Federal Court of Australia

I-MED Radiology Network Limited v The Director of Professional Services Review [2020] FCA 1645

ORDERS

THE COURT ORDERS THAT:

1.    The application be dismissed.

2.    Notwithstanding Order 1, for a period of 30 days from the date hereof or further earlier Order:

(a)    the suspension until the hearing and determination of this proceeding by the Court’s Order of 21 August 2020 of the review of the provision of services by each of the applicants commenced on 15 July 2020, be continued;

(b)    the first respondent must not give notice under subsections 106ZPM(2) or (3) of the Health Insurance Act 1973 (Cth) in respect of the applicants while the review of services of each of the applicants is suspended pursuant to Order 2(a), or further order;

(c)    the second respondent be restrained from taking any steps pursuant to or consequent upon the decision to issue the notices to produce dated 15 July 2020 by the first respondent.

3.    The applicants pay the respondents’ costs of and incidental to the proceeding, to be fixed by a registrar if not agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

LOGAN J:

1    I-MED Radiology Network Limited (I-MED Radiology) and I-MED New South Wales Pty Limited (I-MED NSW), respectively the first and second applicants, are each members of a group of companies, the I-MED Radiology Network Group (I-MED), which, collectively and throughout Australia, provides some 18% of all of the radiology services which are provided in our country.

2    On 15 July 2020, the Director of Professional Services Review (Director), who is the first respondent, at least purporting to act under s 89B of the Health Insurance Act 1973 (Cth) (HIA), issued notices to produce to each of the applicants. The notices were in a common form. They sought the production of documents falling within the following category (using that specified in the s 89B notice directed to I-MED Radiology as an example):

Any record containing the details of practitioners employed or otherwise engaged by I-MED Radiology Network Limited to provide MBS rebateable services in connection with I-MED Radiology Network Limited during the period 1 July 2018 to 30 June 2019 inclusive.

For the purposes of the requested production, the notices extensively defined on their face, albeit in a non-exhaustive way, the content of the requested “details”. It will be necessary later in these reasons for judgment to make more particular reference to that definition.

3    The notices to produce were a sequel to two similar requests, each by letters dated 29 June 2020, made of the Director by a delegate of Medicare’s Chief Executive (Chief Executive), the second respondent, at least purportedly pursuant to s 86 of the HIA, to review the provision of services by I-MED Radiology and I-MED NSW respectively, and a subsequent decision by the Director to undertake the review. In each instance:

(a)    the review period specified in the request was 1 July 2018 to 30 June 2019 (Review Period); and

(b)    the basis of the request was that there may have been inappropriate practice by the rendering of services which were not clinically relevant or did not meet the requirements of particular Medicare Benefits Schedule (MBS) items specified in regulations made pursuant to the HIA.

4    The “at least purportedly” qualifications above reflect an interrogative note about the legality of the decisions to make a request and each of the decisions to issue the notices, sounded by judicial review proceedings which I-MED Radiology and I-MED NSW have instituted under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act) and s 39B of the Judiciary Act 1903 (Cth) in respect of those decisions.

5    There are two issues in the proceedings. The first is whether the request in relation to I-MED NSW was valid. The second is whether each notice was valid.

6    I-MED NSW, but no longer I-MED Radiology, contends that a “jurisdictional precondition to a valid decision to request a review under s 86(1) is ‘the provision of services by [the person under review] during the period specified in the request’”.

7    The Professional Services Review Scheme (scheme) is set out in Pt VAA of the HIA. The validity of the scheme was upheld in Wong v The Commonwealth (2009) 236 CLR 573.

8    Within Pt VAA, s 86(1) provides:

Subject to subsection (1A), the Chief Executive Medicare may, in writing, request the Director to review the provision of services by a person during the period specified in the request.

The expression “provides services” is defined by s 81(2):

Meaning of provides services

(2)    For the purposes of this Part, a person provides services if the services are rendered or initiated by:

  (a)    the person; or

  (b)    a practitioner employed or otherwise engaged by the person; or

(c)    a practitioner employed or otherwise engaged by a body corporate of which the person is an officer.

9    The effect of s 81(2) is, according to its terms, to expand the reach of the person who has rendered or initiated a service beyond a practitioner who has so done. In relation to I-MED NSW, the practitioner identified in the Chief Executive’s request was Dr M (name supressed). I-MED NSW contends that the request was invalid because Dr M was neither employed nor engaged by it.

10    I have supressed the name of the practitioner because, were the matter to progress to the stage of investigation by a Professional Services Review Committee (Committee), the practitioner’s name would, by virtue of s 106ZR of the HIA, be confidential. In relation to the publication of a practitioner’s name, the generally prevailing position under Pt VAA is that this does not occur unless and until a matter has progressed to the stage of a final determination by a Determining Authority, at which time the Director is authorised to publish the name of, and other particulars relating to, that practitioner: s 106ZPR of the HIA.

11    In general, in civil litigation, it is for an applicant or plaintiff to prove by admissible evidence the factual elements of the cause of action pleaded as the source of the relief claimed. A judicial review proceeding is but a particular form of civil litigation. Thus, in a judicial review proceeding, the obligation to prove the existence of jurisdictional error falls on an applicant: Plaintiff M64/2015 v Minister for Immigration and Border Protection (2015) 258 CLR 173, at [24]. As to the necessary factual foundation for that jurisdictional error, and by virtue of s 140, Evidence Act 1995 (Cth) (Evidence Act), that means proof on the balance of probabilities by evidence admissible either under that Act or otherwise.

12    On the assumption that Dr M’s being a person “employed or otherwise engaged” by I-MED NSW is a jurisdictional fact upon the existence of which the validity of the request depended, it is therefore for I-MED NSW to prove by admissible evidence that Dr M was neither employed nor engaged by it during the Review Period.

13    The Chief Executive and the Director submitted that there was no such evidence.

14    The evidence relied upon by I-MED NSW consisted of an affidavit made by I-MED’s Chief Financial Officer, Ms Clare Louise Battellino. She states, at [5]:

5.    I have reviewed the payroll records maintained by I-MED in relation to [Dr M]. Those records show that [Dr M] is employed by I-MED Services Pty Ltd and has been since prior to 1 July 2018. Throughout this period, I-MED Services Pty Ltd has been registered as [Dr M’s] employer with the [Australian Taxation Office], responsible for remitting PAYG instalments and superannuation guarantee contributions on behalf of [Dr M], and at all relevant times, this entity has held a Workers’ Compensation insurance policy which covers [Dr M].

Annexed to her affidavit are payment summaries in respect of payments made to Dr M by I-MED Services Pty Limited (I-MED Services) between 1 July 2018 and 30 June 2020. None of the other records to which Ms Battellino refers in her affidavit are annexed to it.

15    In my view, each PAYG summary is a business record of I-MED Services in terms of s 69 of the Evidence Act. On its face, each is a record maintained in the ordinary course of the business of that company for its purposes. Each contains a representation that Dr M was, during the financial year in question, an employee of I-MED Services. That representation is, by virtue of s 69(2) of the Evidence Act, admissible in evidence as an exception to the hearsay rule.

16    Given the annexure of the PAYG summaries, there is no great harm, and much convenience, in Ms Battellino’s relating in her affidavit their effect, even though, absent their annexure, her statement as to their effect would not, given the absence of consent, have been admissible in evidence. In contrast, the absence of any annexure of the workers’ compensation policy covering Dr M renders that part of her affidavit inadmissible, as it is in violation of the hearsay rule in s 59 of the Evidence Act.

17    Though the wording is hardly felicitous, on a fair reading, given that I-MED is a group of companies of which, materially, I-MED NSW is one and I-MED Services is another, I consider that Ms Battellino’s statement as to having reviewed the records of I-MED is to read as a statement that she has reviewed the records of the group of companies and that there is no record of I-MED NSW employing Dr M. That seems to be a necessary inference from her statements that she has reviewed the records of I-MED and her consequential annexure of the I-MED Services PAYG summaries.

18    So read, this part of Ms Battellino’s affidavit is an account of a negative search. In my view, the absence of any such record is a fact admissible in evidence, as it falls within the exception the hearsay rule for which s 69(4) of the Evidence Act provides:

(4)    If:

  (a)    the occurrence of an event of a particular kind is in question; and

(b)    in the course of a business, a system has been followed of making and keeping a record of the occurrence of all events of that kind;

the hearsay rule does not apply to evidence that tends to prove that there is no record kept, in accordance with that system, of the occurrence of the event.

19    There is a cognate “negative search” exception to the common law hearsay rule in s 7E(1) of the Evidence Act 1905 (Cth). Pursuant to this provision, Toohey J, when a judge of this Court, in Re Riggs; ex parte Commissioner of Taxation (1986) 9 FCR 149, at 151 – 152, and Heerey J in Prasad v Minister for Immigration, Local Government and Ethnic Affairs (1991) 101 ALR 109, at 121 – 122, admitted evidence of the absence of a record on a particular subject after due search. This part of Ms Battellino’s evidence has been tendered and is admissible on an analogous basis.

20    Given the presence of s 69(4) in the Evidence Act, it is neither necessary nor desirable to embark on considering the vexed question as to what may have been the position at common law in relation to the admissibility of such negative search evidence: qv Heydon JD, Cross on Evidence (12th ed, LexisNexis, 2020), at [31145] and [35220].

21    There is doubtless a mixed law and fact quality in relation to any use of the word “employed” and the like by a witness. But it is an ordinary English word and Ms Battellino was not cross-examined so as to suggest that her use of it was idiosyncratic.

22    The fact of the absence of a record of I-MED NSW employing Dr M tends to support the positive fact of his employment by I-MED Services.

23    It is true, as the Chief Executive and the Director submitted, that a conclusion that, in law, an individual is an employee of another is not necessarily determined by their being subject to PAYG income tax withholdings. Evidence as to the totality of a relationship can either confirm a position suggested by such withholdings or contradict it. Indeed, the very making of such withholdings reflects certain assumptions as to the nature of the relationship by the person making the withholdings. Evidence as to other aspects of the relationship between I-Med Services and Dr M is lacking. All that means is that I must decide the issue on the evidence to hand. On the basis of the PAYG summaries and Ms Battellino’s negative search evidence, I find that it is more probable than not that, during the Review Period, Dr M was not employed by I-Med NSW but rather by I-Med Services.

24    These findings are insufficient for I-MED NSW to prove the absence of the asserted jurisdictional fact.

25    That is because, within the definition of “provides services” in s 81(2) of the HIA, s 81(2)(b) materially but also s 81(2)(c), contain a correlative conjunction, “employed or otherwise engaged”. The effect is a comprehensive composite covering not just employment relationships to which the practitioner is a party with another person but also other relationships which do not amount to employment. That composite in s 81(2)(b) is one of the alternative objects of the conditional clause in s 81(2), “if the services are rendered or initiated by” [the objects specified in paragraphs (a), (b) or (c)].

26    Ms Battellino’s evidence proves an absence of employment during the Review Period but not an absence of engagement of Dr M by I-MED NSW not amounting to employment. There is no other evidence which would prove an absence of such engagement.

27    The result is that, even assuming that s 86 contains a jurisdictional fact as asserted, I-MED NSW’s case on this point fails at an evidentiary level.

28    This conclusion lends an academic quality to I-MED NSW’s jurisdictional fact point. The traditional approach is to deal with the law only insofar as it is necessary to resolve the case at hand. It seems to me desirable to follow that approach in this case, most especially because of the systemic ramifications for the administration of Pt VAA of the HIA entailed in the point, if it is sound.

29    I therefore refrain from deciding the point. In deference to the submissions of counsel, I merely make the following observations.

30    There is no direct authority on the point. Each party took care to highlight, I-MED NSW and I-MED Radiology for the purpose of submitting the observations were erroneous and the Chief Executive and Director to commend those same observations as correct, that Griffiths J had recently made observations on a similar point in National Home Doctor Service Pty Ltd (ACN 006 013 421) v Director of Professional Services Review (2020) 379 ALR 513 (NHDS v The Director).

31    Before turning to NHDS v The Director it is desirable to make some observations flowing from the text and purpose of the HIA.

32    Part VAA of the HIA was comprehensively reformed by the Health Insurance Amendment (Professional Services Review and Other Matters) Act 2002 (Cth) (Act No. 130 of 2002). However, at that time, the new s 81(2) of the HIA did not contain in s 81(2)(b) its present correlative conjunction. That paragraph of the definition merely referred to a “practitioner employed”. It was not until the commencement of the Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Act 2018 (Cth) (2018 Amendment Act) that the correlative conjunction “employed or otherwise engaged” was introduced by amendment.

33    The relevant part (p 20) of the Explanatory Memorandum in respect of the Bill which became the 2018 Amendment Act confirms what regard to the text as amended in any event discloses, which is that the purpose of the amendment of s 81(2) was to expand the reach of the provision of services the review of which the Chief Executive might request the Director to undertake by making otiose any distinction between employment and any other relationship which exists between the practitioner rendering a service and the person under review:

Item 1 amends paragraphs 81(2)(b) and (c) of the Health Insurance Act. The effect of these amendments is to enable the Chief Executive Medicare to request the Director of the Professional Services Review to review the provision of services by persons acting for or under the instruction or control of a person under review, regardless of whether there was a formal employment arrangement in place between the person under the review and the person rendering the service. This includes circumstances where the person under review is a corporate entity.

34    In itself, this evident purpose says nothing about whether the “provision of services”, as defined by s 81(2), is a jurisdictional fact for the purpose of s 86 of the HIA.

35    The “main features” of the scheme are stated in s 80 of the HIA. So far as presently relevant, one there finds the following:

(2)    The Professional Services Review Scheme is a scheme for reviewing and investigating the provision of services by a person to determine whether the person has engaged in inappropriate practice.

(3)    The Chief Executive Medicare can request the Director to review the provision of services by a person and the Director must decide whether to undertake a review.

 (4)    Following a review, the Director must:

(a)    decide to take no further action in relation to the review; or

(b)    enter into an agreement with the person under review; or

(c)    make a referral to a Committee …

36    Reading s 80(2) in isolation, the point made for I-MED NSW is not without attraction. The text of that subsection does not state, as the object, “review the provision of services to determine whether a person has provided those services and, if so, to determine whether that person has engaged in inappropriate practice”.

37    Yet, when ss 80(2), (3) and (4) are read in conjunction with s 86 and in the overall context of Pt VAA, much depends on the level of abstraction at which one approaches the object of, in the first instance, a request of the Director by the Chief Executive for the review of “the provision of services by a person to determine whether the person has engaged in inappropriate practice”. At a general level of abstraction, it is perhaps possible to see that one object might be to determine on review who was “the person”.

38    That possible view is challenged when one looks further afield in the HIA. At the heart of that Act, and engaging with the head of parliamentary legislative competence in s 51(xxiiiA) of the Constitution, is s 10(1), which provides for an entitlement to medicare benefits where medical expenses are incurred in respect of a professional service rendered in Australia to an eligible person. By s 10(2), and subject to the HIA, the amount of medicare benefit in respect of that professional service is the whole, or a percentage, of fees set out in a detailed Schedule to regulations made under that Act. In turn, by s 20A(1), an eligible person may enter into an agreement with the person by whom, or on whose behalf, that professional service was rendered (referred to as “the practitioner” for the purposes of that subsection), in accordance with an approved form, by which:

(a)    the … eligible person assigns his or her right to the payment of the medicare benefit to the practitioner; and

(b)    the practitioner accepts the assignment in full payment of the medical expenses incurred in respect of the professional service by the … eligible person.

39    It might be thought that the inclusion in the s 20A(1) definition of “practitioner” of “on whose behalf” would mean that the Chief Executive, in her administration of bulk billing payments consequential on assignments of the medicare benefits of eligible persons, would thereby come to know of the person who, in terms of s 81(2)(b) of the HIA, had “employed or otherwise engaged” the practitioner to render or initiate the service. On that basis, it could be said that the Director and Chief Executive protesteth too much in their cri de coeur in submissions as to the latter’s limited investigatory powers as a reason not to adopt the construction promoted by I-MED NSW.

40    Tending back the other way, and within Pt VAA itself, it might alternatively be thought odd that s 86 contains any jurisdictional fact when:

(a)    a decision by the Director to undertake a review is initiated by nothing more than “it appears to the Director that there is a possibility that the person has engaged in inappropriate practice in providing services during the review period” (emphasis added) (s 88A(2), of which more below); and

(b)    the remit of the Committee upon any subsequent, consequential referral by the Director is to “investigate whether the person under review engaged in inappropriate practice in providing the services specified in the referral”: s 93(1).

“Provision of services” is mentioned in each of ss 86(1), 88A(2) and 93 but it would rather put the first stage, request cart before the later stages, appearance of possibility and investigatory horses to hold that any element of provision of services, in particular employment or engagement of a practitioner, was a jurisdictional fact at the s 86 request stage.

41    In NHDS v The Director, at [167], Griffiths J, in what were, strictly, obiter observations, saw in the text of s 93 of the HIA, which empowers the Director to “make a referral… to investigate whether the person under review engaged in inappropriate practice in providing the services…” (emphasis added by Griffiths J), an indication that the issue of whether the person under review provided the services specified in the referral is an aspect of the question that is referred for investigation to the Committee and is not a jurisdictional fact. Also influential, at [169], in this conclusion was, “the considerable inconvenience and disruption which would follow if the matter involved a jurisdictional fact”.

42    While I respectfully acknowledge the force of his Honour’s observations, and that they may be relevant by analogy to the construction of s 86, I expressly refrain, for the reasons given above, from expressing any concurrence with them. This aside, in NHDS v The Director, Griffiths J offers a most helpful summary, which I do not repeat, of the potential stages of scrutiny for which the scheme provides.

43    The truth is that some of the drafting of Pt VAA of the HIA, notably s 86, read with s 81(2), is difficult. The scheme would be coherent, and in no need of the meaning discerned by Griffiths J in NHDS v The Director for that coherence, if its focus were only on the practitioner who provided the service. In the first instance, the difficulty arises from the expansion of the definition of “provides services” and at least a potential ignorance by the Chief Executive as to which legal entity employed or engaged that practitioner. In the second instance, the difficulty is whether the text of Pt VAA is sufficient to permit the Chief Executive to make a request of the Director and in turn for the Director to review who provided the service in addition to the review of whether there has been “inappropriate practice”. The like may be said of the sufficiency of the text as to the investigatory remit of a Committee. It may be that the text adopted by Parliament has inadequately conveyed an intention to achieve the end asserted by the Director and the Chief Executive in this case.

44    In Gauntlett v Repatriation Commission (1991) 32 FCR 73, at 77, in a passage cited with approval by the Full Court in Ralph v Repatriation Commission (2016) 248 FCR 438, at [56], Pincus J, when a judge of this Court, stated:

… [T]his is not the first time in which the respondent Commission has implied in argument that provisions of this sort could not possibly have been intended to produce such anomalies as, literally read, seem to follow from them; but it is the constitutional function of Parliament, and not that of the judges, to correct any anomalies thought to arise from applying the plain language of legislation.

45    The construction promoted by I-MED NSW may perhaps likewise be productive of anomalies. In these circumstances, it is truly better not to decide the point when that is unnecessary in order to determine the related ground of review. As it is, whatever merit it may have, the point lacks an evidentiary foundation. The expansion of the definition of “provides services” beyond the individual practitioner who has physically provided them doubtless reflects recognition by Parliament of contemporary arrangements in the medical, dental and pharmaceutical professions and allied health-related occupations. In these circumstances, that there may perhaps be anomalies in the present text of Pt VAA of the HIA highlighted by this case might be thought by the Chief Executive and the Director to be a law reform issue worthy of raising with the responsible Minister for consideration of whether, if only out of an abundance of caution, remedial amendments to Pt VAA ought to be put to Parliament.

46    That then leaves for consideration the validity of the s 89B notices.

47    Rather tellingly, given the onus of proof, it is admitted on the pleadings (para 20 of the amended statement of claim and para 20 of the amended defence refer) that, on or about 15 July 2020, and upon receipt of a request for review in respect of each applicant, the Director, pursuant to s 88A(4) of the HIA, gave notice (s 88A Notice) to each applicant:

 (a)    that it appeared that there is a possibility that each may have engaged in inappropriate practice within the meaning of the HIA during the [Review Period];

 (b)    that she had decided to undertake a review (the review) into each of the [a]pplicant’s provision of services during the [Review Period];

  (c)    of the scope of the review of the Director;

(d)    that she would either, pursuant to s.89C(1), make a decision (with reasons) under s.91 to take no further action (s.89C(1)(a)); or give an invitation to the [a]pplicants a written report setting out reasons why she had decided not to dismiss the matter under s 91 and inviting the applicants to make written submissions to the Director as to further disposition of the review (s.89C(1)(b)(ii)).

48    In addition to these admitted facts, it is also desirable to set out exactly the terms of the Director’s decision to undertake the review, as specified in her materially identical letters of 15 July 2020 to each applicant:

I am writing to advise [I-MED Radiology, or as the case may be I-MED NSW] that it does appear to me that there is a possibility that [I-MED Radiology, or as the case may be I-MED NSW] may have engaged in inappropriate practice during the Review Period as described above.

Accordingly, today I have decided to undertake a review into [I-MED Radiology, or as the case may be I-MED NSW]’s provision of services during the Review Period in accordance with the requirements of the [HIA]. This letter constitutes written notice of that decision for the purposes of s 88A(4)(a) of the [HIA].

[Emphasis added] [footnote reference omitted]

In a footnote to “in accordance with the requirements of the [HIA]”, the following is stated:

Pursuant to s 81(2) of the [HIA], services includes services rendered or initiated by a practitioner employed or otherwise engaged by [I-MED Radiology, or as the case may be I-MED NSW].

49    The Director’s understanding as to how a body corporate such as I-MED Radiology, or as the case may be I-MED NSW, rather than the practitioner who rendered the service, might engage in “inappropriate practice” is revealed by this preceding statement in her letters:

In general terms, an entity engages in “inappropriate practice” if it knowingly, recklessly or negligently causes or permits a practitioner employed or otherwise engaged by it to engage in conduct that constitutes inappropriate practice by the practitioner under ss 82(1) or (1A) of the [HIA].

50    The scope of the review, together with an expression of the Director’s understanding of the meaning and effect of s 88B of the HIA in each letter of 15 July 2020, was as follows (using that specified in the letter directed to I-MED Radiology as an example):

Scope of my review

Medicare’s request outlines concerns that I-MED Radiology Network Limited was knowingly, recklessly or negligently causing or permitting practitioners employed or otherwise engaged by it to engage in conduct constituting inappropriate practice by co-claiming magnetic resonance imaging (MRI) services in circumstances where services may not have been clinically indicated or MBS requirements may not have been met.

In accordance with s 88B of the Act, I-MED Radiology Network Limited should be aware that in undertaking my review:

•    I may review any or all services rendered or initiated by any or all practitioners employed or otherwise engaged by I-MED Radiology Network Limited during the Review Period that attracted a Medicare or Pharmaceutical benefit,

•    I may undertake the review in such a manner as I think appropriate - this may include arranging an initial informal meeting with representatives of I-MED Radiology Network Limited or any practitioner employed or otherwise engaged by I-MED Radiology Network Limited if I think it will be helpful to the process of review, and

•    I am not limited by the areas of concern or reasons included in Medicare’s request.

51    On the evidence, the Director’s decision to undertake the review in respect of both I-MED NSW and I-MED Radiology was made on 15 July 2020, the date on which she signed each s 88A Notice. Each s 88A Notice notified the making of that decision but did not furnish reasons as to why it appeared to the Director that there was a possibility that each may have engaged in inappropriate practice. The HIA imposed no obligation on the Director to furnish such reasons. At common law, no such obligation existed: Public Service Board (NSW) v Osmond (1986) 159 CLR 656.

52    By s 89B(2) of the HIA, it is provided:

(2)    For the purpose of undertaking a review, the Director may, by written notice given to:

  (a)    the person under review; or

(b)    any other person whom the Director believes to have possession, custody or control of, or to be able to obtain, relevant documents;

require the person to whom the notice is given:

(c)    to produce to the Director, or to a person nominated by the Director, such relevant documents as are referred to in the notice; and

(d)    if the person does not have possession, custody or control of, and cannot obtain, any of those documents:

(i)    to inform the Director or a person nominated by the Director of that fact; and

(ii)    if the person knows, or can readily find out, the name and address of a person who has possession, custody or control of, or can obtain, any of the documents—to give that name and address to the Director or to a person nominated by the Director.

53    Subsections 89B(3), (4) and (5) specify certain formal requirements in respect of a notice in relation to the allowance of time, and the specification of a place, for production, as well as making explicit on the face of the notice the statutory consequences of a failure to comply with a notice. Provision for the inspection, retention and copying of produced documents by the Director is made by s 89B(6) of the HIA.

54    For the purposes of s 89B, the term “relevant documents” is defined by s 89B(1) of the HIA:

relevant documents means documents that are relevant to the review and includes clinical or practice records of services rendered or initiated during the review period by:

 (a)    the person under review; or

 (b)    a practitioner employed or otherwise engaged by the person under review; or

(c)    a practitioner employed or otherwise engaged by a body corporate of which the person under review is an officer.

55    The specified “details” in each s 89B notice were as follows (using that specified in the s 89B notice directed to I-MED Radiology as an example):

For the purpose of this notice, ‘details’ includes but is not limited to:

•    Name, specialty and provider number of each practitioner and state (if applicable) from which they rendered MBS services in connection with I-MED Radiology Network Limited during the period identified.

•    Terms of engagement between I-MED Radiology Network Limited and each practitioner including any employment contract, contract for service, consultancy agreement, management, administration or licencing agreement or any other document containing all or part of the arrangements upon which the practitioner is to provide MBS rebateable services in connection with I-MED Radiology Network Limited and including any standard or proforma terms or conditions that may apply to such engagement arrangements.

•    Remuneration arrangements for each practitioner including arrangements for practitioners to render claims to Medicare, receipt of rebate monies from Medicare and how rebate monies from Medicare are distributed.

•    Any directions, instructions, guidelines, protocols, recommendations or standing orders provided to practitioners regarding the manner in which services may be rendered including billing arrangements, record keeping, use or interpretation of MBS item numbers.

•    Any supervision, audit, review or assessment of each practitioner.

[emphasis in original]

56    The s 89B notices and the decision to issue them are alleged to be invalid on multiple bases. On the pleadings as amended, it is contended that the s 89B notices were:

26.    …

(a)    made in error of law and/or jurisdictional error, because:

(i)    the legal liability of the Applicants being investigated is both unclear and conflicting arising from the difference between conduct under s.82(1) and s.82(2)(a) of the HIA; and

(ii)    is thereby made in impossibility of knowledge of relevance;

(b)    made in error of fact giving rise to an error of law or jurisdictional error because by the error of law referred to in 26(a) hereof the fact(s) to be inquired in the review is and must be unknown;

(c)    unintelligible, unfair and unreasonable occasioning error of law or jurisdictional error because:

(i)    the matters the subject of review are unknown; and

(ii)    therefore the relevance of the documents sought to be produced cannot be determined; and

(iii)    the matters the subject of the review as determined by the Director on or about 15 July 2020 materially alters from the request for review, for it is unclear whether the review is investigating conduct within the meaning of s.82(2)(a) or s.82(1) of the HIA; and thereby

(iv)    relevance is impossible to determine;

(d)    made in abuse of power or on an improper exercise of power or misuse of power occasioning error of law or or jurisdictional error because:

(i)    each of the [s 89B notices] are premised on an investigation described by the request to review and the s.88A(2) Notice which in their terms do not reconcile with the nature of the liability question investigated by the Director, as referred to in [26(a) and (c)] hereof;

(e)    made on the occasion of the raking of an irrelevant consideration giving rise to error of law or jurisdictional error because any liability under s.82(2)(a) is different to any liability under s.82(1);

  (f)    induced by an error of law or a jurisdictional error because:

(i)    the power in s.89B to compel production of documents is conditioned by the capacity to determine relevance of the documents to the matter under review; and

(ii)    when the matter under review cannot be identified with precision, thereby the power in s.89B has been exercised in breach of the condition on its power.

[sic]

57    Given the references in these contentions to s 82(1) and s 82(2)(a) of the HIA, it is desirable to set out material parts of each of these provisions:

82    Definitions of inappropriate practice

Unacceptable conduct

(1)    A practitioner engages in inappropriate practice if the practitioner’s conduct in connection with rendering or initiating services (other than a service of a kind referred to in paragraph (c) of the definition of service in subsection 81(1)) is such that a Committee could reasonably conclude that:

   (a)    … ; or

(b)    if the practitioner rendered or initiated the services as a specialist (other than a consultant physician) in a particular specialty—the conduct would be unacceptable to the general body of specialists in that specialty; or …

Causing or permitting inappropriate practice

(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 or otherwise engaged by the person to engage in conduct that constitutes inappropriate practice by the practitioner under subsection (1) …; or …

[Emphasis in original]

58    In Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611, at [130], and with reference to observations made by Isaacs and Rich JJ in Bankstown Municipal Council v Fripp (1919) 26 CLR 385, at 403, Gummow J stated that, “with the object of preventing litigation on questions of jurisdictional fact, the legislature may introduce into the criterion elements of opinion or belief by the decision-maker”. Subsection 88A(2) of the HIA offers an example of this type of provision in the conditional clause, “if … it appears to the Director”.

59    That, as a matter of fact, it appeared to the Director that, “there is a possibility that [I-MED Radiology, or as the case may be I-MED NSW] may have engaged in inappropriate practice during the Review Period” is, as I have already highlighted by reference to the pleadings, an uncontroversial given in this case. The requisite jurisdictional fact is not lacking. Rather, its existence is common ground.

60    The “provision of services” by a person, which is defined in s 81(2) of the HIA, is not necessarily assimilated with the rendering or initiating of that service by that person. It can be, if that person is the practitioner concerned, but the reach of the scheme in Pt VAA of the HIA is wider than that. That is the whole point, as discussed above, of the expansive definition in s 81(2), and of the differentiation evident in s 82.

61    The consequence of the possibility appearing was that the Director was obliged, by s 88A(2) of the HIA to undertake the review of the provision of services by I-MED Radiology, or as the case may be I-MED NSW. In this sense, s 88A of the HIA operates in a similar way to s 65(1) of the Migration Act 1958 (Cth) in that, once the requisite state of mind is formed by the decision-maker, an obligation to make a decision in a particular way arises per force of statute, there being no residual discretion reserved to the decision-maker.

62    Once the reach of the scheme beyond the practitioner who has rendered or initiated a service is appreciated, there is not, or ought not to be, any great mystery or difficulty of understanding, even in the absence of formal reasons from the Director, as to her remit in undertaking the review.

63    Neither I-MED Radiology nor I-MED NSW is a practitioner but each, as a body corporate, is, juristically, a “person” (s 2C(1), Acts Interpretation Act 1901 (Cth)). That being so, then, having regard to s 82 of the HIA, each could only engage in “inappropriate practice” if, in terms of s 82(2) of that Act, each had caused or permitted inappropriate practice. The admitted fact of what “appeared” to the Director is the possibility that I-MED Radiology, or as the case may be I-MED NSW, may have engaged in inappropriate practice during the Review Period. Necessarily, even in the absence of formal reasons, that means, and can only mean, that the possibility of “inappropriate practice” arose under s 82(2) of the HIA. In turn, as is patent from the language of s 82(2), a necessary element of that type of “inappropriate practice”, and thus of the possibility, is during the Review Period, “a practitioner employed or otherwise engaged by the person to engage in conduct that constitutes inappropriate practice by the practitioner” under, materially, s 82(1). I have emphasised “possibility” because that is the requisite statement of mind for the Director.

64    Read fairly and as a whole, that is what is conveyed by the Director’s letters of 15 July 2020. The alleged lack of clarity arising from a “difference between conduct under s.82(1) and s.82(2)(a) of the HIA”, put in various ways in the applicants’ contentions, is, truly, and with respect, a confected issue.

65    As was correctly submitted by the Chief Executive and the Director, once the obligation to undertake a review arises by virtue of the appearance of the specified possibility, the scope of the review, and the manner of its undertaking, is as specified by s 88B of the HIA:

88B    Scope of Director’s review

If the Director decides to undertake the review, he or she:

(a)    may review any or all of the services provided by the person under review during the review period; and

 (b)    may undertake the review in such manner as he or she thinks appropriate; and

(c)    in undertaking the review, is not limited by the reasons included in the request under subsection 86(3).

66    Paragraph 88B(a) is facultative in relation to the permissible scope of the review. Paragraph 88B(c) makes patent that the review is not limited by the reasons included in the Chief Executive’s request under s 86(3). In short, the Director is entitled to undertake a roving review – “any or all of the services provided by the person” – within the confines of the Review Period. The HIA itself, by s 88B(a), supplies the relevant “matter”, qv, for example, Construction, Forestry, Maritime, Mining and Energy Union v Fair Work Inspector Lam [2018] FCA 1379, at [27(b)(ii)]. Again, read fairly and as a whole, this is one of the points conveyed by the Director’s letters of 15 July 2020.

67    At the conclusion of the review, one outcome, as s 89C(1) contemplates, may be that the Director decides under s 91 of the HIA to take no further action. That might be because, upon review, the Director was satisfied that what had appeared to her to be the possibility of inappropriate practice by I-MED Radiology and I-MED NSW was not, in respect of either or each of them, an actuality at all. One, but by no means the only, reason for that decision might be that the Director was satisfied that none of the services concerned were rendered or initiated by a practitioner who was employed or otherwise engaged by I-MED Radiology, or as the case may be I-MED NSW, or at least, in terms of s 91(1)(a) of the HIA, that there were insufficient grounds on which a Committee could reasonably so find.

68    In the course of submissions, I was taken to numerous authorities concerning the exercise, and validity of exercise, of information gathering or document production powers conferred by various statutes. Each of these ultimately turned on the terms of the notice requiring the giving of information or production of documents and the authority conferred by the statute concerned.

69    Insofar as there are any general principles, they may be gleaned from observations made by Bowen CJ in Riley McKay Pty Ltd v Bannerman (1977) 15 ALR 561 (Bannerman), at 566, in relation to an information gathering notice given under s 155 of the then Trade Practices Act 1974 (Cth). The power of requiring the giving of information or production of documents must be exercised for the statutory purpose for which it is given. Here, that purpose is as specified by s 89B(2) of the HIA, “For the purpose of undertaking a review”. There is nothing on the evidence to suggest the possession of any purpose by the Director in giving these two notices other than the undertaking of a review in relation to the applicants’ provision of services in respect of the Review Period. Within these confines, the only further requirement, flowing from the definition of “relevant documents” in s 89B(1) of the HIA, is that the documents sought be “relevant to the review”.

70    Such a notice must also “specify the information sought with sufficient certainty to enable the recipient of the notice to know what is required of him”: Bannerman, at 566. To like effect is this statement, recently offered by Wigney J, together with a summary of authorities, in Australian Securities and Investments Commission v Maxi EFX Global AU Pty Ltd [2020] FCA 1263 (Maxi EFX Global AU), at [90], in relation to a cognate requirement under s 33(1) of the Australian Securities and Investments Commission Act 2001 (Cth) to produce “specified books”, “the documents which are required to be produced be identified in the notice with sufficient clarity and precision to enable the recipient to know what documents come within the terms of the notice and to form a view about what must be produced so as to comply with the notice”. To the summary of authorities offered in Maxi EFX Global AU, but to no different effect, might be added Australia and New Zealand Banking Group Ltd v Konza (2012) 206 FCR 450, at [46] – [47].

71    I-MED Radiology and I-MED NSW also advanced, in oral submissions other objections to the legality of the s 89B notices. It may well be that not all of the perceived deficiencies of clarity were expressly pleaded by them in their amended statement of claim. Most of the alleged deficiencies, for reasons already given in relation to those pleaded, were confected. In keeping with its use throughout Pt VAA, the s 89B notices adopt the correlative conjunction, “employed or otherwise engaged”. That relieves I-MED Radiology, or as the case may be I-MED NSW, of whatever burden there is in determining whether, as a matter of law, it “employed” a particular practitioner. For any engagement short of, or different to, that to provide services is within the embrace of the production obligation as well.

72    I rather doubt in any event that there could be any valid objection, on the basis of lack of clarity, to a requirement to produce the records of a recipient’s “employees”. Adverse though the consequences of non-compliance may be, that is not a licence for pedantry on the part of a recipient.

73    Once the breadth of review permitted by s 88B upon the appearance of a possibility is understood, there was no requirement that the notices identify particular practitioners, be they Dr M or another practitioner mentioned in the evidence, Dr S (whose name is suppressed for like reasons) or otherwise. The Director was entitled to inquire who those practitioners were as an initial step in her review. That is one object of the s 89B notices. Subject to one possible qualification, flowing from the non-exhaustive nature of the definition of “details” for the purposes of the s 89B notices, that the documents sought were relevant is patent on a fair reading of the notices in light of that definition.

74    As to that non-exhaustive quality, flowing from the use of the word, “includes”, and by analogy with an observation made by Robertson J in Binetter v Deputy Commissioner of Taxation (No 3) (2012) 89 ATR 296 (Binetter), at [62], concerning a similar use of the word “including” in a notice, it means no more in context than that the recipient is also to produce any other document which shows which practitioners were employed or otherwise engaged to provide MBS rebateable services in connection with it during the Review Period.

75    Another fallacy in the applicants’ complaint about the notices, flowing from a failure to appreciate the breadth of review permitted by s 88B of the HIA and the ends to which such a review are directed, was the assertion of a need to detail particular contraventions or instances of “inappropriate practice”. What precedes a review is nothing more than the appearance of a possibility. The scope of the review is, as I have already highlighted, not limited to whatever has occasioned the appearance of that possibility. At the conclusion of the review, the actions which the Director may take are those specified in s 89C of the HIA (agreement under s 92 being excluded because those under review are not practitioners). At that time, the Director may come to identify with precision, and for the purposes of a referral to, and investigation by, a Committee, specified instances in which it is alleged that the person under review engaged in inappropriate practice in providing services: see s 93(1) of the HIA. It then becomes the remit of the Committee, not the Director, to investigate and report upon whether the person under review engaged in inappropriate practice in providing the services specified in that referral.

76    A notice issued under statute to produce documents will not be invalid merely because compliance with it is burdensome and visits considerable compliance work and expense on its recipient: Bannerman, at 567. Invalidity on this basis might, however, be found if the time allowed for compliance were not reasonable, having regard to the nature and extent of the production obligation imposed.

77    The applicants did not introduce evidence on this subject. That was because of, so they submitted, “the inherent difficulty of identifying the class of persons in respect of whom documents may need to be produced”. That alleged “inherent difficulty” as to the class of persons, was, however, for reasons already given, grounded in a misunderstanding of s 88B(a). Contrary to the applicants’ submission, what any other practitioner other than Dr M or Dr S has done or not is relevant to this review.

78    The applicants made a deliberate, forensic choice not to introduce evidence of the burden entailed in compliance, having regard to the time for production specified in the s 89B notices. In some circumstances, it might be possible, having regard to the apparent breadth of production sought and the time allowed for that production, to conclude that, on any view and objectively, a notice to produce was invalid. Quite apart from violating the 14-day minimum period mentioned in s 89B(4) of the HIA, perhaps such a conclusion would have been open here if the notice had required production the following day. Here, each s 89B notice specified that, “The documents must be produced by no later than: 5pm, Friday 14 August 2020”, in other words, not less than 30 days and more than double that 14 day, minimum period. Sometimes, a conclusion of unreasonableness, and hence invalidity, might flow from a consideration of the material before the person who issued the notice at the time when it was issued. The metes and bounds of that material is not in evidence here. In Binetter, at [82], and with reference to the power granted to the Commissioner of Taxation, under s 264 of the Income Tax Assessment Act 1936 (Cth), to require a person to provide information and to produce documents, Robertson J made the following observations by reference to authority:

The status of the objective test of reasonableness, on the basis of the decision in DCT v Ganke [1975] 1 NSWLR 252; (1975) 5 ATR 292; 25 FLR 98; 75 ATC 4097, was referred to by Jagot J in Krok v FCT (2009) 77 ATR 897 at 907 [46]; 2009 ATC 20-156 at 10,565 [46]. Her Honour noted a potential inconsistency between the approach in Perron Investments and the approach in Holmes v DCT (1988) 19 ATR 1173; 88 ATC 4328 and in the full court in Wouters v DCT (1988) 20 FCR 342; 19 ATR 1884; 88 ATC 4906; 84 ALR 577.

It is not necessary in the present case to explore whether there is any inconsistency of the kind mentioned in the passage quoted, much less to endeavour to resolve it if there is. Suffice it to say, on the true construction of the s 89B notices on their face, I am not prepared to find that the time for compliance, considered objectively, was unreasonable in the sense referred to in Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541, at [10], per Kiefel CJ and, at [82], per Nettle and Gordon JJ.

79    Neither applicant produced documents by the time specified but there was a reason for that. These proceedings were instituted on the following Monday, 17 August 2020 in order to test the validity of the notices. After initially being mentioned on 18 August 2020, the applicants’ application for interlocutory injunctive relief was adjourned to 21 August 2020. On that day, and apart from making orders directed to an expeditious hearing of the substantive application, the Court made the following interlocutory orders:

10    The review of services of each of the applicants commenced on 15 July 2020 are suspended until the hearing and determination of this proceeding.

11    The first respondent must not give notice under subsections 106ZPM(2) or (3) of the [HIA] in respect of the applicants while the review of services of each of the applicants is suspended pursuant to Order 10.

12    The second respondent be restrained from taking any steps pursuant to or consequent upon the decision to issue the notices to produce dated 15 July 2020 by the first respondent, until the hearing and determination of this proceeding or further order of the Court.

[sic]

80    The obvious concern of the applicants, reflected and addressed in these interlocutory orders, was to avoid the disqualification for which s 106ZPM of the HIA provides. Read in isolation, s 106ZPM(1) might be thought to suggest that there is a self-executing quality about any such disqualification in the event that the two objects of the conditional clause are met. One of these is that the person to whom the notice is directed, “intentionally refuses or fails to comply with the requirement within the period specified in the notice”. Delving further into s 106ZPM, one sees that this is not so. Having regard to ss 106ZPM(2), (3) and (4), it is only if, additionally, the Director considers that s 106ZPM(1) prevents medicare benefits from being payable in respect of services rendered or initiated by the applicants and gives a notice to that effect to the that they are then taken, at that time, to be fully disqualified for the purposes of s 19D of the HIA. Section 19B is concerned with the disqualification of practitioners and the prevention of payment of medicare benefits to them or on their behalf. It is not necessary for the purposes of the present case to consider the interface between such a disqualification and bodies corporate such as the applicants, neither of which is a “practitioner”. Whatever effect that may be, the administrative progression of the s 106ZPM process is presently stayed by the interlocutory orders.

81    There is nothing in the evidence to suggest that either I-MED Radiology or I-MED NSW approached the question of complying with the respective s 89B notices other than in good faith and on the basis that they ought only to be required to produce documents according to law, nothing more but equally nothing less. As it transpires, and for the reasons given above, their understanding that the notices were invalid was misplaced. It is in the nature of the finality of judicial decision-making that the absence of merit in the asserted grounds of invalidity has a clarity in hindsight that it may well not have had in prospect. By virtue of s 106ZPM(2), it is, however, for the Director, not me, to form a view (“considers”) as to the operation of s 106ZPM(1) (in effect, as to the applicants’ intention in relation to the failure to comply).

82    At present, the interlocutory injunctions will expire on the determination of this proceeding. It seems to me that the interests of justice in the circumstances are best served by continuing those injunctions for a further 30 days from the date of the judgment. That will allow the parties time to consider these reasons for judgment, accommodate the period for the institution of any appeal and also allow the originally contemplated period for production in the event that the applicants are disposed now to produce what has been required. I note that the Director is given certain powers under s 94 of the HIA to extend the 12 month period upon the expiry of which a deemed no further action decision can arise. The existence of those powers means that the Director, if so disposed, can address any concern she might have, arising from this litigation and the injunctions, as to any untoward such deeming.

83    It only comes to this. For the reasons given above, the application must be dismissed. Costs must follow the event.

Associate:    

Dated:    13 November 2020