FEDERAL COURT OF AUSTRALIA

Crowley v Holmes [2003] FCA 414

PRACTICE AND PROCEDURE – Health Law – interlocutory application – referrals made by Health Insurance Commission and Director of Professional Services Review under the Health Insurance Act 1973 (Cth) relating to conduct of medical practitioner – Professional Services Review Committee scheduled a hearing to assess whether conduct constituted “engaging in inappropriate practice” within the meaning of the Health Insurance Act 1973 (Cth) – earlier referrals made in relation to conduct of the medical practitioner at a different period of time before a differently constituted Committee – separate proceeding before the Court in relation to earlier referral, on appeal – Committee restrained from hearing matters relating to earlier referral until determination of that appeal – whether serious question to be tried – whether inclusion of practice statistics relating to periods outside the period proscribed by the Health Insurance Act 1973 (Cth) invalidated the referrals or created an apprehension of bias in the Committee – whether decisions of the Commission and Director leading to multiple hearings before differently constituted Committees were invalid as ultra vires to the Health Insurance Act 1973 (Cth), improperly made or a misuse of power.

PAUL DAVID CROWLEY v ALAN JOHN HOLMES & ORS

V 273 of 2003

GOLDBERG J

1 MAY 2003

MELBOURNE

THE COURT ORDERS THAT:

1.         The application for interlocutory relief be dismissed.

2.           The costs of the application for interlocutory relief and the hearing on 30 April 2003 be reserved for further consideration.

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

REASONS FOR JUDGMENT

1                     The applicant is a medical practitioner who carries on a general practice in Lowood in Queensland.  The first respondent is the Director of Professional Services Review (“the Director”) appointed under the provisions of s 83 of the Health Insurance Act 1973 (Cth) (“the Act”). 

2                     The second, third and fourth respondents are the members of the Professional Services Review Committee No 366 (“the Committee”) established by the Director on or about 20 December 2002 pursuant to the provisions of the Pt VAA of the Act.

3                     The fifth respondent is the Health Insurance Commission (“the Commission”) established pursuant to the provisions of the Act which is able, pursuant to s 86 of the Act, to make investigative referrals of certain conduct to the Director.

4                     The application instituting this proceeding was filed on 22 April 2003.  By that application the applicant seeks declarations to the effect that the decision of the Commission to make an investigative referral to the Director and the decision of the Director to make Adjudicative Referral No 366 and to establish the Committee have been affected by legal error and should be set aside.  The Committee proposes to commence a hearing under the provisions of Pt VAA of the Act tomorrow, 2 May 2003. 

5                     The matter presently before the Court is an application for interlocutory relief seeking an interlocutory injunction restraining the members of the Committee from hearing the matters which are the subject of Adjudicative Referral No 366 pending the hearing and determination of the initiating application or further order.  The application for interlocutory relief was initially set down for hearing before a judge of the Court on 3 June 2003.  The applicant sought to have the Committee adjourn the further hearing to enable the application to be heard but the Committee has refused to adjourn the hearing. 

6                     There was some inconsistency in the time for which the adjournment was sought, that is, for the time during which the period of the injunction was to run.  Ultimately however the applicant submitted that he applied for an order restraining the Committee from hearing Adjudicative Referral No 366 for a short period, namely until the earliest convenient date after 3 June 2003, that being the date set down for the hearing of the application for interlocutory relief before another judge of the Court. 

7                     There is presently outstanding an earlier Investigative Referral No 296 and Adjudicative Referral No 296 whereby Professional Services Review Committee No 296 was appointed by the Director to consider whether conduct by the applicant in connection with the rendering of services specified in that referral constituted engaging in inappropriate practice.  On 18 December 2002 North J dismissed an application seeking to invalidate Adjudicative Referral No 296:  Crowley v Holmes [2002] FCA 1585.  On 21 January 2003 a notice of appeal was filed in respect of that decision and that appeal is listed for hearing on 21 May 2003.  On 25 March 2003 North J restrained the members of the Professional Services Review Committee No 296 from proceeding to hear the matters the subject of Adjudicative Referral No 296 until 4.15pm on 21 May 2003, that being the day fixed for the hearing of the appeal.

8                     The application before the Court arises in the context of Pt VAA of the Act which establishes the Professional Services Review Scheme.  Section 80(1) of the Act provides:

“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.”

9                     Section 86 of the Act provides that the Commission may 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.” 

Such a referral is described as an “investigative referral”.  Section 89 provides that having received such a referral, the Director must conduct an investigation into the referred services.  By virtue of s 93(1) of the Act the Director can set up a Professional Services Review Committee in accordance with Div 4 and make an adjudicative referral to that Committee.  Where the Director sets up a Professional Services Review Committee and makes an adjudicative referral to it, the Committee is obliged to consider whether the rendering of the referred services constituted “engaging in inappropriate practice”.  Under s 106L of the Act the Professional Services Review Committee must give a report to the Director and the person under review indicating whether, in its opinion, the person under review engaged in inappropriate practice in connection with the referred services.  The end of the procedure is that the Determining Authority provided for in Pt VAA of the Act must make a final determination which may contain a number of outcomes such as reprimand, counselling, repayment of Medicare benefits, revocation or suspension of Pt VII authority for the purposes of the National Health Act 1953 (Cth) and disqualification.

10                  The Act contains a definition of “inappropriate practice” which is found in s 106KA.  This relevantly provides:

"(1)     Subject to subsections (2) and (2A), if, during a particular period (the relevant period), the circumstances in which some or all of the referred services were rendered or initiated constituted a prescribed pattern of services, the conduct of the person under review in connection with rendering or initiating services during that period in those circumstances is taken, for the purposes of this Part, to have constituted engaging in inappropriate practice.

(2)       If the person under review satisfies the Committee that, on a particular day or particular days during the relevant period, exceptional circumstances existed that affected the rendering or initiating of services by the person, the person’s conduct in connection with rendering or initiating services on that day or those days is not taken by subsection (1) to have constituted engaging in inappropriate practice.

(2A)     However, subsection (2) does not affect the operation of subsection (1) in respect of the remaining day or days during the relevant period on which the person rendered or initiated referred services even if the circumstances in which the referred services were rendered or initiated on that day or those days would not, if considered alone, have constituted a prescribed pattern of services.

(3)       The regulations may prescribe, in relation to:

(a)        a particular profession; or

(b)        an identified group or groups of practitioners in a particular profession;

circumstances in which services of a particular kind or description that are rendered or initiated constitute, or do not constitute, a prescribed pattern of services for the purposes of subsection (1).

(4)       The circumstances that may be prescribed under subsection (3) as circumstances in which services that are rendered or initiated constitute a prescribed pattern of services include, but are not limited to, the rendering or initiation of more than a specified number of services, or more than a specified number of services of a particular kind, on each of more than a specified number of days during a period of a specified duration.

(5)       The circumstances that constitute exceptional circumstances for the purposes of subsection (2) include, but are not limited to, circumstances that are declared by the regulations to be exceptional circumstances.”

11                  Part 3 of the Health Insurance (Professional Services Review) Regulations 1999 (Cth) (“the Regulations”) relevantly provides:

“9        Practitioners affected by these Regulations

For subsection 106KA(3) of the Act, the following groups of practitioners in the profession of medicine are groups to which these Regulations apply:

(a)        general practitioners;

(b)        other medical practitioners rendering professional attendances.

10        Circumstances constituting a prescribed pattern

The circumstance in which services that are professional attendances constitute a prescribed pattern of services is that 80 or more such services are rendered on each of 20 or more days in a 12 month period.

11        Exceptional circumstances

For subsection 106KA(5) of the Act, the following circumstances are declared as constituting exceptional circumstances:

(a)        an unusual occurrence causing an unusual level of need for professional attendances;

(b)        an absence of other medical services, for patients of the person under review during the relevant period, having regard to:

(i)         the location of the practice of the person under review; and

(ii)        characteristics of the patients of the person under review.”

12                  In order to understand how the present application for interlocutory relief arises it is necessary to look at the context in which the two adjudicative referrals have arisen.  The following brief chronology sets out the interrelationship between the two adjudicative referrals.

13 December 2001       Investigative Referral No 296 was instigated.

14 February 2002         Adjudicative Referral No 296 was made and Professional Services Review Committee No 296 was established with a hearing scheduled to commence on 31 May 2002.

6 May 2002                 Proceeding V 259 of 2002 commenced in this Court, in which the applicant sought to challenge the decisions to make Adjudicative Referral No 296 and to establish Professional Services Review Committee No 296. 

22 May 2002               Undertakings were given by members of the Professional Services Review Committee No 296 not to proceed to a hearing on 31 May 2002.

11 October 2002          Investigative Referral No 366 was instigated.

18 December 2002       North J gave judgment in proceeding V 259 of 2002 dismissing the application.

20 December 2002       Adjudicative Referral No 366 was made and Professional Services Review Committee No 366 was established.

21 January 2003           A notice of appeal was filed.

12 February 2003         A notice of hearing by Professional Services Review Committee No 366 was given with a hearing scheduled for 2 May 2003.

24 February 2003         A notice of hearing by Professional Services Review Committee No 296 was given with a hearing scheduled for 11 April 2003.

25 March 2003            North J granted an injunction restraining Professional Services Review Committee No 296 from conducting its hearing until the hearing, but not the determination, of the appeal scheduled to be heard on 21 May.  An application to join the Professional Services Review Committee No 366 into that appeal and to restrain the Professional Services Review Committee No 366 from proceeding until a determination of the appeal was refused. 

22 April 2003               Proceeding V 273 of 2003 was commenced to restrain Professional Services Review Committee No 366 from commencing its hearing on 2 May 2003.

13                  In his judgment on 18 December 2002, North J rejected an argument that Investigative Referral No 296 did not comply with the statutory provision requiring an investigative referral to relate only to services rendered during the two year period immediately preceding the referral.  That argument was based on the fact that Investigative Referral No 296 included the applicant’s practice statistics from 1 January 1997 to 31 March 2001.  North J found that the Investigative Referral No 296 related only to the period on and from 1 January 2000 to 31 October 2000. 

14                  North J also rejected a submission that Adjudicative Referral No 296, to which Investigative Referral No 296 was attached, was invalid or created an apprehension of bias because the Investigative Referral referred to the fact that the applicant was counselled by the Commission in 1993 and 1995, that his conduct was referred to the Director in 1996 and that a determination was made in 1997 that he be counselled by the Director and disqualified for six months.  I refer hereafter to these matters as the applicant’s prior history.

15                  The Investigative Referral also contained the practice statistics which the applicant had submitted were both irrelevant and prejudicial.  His Honour rejected the submission that those matters created an apprehension of bias in the Professional Services Review Committee No 296.  North J treated the practice statistics as prejudicial and irrelevant to any issue to be considered by the Professional Services Review Committee No 296 but concluded that he did not intend to preclude the Committee from drawing its own conclusions about their relevance.  His Honour said, at par [49] of Crowley v Holmes (supra):

“I have approached this argument on the basis that the practice statistics are prejudicial and irrelevant.  Because, even on that assumption, at this stage, their inclusion in the adjudicative referral does not give rise to a reasonable apprehension of bias by the Committee.  However, this assumption is not intended to preclude the Committee from drawing its own conclusions about the relevance of the practice statistics.  The relevance of the practice statistics is a question for the Committee to determine.  The practice statistics may turn out to be relevant to the exceptional circumstances argument.  That will depend on the evidence and argument relied upon by Dr Crowley at the hearing.”

16                  The notice of appeal, filed on 21 January 2003, only challenges North J’s finding that, even if the references in the Adjudicative Referral No 296 to the prior history of the applicant were irrelevant and prejudicial, the inclusion of that material did not give rise to a reasonable apprehension of bias and did not require a finding that it invalidated the Adjudicative Referral.  The notice of appeal did not raise any ground in relation to his Honour’s findings regarding the inclusion of the practice statistics. 

17                  The application for interlocutory injunctive relief before me must be grounded in a claim which challenges the validity of Adjudicative Referral No 366 or the underlying Investigative Referral No 366.  It is to be noted that Adjudicative referral No 296 covers the period from 1 January 2000 to 31 October 2000 whereas Adjudicative Referral No 366 covers the period from 2 January 2001 to 6 March 2001.  There is no overlap of these periods.  The invalidity of Adjudicative Referral No 366 and the underlying Investigative Referral No 366 is said to arise from two factors.  The first factor is the decision to make two investigative referrals instead of one.  It was submitted that this decision to have the two investigative referrals instead of one was ultra vires the Act, a decision improperly made and a misuse of power.  The circumstances said to constitute these matters were set out in par 8 of the statement of claim as follows:

“A.      By s.106KA of the Act if, during a particular period, the circumstances in which some or all of the referred services were rendered or initiated constituted a prescribed pattern of services, the conduct of the person under review in connection with rendering or initiating services during that period in those circumstances is taken to have constituted engaging in inappropriate practice.

B.         By Regulation 10 of Part 3 of the Regulations, the circumstance in which services that are professional attendances constitute a prescribed pattern of services is that 80 or more such services are rendered on each of 20 or more days in a 12 month period.

C.        By s.106KA(2) of the Act, if the person under review satisfies a Committee that, on a particular day or particular days during the relevant period, exceptional circumstances existed that affected the rendering or initiating of services by the person, the person’s conduct in connection with rendering or initiating services on that day or those days is not taken by subsection (1) to have constituted in engaging in inappropriate practice.

D.        In making the decision to make separate Referrals, the Commission failed to consider relevant circumstances.  In particular, the Commission failed to consider the consequences of separate hearings which involved the likelihood that the Applicant would have to present a case, on exceptional circumstances, on two separate occasions, with unnecessary and unfair inconvenience and expense, and which gave rise to the possibility of inconsistent findings in a single case artificially divided into two cases.  A possibility of inconsistent findings was a serious and relevant matter which, if it occurred, would bring the law in general and the Professional Services Review Scheme in particular into disrepute.”

18                  It was then said that the Director fell into legal error in not referring Adjudicative Referral No 366 to the Professional Services Review Committee No 296 and in establishing two hearings.  The legal error was said to be that the Director failed to take into account a relevant consideration, namely that the applicant was relying upon the same argument in relation to the issue of exceptional circumstances in each referral.  It was also said that the Director failed to take into account the fact that the testimony of the applicant on the issue of exceptional circumstances would be likely to cover both referral periods and the material between them in a single narrative because the referral periods were linked by a common range of circumstances, and the intervening period and the period after 6 March 2001 were characterised by circumstances which contrasted with those pertaining to the referral periods.  It was also said that in reaching findings in relation to one period, the consideration of circumstances existing in other periods was relevant in either adding cogency to the applicant’s evidence or in reducing the credibility of that evidence.  It was said these matters were not taken into account by the Director.

19                  The second ground of invalidity relied on was set out in par 11 of the statement of claim, which alleged that Investigative Referral No 366 contained information and material relating to services rendered by the applicant in a period of time not being the two year period immediately preceding the date of that referral.  Adjudicative Referral No 366 included extracts from Investigative Referral No 366, being practice statistics covering 1 January 1998 to 31 March 2001.  It was said, therefore, that the Adjudicative Referral contained irrelevant and prejudicial material and thereby failed to comply with Div 3 Pt VAA of the Act, and that the material led, in the light of the fact that irrelevant and prejudicial matter would be placed before the Committee, to a reasonable apprehension of bias of members of that Committee.

20                  It was then said that the Committee lacked a jurisdictional basis to determine to hold a hearing.  This second ground was raised before North J in relation to Investigative Referral No 296 and Adjudicative Referral No 296 and was rejected by him.  The rejection of that ground is not raised in the notice of appeal.  The only ground raised in the notice of appeal is the applicant’s prior history, and references to those matters are not found in Adjudicative Referral No 366. 

21                  I do not consider that either of these two factors raises a serious question to be tried as to the invalidity of Adjudicative Referral No 366 or the underlying Investigative Referral No 366. 

22                  The first factor, that is, in relation to the decision to make or to direct two hearings, is substantially a complaint about the inconvenience of two separate hearings and their attendant cost.  It is said that inconsistent findings will occur on account of a common defence being raised.  But each referral is in relation to a different period so there cannot be any inconsistent findings on any of the principal issues.  The success of the defence depends upon its applicability to two separate and distinct periods.  The matter of the defence and the inconvenience of two hearings cannot vitiate the decision to make either Investigative Referral No 366 or Adjudicative Referral No 366, where those referrals are in particular based on the application of s 106KA of the Act and reg 10 of the Regulations, which in substance deem conduct coming within reg 10 to be engaging in inappropriate practice. 

23                  In my view, there is no statutory warrant or requirement for Adjudicative Referral No 366 to be referred to, or to be required to go before, the Committee constituted in respect of Adjudicative Review No 296.  I am satisfied that there is no serious question that the fact of the two decisions, one a decision in relation to Adjudicative Review No 296 and the second in relation to Adjudicative Review No 366, which deal with separate periods, raises any issue of the decision in relation to Adjudicative Referral No 366 being ultra vires, or an improper exercise or a misuse of decision‑making power.

24                  I turn to the second ground of invalidity relied upon.  As I have noted, I am satisfied that the conduct, which is the subject of the Adjudicative Referral No 366, is the conduct within the specified period 2 January 2001 to 6 March 2001.  The inclusion of the practice statistics in relation to the period 1 January 1998 to 31 March 2001 is not for the purpose of investigating the conduct of the applicant during that period.  As this is not the subject or ground of appeal in relation to Adjudicative Referral No 296, I consider that I should adopt the same approach as North J adopted in relation to Adjudicative Referral No 296. 

25                  However, the applicant said before me through counsel that he proposed to amend his notice of appeal to challenge North J’s reasoning on this issue.  I therefore proceed on the basis that the applicant wishes to raise this ground on appeal.  Nevertheless, I do not consider that there is a serious question to be tried in relation to this ground.  Adjudicative Referral No 366 makes it abundantly clear that the Committee is only to inquire into conduct on each of the 33 days within the referral period.  The referral period is specifically defined in par 2 of the Adjudicative Referral as being “On and from 2 January 2001 to 6 March 2001”.  That period being defined as the referral period, it is clear from par 5 of the Adjudicative Referral No 366 that the inquiry is limited to that period.  Paragraph 5 provides:

“Pursuant to subsection 93(1), I hereby make this adjudicative referral to PSRC No. 366 to consider whether the conduct of Dr Crowley in connection with rendering the following services (the specified services) constituted engaging in inappropriate practice because the circumstances in which some or all of the specified services were rendered constituted a prescribed pattern of services as defined in section 106KA of the Act and Part 3 of the Regulations:

Ø            all professional attendances rendered by Dr Crowley, on each of the 33 days identified in Report No. 6, pages 11‑76 of the investigative referral, within the referral period and within the specified locations, namely:

·               Lowood Medical Centre

Shop 14, Walters Street,

Lowood, Qld,”

26                  There is no reason to conclude that the Committee will not bring an impartial mind to bear upon the issues before it.  The applicant will have the opportunity to make submissions in relation to the relevance or irrelevance of the practice statistics.  I adopt, with respect, the observations of North J in Crowley v Holmes (supra) at pars [37] to [39] and [49]:

37.       Having regard to the manner in which the practice statistics came to be included in the adjudicative referral, that is to say, by attachment of the investigative referral to the adjudicative referral, it seems likely that the reason for inclusion was simply to provide a record of the background steps taken prior to the making of the adjudicative referral.  In other words, the practice statistics appeared by way of attachment to the adjudicative referral as a matter of history only.  However, one cannot confidently say that the practice statistics bear on any issue to be considered by the Committee.  Thus, for present purposes, I intend to treat the practice statistics as if they are not relevant to any issue to be considered by the Committee.

38.       Assuming for present purposes that the contentious material is prejudicial to the applicant, as well as irrelevant to the determination of the adjudicative referral, in my view, its mere inclusion in the referral does not alone give reason for a reasonable apprehension of bias.  In this area of discourse, bias involves a fixed state of mind which no argument or evidence is able to change.  A reasonable person must apprehend from a tribunal’s conduct or the circumstances in which it considers material that is said to be irrelevant and prejudicial, that it has such a state of mind caused by the material: Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293‑4.  Irrelevant and prejudicial material might be of such a nature as to cause a reasonable person to apprehend that its mere presence will pollute the minds of the tribunal against the applicant.

39.       It is premature to conclude that the Committee has been affected by the material in a way which is unalterable, or that a reasonable person viewing the situation would so conclude.  A reasonable person observing the situation of the Committee would need to wait and see how the Committee deals with the material.  The following factors bear on the approach the Committee will take to the contentious material.

…

49.       I have approached this argument on the basis that the practice statistics are prejudicial and irrelevant.  Because, even on that assumption, at this stage, their inclusion in the adjudicative referral does not give rise to a reasonable apprehension of bias by the Committee.  However, this assumption is not intended to preclude the Committee from drawing its own conclusions about the relevance of the practice statistics.  The relevance of the practice statistics is a question for the Committee to determine. The practice statistics may turn out to be relevant to the exceptional circumstances argument. That will depend on the evidence and argument relied upon by Dr Crowley at the hearing.”

27                  It is to be noted that North J distinguished the issue of the applicant’s prior history from the issue of the practice statistics.

28                  Being satisfied that there is no serious question to be tried, the application for interlocutory injunctive relief should be dismissed.  It is not necessary for me therefore to advert or to go to the issue of the balance of convenience.  However, I would observe that the balance of convenience weighed in favour of the applicant.  No issue of imminent public harm or conduct of the applicant prejudicial to the public was identified by the respondent.

29                  I should also point out that in the course of argument I raised the issue whether there had been any delay on the part of the applicant in bringing this proceeding.  I am satisfied there was no such delay as would give rise to any discretionary consideration as to whether this application should be granted or refused.  I have not taken into account in any way in these reasons the issue of any delay that may have been said to have occurred on the part of the applicant in bringing the proceeding.  There was no such delay. 

30                  The application for interlocutory relief will be dismissed.  Because the applicant wishes to keep the proceeding alive, the situation may arise, which I cannot discount, that ultimately on a full investigation there may be a decision different on the substantive issues from the issue I have determined.  I therefore think the costs should be reserved for further consideration.  That order does not disadvantage the respondent because I would not have ordered, in any event, that the costs be taxed and paid forthwith.  The question of costs then remains alive for the respondent and the applicant. 

Associate:

Dated:              6 May 2003