FEDERAL COURT OF AUSTRALIA

Reece v Webber [2010] FCA 1025

THE COURT ORDERS THAT:

1.                  The application be dismissed.

2.                  The applicant pay the respondents’ costs, as taxed or agreed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

Introduction

1                                             This application invokes the jurisdiction of the Court under ss 5 and 6 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 39B(1A) of the Judiciary Act 1903 (Cth) and seeks review of the decision, conduct or action of:

(1)               The first respondent (‘the Director’) to set up Professional Services Review Committee No. 507 (‘the Committee’) pursuant to Pt VAA (The Professional Services Review Scheme) of the Health Insurance Act 1973 (Cth) (‘the Act’) and to make a referral to the Committee to investigate whether the applicant engaged in inappropriate practice in connection with services provided by him as or from his practice locations within Australia during the review period (from 1 April 2006 to 31 March 2007 inclusive);

(2)               The Committee investigating and reporting on a class of services provided by the applicant which the Director referred to it.

2                                             The Director is alleged to have erred in law and/or exceeded his power in referring to the Committee all services provided by the applicant within the review period, rather than only those classes of services in relation to which the Director thought the applicant may have engaged in inappropriate practice in providing the services (ground 1).

3                                             The Committee is alleged to have erred in law, first, by investigating the class of services referred to in [2] and reporting thereon (ground 2); second, by including reasons for findings in its final report which reasons were allegedly not included in the draft report contrary to s 106L(1B) of the Act (ground 3); three, by allegedly failing to take into account the applicant’s written submissions on its draft report in finalising its final report (ground 4); and fourth, by creating a reasonable apprehension of bias, constituting a breach of procedural fairness, for the failure constituting the error in ground 4 (ground 5).

4                                             Grounds 1 and 2 run together; as do grounds 4 and 5.

The Legislative Scheme

General Provisions

5                                             Section 10 of the Act provides for the payment of medicare benefits to an eligible person who incurs medical expenses for a professional service rendered in Australia.

6                                             Section 4 provides for the making of regulations that prescribe a table of medical services containing ‘items of medical services’, the fees payable for those items, and rules for the interpretation of the table.  Regulations are made annually under s 4, the table is set out in Schedule 1 to the Health Insurance (General Medical Services Table) Regulations 2006 (Cth).  A booklet which reproduces the contents of the schedule is published annually and circulated to medical practitioners; it is commonly known as the ‘MBS Book’.

7                                             In its draft and final reports, the Committee referred to items in the general medical services table as ‘MBS item 36, ‘MBS item 44’, ‘MBS 721’.  The Committee reproduced the ‘descriptors’ for each of the MBS items relevant to its investigation in the glossary at the commencement of the draft and final reports (documents 10 and 12 respectively in Ex 2).

Part VAA

8                                             Part VAA of the Act provides for review of the conduct of a medical practitioner in connection with rendering services for which medicare benefits have been paid or are payable.  The purpose of the review is to determine whether the practitioner has engaged in ‘inappropriate practice’ as defined in s 82, which relevantly provides:

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

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

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

9                                             The review scheme involves four independent persons and/or entities:

(1)               The head of the entity that receives and pays claims for medicare benefits: the Medicare Australia CEO.  The CEO initiates the review process by making a request to the Director of Professional Services Review (s 86).

(2)               The Directorof Professional Services Review, a medical practitioner appointed to that position under s 83.  On receiving a request, the Director must decide whether or not to undertake a review (s 88A).  The Director may decide to set up a Professional Services Review Committee to investigate whether the practitioner has engaged in inappropriate practice (s 93).  The Director makes a referral to a Committee (s 93). 

(3)               A Professional Services Review Committee consisting of a Deputy Director of Professional Services Review and two other practitioners who practise in the same profession as the practitioner whose conduct is being reviewed (ss 95(1) and 95(2)).  A Committee conducts hearings (s 101), prepares a draft report on which the practitioner is invited to make submissions suggesting changes (s 106KD) and makes a final report on whether the practitioner’s conduct involved inappropriate practice (s 106L).  The final report is given to the practitioner, the Director and (if it contains a finding of inappropriate practice) – after one month – to the Determining Authority (s 106L). 

(4)               The Determining Authority established under s 106Q.  If the final report contains a finding of inappropriate practice, the Determining Authority must prepare a draft determination containing one or more of the directions in s 106U (s 106T).  Within one month after the medical practitioner has been given fourteen days to make submissions on the draft determination, the Determining Authority makes a final determination (s 106TA).

10                                          While the scheme involves discipline of practitioners, that is not its only focus.  After a comprehensive review of relevant decisions in Health Insurance Commission v Grey (2002) 120 FCR 470, the Full Court noted consensus in the Court’s judgments in relation to various matters, including the following proposition at [173]:

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

11                                          A Committee that is investigating a class of services may decide to have regard to only a sample of services in that class (s 106K(l)).  If a Committee finds inappropriate practice in all of the services in the sample, that finding is deemed to apply to all of the services in the class (s 106K(2)).  If a Committee finds inappropriate practice in a proportion of the services in the sample, that finding is deemed to apply to that proportion of the services in the class (s 106K(2)).

12                                          The Minister has power to determine the sampling methodologies that a Committee may use (s 106K(3)), and a Determination has been made under that provision.

Factual Background

13                                          On 22 November 2007 Medicare Australia made a request to the Director to review the provision of services by the applicant during the review period.  The applicant is a vocationally registered general practitioner.  

14                                          The Director undertook the review, and on 7 April 2008 set up the Committee and made Referral No. 507 to the Committee.

15                                          The Director’s instrument of establishment of and referral to the Committee relevantly provided:

‘I, Anthony David Webber, Director of Professional Services Review, make the following instrument in accordance with sections 93 and 95 of the Health Insurance Act 1973, setting up Professional Services Review Committee No. 507 and making a referral to the Committee as follows:

Interpretation and Citation

1.1.             In this instrument:

“Act” means the Health Insurance Act 1973;

“person under review” means Dr Albert Reece of Southcity 7-Day Family Medical Centre, 39 Gladstone Road, Highgate Hill, QLD, 4101;

“review period” means the period from 1 April 2006 to 31 March 2007 inclusive;

“Regulations” means the Health Insurance (Professional Services Review) Regulations 1999;

“specified services” means the services specified in paragraph 3 below;

“professional services” has the same meaning as in section 3 of the Act.

1.2               This instrument may be cited as PSRC Referral No. 507.

Committee set up

2.                  Professional Services Review Committee No. 507 is set up having the members appointed by paragraph 4 of this instrument.

Referral to the Committee

3.                  I hereby make a referral to Professional Services Review Committee No. 507 to investigate whether the person under review engaged in inappropriate practice in providing the following specified services:

•           all services provided by Dr Reece at or from his practice locations within Australia during the review period.

…

Terms of Sections of the Act

5.         A notice setting out the terms of sections 102, 106H and 106K of the Act is at Attachment A.

Director’s Report

6.         My report for the purposes of subsection 93(6) of the Act in respect of the specified services, which gives reasons why I think the person under review may have engaged in inappropriate practice in providing those services, is at Attachment B.’

16                                          Attachment B (the Director’s s 93(6) report) to the instrument of establishment and referral relevantly provided:

‘Material considered

5.         My decision to refer this matter to a PSRC is based on consideration of the following material:

•           Request to Review No. 507 dated 22 November 2007;

•           A random selection of medical records of patients to whom Dr Reece provided MBS item 23, 36, 44 and 721 services during the specified period;

•           A random selection of medical records of patients to whom Dr Reece initiated pathology items 66515, 69481 and 69478 during the specified period;

•           A random selection of medical records of patients to whom Dr Reece prescribed diazepam during the specified period;

•           Calendar charts (PIRT reports) provided by Medicare Australia of all services provided by Dr Reece to the patients in the above selection during the specified period;

•           the results of my Review;

•           correspondence from Avant Mutual Group Limited dated 26 March 2008.

Discussion and findings

6.         The services provided during the review period were within the two year period immediately preceding the date of Medicare Australia’s Request, in accordance with subsection 86(2) of the Act.

7.         The examination of the medical records in relation to MBS item 23, 721, 66515, 69481 and 69478 services and Dr Reece’s prescribing of diazepam did not, overall, raise major concerns.’

17                                          The Committee conducted hearings on 30 and 31 October and 14 November 2008.  At those hearings it examined samples of three classes of services, namely MBS items 36, 44 and 721.  The applicant was accompanied throughout the hearings by a ‘legal representative’ and a barrister.

18                                          The Committee prepared a draft report and invited the applicant to make written submissions suggesting changes.  On 12 August 2009 the Committee received the applicant’s submissions and on 29 October 2009 the Committee made its final report.

19                                          The applicant applied to the Court for a review on 27 November 2009, and filed an amended application on 25 February 2010.

Grounds 1 and 2

20                                          The applicant contended that the Director could not refer MBS item 721 services to the Committee and the Committee could not investigate them because s 93 empowers the Director to refer only those services or classes of services ‘in relation to which he believes the applicant may have engaged in inappropriate practice’.

21                                          In my view, the contention is misconceived for the following reasons.

22                                          First, there is no such limitation to be found in the Act.  The Director may make a referral to a Committee to investigate whether a practitioner engaged in inappropriate practice in providing ‘the services specified in the referral’: s 93(1).  The services that may be specified are ‘any or all of the services provided by the person under review during the review period’: s 93(7B).

23                                          Second, there was nothing upon which a conclusion could be drawn that the Director was of the belief that in relation to MBS item 721 services the applicant had not engaged in inappropriate practice.  By [3] of the instrument of establishment and referral, the Director referred ‘all services provided by [the applicant] at or from his practice locations within Australia during the review period’ (see [14] above).

24                                          The Director must attach to the referral a written report ‘giving reasons why the Director thinks the person may have engaged in inappropriate practice in providing the services’: s 93(6).

25                                          The Director attached to the instrument of establishment and referral a s 93(6) report as Attachment B.  Attachment B contained the following paragraph numbered 7:

‘7.        The examination of the medical records in relation to MBS item 23, 721, 66515, 69481, 69478 services and Dr Reece’s prescribing of diazepam did not, overall, raise major concerns.’  (Emphasis added.)

26                                          Earlier in Attachment B, it read:

‘Material considered

5.         My decision to refer this matter to a PSRC is based on consideration of the following material:

•           …

•           A random selection of medical records of patients to whom Dr Reece provided MBS item 23, 36, 44 and 721 services during the specified period;

•           A random selection of medical records of patients to whom Dr Reece initiated pathology items 66515, 69481 and 69478 during the specified period;

•           A random selection of medical records of patients to whom Dr Reece prescribed diazepam during the specified period; …’

27                                          Read in the context of Attachment B, [7] could not, in my view, be read as a statement that the Director was of the belief that in relation to MBS item 721 services the applicant had not engaged in inappropriate practice; [7] does not, on any view, go that far in relation to that particular item; at most, it is an overview of a number of items on a global or holistic basis.

28                                          Third, one would be very slow to draw the limitation contended for, that is, that the Director was not empowered to refer a service in relation to which he did not hold the belief that the practitioner may have engaged in inappropriate practice, where the Committee could nevertheless investigate that matter and that is the clear effect of s 106H(3) which provides that:

‘The Committee’s investigation of the referred services is not limited by:

(a)        the reasons given in the Director’s report to the Committee under paragraph 93(6)(a) or anything else in that report; …’

29                                          In Thoo v Kelly (2008) 169 FCR 470, Lindgren J considered and rejected a contention that the authority of a committee to investigate services ‘was limited to ... the concern that had moved the Director to act’ [26].  His Honour held that ss 106H(l) and (3) ‘provide a complete answer to this contention’, and observed at [28] in relation to s l06H(3):

‘Subsection (3), although not itself a “source” of power, had the effect that the Committee’s investigation of the referred services identified above was not to be limited by the reasons given by the Director or anything else in the Director’s report (or the reasons given in the HIC’s request or anything else in the HIC’s request).’

30                                          For these reasons, grounds 1 and 2 cannot be sustained.

Ground 3

31                                          The applicant contended that the Committee denied him procedural fairness by failing to comply with s 106L(1B) of the Act.  He claimed that the reasons given in the final report for finding inappropriate practice in service Nos. 8, 10, 15, 17 and 25 (‘the five services’) in the sample of MBS item 36 services, were not reasons that were included in the draft report.

32                                          Section 106L(1B) provides:

‘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 under section 106KD.’

33                                          The ‘descriptor’ for an MBS item 36 service is:

‘Professional attendance involving taking a detailed history, an examination of multiple systems, arranging any necessary investigations and implementing a management plan in relation to 1 or more problems, and lasting at least 20 minutes, OR a professional attendance of less than 40 minutes duration involving components of a service to which item 44, 47, 48, 50 or 51 applies.’

(Emphasis added.)

34                                          The reasons given in the draft report for finding inappropriate practice in each of the five services (at pages 15, 17, 18, 19 and 23) included the following sentence, which reproduced part of the MBS item 36 descriptor:

‘[T]he Committee does not accept .... that Dr Reece provided sufficient clinical input to support a professional attendance of less than 40 minutes duration which involved components of a service to which MBS item 44, 47, 48, 50 or 51 applied.’

(Emphasis added.)

35                                          In the final report another sentence (set out below in bold type) was added to the reasons for each of the five services (at pages 15, 17, 18, 19 and 23):

‘[T]he Committee does not accept ... that Dr Reece provided sufficient clinical input to support a professional attendance of less than 40 minutes duration which involved components of a service to which MBS item 44, 47, 48, 50 or 51 applied. Dr Reece did not take an exhaustive history, a comprehensive examination of multiple systems, arrange any necessary investigations or implement a management plan in relation to one or more complex problems.’

(Emphasis added.)

36                                          The ‘descriptor’ for MBS item 44 is:

‘Professional attendance involving taking an exhaustive history, a comprehensive examination of multiple systems, arranging any necessary investigations and implementing a management plan in relation to 1 or more complex problems, and lasting at least 40 minutes, OR a professional attendance of at least 40 minutes duration for implementation of a management plan.’

(Emphasis added.)

37                                          In its final report, the Committee did not add a new reason for finding inappropriate practice in the five services.  It had referred to MBS item 44 in the reasons it gave in the draft report.  The only change the Committee made in the final report was to reproduce part of the descriptor for MBS item 44 in the reasons.

38                                          In my view, no reason for the finding in the five services has been included in the final report that was not included in the draft report; the final report merely particularises the generality of the draft report.

Grounds 4 and 5

39                                          The applicant alleges in ground 4 that the Committee did not take his submissions suggesting changes to the draft report into account.  That allegation is unsustainable, because the Committee explicitly addressed the submissions in its final report at [26] and [27].

40                                          The applicant also alleges in ground 5 that the Committee’s ‘draft and final reasons, considered together, give rise to a reasonable apprehension of bias’.  The test for apprehended bias formulated in Re Refugee Review Tribunal; Ex parte H (2001) 75 ALJR 982 at [28] refers to ‘a hypothetical fair-minded lay person who is properly informed as to the nature of the proceedings, the matters in issue, and the conduct which is said to give rise to an apprehension of bias’ and involves the ‘objective test of possibility, as distinct from probability.’  Apprehended bias must be ‘firmly established’: R v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group (1969) 122 CLR 546 at 553 – 554, affirmed in Re Shaw; Ex parte Shaw (1980) 55 ALJR 12 at 14.  See also Kirby J in Re Minister for Immigration and Multicultural Affairs; Ex parte Epeabaka (2001) 206 CLR 128 at [90]:

‘Although the law interposes the imputed consideration of a fair minded observer and speculates on whether that person “might” (rather than “would”) entertain a reasonable apprehension of bias in the particular case, the serious consequences that necessarily attend the affirmative conclusion oblige that it should be “firmly established”.’

41                                          The applicant’s ‘evidence’ in support of grounds 4 and 5 is the assertion that ‘the reasons do not disclose an “active intellectual process” of engagement in relation to the relevant matter or document’.  That assertion assumes – incorrectly – that the Committee was required to give reasons for not making the changes to the draft report that the applicant suggested.

42                                          The Act relevantly provides that:

·                    The draft report ‘must set out the reasons for the preliminary findings’ – s 106KD(1A));

·                    A Committee ‘must ... give a notice inviting the person [under review] to make ... written submissions suggesting changes to the draft report’ – s 106KD(3);

·                    The Committee ‘must, after taking into account any submissions ... prepare a final report ...’ – s 106L(1); and

·                    ‘The final report must not include a finding of inappropriate practice unless the findings and the reasons for the finding were included in the draft report under section 106KD ‘ – s 106L(1B).

43                                          The Act does not provide that a Committee is to set out in its final report its reasons for not making changes to the draft report that have been suggested by a practitioner.  The Committee in the present case did not err in law in the manner alleged in ground 4; there is no duty to give reasons in the absence of a statutory requirement to do so.  See Dimian v Health Insurance Commission [2004] FCA 1615 at [78] – [80] per Jacobson J.  An appeal from the Dimian decision which did not involve this issue was dismissed: Dimian v Health Insurance Commission [2005] FCAFC 200.

44                                          The applicant’s submissions on grounds 4 and 5 also assume – incorrectly – that if the Committee fails to make a change to a draft report that has been suggested to it, the Court would be entitled to infer that the Committee did not take the submissions into account, and the fair-minded lay person would be entitled to infer that the Committee closed its mind to the submissions.   See Mathews v Health Insurance Commission (2006) 90 ALD 49 at [32].

45                                          The Committee was required to take the submissions into account, but ‘it is generally for the decision-maker and not the court to determine the weight to be given to the matters which are required to be taken into account in exercising the statutory power’: Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 at 41 per Mason J.

46                                          The expression ‘take into account’ was considered by Batt J in Roads Corporation v Dacakis [1995] 2 VR 508.  His Honour observed at 536:

‘In my view, the expression “take into account” here means “pay attention to in the course of an intellectual process” or “take into consideration”. ... The expression seems to me to be very similar in effect to the expression “have regard to”, which has been interpreted as meaning to take into account and give weight to as a fundamental element in making the decision. ... A duty to have regard to or to take into account certain considerations does not require a specific finding to be made in respect of each of those considerations or require each of them to be given any particular weight; it is, rather, a duty to consider each of the considerations and whether any or any particular weight should be given to each ...’

47                                          Conformably with its duty to take the submissions into account, it was open to the Committee to give each matter raised in the submissions such weight as it thought appropriate.

48                                          In my view, grounds 4 and 5 cannot be sustained.

Conclusion

49                                          The application must be dismissed with costs.

Associate:

Dated:         17 September 2010