FEDERAL COURT OF AUSTRALIA

Mitchelson v Health Insurance Commission & Ors (No. 3) [2007] FCA 1491

PRACTICE AND PROCEDURE – consideration of an application for leave to amend a document initiating an appeal from a decision of a Determining Authority under the Health Insurance Act 1973 (Cth) – consideration of delay and failure to comply with court orders granting leave to amend and directions for making an application for leave to amend – consideration of the public interest in determining an application for leave in connection with a decision of a Determining Authority – consideration of the utility of the proposed amendments – consideration of the adequacy of the proposed amendment.

Health Insurance Act 1973 (Cth) ss 79A, 81, 84, 85, 93, 95, 97, 98, 99, 101, 103, 105A, 106(1), 106(2), 106A, 106B, 106E, 106F, 106G, 106H, 106K, 106KA, 106KC, 106KD, 106L, 106N, 106Q, 106SA, 106T, 106TA, 106V

Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5(1)(e), 5(2)(b), 11(1)(c), 11(3)(a)

Health Industry (Professional Services Review) Regulations 1999 Regulations 5 and 6

Mitchelson v Health Insurance Commission [2007] FCA 1372, cited

Health Insurance Commission and Ors v Grey (2002) 120 FCR 470, cited

State of Queensland and Anor v JL Holdings Pty Ltd (1996) 141 ALR 353, cited

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, cited

Plaintiff s 157/2002 v Commonwealth (2003) 211 CLR 476, cited

Tisdall v Kelly [2005] FCA 365, cited

Briginshaw v Briginshaw (1938) 60 CLR 336, cited

Spotwire Pty Ltd v Visa International services Inc (2003) ATPR 41-949, cited

Lamb v Moss (1983) 49 ALR 533, (1983) 76 FLR 296, (1983) 5 ALD 446, cited

Seymour v Attorney-General (Cth) (1984) 4 FCR 498, cited

Kamba v Australian Prudential Regulation Authority [2007] FCA 1422, cited

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

25 SEPTEMBER 2007

BRISBANE

THE COURT ORDERS THAT:

1.                  The application for leave to amend the applicant’s Notice of Appeal (filed on 8 May 2007) by notice of motion filed on 12 September 2007 is refused. 

2.                  The Notice of Appeal filed by the applicants on 8 May 2007 is dismissed.

3.                  The applicant pay the costs of the respondents of and incidental to the applicant’s notice of motion for leave to amend the applicant’s Notice of Appeal, filed on 12 September 2007 on an indemnity basis.

4.                  The applicant pay the costs of the respondents of and incidental to the respondents notice of motion filed 3 August 2007 on an indemnity basis.

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

REASONS FOR JUDGMENT

1                                             There are two Notices of Motion before the Court for determination.  One filed by the applicant in the proceeding, Dr Mitchelson, on 12 September 2007 by which an Order is sought that ‘the applicant be given leave to amend his Notice of Appeal’ and a second filed by the respondents on 3 August 2007 seeking the dismissal of the proceeding as constituted by the purported Notice of Appeal dated 3 May 2007 and filed on 8 May 2007.

2                                             The respondents’ motion was initially heard on 28 August 2007.  During the course of the hearing on the motion, the solicitor for the applicant Mr Royds sought leave to amend the ‘Notice of Appeal’ in terms of an ‘Amended Application for an Order of Review’ (‘the Amended Application’) filed on 24 August 2007.

3                                             The Notice of Appeal filed on 8 May 2007 purports on its face to be an appeal to the court in its original jurisdiction from a decision of either a ‘Professional Services Review Committee’ (‘the PSR Committee’) or a ‘Determining Authority’ (‘the Authority’) established in accordance with ss 93 and 95 of the Health Insurance Act 1973 (Cth) (‘the Act’) and s 106Q of the Act respectively.  For the reasons indicated in Mitchelson v Health Insurance Commission [2007] FCA 1372, that document entirely fails as a document originating a proceeding as an appeal from a decision of either body, as no appeal lies to the court from such a decision.

4                                             However, as noted in the earlier Mitchelson decision, the document seeks to challenge the decision of the Authority on the ground that the Authority erred by failing to take into account relevant considerations in reaching its decision.  That contention seems to be an attempt to enliven a ground of challenge that the making of the decision is 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 Administrative Decisions (Judicial Review) Act 1977 (Cth)(‘ADJR Act’) and possibly on other grounds. 

5                                             The Amended Application seeks review of the decision of the Authority of 5 April 2007 to make ‘directions’ as a decision of an administrative character made under an enactment for the purposes of the ADJR Act.  The Amended Application 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.

6                                             The background to the decision of the Authority is this.

7                                             On 6 December 2004 a request was made under the Act by the Health Insurance Commission (‘the Commission’) of the Director of Professional Services Review to review the provision of services by Dr Mitchelson during the period specified in the request (ss 83 and 86 of the Act) and to consider whether Dr Mitchelson’s conduct amounted to ‘inappropriate practice’ for the purposes of the Act. On 22 July 2006, the Director, under Division 3A of Part VAA of the Act (s 93) elected to establish a PSR Committee and make a referral to that committee to investigate whether Dr Mitchelson had engaged in inappropriate practice in providing services described as Item 23 and Item 36 services. PSR Committee 445 was established under s 95 of the Act.  Section 95 sets out the requirements to be satisfied by the Director in exercising the power conferred by s 93 and provides:

95 Constitution of Committees

(1) A Committee set up under section 93 in connection with a referral consists of the following members appointed by the Director:

            (a) a Chairperson who is a Deputy Director; and

            (b) 2 other Panel member; and

(c) if subsection (6) applies – not more than 2 additional Panel members.

(1A) …

(2) If the person under review is the practitioner who rendered or initiated all of the referred services the Chairperson, and the other Panel members referred to in paragraph (1)(b), must be practitioners who belong to the profession in which the practitioner was practising when the services were rendered or initiated.

(3) If the practitioner was at that time a consultant physician in relation to a particular specialty, the Panel members referred to in paragraph (1)(b) must also be consulting physicians in relation to that specialty.

(4) If the practitioner was at that time a specialist in relation to a particular specialty, the other Panel members referred to in paragraph (1)(b) must also be specialists in relation to that specialty.

(5) If the practitioner was at that time a general practitioner, the other Panel members referred to in paragraph (1)(b) must also be general practitioners.

(6) The Director may appoint an additional Panel member or additional Panel members referred to in paragraph (1)(c) if the Director thinks it is desirable to do so in order to give the Committee a wider range of clinical expertise, having regard to the services specified in the referral.

(7) An additional Panel member must be a member of a profession or a specialty relevant to a field of practice of the practitioner, or any of the practitioners, who rendered or initiated the referred services.

(8) Any Panel member whom the Director consulted under section 90 in relation to the referral must not be appointed as a member of the Committee.

8                                             PSR Committee 445 consisted of the second, third and fourth respondents.  The PSR Committee conducted a hearing on 3 and 4 November 2005 and 9 March 2006; concluded that Dr Mitchelson had engaged in inappropriate practice in relation to the particular services; and issued a final report (s 106L) to the Director and the Authority.  The Authority is required by the Act to consider the final report of the PSR 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).

9                                             The final report of the PSR Committee 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 PSR 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; Dr Mitchelson be suspended for a period of six months and fully disqualified from the provision of services to which MBS benefits relate for a period of six months.

10                                          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. 

11                                          ‘Adequate and contemporaneous records’ of the provision of services means records that meet the standards prescribed by regulations 5 and 6 of the Health Industry (Professional Services Review) Regulations 1999 (s 81 of the Act).

12                                          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.

13                                          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. 

14                                          The provisions of the Act establishing a scheme for the review and investigation of the provision of services by a person to determine whether that person has engaged in inappropriate practice fall within Part VAA the object of which is to protect the integrity of the Commonwealth medicare benefits and pharmaceutical benefits programmes 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 costs of services provided as a result of inappropriate practice (s 79A).

15                                          The Act and particularly Part VAA has been described as ‘public protective’ legislation which should not be narrowly interpreted as the legislation has as its object the ‘protection of the public’ (Health Insurance Commission and Ors v Grey (2002) 120 FCR 470 [173] and [179]).

16                                          This is the third occasion on which the applicant’s proposal to amend his proceeding has come before the Court.  The applicant initially sought to challenge the decision of the Authority by filing the Notice of Appeal of 8 May 2007.  The grounds raised were 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.

17                                          Sections 11(1)(c) and 11(3)(a) required Dr Mitchelson file an application for an order of review not later than 28 days after receipt by him of a decision setting out findings on material questions of fact, references to the evidence supporting those findings and reasons for the decision.  Dr Mitchelson was served with the decision material on Wednesday 11 April, 2007 by courier delivery to Karen O’Mullane, a legal representative from United Medical Protection now known as Avant Mutual Group Limited.  Ms O’Mullane represented Dr Mitchelson before the PSR Committee.  Mr Royds is informed by Dr Mitchelson and swears to a belief that the material was received by Dr Mitchelson on 15 April 2007.  Accordingly, the 28 days provided for by the ADJR Act expired on either 9 May 2007 or 13 May 2007.  The Notice of Appeal filed on 8 May 2007 was within time although entirely devoid of any proper formulation of the grounds of review or any material facts in support of those grounds.

18                                          The question of an amendment first arose 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 directions of 12 July 2007 provided Dr Mitchelson with a further 18 days beyond 12 July to properly formulate an Amended Application for an order of review setting out properly identified grounds in support of an order having regard to s 5 of the ADJR Act and the material facts (properly particularised) in support of the contended grounds.  By 30 July 2007, 106 days had elapsed since Dr Mitchelson had, on his evidence, received the decision material yet no application beyond that formulated as the ‘Notice of Appeal’ had been filed. During this period Dr Mitchelson had the benefit of s 106V(2) preventing the determination of the Authority taking effect.  The applicant failed to comply with the direction order made on 12 July 2007.

19                                          The matter was to be relisted for further directions on 6 August 2007 on the footing that by that date, an amended document would have been filed by Mr Royds on behalf of Dr Mitchelson. That directions date was vacated. On 3 August 2007, the respondents filed the present Notice of Motion returnable on Tuesday 28 August 2007.  On Friday 24 August, 2007 Dr Mitchelson filed the amended application.  On the hearing of the respondent’s motion, Mr Royds again sought leave to amend the Notice of Appeal. This time in terms of the amended application filed on 24 August 2007.  Mr Royds said it was clear that the Notice of Appeal would need to be amended; it was filed in circumstances of urgency, it misdescribes the true character of the initiating document; the document is in substance an application for an order of review; and leave ought to be granted to amend the document in terms of the amended application. 

20                                          On 28 August, the court refused leave to amend the Notice of Appeal in terms of the amended application and made a direction 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’ (Mitchelson [23]).  By 28 August, the second time the question arose, 134 days had elapsed since Dr Mitchelson had received the decision material.  Plainly enough, within that time, Dr Mitchelson ought to have been able to formulate precise grounds of challenge to the Authority’s decision and the material facts in support of those grounds especially having regard to the statutory stay effected by s 106V(2) of the Act.  The Court further directed that the application for leave to amend the Notice of Appeal would be listed and heard on Tuesday 18 September 2007 at 10.15 am.  When the matter came on for hearing on 18 September, the applicant relied upon a notice of motion filed on 12 September which simply sought leave to amend in terms of the same document filed on 24 August 2007.  Dr Mitchelson has made no effort to reformulate the amended application to either identify with any precision the grounds of challenge or the material facts giving content and expression to those grounds.  Shortly prior to Tuesday 18 September, Mr Royds sought approval to appear and argue the application for leave by telephone.  Mr Royds then provided a mobile telephone number to the Court as the appropriate contact telephone number. Mr Moloney appeared in Court for the respondents.

21                                          Although an application in such a manner by a lawyer for a party seeking leave to amend a document such as the inadequate ‘Notice of Appeal’ in the context of a decision of the importance to Dr Mitchelson of the Authority’s decision is unsatisfactory, ultimately the matter is one for Mr Royds against the background of the earlier Orders made in the proceeding which have not been met and the perceived strength of the argument for leave.  If the material filed in support of the application is clear, precise and compelling, an election to seek and obtain approval to support the application by attendance before the Court by telephone or mobile network telephone attendance, might be thought to be cost efficient since Mr Royds practices in Cairns. However, Mr Royds did not file any reformulation of the earlier amended application and by 18 September, 156 days had elapsed since Dr Mitchelson had received the decision material with a continuing statutory stay of the Authority’s directions.

22                                          Dr Mitchelson and Mr Royds have had more than enough time beyond the statutory 28 days prescribed by the ADJR Act to file a proper document. 

23                                          The statutory period of 28 days is not intended by the Act to operate simply as a holding or ‘peg in the ground’ period.  Plainly enough, a party might file a document within a 28 day period which for a number of perfectly sensible reasons requires amendment or perhaps comprehensive amendment.  In this case, slightly over 5 months have now elapsed since Dr Mitchelson received the decision material and the applicant has failed to comply with two Orders of the Court.

24                                          Having regard to the objects of the Act, the protective nature of the legislation, the failure to comply with Orders and the long delay in attempting to formulate a proper application, I am prima facie inclined to exercise the discretion against granting leave. 

25                                          The overwhelming consideration however is whether the amended application as filed throws up, whether obfuscated or not, a basis for challenge to the decision of the Authority which ought fairly and properly to be entertained by the Court in the fulfilment of its ultimate aim of attaining justice between the parties to the controversy (State of Queensland and Anor v JL Holdings Pty Ltd (1996) 141 ALR 353, per Dawson Gaudron and McHugh JJ).

26                                          What then does the proposed amendment contend for.

27                                          Dr Mitchelson is said to be aggrieved by the Authority’s decision first because he was ‘denied natural justice’ and secondly, the PSR Committee did not apply the principles of Briginshaw v Briginshaw in reaching its findings. Dr Mitchelson is an ‘aggrieved person’ because of the effect upon him of the decision.  The above two contentions are a statement of the grounds on which an order of review of the decision is sought.  Section 5(1)(a) of the ADJR Act provides as a ground of challenge that ‘a breach of the rules of natural justice occurred in connection with the making of the decision’ and s 5(1)(f) provides a further ground that ‘the decision involved an error of law, whether or not the error appears on the record of the decision’.  Mr Royds says the Briginshaw point is reliant upon the s 5(1)(f) ground.

28                                          As to natural justice ground, paragraphs 1, 2 and 3 of the ‘grounds of the application’ make two points. First, the Authority relied upon a report of the PSR Committee.  That committee was constituted by three doctors who each practice in a metropolitan area  The PSR Committee should, it is said, have consisted of a committee one of whom at least was a regional practitioner familiar with the provision of services to patients of a ‘lower socio-economic group’.  Because it did not, Dr Mitchelson was denied natural justice.  Dr Mitchelson does not identify the precise content of the natural justice rule said to be breached.  When put to Mr Royds that Dr Mitchelson seems to be relying on the fair hearing rule, Mr Royds agreed. 

29                                          Although it is not put this way, the contention seems to be that Dr Mitchelson was denied ‘fairness’ in a proper assessment of the facts; and the formulation of a fair draft and final report of the Committee was rendered illusory due to the composition of the Committee, which, in turn, poisoned the decision of the Authority.

30                                          The second point, which may be reliant upon a denial of natural justice but is expressed as a failure to apply ‘the Briginshaw principle correctly’ is that the PSR Committee relied upon a sampling methodology to test whether Dr Mitchelson had engaged in inappropriate practice in connection with the provision of services in the categories MBS benefit Item 23 and MBS benefit Item 36. 

31                                          As to the composition of the Committee, the Director exercised a power conferred by the Act and constituted a committee made up of Dr Hirst, a medical practitioner and Deputy Director of Professional Services Review under the Act (s 85) and two general practitioners, Dr Marcela Cox and Dr Brian Morton appointed after consultation with the Australian Medical Association (s 84).  There is no suggestion that there is a statutory obligation on the Director in exercising the power conferred by the Act in constituting a committee, to appoint a regional medical practitioner nor any want of power in constituting the committee as formed.  There is no arguable denial of natural justice in these circumstances or a denial of procedural fairness made out (Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 365-368 per Deane J and Plaintiff s 157/2002 v Commonwealth (2003) 211 CLR 476 at 489-490, per Gleeson CJ).  Mr Royds says that Tisdall v Kelly [2005] FCA 365 is authority for the proposition that a PSR Committee must include a medical practitioner from a regional area or a practitioner familiar with patients from the class or catchment from which the medical practitioner under review draws his or her patients.  It seems to me that Tisdall is not authority for that proposition.

32                                          As to the sampling methodology, the PSR Committee said this

Sampling

20.    Because the Committee decided to investigate services in a particular class of the Referred Services, namely, MBS item 23 and 36 services, the Committee decided to proceed in accordance with the sampling methodology provided for in subsection 106K of the Act for the two classes.

21.    For MBS item 23, in accordance with subsection 106K(4) of the Act, the Committee wrote to Professor Des Nicholls, a statistician accredited by the Statistical Society of Australia Inc, who advised on 11 August 2006 that the sampling methodology used by the Committee for this class is statistically valid.

22.    For MBS item 36, the Committee has used the Health Insurance (Professional Services Review – Sampling Methodology) Determination 2000 (No.1) (the Determination).  The Committee is satisfied that the preliminary random sample was a random sample and the exploratory sample was randomly drawn from the preliminary random sample and therefore complies with the Determination.

23.    For ease of reference the following table indicates the outcome of the Committee’s examination of Dr Mitchelson’s conduct in connection with providing the MBS item 23 and 36 services examined.

33                                          Section 106K is in these terms:

106K  Committee may have regard to samples of services

(1) The Committee may, in investigating the provision of services included in a particular class of the referred services, have regard only to a sample of the services included in the class.

(2) If the Committee finds that a person has engaged in inappropriate practice in providing all, or a proportion, of the services included in the sample, then, the person under review is taken, for the purposes of this Part, to have engaged in inappropriate practice in the provision of all, or that proportion, as the case may be, of the services included in the class from which the sample is chosen.

(3) The Minister may make written determinations specifying the content and form of sampling methodologies that may be used by Committees for the purposes of subsection (1).

(4) The Committee may use a sampling methodology that is not specified in such a determination if, the Committee has been advised by a statistician accredited by the Statistical Society of Australia Inc that the sampling methodology is statistically valid.

(5) A determination by the Minister under subsection (3) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

34                                          There is no contention that the Committee acted beyond power in adopting a sampling methodology nor that in doing so, s 106K(2) does not operate to bring about the result that the person is taken for the purposes of part VAA to have engaged in inappropriate practice in the provision of that proportion of the services in the class from which the sample was chosen.  Nor is there a contention that the Committee acted beyond power in relying upon the advise and recommendations of Professor Nicholls, who advised that the sampling methodology adopted by the Committee for item 23 services is a statistically valid method (s 106K(4)).  In addition, there is no challenge to reliance by the Committee upon the Health Insurance (Professional Services Review – Sampling Methodology) determination 2000 (no. 1) in accordance with s 106K(3).  In this case, the Committee has relied upon an express statutory power and acted within the limits of the power.  Plainly enough, the Committee must act judicially in the sense that it must act in accordance with the requirements of procedural fairness or natural justice and not act arbitrarily, irrationally or unreasonably. It cannot be contended that the Committee has acted arbitrarily, irrationally or unreasonably by expressly acting in conformity with the statutory instrument.  No doubt, that is why Deane J observed in Bond that the precise content of an obligation upon a tribunal or statutory body to observe the requirements of natural justice or procedural fairness varies ‘according to the statutory framework of the particular proceedings’ and ‘that being so, the content of the obligation is not susceptible of precise definition’ (366-367).

35                                          Grounds 3, 4, 5, 6 and 7 of the proposed amended application all, in one way or another, rely upon the application of the principle derived from Briginshaw v Briginshaw (1938) 60 CLR 336.

36                                          The content of the Briginshaw point at paragraphs 4, 5, 6 and 7 of the amended document is this.  The PSR Committee acted on inexact proof; the gravity of the consequences flowing from the PSR Committee’s findings required a higher level of proof; the PSR Committee did not consult with any of the patients within the sample group; and the PSR Committee ought to have considered the nature of the client base of Dr Mitchelson and the limited number of bulk billing practices in regional centres.

37                                          The PSR Committee was established to ‘investigate whether Dr Mitchelson engaged in appropriate practice in providing the ‘Referred Services’’ and whether Dr Mitchelson may have:

·     ‘failed to provide appropriate professional services to his patients;

·     failed to satisfy the requirements of the relevant items in the MBS;

·     failed to provide adequate clinical input into the services;

·     provided services that were not necessary and/or not clinically relevant;

·     kept records that were deficient in the essential clinical information’

                                                                                         (Final report PSR Committee no.445)

38                                          Subdivision B of Part VAA of the Act provides for ‘Proceedings of Committees’.  The chairperson is to convene meetings of the committee (s 97).  The committee may regulate the proceedings of its meetings as it thinks fit (s 98(1)).  For the purposes of its enquiry, the committee may inform itself in any manner it thinks fit (s 98(3)).  A question arising at a meeting is decided by a majority of votes of members present and voting (s 99(4)).  The committee must hold a hearing if it appears to the committee that the person under review may have engaged in inappropriate practice in providing the referred services (s 101(2)).  The person under review is entitled, subject to any reasonable limitations or restrictions the committee may impose, to attend the hearing; be accompanied by a lawyer or other advisor; call witnesses to give evidence; produce written statements going to character; question persons giving evidence at the hearing; address the committee on questions of law during the hearing; and after the conclusion of the taking of evidence, make a final address to the committee on questions of law, the conduct of the hearing and the merits of the matters to which the hearing relates (s 103).  The committee has power to require the production of relevant documents (s 105A). 

39                                          The procedure for conducting a hearing is within the discretion of the Committee member presiding at the meeting in question (s 106(1)).  The committee is not bound by the rules of evidence but may inform itself on any matter in any way it thinks appropriate (s 106(2)).  Evidence at a hearing may be taken on oath or affirmation (s 106A(1)).  A committee member may by instrument in writing summon a person to appear at a hearing and give evidence or produce documents (s 106B).  A person appearing as a witness at a hearing must not refuse or fail to be sworn or make an affirmation or refuse or fail to answer a question that he or she is required by a committee member to answer or refuse or fail to produce a document that he or she is required under the Act to produce (s 106E).  A person must not give an answer to a question knowing the answer to be false or misleading in a material particular (s 106E(2)).  A person is not excused from answering a question or producing a document on the ground that the answer or production of the document may incriminate the person (s 106E(3)).  An answer given or a document produced and information obtained as a direct or indirect result of answering a question or producing a document is not admissible in evidence against the person in any criminal proceedings (s 106E(4)).  A committee member has, in the performance of his or her duties, the same protection and immunity as a Justice of the High Court (s 106F). 

40                                          It is the duty of a committee to carry out its functions so that its final report is given to the Determining Authority within certain timeframes (s 106G).  The committee is to make findings only in respect of the referred services (s 106H).  The committee may in investigating the provision of services included in a particular class of the referred services, have regard only to a sample of the services included in the class (s 106K(1)) and may have regard to a pattern of services (s 106KA).  If in the course of the committee’s investigation the committee becomes aware of any matter that the committee considers to be of concern to the profession of which the practitioner is a member, the committee must notify the director in writing of that matter and if such notification is made, the director must give particulars of that matter to the commission or another appropriate authority or body (s 106KC). 

41                                          In preparing a draft report of preliminary findings, the committee must set out those preliminary findings if the committee members are unanimous in those findings.  If not, the majority must set out their findings and the other committee members must set out their findings.  If there is no majority of committee members that are agreed on preliminary findings, the preliminary report must set out the respective preliminary findings of committee members (s 106KD(1)).  The draft report must set out the reasons for the preliminary findings (s 106KD(1A)) and the committee must give the person under review a copy of the draft together with a notice inviting that person to make written submissions to the committee suggesting changes to the draft within one month of receiving the draft (s 106KD(3)). 

42                                          After the period of one month, the committee must, after taking into account any submissions made, prepare a final report setting out the findings of the committee members if they are unanimous in those findings; the majority findings if there be a majority; and if not, the respective findings of the committee members (s 106L).  The final report must not include a finding of inappropriate practice unless the finding and the reasons for the finding were included in the draft report; the committee must give copies of the final report to the person under review, the director, and the Determining Authority not earlier than one month after the day of which a copy of the report is given to the person under review.  The committee may refer material to the commission if fraud is suspected (s 106N). 

43                                          The decision reached by the PSR Committee is that Dr Mitchelson engaged in inappropriate practice for the following reasons.  Dr Mitchelson:

·      ‘failed to satisfy the requirements of item 23;

·      failed to provide adequate clinical input into the services;

·      kept records that were deficient in essential clinical information; and

·      pursuant to subsection 106H(3) of the Act, failed to satisfy the requirements of the pharmaceutical benefits scheme’.

44                                          The Committee further found that Dr Mitchelson engaged in inappropriate practice for the following reasons.  Dr Mitchelson:

·      ‘failed to satisfy the requirements of item 36;

·      failed to provide adequate clinical input into the services;

·      kept records that were deficient in essential clinical information;

·      pursuant to subsection 106H(3) of the Act, failed to satisfy the requirements of the pharmaceutical benefits scheme’; and

·      pursuant to subsection 106H(3) of the Act used MBS item 36 when not warranted’.

45                                          The statutory role of the committee is investigative.  It makes findings to be relied upon by the Authority in making draft and final determinations containing one or more of the directions contemplated by s 106U which include repayment to the Commonwealth of the whole or part of a medical benefit paid for a service or class of services where inappropriate practice has been found and suspension for a period and/or disqualification for a period from the provision of services to which medical benefits relate.  The Briginshaw point seems to be that in relying on the composition and size of the sample selected and in failing to consult with patients, the proof of matters going to ‘inappropriate practice’ was inexact and failed to attain the standard of proof a committee acting reasonably in the conduct of its proceedings ought to adopt having regard to the gravity of the possible s 106U directions.

46                                          The statute expressly provides that the committee in discharging its investigative function may ‘have regard only to a sample of the services’ in a class of services where reliance on a sample is for the very purpose of testing ‘inappropriate practice’ leading to findings likely to lead to one or more of the serious s 106U directions by the Authority. 

47                                          The sampling methodology adopted by the committee might be that contained in a ministerial determination specifying the content and form of sampling methodologies that may be used (s 106K(3)); or a nonspecified methodology ‘if but only if’ shown on advice to the committee to be statistically valid, by an accredited statistician.

48                                          Since the Committee has acted in conformity with the Act by having regard only to a sample within the statutory constraints upon the methodology to be used (and no contention to the contrary is made) the question is whether any Briginshaw principle is engaged.  Should the Committee have selected a method of fact finding other than by sampling the services? 

49                                          The committee must act reasonably.  In order to be satisfied that Dr Mitchelson engaged in ‘inappropriate practice’ the committee needs to reach a state of affirmative satisfaction of the foundation factual matters giving rise to that conclusion to a standard of ‘reasonable satisfaction’.  A member, acting reasonably, will not be so satisfied ‘independently of the nature and consequence of the fact or facts to be proved’ (Briginshaw, per Dixon J at 362).  The seriousness of the allegation or the gravity of the consequences flowing from a particular finding must necessarily affect the judgment made by each committee member as to whether the particular issue has been established to that member’s reasonable satisfaction. As Sir Owen Dixon observed, reasonable satisfaction should not be reached by ‘inexact proofs, indefinite testimony or indirect inferences’ (p, 362).  Plainly enough, the nature of the issue before the tribunal ‘necessarily affects the process by which reasonable satisfaction is attained’ (Dixon J per 363).

50                                          The proposed amended application simply asserts a conclusion of reliance upon inexact proof and thus, inferentially, a failure on the part of committee members to be reasonably satisfied of the relevant matters.  The difficulty with that bald conclusionary assertion is that the Committee acted in conformity with the Act in circumstances where the sampling methodology was the subject of advice from an expert, Professor Nicholls, of statistical validity. Prima facie the Committee acted reasonably in conducting its investigation.  No attempt has been made by Dr Mitchelson to isolate the process of reasoning in respect of any of the various sample services and demonstrate any failure on the part of the Committee.  There is no reference to factual material from which ‘inferences’ were drawn incorrectly nor reference to ‘indefinite testimony’ or ‘inexactness’ in any of the analyses of the sample services.

51                                          As a result, the proposed amended application fails to identify a ground of challenge supported by material facts going to a ground of challenge. 

52                                          It may be however that the election to rely upon a sampling methodology having regard to particular facts can be shown to amount to an error of law.  There is nothing in any of the material that demonstrates that to be so.  The conclusionary assertion is made but nothing of support for it has been identified. 

53                                          There is no attempt to plead facts demonstrating that the methodology relied upon by the Committee on the advise of Professor Nicholl’s was unreasonable, unsound or unreliable as statistically invalid.  Nor is there any attempt to demonstrate, for example, that the finding of the Committee that Dr Mitchelson kept records that were deficient in essential clinical information, was unsupported by evidence before the Committee.  Nor is there any attempt to demonstrate that the findings of the Committee that Dr Mitchelson failed to provide appropriate professional services to his patients; failed to satisfy the requirements of the relevant MBS item; failed to provide adequate clinical input into the services and provided services that were not necessary and/or not clinically relevant, were each unsupported by evidence before the Committee.

54                                          In this application for leave to amend, there is no attempt to isolate with any precision, a contended basis on which the Committee could not have been reasonably satisfied of the findings it made. 

55                                          It should be remembered that Dr Mitchelson attended the hearing before the Committee and was represented on 3 and 4 November 2005 by Mr Boddice of Counsel, Ms O’Mullane together with Dr David Pakchung and Mr Harry Mackay from United Medical Protection.  Dr Mitchelson was represented on 9 March 2006 by Ms Jenny Rosengren of Counsel, Ms O’Mullane and was assisted by Dr Pakchung.  Dr Mitchelson was invited to address the Committee at any time and to request an adjournment if required at any time to seek legal or other advice.  During the hearing, the Committee questioned and heard evidence from Dr Mitchelson and examined the medical records.  The Committee summarised its preliminary views at the conclusion of the hearing.  Dr Mitchelson was invited to make submissions about matters that had been put to him. Neither Dr Mitchelson nor his legal advisors made oral submissions at the close of the hearing.  After the close of the hearing, the Committee’s secretary under instructions from the chair of the Committee invited Dr Mitchelson and/or his lawyers to make written submissions within one month.  They did not do so.

56                                          Dr Mitchelson has been intimately familiar with the composition of the PSR Committee, the issues and contentions, the records relied upon by the PSR Committee and Dr Mitchelson has engaged with representatives in the conduct of the hearing.

57                                          Notwithstanding that degree of engagement in the investigation and the lengthy time afforded to Dr Mitchelson to properly formulate with some precision the basis upon which the PSR Committee could not be ‘reasonably satisfied’ of the relevant matters, thus failing to attain the relevant state of satisfaction, no properly formulated contention has emerged.

58                                          As a result, the application for leave to amend in terms of the proposed amended application for an order of review must necessarily fail. 

59                                          A question might arise as to whether a sample of services in a class of services, as a matter of predictive validity, gives rise to a sufficient degree of reliability to enable a committee to conclude to its reasonable satisfaction that the sample properly reflects ‘inappropriate practice’ in respect of a class of services at the level found.  However, the Committee elected to have regard only to a sample and adopted a method advised by Professor Nicholls to be statistically valid.  Section 106K(2) brings about the deemed result in respect of that class. 

60                                          The question of a proposed amendment to the applicant’s initiating document has been before the Court on three occasions; 12 July 2007, 28 August 2007 and 18 September 2007.  The foundation document filed on 8 May 2007 was so inadequate that the proposed amended application is in truth the first attempt to formulate an ADJR ground of challenge supported by any facts.  The amended application seems to be the best the applicant can say after 156 days (and two court orders) of reflection on the PSR Committee’s findings having elected to make no oral submissions at the conclusion of the hearing nor written submissions notwithstanding the invitation by the committee chair to do both.  During this period (over 5 months from receipt by Dr Mitchelson of the decision material) Dr Mitchelson has had the benefit of the statutory stay upon the Authority’s directions taking effect and the consequent fulfilment of the statutory objective of protecting the public interest. 

61                                          I am satisfied that the claims made by the applicant as formulated by the proposed amended application cannot succeed and are bound to fail in the sense identified by Bennett J in Spotwire Pty Ltd v Visa International Services Inc (2003) ATPR 41-949 at 47, 410.  Accordingly, it would be futile to grant leave to amend in terms of the proposed document.  I refuse leave to amend and dismiss the applicant’s notice of motion filed on 12 September 2007. 

62                                          I have given consideration to this difficulty.  I am not sure whether the failure to formulate a ground of challenge supported by material facts is a function of delay by Mr Royds or for that matter Mr Royds and Dr Mitchelson.  I am satisfied that Mr Royds does not appreciate the need to comply with a time limitation contained in the principal legislation nor the need to file and serve a properly formulated document identifying arguable grounds supported by material facts rather than simply filing anything.  Nor, apparently, is there an appreciation of a need to comply with orders of the court. 

63                                          Having regard to the lengthy period of time afforded to Dr Mitchelson to properly formulate an application which raises an arguable ground of challenge to the Committee’s decision supported by material facts, the failure to comply with Court orders and the statutory objective of the legislation to protect the public interest and the discretionary nature of the relief (Lamb v Moss (1983) 49 ALR 533, (1983) 76 FLR 296, (1983) 5 ALD 446; Seymour v Attorney-General (Cth) (1984) 4 FCR 498; Kamba v Australian Prudential Regulation Authority [2007] FCA 1422 (13 September 2007) at [8]), I propose to refuse leave to amend and dismiss the notice of appeal filed by Dr Mitchelson on 8 May 2007.

64                                          Having regard to all these considerations, I propose to make an order that Dr Mitchelson pay the costs of the respondents of and incidental to the respondents notice of motion filed on 3 August 2007, on an indemnity basis and those costs of the respondents of and incidental to the notice of motion of the applicant filed 12 September 2007 seeking leave to amend the Notice of Appeal, on an indemnity basis.

Associate:

Dated:         25 September 2007