FEDERAL COURT OF AUSTRALIA

Mitchelson v Health Insurance Commission & Ors [2007] FCA 1372

PRACTICE AND PROCEDURE – application to strike out a document described as a Notice of Appeal – consideration of whether the document is a proceeding – consideration of an application for leave to amend the initiating proceeding – consideration of the relationship between the initiating document and the requirements of a document seeking an Order of Review for the purposes of the Administrative Decisions (Judicial Review) Act 1977 (Cth) – consideration of an order for indemnity costs – consideration of an order pursuant to Order 62 of the Federal Court Rules that costs be payable forthwith upon determination of the quantum of the costs notwithstanding that the proceeding is not concluded. 

Health Insurance Act 1973 (Cth), ss 86, 88A, 93, 95, ss 97-106F, 106KD, 106L, 106SA, 106T, 106TA, 106V(1), (2)

Administrative Decisions (Judicial Review) Act 1977, ss 3, 5, 11

DR MARK LESLIE MITCHELSON v HEALTH INSURANCE COMMISSION, DR GEOFFREY HIRST, DR MARCELA COX, DR BRIAN MORTON, DR NICOLAS RADFORD, DR WILLIAM MEAGHER AND MS JANE PHELAN

QUD128 OF 2007

GREENWOOD J

4 SEPTEMBER 2007

BRISBANE

THE COURT ORDERS THAT:

1.                  The Orders sought by the respondents by Notice of Motion filed 3 August 2007 are refused.

2.                  The Notice of Motion is adjourned generally.

3.                  The oral application made on 28 August 2007 by the applicant for leave to amend a document described as a Notice of Appeal filed on 8 May 2007 is refused.

4.                  The applicant is directed to file and serve within the time limits required by the Federal Court Rules an Application for Leave to Amend a document described as a Notice of Appeal filed by the applicant on 8 May 2007, such Application to be heard at 10.15am on Tuesday, 18 September 2007. 

5.                  Costs reserved.

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

REASONS FOR JUDGMENT

1                     On 8 May 2007, the solicitors for Dr Mark Leslie Mitchelson filed a document in the Court described as a Notice of Appeal for the purpose of commencing a proceeding described on the face of the document as ‘On appeal from the Professional Services Review Committee – Determining Authority’.  The Notice of Appeal recites that the document is in accordance with Form 55A and is filed pursuant to Order 53, r 2, Order 53B, r 2 and Order 59, r 1 of the Federal Court Rules. 

2                     The reference to a ‘Professional Services Review Committee’ is a reference to a committee established in accordance with ss 93 and 95 of the Health Insurance Act 1973 (Cth) (‘the Act’) and the reference to a ‘Determining Authority’ (‘the Authority’) is a reference to the Authority established under s 106Q of the Act.  These sections fall within Part VAA of the Act.  The object of Part VAA is to ‘protect the integrity of the Commonwealth medicare benefits and pharmaceutical benefits programs and, in doing so: (a) protect patients and the community in general from the risks associated with inappropriate practice; and (b) protect the Commonwealth from having to meet the cost of services provided as a result of inappropriate practice’ (s 79A).  Those objects are achieved by establishing a ‘scheme’ for reviewing and investigating the provision of services by a person to determine whether the person has engaged in ‘inappropriate practice’ (s 80, s 82 of the Act). 

3                     The respondents to the Notice of Appeal comprise the Chairperson and both additional members of a Professional Services Review Committee established under the Act described as Committee No. 445 and the Chairperson and two members of the Authority which considered the final report of Committee No. 445 arising out of a referral by the Director of Professional Services Review appointed pursuant to s 83 of the Act. 

4                     The respondents to the proceeding filed a Notice of Motion on 3 August 2007 seeking to dismiss the proceeding as constituted by the purported Notice of Appeal dated 3 May 2007 and filed 8 May 2007, pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) (‘Federal Court Act’) or alternatively pursuant to Order 53, r 18 of the Federal Court Rules, as incompetent; alternatively, an order that the proceeding be struck out pursuant to s 23 of the Federal Court Act or pursuant to Order 11, r 16 of the Federal Court Rules. 

Background

5                     The background matters are these. 

6                     The elements of the scheme contemplated by the objects of Part VAA of the Act relevant for present purposes are these.  The CEO of Medicare Australia may request the Director of ‘Professional Services Review’ to review the provision of services by a person such as Dr Mitchelson during a particular period (s 86).  The Director might elect to undertake a review in response to such a request (s 88A) and take the steps contemplated by the Act consequent upon that decision.  The Act contains a sequence of sections which address steps the Director needs to consider and obligations he or she needs to discharge. 

7                     The Director might elect to establish a ‘Professional Services Review Committee’ and make a referral to the Committee to investigate whether the person under review engaged in inappropriate practice as that term is understood for the purposes of the Act in providing the services specified in the referral (s 93).  Subdivision B of Part VAA (ss 97 ‑ 106F) sets out the considerations governing proceedings before the Committee.  The Act makes it clear that the ‘duty’ of the Committee is to conduct an investigation consistent with the referral, formulate a draft report and deal with that report in accordance with the Act and to ultimately submit a final report to the ‘Determining Authority’ (ss 106KD, 106L).  The Authority is to consider the final report of the Committee; invite the affected person to make submissions as to any directions the Authority should make as a result of the final report (s 106SA); issue a draft determination (s 106T) and ultimately a final determination (s 106TA). 

8                     Section 82 of the Act defines ‘inappropriate practice’ in these terms:

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

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

…

(2)       A person (including a practitioner) engages in inappropriate practice if the person:

            (a)        knowingly, recklessly or negligently causes, or knowingly, recklessly or negligently permits, a practitioner employed by the person to engage in conduct that constitutes inappropriate practice by the practitioner within the meaning of subsection (1); or

            (b)        is an officer of a body corporate and knowingly, recklessly or negligently causes, or knowingly, recklessly or negligently permits, a practitioner employed by the body corporate to engage in conduct that constitutes inappropriate practice by the practitioner within the meaning of subsection (1).

(3)        A Committee must, in determining whether a practitioner’s conduct in connection with rendering or initiating services was inappropriate practice, have regard to (as well as to other relevant matters) whether or not the practitioner kept adequate and contemporaneous records of the rendering or initiation of the services. 

9                     The range of possible ‘directions’ a draft or final determination might contain is set out in s 106U of the Act.  Section 106V(1) provides that a final determination takes effect on the 35^th day after the day on which the Determining Authority gives a copy of the determination to the person under review subject to s 106V(2) which provides:

(2)       If, before the 35^th day, a proceeding is instituted in a court in respect of the final determination, the determination takes effect at the end of the prescribed number of days after:

            (a)        the day on which the court gives its decision; or

            (b)        if an appeal is instituted against the decision but the appeal is withdrawn or discontinued – the day on which the appeal is withdrawn or discontinued; or

            (c)        if an appeal is instituted against the decision and the appeal is decided – the day on which a court gives its decision on the appeal or, if there are further appeals, on the ultimate appeal.

10                  The term ‘prescribed number of days’ means in relation to a proceeding (including an appellate proceeding) in a court other than the High Court – 35 days. 

11                  The Act does not provide for an appeal to the Federal Court from a final determination of the Determining Authority by way of an application made in the original jurisdiction of the court in the nature of an appeal either on a question of law or otherwise. 

12                  In the case of Dr Mitchelson, the facts apparent from the affidavit of Mary Margaret Brennan filed 3 August 2007 on behalf of the respondents (the applicants on the motion) are these.  On 6 December 2004, a request was made under the Act of the Director to review the provision of services by Dr Mitchelson during a relevant period and to consider whether Dr Mitchelson’s conduct amounted to ‘inappropriate practice’ for the purposes of the Act.  On 22 July 2006, the Director established Committee No. 445 and made a referral to the Committee to investigate whether Dr Mitchelson had engaged in inappropriate practice in providing services during the relevant period.  The Committee consisted of the second, third and fourth respondents.  The Committee conducted a hearing on 3 and 4 November 2005; concluded that Dr Mitchelson had engaged in inappropriate practice; and issued a final report.  On 5 April 2007, the Authority made a Final Determination.  The solicitor for Dr Mitchelson contends that a copy of the Final Determination of the Authority together with reasons for the decision were provided to Dr Mitchelson on 15 April 2007 although the respondents suggest that the Final Determination and reasons were despatched to Dr Mitchelson by letter dated 5 April 2007 addressed to him care of Ms Karen O’Mullane at United Medical Protection.  For present purposes I will proceed on the footing that the Final Determination and reasons were received by Dr Mitchelson on 15 April 2007.  There is no sworn evidence on the question. 

13                  The final report of Committee No. 445 was that Dr Mitchelson engaged in inappropriate practice in connection with 73% of Medicare Benefits Schedule (‘MBS’) Item 23 services and 83% of MBS Item 36 services examined by the Committee by reference to sampling methodology.  The Authority directed that Dr Mitchelson be reprimanded and counselled; Dr Mitchelson pay $137,660.95 to the Commonwealth in respect of the Item 23 services and $50,595.84 in respect of the Item 36 services; that Dr Mitchelson be suspended for a period of six months and fully disqualified from the provision of services to which Medicare Benefits relate for a period of six months. 

14                  On 8 May 2007, Dr Mitchelson filed a Notice of Appeal in the Court by which he appealed ‘against the finding of the Determining Authority of 5 April 2007’.  The question of law raised on the appeal is identified ‘as stated in the Grounds of Appeal’ and the ‘Grounds’ are these:

4.1       The applicant appeals against the findings of the Determining Authority of 5 April 2007 on the following grounds:

4.2       As a matter of law erred in reaching the conclusion that they did in fact make.

4.3       As a matter of law the conclusions reached was in error by failing to take into account relevant considerations.

4.4       As a matter of law erred in failing to take into account relevant considerations.

4.5       As a matter of law the penalty that was imposed was manifestly excessive.

15                  At a directions hearing conducted on 12 July 2007, it became clear that Dr Mitchelson proposed to file an Amended Notice of Appeal and accordingly the court ordered that an Amended Notice of Appeal be filed by Monday, 30 July 2007.  The matter was to be re‑listed for further directions on 6 August 2007 although that date was subsequently vacated.  On 3 August 2007, the respondents filed the present Notice of Motion returnable on 28 August 2007.  On 24 August 2007, the applicant in the proceedings filed an ‘Amended Application for an Order of Review’ pursuant to Order 54.  On the hearing of the respondent’s motion, Dr Mitchelson’s solicitor sought leave to amend the Notice of Appeal in terms of the Amended Application for an Order of Review filed on 24 August 2007.  Dr Mitchelson’s solicitor says that it was clear from the outset that the Notice of Appeal would need to be amended; the Notice of Appeal was filed in circumstances of urgency; the Notice of Appeal misdescribes the true character of the initiating document; the Notice of Appeal is in substance an application for an Order of Review; leave ought to be granted to amend the document in terms of the filed Amended Application; and should the Notice of Appeal be struck out and leave to amend not granted, great prejudice would be suffered by Dr Mitchelson. 

16                  The Amended Application seeks review of the decision of the Determining Authority of 5 April 2007 to make directions as a decision of an administrative character made under an enactment for the purposes of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (‘ADJR Act’).  The Amended Application for an Order of Review document is in these terms:

The applicant is aggrieved by the decision because –

1.         That the Applicant was denied natural justice.

2.         The Professional Services Review Committee did not properly apply the principles identified in Briginshaw –v- Briginshaw (1938) 60 CLR 336 in reaching its findings. 

The grounds of the application are –

1.         The Applicant was denied natural justice in that the determining authority acted upon the draft report of a Professional Services Review Committee which was comprised of metropolitan practitioners.

2.         The Professional Services Review Committee should have had a regional practitioner experienced in the issues which face regional practitioners, particularly catering for a high number of patients from a lower socio economic group.

3.         The Professional Services Review Committee relied upon a sample of 30 cases out of a total of 7,499 cases.  This figure represents 0.4% of the class size, the Professional Services Review Committee has not applied the Briginshaw principle correctly in that a larger sample should have been assessed.

4.         The Professional Services Review Committee acted upon inexact proof.

5.         The gravity of the consequences which flowed from the Professional Services Review Committee’s findings were such that a higher level of proof was required.

6.         The Professional Services Review Committee did not consult with any of the patients the subject of the 30 cases to ascertain whether they were satisfied with their treatment or whether they disputed the duration of time the applicant claimed to spend with each.

7.         That in applying the Briginshaw principles the Professional Services Review Committee should have considered the nature of the client base the applicant was working with and the limited number of Bulk billing practices in regional centres.

17                  Dr Mitchelson seeks an order quashing the directions of the Determining Authority.  Section 11 of the ADJR Act provides that an Application for an Order of Review shall be made in the manner prescribed; set out the grounds of the Application and shall be lodged with the Registry of the court within 28 days after the decision containing findings on material questions of fact is furnished to Dr Mitchelson or within such further time as the Court allows.  If Dr Mitchelson received the decision and reasons on 15 April 2007, 28 days expired on 14 May 2007.  If Dr Mitchelson received the material on or about 5 April 2007, 28 days expired on or about 3 May 2007.  On the assumption that the relevant date is 15 April 2007, the Notice of Appeal is filed within time if it operates as a proceeding enlivening the jurisdiction of the Court as an Application for an Order of Review.  The directions made by the Authority ‘take effect’ (that is, commence their operation) on the 35^th day after the day on which the Authority gave notice to Dr Mitchelson of the decision to make the directions (together with reasons).  The time for filing an Application for an Order for Review however is 28 days from service of the decision. 

18                  The original jurisdiction of the Federal Court is conferred by s 19 of the Federal Court Act and the court’s power in relation to matters in which it has jurisdiction, to make orders as the court thinks appropriate, is conferred by s 23.  No jurisdiction is conferred upon the court to hear an appeal from a determination of the Determining Authority established under the Act.  Plainly, there can be no exercise of the court’s appellate jurisdiction conferred by the Act.  However, had the Parliament chosen to do so, it could have conferred jurisdiction upon the court to hear in the court’s original jurisdiction an application by way of an appeal on a question of law or on some other formulation. 

19                  Accordingly, as a ‘Notice of Appeal’, the document filed by Dr Mitchelson’s lawyers on 8 May 2007 entirely fails. 

20                  The document seeks to challenge the decision of the Determining Authority on the ground that the Authority erred by failing to take into account relevant considerations.  That statement is an attempt to enliven a ground of challenge that the making of the decision was an improper exercise of the power conferred by the Health Insurance Act 1973 (see s 5(1)(e) and s 5(2)(b) of the ADJR Act).  Although the document is misconceived and misdescribed it seems clear enough that Dr Mitchelson was attempting to file within 28 days a document which would enliven the court’s jurisdiction under the ADJR Act to determine whether the administrative decision of the Determining Authority is susceptible of review at least on the ground of an improper exercise of power and possibly other grounds. 

21                  Order 13, r 2 of the Federal Court Rules provides that the court may at any stage of any proceeding order that any document in the proceeding be amended or that any party have leave to amend any document in the proceeding in such manner as the court thinks fit.  Order 13, r 2(2) makes it clear that ‘all necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings’.  The powers of the court under Order 13 are remedial and are designed to enable all issues which arise in or in connection with a proceeding to be determined without the necessity of a multiplicity of actions.  Plainly, Dr Mitchelson seeks to enliven the court’s jurisdiction to make an Order of Review based upon one or more of the grounds identified in s 5 of the ADJR Act.  However, the proposed amendment to the document misdescribed as a Notice of Appeal does not properly identify grounds based upon s 5 of the ADJR Act and is not properly particularised. 

22                  Accordingly, I propose to take the following course. 

23                  I propose to treat the Notice of Appeal as commencing a proceeding by which orders have been sought to set aside the decision of the Determining Authority on the ground of an improper exercise of power.  As a result, I refuse the motion to dismiss or strike out the Notice of Appeal, that is, the originating proceeding.  I refuse the oral application by the solicitor for Dr Mitchelson for leave to amend the Notice of Appeal in terms of the proposed Amended Application for an Order of Review filed on 24 August 2007 and direct that the applicant in the proceedings file and serve an Application supported by appropriate material for leave to amend the document described as the ‘Notice of Appeal’ filed on 8 May 2007 so as to properly formulate having regard to identified grounds and particulars of those grounds, an Application for an Order of Review of an identified decision for the purposes of the ADJR Act.  The Application will be heard on Tuesday, 18 September 2007 at 10.15am.  Although for present purposes I have assumed that Dr Mitchelson received the Final Determination of the Determining Authority on 15 April 2007, I do so only for the present Application and not for any other purposes.  That question will be relevant in an Application for Leave to Amend as the document treated as initiating the proceeding may not have been filed within time in which event an Application for Leave to extend time will be necessary consistent with the Rules.

24                  The Notice of Motion filed by the respondents on 3 August 2007 is adjourned generally.  The respondents may elect to re‑list the motion in the event that Dr Mitchelson and his lawyers fail to file the application contemplated by paragraph 23 either within time or at all. 

25                  Dr Mitchelson filed the initiating document on 8 May 2007.  That document was to be amended in proper form so as to formulate a competent initiating proceeding, by Monday, 30 July 2007.  Nothing happened until the respondents filed their Notice of Motion returnable on Tuesday, 28 August 2007 with the result that on the preceding Friday, 24 August 2007, Dr Mitchelson filed the contended Amended Application for an Order of Review.  As a result, nothing of any consequence has happened in the conduct of the matter throughout May, June, July and now August.  Plainly, this matter needs to be and will be expedited. 

26                  As to the costs of the Notice of Motion, the respondents quite properly brought on the Notice of Motion to strike out the Notice of Appeal.  That Application provoked the filing of the Amended Application on 24 August 2007.  The initial document ought to have formulated a coherent Application.  There is no excuse for failing to amend a document filed in haste within the time limited by the court in granting leave on 12 July 2007, particularly having regard to the delay caused in failing to do so.  The applicant’s solicitor says that Dr Mitchelson should not be prejudiced by the delay caused by his lawyers in failing to make the necessary amendments.  In delivering judgment on the Notice of Motion, I will hear the parties on the question of costs. 

Associate:

Dated:         4 September 2007