Crowley v Holmes

Federal Court of Australia (Full Court)|2003-08-21|Before: Dowsett J, North J, Finkelstein JJ, Madgwick J, Dowsett JJ, Finkelstein J

MADGWICK J: 1 I agree with Dowsett J's conclusions and with his reasoning. 2 There is one aspect on which I should comment and that is his treatment, following Holmes v Mercado, of the ostensible bias issue. Were it not for the authority of that case and the fact that North J at first instance and now, on appeal, Dowsett and Finkelstein JJ have agreed with the approach there taken, I might well have viewed the matter differently. I quite agree that doctors are as capable as lawyers, including judges, of putting merely prejudicial matters from their minds. However modern psychology suggests, I believe, that people (whether or not they are judges, other lawyers or doctors) are actually not very good at doing that at all. It might therefore be more realistic to view more cautiously than was done in Holmes v Mercado people's (including doctors') ability to do so. Nevertheless, six judges of this court think differently and I do not feel that I would be justified in not following an earlier Full Court decision I certify that the preceding two (2) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

AND: ALAN JOHN HOLMES (in his capacity as the Director of Professional Services Review)

FINKELSTEIN J: 3 I agree in the reasons of Dowsett J. I certify that the preceding one (1) paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

AND: ALAN JOHN HOLMES (in his capacity as the Director of Professional Services Review)

GENERAL 4 The appellant is a medical practitioner conducting his practice at Lowood in Queensland. The first respondent is the Director of Professional Services Review (the "Director") of the fifth respondent (the "Commission"). The second, third and fourth respondents are members of a Professional Services Review Committee (the "Committee") established pursuant to s 93 of the Health Insurance Act 1973 (Cth) (the "Health Insurance Act"). 5 Section 82 of the Health Insurance Act provided: "(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 referred services as a general practitioner - the conduct would be unacceptable to the general body of general practitioners; or (b) … (c) … (d) … (2) … (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 to other relevant matters) whether or not the practitioner kept adequate and contemporaneous records of the rendering … of the services." 6 At the time in question s 106KA provided: "(1) Subject to subsections (2) and (2A), if, during a particular period (the relevant period), the circumstances in which some or all of the referred services were rendered … constituted a prescribed pattern of services, the conduct of the person under review in connection with rendering … services during that period in those circumstances is taken, for the purposes of this Part, to have constituted engaging in inappropriate practice. (2) If the person under review satisfies the Committee that, on a particular day or particular days during the relevant period, exceptional circumstances existed that affected the rendering … of services by the person, the person's conduct in connection with rendering … services on that day or those days is not taken by subsection (1) to have constituted engaging in inappropriate practice. (2A) However, subsection (2) does not affect the operation of subsection (1) in respect of the remaining day or days during the relevant period on which the person rendered … referred services even if the circumstances in which the referred services were rendered … on that day or those days would not, if considered alone, have constituted a prescribed pattern of services. (3) The regulations may prescribe, in relation to: (a) a particular profession; or (b) an identified group or groups of practitioners in a particular profession; circumstances in which services of a particular kind or description that are rendered … constitute, or do not constitute, a prescribed pattern of services for the purposes of subsection (1). (4) The circumstances that may be prescribed under subsection (3) as circumstances in which services that are rendered … constitute a prescribed pattern of services include, but are not limited to, the rendering … of more than a specified number of services, or more than a specified number of services of a particular kind, on each of more than a specified number of days during a period of a specified duration. (5) The circumstances that constitute exceptional circumstances for the purposes of subsection (2) include, but are not limited to, circumstances that are declared by the regulations to be exceptional circumstances. (6) This section only applies to services rendered … after the commencement of this section. (7) This section does not preclude the Committee from making a finding under this Subdivision (other than section 106KB) in relation to conduct during a particular period in connection with rendering … services without considering whether or not the circumstances in which the services were rendered … constituted a prescribed pattern of services." 7 Relevantly, regs 10 and 11 of the Health Insurance (Professional Services Review) Regulations 1999(Cth) (the "Regulations") provided: "10. Circumstances constituting a prescribed pattern The circumstance in which services that are professional attendances constitute a prescribed pattern of services is that 80 or more such services are rendered on each of 20 or more days in a 12 month period. 11. Exceptional circumstances For subsection 106KA(5) of the Act, the following circumstances are declared as constituting exceptional circumstances: (a) an unusual occurrence causing an unusual level of need for professional attendances; (b) an absence of other medical services, for patients of the person under review during the relevant period, having regard to: (i) the location of the practice of the person under review; and (ii) characteristics of the patients of the person under review." 8 Pursuant to s 86 of the Health Insurance Act, the Commission might refer to the Director any concern that a medical practitioner may have engaged in inappropriate practice. The Director was obliged to conduct an investigation. Pursuant to s 93, he or she might then set up a Committee pursuant to the provisions of Div 4 (ss 95 to 106N) and refer to it the question of whether or not the practitioner had engaged in such practice. The content and form of any referral was to comply with guidelines published pursuant to subs 93(4). Subsection 93(6) provided that in making such a referral the Director was to prepare a written report for the Committee, giving his or her reasons for thinking that the person in question may have engaged in inappropriate practice. 9 Paragraph 4 of the Health Insurance (Professional Services Review - Content and Form of Adjudicative Referrals) Guidelines 1999 (the "Guidelines") provided: "(1) The content of an adjudicative referral to a Committee in relation to a person under review may include: (a) information and material received by the Director with the investigative referral relating to the person; and (b) any other relevant information and material discovered or obtained by the Director. (2) The information included may relate to services rendered or initiated by: (a) any of the persons mentioned in paragraph 86(4)(a) of the Act; and (b) for comparative purposes: (i) a class of practitioners; and (ii) all practitioners." 10 The reference to an "investigative referral" was to a referral by the Commission to the Director pursuant to s 86. The reference to an "adjudicative referral" was to a referral by the Director to a Committee pursuant to s 93. 11 On 13 December 2001 the Commission referred to the Director the appellant's conduct in providing services in the period from 1 January to 31 October 2000. On 14 February 2002 the Director referred the matter to the Committee. On 6 May 2002, the appellant commenced proceedings in this Court, seeking:

Ÿ a declaration that the referral dated 13 December 2001 (by the Commission to the Director) was invalid;

Ÿ a declaration that the referral dated 14 February 2002 (by the Director to the Committee) was invalid; and

12 Pursuant to subs 86(2) the Commission might only refer to the Director "services rendered" in the two years preceding the referral. In this case, the Commission purported to refer conduct which occurred in the period from 1 January to 31 October 2000. However the referral also contained certain information concerning the appellant's professional conduct from 1997 to 2000. There was also some information concerning the appellant's practice after 31 October 2000, although it seems not to have caused any concern to the appellant. All of this material will be described as the "additional material". The appellant submitted at first instance that the referral was void because it, in effect, purported to refer to the Director the conduct referred to in the additional material which had occurred more than two years prior thereto. It is clear that the referral was only of conduct within the two year period, and that the references to other conduct in the additional material was not intended to constitute a referral of it. North J, at first instance, dismissed this aspect of the appellant's claim. That decision is not presently under appeal. 13 As appears from his Honour's reasons, the appellant also argued that the Director's adjudicative referral to the Committee was invalid because: "(b) … it fails to comply with Section 93 of the Act, in that, because of the presence of irrelevant and extremely prejudicial material, it does not refer a question to the Committee to consider the question in a fair and impartial manner on the basis of logically probative and relevant evidence, that being an implied requirement of Section 93, and (c) if the Adjudicative Referral, despite the Submissions, is valid, nonetheless the content of the referral is such as to create a reasonable apprehension of bias." 14 The "material" in question was the additional material. North J dismissed the application. On appeal, the appellant made similar submissions.

The additional material 15 The additional material was originally included in section D and parts 1 and 2 of section E of the investigative referral and will be described accordingly. Prima facie, its inclusion in the adjudicative review was at least authorized by par 4 of the Guidelines. Section D is headed "Chronological Record Of This Investigative Referral". It seems to be a chronological record of dealings between the appellant and the Commission from 5 January 1993 to 12 December 2001. The document is as follows: "D. CHRONOLOGICAL RECORD OF THIS INVESTIGATIVE REFERRAL 5 January 1993 & Dr Crowley was counselled by a HIC Medical Adviser in relation to his volume of rendered services. 2 February 1995 17 December 1996 The HIC referred Dr Crowley's conduct to the Director of Professional Services Review. 3 November 1997 A Final Determination was made that Dr Crowley be counselled by the Director of Professional Services Review and be disqualified for a period of 6 months in relation to Group A1 of Part 2 from the General Medical Services Table from 5 December 1997 to 4 June 1998 inclusive. 28 July 2000 The HIC generated a report which identified that Dr Crowley may have engaged in inappropriate practice in connection with the rendering of services constituting a prescribed pattern of services within the meaning of subsection 106KA(1) of the Act and Part 3 of the Regulations. 20 December 2000 The HIC forwarded a letter to Dr Crowley outlining the HIC's concerns that the professional attendances rendered by him may constitute a prescribed pattern of services as defined in section 106KA of the Act and Part 3 of the Regulations. Dr Crowley was advised that he may be referred to the Director of Professional Services Review for consideration of whether he has engaged in inappropriate practice. 29 May 2001 The HIC referred the conduct of Dr Crowley to the Directorof Professional Services Review. 7 December 2001 The Director of Professional Services Review decided to take no further action in respect of Investigative Referral No.249 due to its similar wording to the referral in Pradhan v Holmes & Ors. 12 December 2001 As the HIC's concern still remain the HIC decided to refer again the conduct of Dr Crowley. 12 December 2001 Correspondence from the HIC to Dr Crowley advising that the HIC has decided to refer again his conduct to the Director of Professional Services Review."

16 The appellant is concerned that the entry for 5 January 1993 and 2 February 1995 and that for 3 November 1997 disclose that the Commission had previously formed adverse views concerning his conduct on occasions prior to the referral period. 17 Part 1 of section E deals with the mode of payment of Medicare benefits for services rendered by the appellant from 1 January to 31 December 2000. This includes the period under investigation and two months thereafter. It seems to indicate that the appellant received virtually all payments of Medicare benefits by way of "Direct bill benefit assigned to provider", whatever that may mean. The appellant has no specific concerns about Part 1. Part 2 of section E contains statistics concerning the appellant's practice for each quarter from that commencing on 1 January 1997 until that concluding on 31 March 2001. For each quarter it shows:

18 No doubt these figures have some significance for the Commission, but it is a little difficult to know what it might be. I have identified the high and low points of the range of figures for each category of information over the whole period. In the following table, I compare the actual figures for each quarter of the year 2000 with those ranges. Of course, only the first month of the fourth quarter of 2000 is presently relevant. PERIOD TOTAL PATIENTS TOTAL SERVICES SRV/ BENEFIT BEN/ BEN/ PAT PAT SRV 1997 - 2001 2,377 - 4,621 - 1.91 - $103,955.20 - $40.61 - $19.37 - min 3,453 7,223 2.12 $158,577.60 $48.17 $24.08 max Q1 2000 3,023 6,166 2.04 $141,968.25 $46.96 $23.02 Q2 2000 3,027 6,118 2.02 $141,269.25 $46.67 $23.09 Q3 2000 3,361 6,688 1.99 $156,318.90 $46.51 $23.37 Q4 2000 2,905 5,593 1.93 $132,126.10 $45.48 $23.62

19 Clearly, the figures for each quarter of 2000 are within the range for the whole period. It may be possible to infer that the appellant's professional conduct during the referral period was consistent with his conduct over the whole period. That might make it more difficult for him to demonstrate exceptional circumstances during the referral period. I do not suggest that such a line of reasoning should be followed. I advance it only as a possible explanation for its inclusion in the reference and for the appellant's concern about such inclusion.

PRESCRIBED CONTENT OF THE REFERRAL 20 Pursuant to subs 93(6) the Director was obliged to provide to the Committee a written report, giving his reasons for concluding that the appellant's conduct might have constituted inappropriate practice. Pursuant to subs 93(3) the referral had also to comply with par 4 of the Guidelines which at least authorized the Director to provide:

Ÿ material supplied to him by the Commission with the investigative referral; and

Ÿ any other relevant information and material discovered or obtained by him in his investigation.

21 Pursuant to subpar 4(2), that information might relate to "… services rendered … by … any of the persons mentioned in paragraph 86(4)(a) of the Act; …". Not surprisingly, one such person is the person whose conduct is under review. Paragraph 86(4)(a) of the Health Insurance Act requires that the referral contain particulars of all services rendered during the referral period. However, subpar 4(2) of the Guidelines permits inclusion in the adjudicative referral of information concerning services rendered by the practitioner other than during the referral period.

Committee Proceedings 22 Section 106 relevantly provides: "(1) Subject to this Subdivision and the regulations, the procedure for conducting the hearing is within the discretion of the Committee member presiding at the meeting in question. (2) The Committee is not bound by the rules of evidence but may inform itself on any matter in any way it thinks appropriate. … " 23 The Committee may take evidence on oath and may compel the attendance of witnesses to give evidence and/or to produce documents. No doubt the Committee is bound by the rules of natural justice. It is also bound to perform the function conferred upon it by the Health Insurance Act and to observe any statutory procedural requirements.

The Appeal 24 I assume for present purposes that this Court has jurisdiction to ensure that the Committee and the Director proceed in accordance with law. The appellant's argument depends upon one or more of the following propositions:

Ÿ the Committee could not, in performing its function, properly consider the additional material;

Ÿ the adjudicative referral should not have contained material which was incapable of being so considered; and

Ÿ possession of the additional material by the Committee might create a perception of bias in a fair-minded observer.

25 None of these propositions is superficially attractive.

USE OF THE ADDITIONAL MATERIAL 26 It is primarily for the Committee to identify the material on which it should rely. The Health Insurance Act provides for inclusion in the adjudicative referral of material supplied by the Commission to the Director. The additional material was so supplied. While the information in section D may itself be too imprecise to be of any use, the Committee might infer that the Committee's concerns on earlier occasions suggest that the appellant's prior conduct could be relevant to the referral and choose to inquire further as to that conduct. The Full Court (Wilcox, Merkel and Weinberg JJ) observed in Holmes v Mercado (2000) 111 FCR 160 at [57] - [59]: "[57] … It is important for committees and tribunals undertaking statutory reviews in respect of the provision of professional services to confine their findings to the period of time and the work locations specified in the relevant Commission reference. However, evidence about events that occur outside those work locations and period of time may bear on the matter under review. This is, perhaps, particularly a possibility in relation to a concept as imprecise as "inappropriate practice", as defined in s 82(1)(a) of the Health Insurance Act. It will be recalled this definition makes the question whether particular conduct is "inappropriate practice" depend on the committee's perception as to whether the conduct "would be unacceptable to the general body of practitioners". That must depend upon the whole of the circumstances surrounding the conduct. [58] … A person under review might justify the provision of an unusually high number of services by reference to the paucity of other practitioners in his or her local area. The practitioner might claim it is better for him or her to work extremely long hours than to leave patients unattended. This attitude might be thought acceptable, even laudable, in the first year. But it might wear a different complexion if it is shown that the practitioner has previously acknowledged that the long hours made it impossible for him or her to provide adequate patient care; and even more so if it is shown that the practitioner neglected a reasonable opportunity to take in a partner or employee. [59] Leaving aside that example, it is a commonplace of human behaviour that particular conduct will be tolerated on its first occurrence but considered unacceptable if repeated, especially if repeated after counselling or an appropriate warning. That statement is true of professional behaviour, as much as in any other sphere." 27 I agree. 28 The appellant's concern regarding section D appears to be similar to that experienced in connection with "similar fact" evidence in criminal cases, that is evidence of prior conduct of the accused, including prior criminal conduct, similar in some way to the conduct which is the subject of the relevant charge. It is important to realize that such evidence is not necessarily inadmissible. See S v The Queen (1989) 168 CLR 266 and B v The Queen (1992) 175 CLR 599. Once it is conceded that even in a criminal trial with a jury, similar fact evidence may be received, provided that the proper conditions for admissibility are shown, there can be little justification for the assertion that material is necessarily inappropriate for the Committee's consideration, merely because it is of that kind. The Committee might treat with some respect the views of the High Court and other courts concerning the dangers of such evidence, but it is not bound by the rules of evidence. It is entitled to determine in a particular case whether prior conduct of a similar kind is relevant to the question which it is addressing and whether it is worthy of weight in that regard. It is for the Committee, not this Court, to determine the material which will be received and acted upon. To deprive the Committee of a possible line of inquiry would be to usurp its function. It was appropriate for the Director to inform the Committee that the appellant had previously come to the attention of the Commission for possibly similar conduct. It was for the Committee to decide whether or not to investigate such matters and to give them such weight as was appropriate. 29 It is true that pursuant to s 106H the Committee may "make findings" only concerning services which are the subject of the referral. However that is a jurisdictional limitation upon the subject matter of the inquiry, not a limitation upon the material which the Committee may treat as relevant to its task. Undoubtedly, the appellant will be heard as to the relevance and weight of the additional material and invited to explain or contradict it. It cannot be said at this stage that evidence of the appellant's prior professional conduct is necessarily irrelevant to the Committee's consideration of this matter. 30 I have already identified one way in which the material in part 2 of section E might legitimately operate to the appellant's disadvantage. Obviously, that possible effect offers no basis for excluding it from the Committee's consideration. If, as seems likely, the appellant asserts that exceptional circumstances justified the level of services which he delivered during the referral period, then he might reasonably be asked to comment upon the fact that his pattern of providing services seems not to have varied much since the beginning of 1997. There may well be a good explanation. The passage in Holmes v Mercado to which I have referred, demonstrates the relevance of this material. It was properly provided by the Director to the Committee for its consideration.

CONTENT OF THE ADJUDICATIVE Referral 31 I turn to the second proposition, that the Director's referral should not have contained material which was inappropriate for the Committee's consideration. I must assume (contrary to my actual view) that the additional material was inappropriate in that way. As I have demonstrated, the Health Insurance Act and the Guidelines prescribe material which may be included in a referral. The Director was obliged to give his reasons for thinking that the appellant's conduct may have constituted inappropriate practice (subs 93(6)). He was also permitted to include information and material received from the Commission and other relevant information and material discovered or obtained during his investigation (Guidelines, par 4). Subject to those provisions, it was for the Director to determine the content of the referral. I can see no basis for intervening in his decision, at least in the absence of any allegation of bad faith, improper purpose or some other similar complaint. The appellant submits that the Director had a "filtering" function. That may well be so. However it does not follow that the inclusion of irrelevant and prejudicial material would necessarily invalidate the referral. In this regard I mention the decision of the High Court in Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355. The majority (McHugh, Gummow, Kirby and Hayne JJ), in considering the extent to which failure to comply with a statutory requirement will invalidate a step taken pursuant to the statute, observed at [93]: "A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid." 32 In the present case no express statutory provision was breached. The appellant argues that there was an implied obligation not to include in the referral "… irrelevant and extremely prejudicial material …" so that "… it does not refer a question to the Committee (so that it is able to) … consider the question in a fair and impartial manner on the basis of logically probative and relevant evidence …". I cannot see any basis for such an implication. The Director acts as an investigator and initiator of proceedings. Whilst it is no doubt desirable that any referral put the matter for consideration in as fair and impartial a way as possible, it is unlikely that such qualities were intended to be conditions precedent to a valid referral. Notions of "fairness" often arise in two different ways in criminal trials. Firstly there is a discretion to exclude evidence because of unfairness in the way in which it was obtained. Secondly, a prosecutor is expected to act fairly, usually meaning that he or she should not pursue a conviction at any cost. However, in neither case does unfairness lead to procedural invalidity. There is nothing in this point.

BIAS 33 Finally, I turn to the alleged perception of bias. For the sake of argument, I again assume (contrary to my actual view) that the additional material was not appropriate for consideration by the Committee in performing its function. In Livesey v The New South Wales Bar Association (1983) 151 CLR 288 at 293 - 294, the High Court observed: " … a judge should not sit to hear a case if in all the circumstances the parties or the public might entertain a reasonable apprehension that he might not bring an impartial and unprejudiced mind to the resolution of the question involved in it. … Although statements of the principle commonly speak of "suspicion of bias", we prefer to avoid the use of that phrase because it sometimes conveys unintended nuances of meaning." 34 In assessing the question, courts frequently speak of the "fair-minded and informed observer". See Holmes v Mercado at [63]. The question is whether such an observer might doubt the impartiality of the Committee because it knows that:

Ÿ in 1993, 1995 and 1997 the Commission considered that the appellant had, or may have engaged in conduct in some way similar to that presently under review; and

Ÿ from the beginning of 1997 until the end of the first quarter of 2001 the appellant had, according to some statistics, conducted his practice in a way which was consistent with the way in which he conducted it during the referral period.

35 As I have observed, in order to consider this submission, it is necessary to assume that the additional material had no legitimate bearing upon the matter in issue before the Committee. In that theoretical situation, I cannot see how anything in part 2 of section E could in any way prejudice the appellant. However, some people might conclude that a tribunal of fact could be inappropriately affected by knowledge of the material concerning prior conduct contained in section D. In this respect, it is important to note that the Committee is not selected at random off the street. As was observed in Holmes v Mercado at [62] and [63]: "Even if we are wrong in holding that the material concerning prior counselling of Dr Mercado was not irrelevant to the task of the committee, we respectfully disagree with the view that the committee members' knowledge of that material leads to a reasonable apprehension of bias. The committee gave assurances to Dr Mercado, on a number of occasions, that it would restrict its findings to referred services … . … The argument put on behalf of Dr Mercado requires the Court to disregard or discount these assurances. The argument has to be, and is, that a fair-minded and informed observer would reasonably have such doubts about the willingness or ability of a lay (as distinct from a legally-trained) tribunal to honour these assurances as to continue to harbour apprehension of bias. We see no basis for that view. The committee comprises three members of the Professional Services Review Panel. Members of the Panel are appointed by the Minister after consultation with the Australian Medical Association (AMA): see s 84(3) of the Act. The committee's chairman is a Deputy Director of Professional Services Review appointed in consultation with the AMA: see s 95(1)(a) and (2). The three members were required to be, and no doubt were, medical practitioners during the review period. We see no reason to doubt that such people are as capable as lawyers of understanding the concept of putting out of their minds an irrelevant matter, when reaching conclusions on a matter of grave importance to a practitioner, and of doing so." 36 I agree. A fair-minded observer would not perceive bias merely because the Committee knew of such previous dealings between the Commission and the appellant. The Committee would inevitably know that the investigative and adjudicative referrals leading to its own deliberations were, in effect, instigated as a result of the Commission having such concerns. That it had previously had similar concerns about other conduct could hardly take the matter any further. The appellant will no doubt have an opportunity to be heard on the matter. He will almost certainly receive assurances similar to those referred to in Holmes v Mercado. Our society relies upon courts and tribunals to determine factual matters by weighing evidence, often rejecting or discounting some of it. There is no justification for the view that a professional tribunal such as the Committee is unable or unwilling to set aside material which, for one reason or another, is not proper for its consideration. I am confident that a fair-minded observer would share that view. 37 I should refer to one other matter. Section 96 of the Health Insurance Act conferred upon the appellant a statutory right to challenge the composition of the Committee, provided that he did so within seven days of receiving notice of the referral. He did not adopt that course. The result has been a substantial delay of the Committee's deliberations. I have assumed that I have power to consider the allegation of perception of bias in these proceedings, notwithstanding the appellant's failure to avail himself of the procedure prescribed in s 96. 38 The appeal must be dismissed with costs. The injunction made by the Court on 21 May 2003 will be dissolved forthwith. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Counsel for the Appellant: Dr J Bleechmore Mr I Hayden

Counsel for the Respondents: Ms F Hampel SC Mr S Moloney

Health Insurance Act 1973(Cth)ss 82, 86, 86(2), 86(4)(a), 93, 93(3), 93(4), 93(6), 95, 96, 106, 106H, 106KA, 106N

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