It acknowledges the reality that in some instances patients need to be re-educated about their attendance habits….

In the case of Dr Doan an appropriate period for review would be 1 January 2001 to 31 December 2001. This period commenced not less than three months after counselling. A review of Dr Doan’s practice statistics over this period will demonstrate that Dr Doan has implemented change and the changes are having an impact. Dr Doan acknowledges that there was little change in the three or four month period immediately following counselling of 2 August 2000 despite his efforts. It is only through a determination to bring about change that Dr Doan has now succeeded in modifying his patient’s expectations.”

35                  Receipt of those submissions was acknowledged in a letter dated 15 February 2002. The letter advised that “the Director’s full consideration will be given to your submission before he makes any decision as required by the Health Insurance Act 1973”.

36                  By letter dated 11 March 2002, the second respondent notified Dr Doan that he had “decided pursuant to subsection 89(1) of [the HI Act] to investigate Dr Doan’s conduct in relation to the referred services”. The letter enclosed, amongst other documents, a Notice to Produce Documents or Information pursuant to s 89B of the HI Act.

37                  On 5 April 2002, Dr Doan’s solicitors again wrote to the second respondent requesting reasons for the decision to investigate his “conduct in relation to the referred services” and the decision “to serve upon him in purported pursuance of section 89B of the Health Insurance Act 1973 a Notice to Produce Documents and to Give Information”.

38                  On 8 April 2002, Dr Doan filed his application in this proceeding.

The legislative context

Definitions - inappropriate practice

39                  Section 82 provides definitions of inappropriate practice. Relevantly, section 82(1)(a) provides that:

“(1) A practitioner engages in inappropriate practice if the practitioner’s conduct in connection with rendering or initiating services is such that a [PSRC] could reasonably conclude that:

            (a) if the practitioner rendered or initiated the referred services as a general practitioner – the conduct would be unacceptable to the general body of general practitioners;

 …”

40                  Section 81(1) in turn defines a “service” as a service for which “at the time it was rendered or initiated, a Medicare benefit was payable”. Medicare benefits are payable where, “on or after 1 February 1984, medical expenses are incurred in respect of a professional service rendered in Australia to an eligible person…”: s 10(1). The meaning of “professional service” (s 3) then directs one to the meaning of a “clinically relevant service” which is defined as 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”: s 3.

Investigative referrals

41                  Section 86 provides for the making of an investigative referral by the first respondent, Sections 86(1) to 86(4) provide as follows:

“(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 rendered 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.”

(emphasis added)

42                  Section 86(4A) then provides:

“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).”

(emphasis added)

43                  In the Explanatory Memorandum accompanying the Health Insurance Amendment (Professional Services Review) Bill 1999 (“the Explanatory Memorandum”), it is stated in relation to s 86(4A) 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.”

(emphasis added)

44                  Section 86(4B) further provides:

“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.”

45                  Section 87 provides for the content and form of investigative referrals, including that their content and form must comply with the guidelines made under s 87(3): s 87(2).

46                  Section 88 then provides for the procedure for notifying the relevant practitioner that an investigative referral has been made. Section 88(1) provides that the first respondent must send a copy of the investigative referral to the practitioner within forty-eight hours of it being sent to the second respondent. The copy of the investigative referral must be accompanied by a notice inviting the practitioner to make written submissions to the second respondent, stating why the referral should be dismissed by him, without setting up a PSRC: s 88(2).

47                  Section 89(1) provides that when an investigative referral is made, the second respondent,

“must conduct an investigation, in such manner as he or she thinks appropriate, into the referred services, including services not dealt with in the reasons given by the Commission under paragraph 86(4)(b).”

48                  Section 89(2) specifies that s 89(1) does not apply if the second respondent “decides under section 93A to take no action or no further action as a result of the referral”.

49                  Upon receipt of the investigative referral, the second respondent may:

·        refer material back to the first respondent, in the event that he considers that an offence may have been committed within the meaning of the Crimes Act 1914 (Cth) (s 89A(1)), and if does so, may either suspend the investigation or continue with it: s 89A(2);

·        give written notice requiring the production of “relevant documents” to the investigation: s 89B(2);

·        consult a Panel member and, or in the alternative, a consultant or learned professional body that he considers appropriate in order to obtain assistance in making a decision on the investigative referral: s 90(1);

·        dismiss the investigative referral if he considers that there are insufficient grounds upon which a PSRC could reasonably find that the person under review has engaged in inappropriate practice in connection with rendering or initiating the referred services: s 91;

·        enter into agreements with the person under review for the resolution of issues; such agreements which may include repayment of the amounts paid by the Commonwealth equal to or part of the Medicare benefits received: s 92; and

·        by writing, set up a PSRC and make an adjudicative referral to it to consider whether the conduct of the person under review, in connection with the rendering or initiating of services specified in the adjudicative referral, constituted “inappropriate practice”: s 93(1).

50                  In the event the second respondent makes an adjudicative referral to a PSRC, s 93(7) provides:

“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).”

(emphasis added)

51                  Section 93A(1) provides that if an investigative referral has been made to the second respondent, but he “is unable to investigate, or complete an investigation into, the referred services”, the second respondent “may decide to take no action or no further action in respect of the investigative referral”. Section 93A(2) then provides that:

“If, before the end of 6 months after the Director has received an investigative referral, the Director has neither:

(a)               notified the person under review that an investigation into the referred services is being carried out; nor

(b)               notified that person under subsection 94(1) that the Director has decided to make an adjudicative referral to a [PSRC] under section 93 in relation to some or all of the referred services;

the Director is taken at the end of that period to have decided under subsection (1) to take no action in respect of the investigative referral.”

Section 93B - in certain circumstances a further investigative referral may be made

52                  Section 93B applies if, after the second respondent decides to take no action in respect of an investigative referral under s 93A(1), or is taken to have decided under s 93A(2) to take no action and second, a further investigative referral is made in respect of the same practitioner. Section 93B(3) then provides that before the end of six months after the day on which further investigative referral is made, the second respondent must take action in accordance with s 93 in respect of the matters to which the further investigative referral relates, unless he has either dismissed the further investigative referral under s 91 or entered into an agreement with the practitioner under s 92, being an agreement that the Determining Authority has ratified.

53                  In relation to s 93B, the Explanatory Memorandum states that:

“Section 93B has been included as a safeguard to subsection 93A(2). It provides that the Director must take action if he or she receives a subsequent investigative referral in relation to the same practitioner. This gives effect to Recommendation 19 of the Report of the Review Committee.

The Director must take action on this subsequent referral (subsection 93B(2)) by either dismissing it, entering into an agreement with the practitioner under section 92, or setting up a Committee in accordance with section 93 (subsection 93B(3)). This must occur before the end of the period of 6 months after the day on which the Director received the further referral.”

54                  In turn, Recommendation 19 of the Report of the Review Committee states:

“The HI Act be amended to give the [Director] an option not to action HIC concerns, with the proviso that if the same practitioner is the subject of subsequent HIC concerns, the [Director] must action those subsequent concerns”.

Section 94 – the requirement of notice of decisions on investigative referrals

55                  Section 94 provides that the second respondent must give notice of his decision on investigative referrals, stating as follows:

         “(1) Within 7 days after making his or her decision on the investigative referral, the Director must give written notice of the decision to the person under review and the Commission.

(2)   If the Director decides to dismiss the investigative referral, the notice must include a statement of his or her reasons for the decision.

(3)   If the Director decides to make an adjudicative referral to the Committee under section 93, the notice must be accompanied by copies of:

a)      the instrument making the adjudicative referral to the Committee; and

b)      the report attached to the adjudicative referral under paragraph 93(6)(b).

(4)   The Director’s decision on the investigative referral is not rendered invalid merely because of a failure to comply with subsection (1) within the 7 day period.”

The Full Court judgment in Grey

56                  The recent judgment of the Full Court in Grey is a judgment of particular relevance in the instant case. The central points, of current relevance, which arise from that judgment are summarised as follows:

·        Whilst the HI Act requires that at all stages of the review under the PSR Scheme the practitioner be treated with fairness, a referral need not be framed as a charge or an indictment: at [179].

·        The general approach taken by Finn J in Pradhan in respect of the legal consequences of a breach of a statutory requirement in the HI Act could not be accepted by the Court for the reason that “a holding of nullification of the whole process for purely formal reasons would occasion public inconvenience, a consequence which the Parliament would be unlikely to intend”, in relation to legislative provisions which have as their purpose the protection of the public: at [179].

·        On the other hand, the Court accepted Finn J’s view in Pradhan that the legislature has not mandated a “roving commission” into a practitioner’s conduct under the PSR Scheme: at [180].

·        At the initiating stage, being in the particular case, the making of a referral to the Director, the whole matter rests in inquiry rather than the precise terms of any so-called “charge”: at [182].

·        The conduct alleged must answer the statutory description of what can be inquired into: at [183].

·        The language of the concerns expressed in the referral in the principal case was an appropriate statement of a subject matter for an inquiry: at [184].

Dr Doan’s submissions

57                  By his amended application, Dr Doan seeks the issue of a writ of mandamus concerning what are termed, in his application, as the “first decision” and the “second decision” of the second respondent, being respectively the “decision” of the second respondent to conduct an investigation in respect of Dr Doan’s conduct in relation to the services referred by Investigative Referral 312 and the “decision” to serve Dr Doan with a Notice to Produce Documents or Information pursuant to s 89B(2). Dr Doan also seeks related declaratory and injunctive relief against both respondents. The challenge to the second decision is dependent upon the success of Dr Doan’s case concerning the first decision, given that the validity of the “second decision” depends on the unassailability of the “first decision”.

Is the decision to conduct an investigation a reviewable decision at law

58                  Counsel for Dr Doan, Mr Monotti, conceded that the terms of s 89(1), when considered in isolation, would support the view that the second respondent is statutorily obliged to investigate when an Investigative Referral is made. Mr Monotti submitted, however, that the second respondent had stated in his letter of 11 March 2002 to Dr Doan that he had “decided pursuant to subsection 89(1) of the [HI Act] to investigate [Dr Doan’s] conduct in relation to the referred services”.

59                  Furthermore, Mr Monotti contended that, having regard to the chronology of events, the “decision” to conduct an investigation was clearly a decision under s 91, being a decision to not dismiss Investigative Referral 312. Mr Monotti submitted that, by letter dated 18 December 2001, the first respondent had invited Dr Doan to make written submissions to the second respondent why Investigative Referral 312 should be dismissed without setting up a PSRC. Subsequently, Dr Doan put forward submissions to which a reply was forwarded, stating that “the [second respondent’s] full consideration will be given to your submission before he makes any decision as required by the Health Insurance Act 1973”. Therefore, the “decision” to investigate Dr Doan’s conduct as notified in the letter of 11 March clearly encompassed a decision to not dismiss the investigative referral.

60                  In the alternative, it was submitted that the “decision” to investigate was conduct within the meaning of s 6 of the AD(JR) Act.

Grounds of review

61                  Various grounds were raised in respect of the attack on the “decisions”. A number of the grounds attack the actual making of Investigative Referral 312. Indeed, the first, second and third grounds of attack on the “first decision” are so premised, asserting that:

·                    Investigative Referral 312 does not comply with the requirements of s 86(1) in that it is not a referral of conduct and is too wide, vague and uncertain;

·                    Investigative Referral 312 does not comply with s 86(4)(b) in that it does not set out the reasons why the first respondent considers that Dr Doan may have engaged in inappropriate practice, and rather just sets out “bare assertions” that could not be considered reasons within the meaning of the HI Act;

·                    the terms of Investigative Referral 312 are outside the scope of the HI Act because they raise questions for investigation beyond the scope of the powers in the HI Act; and/or

·                    Investigative Referral 312 was made in purported reliance on s 93B as a “further referral” when there was no power to do so because Investigative Referral 277 was still extant. It was only on the second respondent’s view that Investigative Referral 277 was invalid.

Does Investigative Referral 312 contain reasons and identify conduct?

62                  Mr Monotti contended that it is not a referral of conduct to simply set out a large body of statistics of services of an individual practitioner and state that the number of services is in the 99^th percentile of services provided. Rather, Mr Monotti contended, specific conduct of the practitioner must be identified. If specific conduct is not identified, the inquiry into the practitioner’s conduct may be far-reaching and ill-defined. A consequence of such a far-reaching and ill-defined inquiry is that procedural fairness to the individual practitioner, which is integral to such a disciplinary scheme, will be undermined. The individual practitioner will not be able to comprehend what the actual concerns about her or his practice are such that all that is alleged against her or him may not be able to be fully addressed.

63                  Mr Monotti asserted that the requirement for reasons in an investigative referral is inextricably connected to ensuring that procedural fairness is afforded to the individual practitioners who are subject to review in the PSR Scheme. It was contended that a simple statement that the first respondent is concerned that Dr Doan has “not provided an appropriate level of clinical input to the services” is not enough to fulfil the obligation under s 86(4)(b). Rather, Mr Monotti submitted, s 86(4)(b) demands that the first respondent have regard to facts and draw some conclusions from those facts, for example, that having regard to the nature of the practitioner’s practice, the kind of services and other related matters, the practitioner may have not been able to devote sufficient time to the provision of proper clinical input.

64                  Mr Monotti contended that, having regard to the importance of fairness in the PSR Scheme, non-compliance with the requirement to give reasons and to identify conduct are matters which strike at the validity of investigative referrals. To support the contention that Investigative Referral 312 would be rendered invalid by such non-compliance, Mr Monotti sought to distinguish the decision of the Full Court in Grey on its facts. Mr Monotti stated that in Grey, the central issue arose a later stage in the review process, whereas, in the instant case, what is at issue is the investigative referral or the document which initiates the inquisitorial process into the individual practitioner. Mr Monotti submitted that as the initiating document, the investigative referral defines the limits of the inquiry and that it is therefore essential to ensure that it does not give way to a wide-ranging, limitless inquiry. The ramifications on the provision of procedural fairness to the individual of a failure to give reasons or adequate reasons and properly identify conduct cannot be, it was submitted, corrected at a later stage in the review process.

65                  Furthermore, in respect of the requirement to give reasons, Mr Monotti submitted that the observation of the Full Court in Grey at [173], in relation to the appropriate construction of the PSR Scheme, is not applicable in the instant case, as it was decided pursuant to the HI Act as it stood prior to the 1999 amendments. Relevantly, the Full Court at [173] observed that the decided cases in this area record consensus in the interpretation of the legislation as follows:

“Although disciplinary powers are conferred under the scheme, the purpose or object of the statute is to protect both patients and the Commonwealth against abuse of the system. That is to say, as public protective legislation, [the legislative scheme] should not be narrowly interpreted.”

Mr Monotti contended that that observation should be limited to the legislation as it stood prior to the 1999 amendments, as the alterations which the 1999 amendments have made to the PSR Scheme, in particular the requirement to give reasons under s 86(4)(b), reinforce the procedural fairness concerns in the scheme. Implicit in the 1999 amendments is the recognition that the PSR Scheme is not only public protective but also disciplinary in nature and the fact that very serious consequences for the individual may follow a finding of “inappropriate practice”. Therefore, according to Mr Monotti, the clear intent of the legislative scheme to afford fairness to the individual practitioner must also be taken into account in the construction of the legislation. The observations in Grey on the appropriate interpretation of the scheme, it was contended, are therefore not applicable to the instant case.

66                  Finally, Mr Monotti acknowledged the binding nature of the Full Court’s decision in Grey but sought to maintain, in the alternative, that Grey had been wrongly decided insofar as it found that the legal consequences of a failure to accord with a procedural requirement in the HI Act will render the referral invalid, and insofar as it deals with the requirement that in referrals under the PSR Scheme conduct must be identified. In both aspects, Mr Monotti formally urged the Court to follow the judgment of Finn J in Pradhan, whilst acknowledging that as a single judge I am bound by Grey.

Whether there was no power to make a “further referral”?

67                  In respect of the argument on whether Investigative Referral 312 was made as a “further referral” when there was no power to so make a further referral, Mr Monotti contended that the conditions in s 93A had not been met, in that the second respondent had not made a decision to not investigate because he was unable to so investigate. Rather, the second respondent had made a decision on the validity of the first referral. That is not a power conferred by the HI Act on the second respondent. Therefore s 93B could not operate because the requirements in that section, that is, a decision pursuant to s 93A had not been met. The practical outcome of this submission is that Investigative Referral 277 would be still on foot, but for it having lapsed in accordance with s 93C. Therefore it was said that there was no valid referral to the second respondent in respect of Dr Doan and that any ensuing investigation would be a nullity.

Relevant considerations and estoppel/abuse of power

68                  As the fourth ground of review, Mr Monotti contended that the “first decision” was an improper exercise of power conferred by the HI Act because:

·                    the conferral of power involved a failure by the first respondent to take into account relevant considerations, including that Dr Doan had made “substantial” changes to his practice to meet the concerns of the first respondent;

·                    it was an exercise of power for a purpose other than for which the power was conferred, namely a purpose of enabling a wide-ranging enquiry into services rendered by Dr Doan rather than the services actually referred which s 89(1) empowers the second respondent to do; and/or

·                    it was an exercise of power in a way that constituted an abuse of power in that the second respondent was estopped from making the “first decision”.

69                  Mr Monotti contended that Dr Doan had formed a belief, based on a representation made by the first respondent in the July 2000 publication concerning the PSR Scheme (see [17] above), and on statements made to him during the counselling period, that if he managed to implement the changes discussed in counselling, his conduct would not be referred to the second respondent. On the basis of the representation, Dr Doan made “substantial changes” to his practice to meet the concerns of the first respondent. Those changes were costly to him (he had therefore acted to his detriment) and inconvenient to his patients. As a consequence, his levels of servicing were reduced during the period 1 January 2001 to 31 December 2001. Furthermore, so the argument ran, the referred services in Investigative Referral 312 should not include the services in the post-counselling review period, as Dr Doan would not have a reasonable opportunity in that time to address the issues raised in the counselling meeting. Mr Monotti contended that fairness demands that Dr Doan be given a reasonable opportunity to address the matters raised and that necessarily means the first respondent is estopped from referring the services in the post-counselling review period.

70                  The first, second and third grounds of attack on the “second decision” rest on the contention that Investigative Referral 312 does not comply with the requirements of s 86(1), in that it is not a referral of conduct and is too wide, vague and uncertain. In the alternative, it was said that Investigative Referral 312 does not comply with s 86(4), because it does not set out the reasons why the first respondent considers that Dr Doan may have engaged in inappropriate practice. Mr Monotti submitted that the second respondent had no jurisdiction to serve the notice or, alternatively, that its service was not authorised by the HI Act, because Investigative Referral 312 is invalid and of no lawful effect. The grounds of relevant considerations, estoppel and abuse of power were also called in aid to challenge the Notice.

The respondents’ submissions

71                  Counsel for the respondents, Ms Hampel SC (who appeared with Mr S Moloney), responded to what she identified as the four submissions of Mr Monotti, being as follows:

1)      Investigative Referral 312 is invalid because it does not contain reasons in accordance with s 86(4) of the HI Act;

2)      there is no “conduct” identified in Investigative Referral 312 as required of a referral pursuant to s 86(1);

3)      Investigative Referral 312 was made in purported reliance on s 93B as a “further referral” when there was no power to do so; and

4)      the first respondent was estopped from making the referral.

72                  In addition, Ms Hampel explained that an underlying issue in the instant case is whether the “first decision”, as identified by Mr Monotti, is a decision of the kind to which the AD(JR) Act applies: see s 5, AD(JR) Act. On this issue, Ms Hampel contended that the second respondent is required under s 89(1), as a statutory function or obligation, to investigate when an investigative referral is made and therefore, there is no decision made pursuant to that section, but rather the carrying out of an obligatory function.

73                  Further, Ms Hampel submitted that, having regard to the legislative context of the PSR Scheme following the 1999 amendments, it is wrong to say that the requirement that the second respondent investigate carries with it a decision not to dismiss a referral under s 91 or a decision not to enter into an agreement under s 92. Whereas under the old scheme, when the first respondent made a referral to the second respondent, the second respondent had power to either dismiss the referral or to establish a peer review committee, the new scheme vests significantly broader powers in the second respondent upon a referral. The second respondent is now obliged to investigate upon a referral and then has significant powers to investigate, and powers to make a number of different decisions in accordance with the HI Act. Further, while Dr Doan was invited to make submissions (pursuant to s 88) why the second respondent should dismiss the investigative referral, it is clear, looking at the relevant provisions, that such submissions are just one of the considerations that the second respondent will have regard to in making a decision.

Does Investigative Referral 312 contain reasons in compliance with s 86(4)(b)?

74                  Ms Hampel contended that while s 86(4)(b) requires the first respondent to set out the reasons why it considers the person under review may have engaged in inappropriate practice in an investigative referral, the reasons given do not bind or limit the second respondent in his investigation. In fact, section 89(1) expressly provides that the second respondent can conduct the investigation into the referred services in the manner which he thinks appropriate, including into services not dealt with in reasons given by the first respondent in the referral. The second respondent is only constrained by the services actually referred. The investigation cannot extend beyond those services and inquire into services relevant to an earlier time.

75                  Ms Hampel contended that the purpose to be achieved by the obligation on the first respondent to provide reasons in making the referral is to be found in s 88. Section 88 obliges the first respondent upon making an investigative referral, to provide a copy of that referral to the practitioner and to invite the practitioner to make submissions as to why the second respondent should dismiss the referral without setting up a PSRC. By providing reasons, the practitioner will have notice of the matters of concern to the first respondent so that she or he can properly reply to the invitation, pursuant to s 88, to make written submissions. The purpose to be achieved by the obligation to provide reasons is to afford the practitioner procedural fairness. Any submissions of the practitioner under a s 88 invitation is then, according to Ms Hampel, just one of the matters which the second respondent can have regard to in considering whether he will dismiss the referral without setting up a PSRC under s 91 or in deciding to take another course of action open to him under the HI Act. The 1999 amendments have extended the second respondent’s investigative powers. Those powers necessarily include the ability to properly investigate any matters raised by the practitioner in response to a s 88 invitation. 

76                  Ms Hampel emphasised that s 86(4)(b) reasons are given at the stage when the inquisitorial process into the relevant practitioner’s conduct is initiated. In this way, Ms Hampel referred to the Full Court’s approval in Grey of the observations of the Full Court in Adams, that at the beginning of an inquiry, the likely or possible findings or the grounds upon which they might be made may well not have been formulated. A referral under s 86 is not in the nature of a charge or indictment, rather it is the beginning of an inquisitorial process and the likely or possible findings or the grounds upon which it might be made may not have been formulated. The obligation to afford a practitioner procedural fairness will be fulfilled if the practitioner knows of, and has a chance to respond to, any likely or possible findings, as the inquiry proceeds through its several stages.

77                  Further, Ms Hampel submitted that, having regard to the limited role the first respondent plays in the PSR Scheme, and the limited information available to the first respondent at the time it makes an investigative referral, as compared with the expertise of the second respondent, and the expertise of the people the second respondent may choose to consult and the expertise of a PSRC, if one is established, it is clear why the s 86(4)(b) reasons do not bind the second respondent: s 89(1). Further, it was said, that the adequacy of the reasons given must be assessed in light of the first respondent’s relative expertise - the reasons which can actually be given are necessarily limited.

78                 Ms Hampel contended that in light of the matters outlined above, Investigative Referral 312 does set out reasons in compliance with s 86(4)(b). Ms Hampel referred to p 5 of Investigative Referral 312, and submitted that the first respondent there gave four reasons why the first respondent was concerned that the conduct referred to may constitute inappropriate practice. Those reasons were that Dr Doan may have rendered or initiated services that were not necessary; not provided an appropriate level of clinical input to the services; not provided appropriate ‘professional services’ to his patients; and had not satisfied the requirements of the relevant items in the Medicare Benefits Schedule Book and the Schedule of Pharmaceutical Benefits. Furthermore, in this way, the reasons reflect or parallel the “concerns” which were set out in the particular referral in Grey (see the first instance decision of Finkelstein J in Grey v Health Insurance Commission [2001] FCA 1257) and the investigative referral in Pradhan. In the case of Pradhan, it was submitted that it was only the catch-all concluding phrase in the investigative referral which caused Finn J to consider that referral invalid.

79                  In addition, it was submitted that the reasons given are proper, adequate and intelligible. The first argument put in support of this submission was that the investigative referral is intended for medical experts, not lay readers. Second, it was contended that Dr Doan’s obligation to not engaged in “inappropriate practice” arose from his commencement as a qualified medical practitioner. Third, the fact that Dr Doan implemented changes to his practice following counselling shows the adequacy of the reasons ultimately given on the investigative referral for the intended audience (being Dr Doan) as those reasons reflect what was originally put to him during counselling. Similarly, his submissions made on the s 88 invitation show an understanding of the concerns put to him in counselling. Fourth, regard must also be had to the fact that it is the individual practitioner’s obligation to comply with the requirements under the HI Act in respect of Medicare payable services. Finally, in assessing the adequacy of reasons, it must be remembered that the making of an investigative referral does not entail a decision which is final and conclusive of substantive rights.

80                  Ms Hampel also submitted that there was a factual basis for the reasons of the first respondent including a comparison of the figures of Dr Doan’s practice when compared to other practices and the other issues considered during counselling with Dr Doan.

81                  Further, the definitional chain of “inappropriate practice” in the HI Act and the overall issue of whether the practitioner has engaged in “inappropriate practice” necessarily demands an analysis of particular questions, including whether the service is clinically relevant, whether the services rendered or initiated in the referral period were necessary, whether there was an appropriate level of clinical input and whether the services were appropriate. In this way, from the definition of s 82 of inappropriate practice, one has to go to s 81(1) which defines a “service” as a service for which “at the time it was rendered or initiated, a Medicare benefit was payable”, such Medicare benefits being payable where, “on or after 1 February 1984, medical expenses are incurred in respect of a professional service rendered in Australia to an eligible person…” (s 10(1)). The meaning of “professional service” in s 3 then directs one to the meaning of a “clinically relevant service” which is defined as 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”: s 3.

82                  Ms Hampel additionally contended that the adequacy of the reasons given by the first respondent must be considered in light of the limited role the first respondent plays in the PSR Scheme and the limited information available to it in deciding to make a referral.

83                  In response to Mr Monotti’s contention that non-compliance with s 86(4)(b) would render an investigative referral a nullity, Ms Hampel submitted, in the alternative, that non-compliance with s 86(4)(b) would be, at its very highest, a non-jurisdictional error of law which would give rise to a discretionary right to relief only. The factors relevant to the granting of such relief include the harm done by a failure to give reasons in accordance with the HI Act and whether that harm can be remedied at a later stage. Reliance was placed on the Full Court’s view in Grey that a finding that a breach of a statutory requirement would render a referral invalid or a nullity would seem contrary to Parliament’s intention in the case of legislative provisions which have as their object the protection of the public. Ms Hampel contended that there is no fundamental jurisdictional requirement in the first respondent to give reasons when making an investigative referral. Therefore, an investigative referral will not be vitiated if reasons are not given in compliance with the HI Act.

Is Investigative Referral 312 a referral of conduct?

84                  Ms Hampel contended that the views of the Full Court in Grey in relation to what was required for the statement of the subject matter of an inquiry or conduct identified under the HI Act are relevant. That is despite the fact that the referral considered in Grey was made prior to the 1999 amendments and the fact that the 1999 amendments do not affect requirements in respect of the specification of conduct. Ms Hampel submitted that, in the instant case, there has been conduct clearly identified in Investigative Referral 312 in the terms required by the HI Act.

85                  In respect of Finn J’s judgment in Pradhan, Ms Hampel also submitted that his Honour’s reasoning concerning the identification of conduct or species of conduct is consistent with a line of authority culminating in Grey.

86                  Furthermore, Ms Hampel noted that the Full Court in Grey at [179] rejected Finn J’s approach in Pradhan of holding that a referral which is not in compliance with the statutory requirements (in Pradhan, ss 86(1) and 93(1) respectively), and in so doing referred to the observation of the High Court in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at p 389. Reference was made to the following observations of the Full Court in Grey at [179]:

“As was explained in Blue Sky … a breach of a statutory requirement may be unlawful and may be liable to be enjoined, if appropriate, so to order, at the Court’s discretion. But this is not to say that a referral was invalid, or illusory or void, or a nullity, a very different thing. When, as here, the Court is considering the effect of legislative provisions, having as its object the protection of the Public, a holding of nullification of the whole process from its beginning for purely formal reasons would occasion public inconvenience, a consequence which parliament would be unlikely to intend. To this extent, we cannot, with respect, accept the general approach taken by Finn J in Pradhan.”

Was Investigative Referral 312 properly made under s 93B as a further referral?

87                  In response to Mr Monotti’s contention that Investigative Referral 312 was made in purported reliance on s 93B as a “further referral” when there was no power to do so, Ms Hampel contended that the second respondent was concerned about the validity of Investigative Referral 277 as a result of Pradhan. This was because Investigative Referral 277 was in similar terms to that which Finn J found problematic in Pradhan. The second respondent therefore made a decision to take no further action in respect of the investigation, on the basis that he was “unable” to do so. Section 93A(1) clearly empowered him to make this decision and as a repository of statutory authority he was obliged to act in accordance with the law as it stood at the time. Having made that decision, the first respondent was entitled to make a further referral under s 93B(1). Ms Hampel contended that the facts of the instant case illustrate the circumstances contemplated by s 93A.

88                  Furthermore, Investigative Referral 277 is not now extant because of s 93A(2) of the HI Act. Therefore, Investigative Referral 312 is the only investigative referral - it was not made as a further referral, according to Ms Hampel.

Did the first respondent fail to take into account relevant considerations and therefore wasthe conferral of power an improper exercise?

89                  Ms Hampel contended that Mr Monotti’s submission on the issue of relevant considerations fails at the factual level because the precise considerations alleged not to have been taken into account were either taken into account (referring to p 5 of Investigative Referral 312) or in the case of the consideration of “substantial changes” to Dr Doan’s practice, no such relevant consideration exists. Counsel referred to paragraph 7 of Dr Doan’s affidavit sworn on 8 April 2002 where Dr Doan stated that he made the “substantial changes”, being primarily a reduction in his surgery hours, in “good faith” on the basis of his belief that as a result, “there would be no action taken against [him] by the [first respondent] in relation to its alleged concerns as to volumes of servicing and prescribing”. Dr Doan then further stated that as a result, his level of servicing was reduced so that during the period 1 January 2001 to 31 December 2001 he provided 14,990 services. Ms Hampel noted that this left him in the 99^th percentile such that there was no “substantial change” which the first respondent could have had regard to in the exercise of making the investigative referral.

Abuse of power or estoppel or improper conduct

90                  Ms Hampel contended that Dr Doan’s submissions on these points must necessarily fail on both a factual and legal basis.

91                  As a matter of fact, according to Ms Hampel, there was no evidence of any representation which was made so as to give to Dr Doan the belief that he deposes to that if he introduced changes to his practice, no referral would be made.

92                  As a matter of law there was no authority to make such a representation. Further, the authorities make it clear that the principles of estoppel are not applicable to discretionary decisions of statutory decision-makers. Ms Hampel relied particularly on the observations of Gummow J in Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193.

93                  In relation to the issue of improper purpose, reliance was again placed on Gummow J’s judgment in Kurtovic. In particular, emphasis was placed his Honour’s observations at p 219 that a revival of a decision previously revoked (paralleling the making of the further investigative referral in this case) “falls well short of the degree of repetitious administrative procedures which would support a contention that the discretion reposed in the decision-maker by an Act of the Commonwealth was being exercised for an improper purpose”.

94                  Finally Ms Hampel contended to the effect that the circumstances of this case are not apt to seriously provide the foundation for a submission based on the abuse of power ground.

Dr Doan’s submissions in reply

95                  In reply to the respondents’ contentions as to whether the instigation of the investigation is a decision within the meaning of the AD(JR) Act, Mr Monotti emphasised that even if the investigation has been misdescribed as a decision under s 89(1), it is clearly a decision of a substantive character under s 91, that is, a decision not to dismiss Investigative Referral 312 in response to the submissions put forward on behalf of Dr Doan.

96                  Mr Monotti further contended that the respondents misunderstood the nature of s 86(4)(b), exemplified by the submission that the purpose of the requirement to give reasons in s 86(4)(b) is to give the person under review “notice of the matters then of concern to the Commission, and the opportunity to make submissions concerning dismissal to the Director”. Mr Monotti submitted that all s 89(2) does is provide that the second respondent is not limited to investigating only the referred services which are dealt with in the reasons.

97                  It was further submitted that the decision in Pradhan did not mean that Investigative Referral 277 was unlawful and the second respondent was unable to proceed in accordance with s 93A. The test of inability under s 93A is objective. The second respondent had no power to make a decision as to the validity of an investigative referral as his own subjective view. The second respondent had a valid investigative referral (Investigative Referral 277) before him and was required to proceed with it.

98                  Additionally, on the estoppel point, Mr Monotti took issue with the respondents’ reliance on Kurtovic on the basis of the different factual situation in that case. Mr Monotti again stressed the primacy of the procedural fairness concerns of the 1999 amendments (referring to the Explanatory Memorandum) and submitted that the counselling process would be valueless, in real terms, if practitioners implemented change on the basis of what they were told during counselling but referrals were nevertheless made.

Consideration

The fulfilment of the s 89 obligation

99                  The word “decision” implies that the decision-maker has some discretion to decide a question or an issue in a particular manner. Section 89 imparts an obligation upon the Director (in the instant case, the second respondent) to conduct an investigation. The second respondent had no choice in the matter. It is irrelevant that the second respondent described his actions as a decision.

100               I do not consider that the implementation of the obligation to conduct an investigation may be described as a decision under s 91 not to dismiss “the investigative referral”. It is apparent that an investigation needs to have commenced before it can be dismissed under s 91 or otherwise. For example, s 90 allows the Director to obtain assistance in making his or her decision on an investigative referral which shows that it is not correct to say that acting to commence an investigation simultaneously means that a decision has been made to not dismiss the referral.

101               I therefore reject Mr Monotti’s submission to the effect that the instigation of the investigation is reviewable.

Compliance with s 86(4)(b)

102               In my view, Investigative Referral 312 did, in its terms, set out the reasons why the first respondent considered that Dr Doan may have engaged in inappropriate practice within the meaning of the HI Act. Implicit in this view is the opinion that the referral of conduct as encapsulated by s 86(1) was not too wide, vague or uncertain. I reject the contention that all the referral did was to simply set out a large body of statistics and make “bare assertions”. I accept the submission of Ms Hampel that the very terms of Investigative Referral 312 gave four reasons why the first respondent was concerned about Dr Doan’s conduct. Those reasons were unambiguous. They are summarised at [78] above. They are clearly more than bare assertions when read in the context of the statistics contained in the referral. I find apposite to this matter, the observations of the Full Court in Grey at [184] where their Honours said:

“In our opinion, the concerns expressed by the Commission elaborated in the attachments to the Referral formed a permissible basis or subject matter for an inquiry by a Committee into the question whether Dr Grey had, in the specified period, and at the specified location, in connection with rendering the 24,774 specified services, engaged in conduct, such that a Committee could conclude that the conduct would be unacceptable to the general body of practitioners.  In our view, as a statement of a subject-matter for an inquiry, there is nothing vague, unintelligible, too wide, unspecified, unlimited or otherwise uncertain or indefinite in this language.”

103               I also accept Ms Hampel’s submission that the reasons given by the first respondent were proper, adequate and intelligible. The obligation to provide reasons has been satisfied given that the reasons disclose, with certainty, the reasoning process applied: see Edwards v Guidice (1999) 95 FCR 561 at 573.

104               Having found that the obligation to provide reasons has been satisfied, it is unnecessary to consider whether a lack of compliance with s 86(4)(b) would render the entire investigative process a nullity. I note, however, that I would be bound to hold consistently with Grey that a lack of such compliance would not have that effect: see Grey at [179] to [182]. I do not accept by Mr Monotti’s submission that Grey is not applicable as it was decided pursuant to the HI Act as it stood prior to the 1999 amendments and because the requirement of reasons under s 86(4)(b) is new. I see no basis for the submission that the addition of s 86(4)(b) to the scheme highlights the fact that the procedural fairness concerns in the scheme must take primacy in interpreting the legislation over any public protection concerns.

105               Additionally, it is sufficient to say that a breach of s 86(4)(b) will not automatically result in the invalidity of a referral. As was said by McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky at pp 388-399:

“An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid of and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition.”

106               I can discern nothing in the HI Act which demonstrates a legislative purpose to invalidate a referral given in breach of s 86(4)(b). That is especially so when one considers that the referral is the first step in the process of an inquiry during which procedural fairness must be accorded to a practitioner.

The s 93B issue

107               I accept that the second respondent was entitled to take the view after Pradhan that the first referral (Investigative Referral 277) would, in all likelihood, be invalid. That was so because of the “catch-all” nature of its terms: see [29] above.

108               Having taken that view, there was nothing to prevent the first respondent from making a further referral. It would have been inappropriate for the second respondent to dismiss Investigative Referral 277 under s 91. That was because, at that stage, he could not have legitimately held the view that there were insufficient grounds on which a PSRC could reasonably find that Dr Doan had engaged in inappropriate practice. The second respondent adopted a sensible, practical course which is not prohibited by the HI Act. Consequently, the first respondent made a new referral. The preconditions set out for that new referral by s 93A were met. As referred to in the preceding paragraph, the second respondent was unable to investigate because Pradhan had rendered the investigation invalid. I consequently reject Mr Monotti’s submission that there was no power to make Investigative Referral 312.

Irrelevant considerations/ Improper exercise or abuse of power

109               I accept Ms Hampel’s submission that the first respondent did not fail to take into account relevant considerations that it was bound to take into account before making Investigative Referral 312. The evidence, referred to in [89] above, discloses that there was no substantial change in Dr Doan’s practice as a result of the counselling he received. In any event, it has not been demonstrated that the first respondent failed to take into account any relevant consideration which it was bound to take into account: see Minister for Aboriginal Affairs v Peko- Wallsend Ltd (1986) 162 CLR 24 at pp 39 to 40.

110               Consequently, there is no basis for the contention that the first respondent dealt with Dr Doan unfairly and should therefore be estopped from making Investigative Referral 312. There is no need to consider whether the law of estoppel would be applicable, in any event, to the implementation by the first respondent of its statutory discretion to make an investigative referral. Further, the facts of this case form no foundation for any objectively realistic view that the respondents abused the powers conferred upon them by the HI Act.

111               In respect of Mr Monotti’s submission that Investigative Referral 312 should not have included services immediately following the counselling period (and that by so including those services, bad faith was demonstrated), I note that ss 86(2) and 86(3), which were introduced by the 1999 amendments provide that:

“(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.”

Clearly, the first respondent had the power to refer services that were rendered or initiated in the probationary period following counselling.

Disposition

112               Having regard to the foregoing, it is apparent that there is no substance in any of the contentions advanced on behalf of Dr Doan. As there is no merit in the challenge to the instigation of the investigation into Dr Doan’s conduct, I see no basis upon which the service of the notice under s 89B can be impugned (see [57] above). The application will be dismissed with costs.

Associate:

Dated: 18 September 2002