Freeman v Health Insurance Commission

Federal Court of Australia (Full Court)|2004-07-01|Before: Downes JJ

Freeman v Health Insurance Commission [2004] FCAFC 335 HEALTH LAW - medical practitioner - Professional Services Review Scheme under Part VAA of the Health Insurance Act 1973 (Cth) - investigative referral made by delegate of Health Insurance Commission to Director of Professional Services Review - adjudicative referral made by Director of Professional Services Review to Professional Services Review Committee - finding by Professional Services Review Committee that general practitioner engaged in inappropriate practice - directions made by Determining Authority including repayment of Medicare benefits received in relation to services identified - whether investigative referral to the Director of Professional Services Review was invalid - whether investigative referral sufficiently specified the conduct referred - whether referral is invalid where conduct not sufficiently specified - whether appellant ought to have been given opportunity by the Determining Authority to present submission concerning 'exceptional circumstances' where that case was not presented by the appellant before the Health Insurance Commission - where appellant not aware that Determining Authority might make directions which went beyond the recommendations of the Health Insurance Commission - powers of the Determining Authority - whether there is denial of procedural fairness resulting in a breach of natural justice where decision-maker not responsible for the unfairness

Cases Al-Mehdawi v Secretary of State for the Home Department [1990] 1 AC 876 Cons Health Insurance Commission v Grey (2002) 120 FCR 470 Cons Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 Cited NAFF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] HCA 62 Cited National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296 Refd to O'Sullivan v Repatriation Commission [2003] FCA 387 Cons Pradhan v Holmes (2001) 125 FCR 280 Not Foll, Dist Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Cited R v Criminal Injuries Compensation Board; Ex parte A [1999] 2 AC 330 Not Foll Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicants S134/2002 (2003) 195 ALR 1 Cons

JACK FREEMAN v HEALTH INSURANCE COMMISSION, DR ALAN JOHN HOLMES (as the Director of Professional Services Review), DR MICHAEL RICE (as Chairperson of Professional Services Review Committee No 224), DR BOB BROWN (as a Member of Professional Services Review Committee No 224), DR BRUCE INGRAM (as a Member of Professional Services Review Committee No 224), DR NICHOLAS RADFORD (as Chairperson of the Determining Authority), DR MORRIS WILLIAMS (as a Member of the Determining Authority), MS JANE PHELAN (as a Member of the Determining Authority) V613 of 2004 KIEFEL, MARSHALL AND DOWNES JJ 22 DECEMBER 2004 MELBOURNE

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

DR ALAN JOHN HOLMES (as the Director of Professional Services Review)

DR MICHAEL RICE (as Chairperson of Professional Services Review Committee No 224)

DR BOB BROWN (as a Member of Professional Services Review Committee No 224)

DR BRUCE INGRAM (as a Member of Professional Services Review Committee No 224)

DR NICHOLAS RADFORD (as Chairperson of the Determining Authority)

DR MORRIS WILLIAMS (as a Member of the Determining Authority)

MS JANE PHELAN (as a Member of the Determining Authority)

THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the respondents' costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

DR ALAN JOHN HOLMES (as the Director of Professional Services Review)

DR MICHAEL RICE (as Chairperson of Professional Services Review Committee No 224)

DR BOB BROWN (as a Member of Professional Services Review Committee No 224)

DR BRUCE INGRAM (as a Member of Professional Services Review Committee No 224)

DR NICHOLAS RADFORD (as Chairperson of the Determining Authority)

DR MORRIS WILLIAMS (as a Member of the Determining Authority)

MS JANE PHELAN (as a Member of the Determining Authority)

REASONS FOR JUDGMENT KIEFEL J : 1 The appellant is a general practitioner who was found by a Professional Services Review Committee ('the Committee'), established under Part VAA of the Health Insurance Act 1973 (Cth) ('the Act'), to have engaged in inappropriate practice. The Act deems the rendering of more than 80 services a day on 20 or more days in a 12 month period to be such a practice. Consequent upon that finding by the Committee, a Determining Authority made directions which included the requirement that the appellant repay Medicare benefits received by him in relation to the services identified. The appellant sought to have the decision referring the question of his conduct to the Committee declared invalid and the decision of the Determining Authority set aside. His Honour, the primary judge, dismissed the application ([2004] FCA 453).

Statutory provisions 2 The Professional Services Review Scheme ('the Scheme') is established under Part VAA of the Act, which was introduced into the Act by the Health Legislation (Professional Services Review) Amendment Act 1994 (Cth). It is the Act as amended by the amendments of 1999 which applies to this case. Section 80(1) provided, with respect to Part VAA: 'This Part creates a scheme under which a person's conduct can be examined to ascertain whether inappropriate practice (see section 82) is involved. It also provides for action that can be taken in response to inappropriate practice.' 3 The Scheme of the Act is that the Health Insurance Commission ('the Commission') may refer the conduct of a person to the Director of Professional Services Review ('the Director'). Section 86(1) provided, so far as is relevant: '(1) The Commission may, in writing, refer to the Director the conduct of a person relating to one or both of the following: (a) whether the person has engaged in inappropriate practice in connection with rendering health services;' This referral is called an 'investigative referral': s 81. An investigative referral may refer only to services rendered during a two year period immediately preceding the referral: s 86(2). An investigative referral is required to contain particulars of the services and the Commission's reasons for the referral. Subsection 86(4) provided: '(4) An investigative referral must: (a) contain particulars of all services rendered or initiated during the referral period by: (i) the person under review; or (ii) a practitioner employed by the person under review; or (iii) a practitioner employed by a body corporate of which the person under review is an officer; and (b) set out the reasons why the Commission considers the person under review may have engaged in inappropriate practice.' Further provision is made in s 87 for the content and form of an investigative referral. The Commission is obliged to send a copy of the investigative referral to the person under review within 48 hours of sending the referral to the Director, together with a notice inviting the person to state why the Director should dismiss the referral without setting up a Committee: s 88. 4 After the Commission has made an investigative referral, the Director may request further information relating to any services contained in the referral. Section 86(4A) provides: 'After the Commission has made an investigative referral, the Director may request the Commission to give him or her further information relating to any services particulars of which are contained in the referral whether or not the services to which the request relates are dealt with in reasons given by the Commission under paragraph (4)(b).' 5 Section 89 obliges a Director to conduct an investigation. Section 89(1) was in these terms: '(1) When an investigative referral is made, the Director must conduct an investigation, in such manner as he or she thinks appropriate, into the referred services, including services not dealt with in reasons given by the Commission under paragraph 86(4)(b).' A Director may dismiss the referral if satisfied that there are insufficient grounds upon which a Committee could reasonably find that the person under review has engaged in inappropriate practice in connection with rendering the referred services: s 91, or may decide to set up a Committee and make what is called an 'adjudicative referral' to the Committee, to consider whether conduct by the person under review in connection with rendering or initiating services specified in the adjudicative referral constituted engaging in inappropriate practice: s 93(1). The Director can also decide to take no action or may be deemed to have taken no action: s 93A. 6 Where the Director establishes a Committee, the Committee must hold a hearing if, after considering the matters the subject of the referral to it, it appears to the Committee that the person under review may have engaged in inappropriate practice in connection with the rendering or initiating of the referred services: s 101(2). There are provisions concerning the power of the Committee to require the production of documents or the giving of information and concerning the procedure to be undertaken at the hearing including matters relating to evidence. The Committee is required to give the person under review notice and to provide particulars of the matter to which the hearing relates: s 102. Following the hearing the Committee is required to prepare a draft report of its preliminary findings and provide the person under review an opportunity to make written submissions suggesting changes to it: s 106KD(1) and (3). 7 After a certain period a final report of the Committee is prepared, which takes into account any submissions made by the person under review: s 106L(1), and that report must be given to the Determining Authority not earlier than 28 days after the day on which copies of the report are given to the person under review: s 106L(4). 'Inappropriate practice' was defined by s 82(1) so far as is relevant, as follows: '(a) if the practitioner rendered or initiated the referred services as a general practitioner - the conduct would be unacceptable to the general body of general practitioners; . . .' 8 Section 106KA(3) provides that the regulations may prescribe circumstances which constitute a prescribed pattern of services. If, during the relevant period, some or all of the referred services rendered or initiated constituted a prescribed pattern of services, the conduct of the person under review in connection with the rendering or initiating of services is taken to have constituted engaging in inappropriate practice: s 106KA(1). However, if the Committee is satisfied by the person under review that on a particular day or days in the relevant period 'exceptional circumstances' existed that affected the rendering or initiating of services then the person's conduct in connection with those services is not to be taken as constituting engaging in inappropriate practice: s 106KA(2). The circumstances that constitute exceptional circumstances include, but are not limited to, those declared by the regulations to be exceptional circumstances: s 106KA(5). The only other subsection which needs specific mention, as it was referred to in argument, is subs (7) which is in these terms: '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 or initiating services without considering whether or not the circumstances in which the services were rendered or initiated constituted a prescribed pattern of services.' 9 The Health Insurance (Professional Services Review) Regulations 1999 (Cth) ('the Regulations') made provision for the circumstances which constituted a prescribed pattern of services and which apply to general and other medical practitioners: see Part 3, reg 9. Regulation 10 provided that: '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.' 10 Regulation 11, 'Exceptional Circumstances', was in these terms: '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.' 11 Section 106T(1) of the Act provided for a draft determination to be made by the Determining Authority in circumstances in which the Committee had made a finding of inappropriate practice. It was in these terms: '(1) If a final report of a Committee that is given to the Determining Authority contains a finding by all, or by a majority, of the Committee members that the person under review has engaged in inappropriate practice in connection with rendering or initiating some or all of the referred services, the Authority must, within one month after the day on which the final report is given to it: (a) make a draft determination in accordance with section 106U relating to the person under review; and (b) give copies of the draft determination to the person under review and to the Director.' 12 Again, the person under review is provided with an opportunity to make submissions. The Determining Authority must, where it has made a draft determination, within one month after the end of a 14 day period, within which the person under review may make submissions, proceed to make a final determination: s 106TA. Section 106U provides that the draft or final determination must contain one or more of the directions which are then listed. They include that the person under review be reprimanded or counselled, that the practitioner be disqualified in relation to the provision of service and that any Medicare benefits for a service subject to the finding of inappropriate practice be repaid to the Commonwealth. The final determination takes effect on a particular day after a copy is given to the person the subject of the review: s 106V(1).

Factual background 13 By an investigative referral dated 20 February 2001, a delegate of the Commission referred to the Director: '… the conduct of Dr Jack Freeman relating to · whether he has engaged in inappropriate practice in connection with the rendering of services constituting a prescribed pattern of services within the meaning of section 106KA(1) of the Act and Part 3 of the Health Insurance (Professional Services Review) Regulations 1999 ("the Regulations").' The referral identified the locations at which the services were rendered and the specified period, namely, on and from 1 January 2000 to and including 19 June 2000 ('the referral period'). The last paragraph of the referral, which assumes some importance on this appeal, is in these terms: 'The attached material is provided to assist the Director of Professional Services Review, but is not intended to limit in any way the conduct referred.' 14 The attached material included details of the Commission's records relating to services rendered by Dr Freeman in the referral period. It also contained the Commission's reasons for the referral: 'In accordance with section 86(4)(b) of the Act the Commission considers Dr Freeman may have engaged in inappropriate practice because there is evidence that some of Dr Freeman's professional attendances constitute a prescribed pattern of services as defined in s 106KA of the Act and Part 3 of the Regulations. Specifically, the Commission's records for professional attendances rendered by Dr Freeman during the referral period show that Dr Freeman: · rendered 80 or more professional attendances per day on 92 occasions on and from 1 January 2000 to and including 19 June 2000. The Commission has documentary evidence verifying the accuracy of this information. For further information in relation to professional attendances and services rendered by Dr Freeman during the referral period refer to Book 1, Section E, Reports 1 to 5 and Book 2, Report 6.' 15 On 26 April 2001 the Director established a Committee and made an adjudicative referral to it. The Committee nominated a date for hearing and wrote to the solicitors for the appellant concerning the issues to be dealt with by the Committee at the hearing. It included an observation that the hearing was an important opportunity for their client to present his evidence in relation to any exceptional circumstances to explain his current situation. 16 The appellant's barrister wrote on 4 September 2001 to the in‑house counsel for the Committee and advised: 'I refer to previous discussions held between us wherein I advised that it was my opinion that my client would be unlikely to be able to establish a defence of exceptional circumstances and that it was my view that it would be likely that the Committee would make a recommendation that my client be suspended from participating in the Medicare Scheme for some period of time.' The letter went on to suggest that, to avoid the necessity of a further hearing, the appellant would not object to a disqualification from participation in the Scheme for a period of two years and six months. He pointed out that in any event the appellant's difficulty in accessing his records would mean that a further adjournment would be necessary, in the event that the matter was not resolved in the way suggested, so that he could run his defence of exceptional circumstances. I should add that the privilege attaching to the correspondence passing between the parties while in negotiation was waived at trial. 17 On 7 September 2001 the Special Counsel to Professional Services Review wrote to the appellant's barrister advising what the Committee would agree to. Before doing so a number of matters were pointed out. It was not accepted that the appellant needed access to his patients' medical records in order to argue that there were exceptional circumstances, which was to be based on general evidence and not on examination of individual patient records. The fourth point made by the Special Counsel was as follows: 'Fourth, although section 106KD(2) of the Health Insurance Act 1973 provides for a Committee recommendation as to a period of disqualification, it makes no provision for any recommendation in relation to other sanctions envisaged under section 106U(1) of the Health Insurance Act 1973. Nor does the Determining Authority appear to be bound by such a recommendation.' The letter then went on: 'Against this background, the Committee would be agreeable to the following: · Dr Freeman would not contest the evidence provided by the Health Insurance Commission as to the numbers of professional attendances which he rendered to patients on days as set out in Investigative Referral No. 224 (and restated in Adjudicative Referral No. 224); · Dr Freeman would forego his right to lead evidence and argue that exceptional circumstances existed on any of those days; · the Committee would accordingly report to the Determining Authority that Dr Freeman's conduct on those days constituted inappropriate practice; · Dr Freeman would indicate the steps he proposes to take to avoid inappropriate practice in future; · the Committee would acknowledge that Dr Freeman's concessions and remedial proposals merited some reduction in the disqualification period; and · pursuant to section 106KD(2), with Dr Freeman's agreement, the Committee would recommend his full disqualification for not more than 2 years and 9 months.' That proposal was agreed to. On 10 October 2001 a consent form signed by the appellant was sent to the Chairman of the Committee. The first paragraph of it was in these terms: 'After receiving legal advice I do not oppose the recommendation that I be fully disqualified from Medicare arrangements for a period of 2 years and 9 months; ….' 18 The final report of the Committee was provided to Dr Freeman on 9 November 2001 and to the Determining Authority on 14 November 2001. On 14 February 2002 the Determining Authority issued a draft determination. It contained an order in accordance with s 106U(1)(ca) requiring Dr Freeman to repay Medicare benefits to the Commonwealth in the amount of $225 377.50. This provoked an angry response from the solicitors of the appellant who wrote to the Committee, but not the Determining Authority, on 22 February 2002 concerning the agreement which had been reached with the Committee. The letter contained the complaint that an opportunity had not been given for the appellant to argue about the refund of the claim. The appellant now wished to contest the allegations made against him and wished the matter to be determined by a new and 'untainted' tribunal rather than the Committee which had determined the matter. He said that no agreement was in fact ever reached with the Committee. The appellant objected to findings of the Committee and reserved his rights whether to enjoin the further hearing of the complaint against him. He also claimed that the referral was invalid. 19 The Determining Authority's Secretary responded to the appellant's solicitors on 26 February 2002 pointing out that the draft determination was that of the Authority and not of the Committee and invited submissions by the appellant suggesting changes to any directions contained in the draft determination. The Secretary pointed out that the Authority was an entity distinct from the Committee and that it determines the sanction to be imposed when the Committee has found the person under review has engaged in inappropriate practice. The Committee may, with the consent of the person under review, include in its report recommendations as to disqualification. However, it advised, it is the Authority that must make the draft determination and that determination must contain one or more of the directions set out in s 106U. The appellant's solicitors wrote to the Determining Authority on 4 March 2002 and again made the point that the initial referral was invalid on the basis of the reasoning in Pradhan v Holmes (2001) 125 FCR 280. It was also contended that no real agreement was reached with the Committee as to the disposition of matters against him. He was given no opportunity to make a submission about the monies to be repaid. The letter demanded a further Professional Service Review Committee be established to determine the allegations against the appellant. 20 The Australian Government Solicitor responded to the letter from the appellant's solicitors on 7 March 2002. It was again pointed out that the Committee could not itself make any recommendation as to the repayment of Medicare benefits or any sanction other than disqualification. It was solely for the Determining Authority to determine sanction. In doing so, the letter advised that the Determining Authority takes into account the Committee's recommendations. The appellant was informed that unless advice to the contrary was received, the earlier letters from the appellant's solicitors would be taken into account by the Determining Authority which would reconvene to make a decision as to whether it should proceed to make a final determination and, if so, the content of that determination. 21 The appellant's solicitors responded on 15 March 2002 reiterating that the initial referral was bad in law on account of the reasoning in Pradhan v Holmes and for that reason a final determination should not be made. By a letter dated 15 August 2002 from the Determining Authority's solicitors the appellant was advised that the Determining Authority was proceeding to make a final determination and invited him to provide any further submissions which he wished the Determining Authority to take into account in making the final determination. On this occasion the appellant's solicitors responded on 22 August 2002 repeating the submissions as to the efficacy of the referral but adding that there was no real agreement reached with the Committee at the time because the question as to any sums payable by him should have been raised. It followed in their submission that no final determination should be made against the appellant. 22 The Determining Authority's solicitors attempted again to explain the roles of the Determining Authority and the Professional Services Review Committee in their letter of 29 August 2002 to the appellant's solicitors. It was said that the agreement referred to was not one with the Determining Authority but that the agreement would be considered by it when making the final determination. It noted that the letter from the appellant's solicitors indicated that if other sanctions were to be included, such as repayment of Medicare benefits, then the appellant no longer supported the Committee's recommendation of disqualification for two years and nine months. However, it was likely that the Determining Authority would, on current information, decide to apply sanctions in addition to disqualification including the repayment of Medicare benefits. Once again it was pointed out that the appellant had an opportunity to make submissions which he wished the Determining Authority to take into account. 23 On 4 October 2002, the Determining Authority made its final determination which included the direction for repayment. The final determination noted (at par 2): 'The Determining Authority has made this final determination following receipt of a report from the Professional Services Review Committee No. 224, which contained a finding that Dr Freeman has engaged in inappropriate practice.' 24 And then went on to make the directions. In the section entitled 'Material relied upon' the letters from and to the appellant's solicitors were identified. Under 'Background and findings of fact' the agreement reached between the Committee and the appellant was set out. The 'major matters' identified from the submissions made for the appellant in the correspondence were identified. They included that there had been a breach of agreement with the Committee; that the Committee had not mentioned the prospect of repayment of Medicare benefits; that, in effect, no agreement had been reached with the Committee because of the appellant's mistaken belief; that he now desired to contest strenuously the allegations made against him; that he wished to present evidence of exceptional circumstances and make submissions; and that the investigative and adjudicative referrals were invalid. It noted that the effect of his submissions was that there should not be a determination made beyond the terms of the Committee's recommendation and, in particular, there should be no direction in relation to the repayment of Medicare benefits. The Determining Authority said that it had considered the submissions in relation to the validity point but considered it appropriate to proceed to make a final determination. 25 Under the heading 'Reasons' the fact that 80 or more professional attendances on 92 days were referred was regarded as 'massively in excess of the threshold' referred to in the legislation. It observed that the purposes of the statutory scheme included the protection of patients and of Commonwealth expenditure under Medicare and went on (at par 47): 'The repayment of Medicare benefits is appropriate in view of the objects of the scheme and the Authority's view of the "prescribed pattern of services" in this case.' 26 The Determining Authority also considered that a substantial period of disqualification should be imposed but accepted that the appellant had consented to the Committee's recommendation because he thought no other direction would be made and that he did not now support the Committee's recommendation. Nevertheless, it directed that he be disqualified for the same period, two years and nine months.

The decision of the primary judge 27 Before his Honour the primary judge it was argued that the investigative referral was invalid because of the concluding sentence 'The attached material is provided to assist the Director of Professional Services Review, but is not intended to limit in any way the conduct referred'. This had been determined by Finn J in Pradhan v Holmes. It was further argued that the Determining Authority ought not to have proceeded to a final determination and should have considered whether to permit the applicant to return to a differently constituted committee to reconsider what recommendations to make to the Determining Authority. 28 In Pradhan v Holmes the form of the investigative referral (at [62] of the Reasons) was held not to comply with s 86(1) of the Act. The referral was of 'the conduct of Dr Jagjit Singh Pradhan relating to whether he has engaged in inappropriate practice within the meaning of section 82 of the Act in connection with rendering and initiation of services'. The services were not further specified although the period in which they occurred was identified. The referral concluded with a sentence which is in similar form to that contained in the referral in the present case: 'The attached material is provided for information only and is not intended in any way to limit the conduct referred.' Finn J noted that the attached material ran to over 170 pages and specified two particular concerns relating to Dr Pradhan's conduct (at [80], [82] and [83]): the high volume of rendered services with high daily servicing, and that some services rendered might not have been reasonably medically necessary for the care of his patients. His Honour's concern was with the statement that the material was provided for information and not intended to limit the conduct referred. His Honour said (at [82] -[83]): '82. … Full force, in my view, should be given to the statement I have quoted above. The Commission, while specifying conduct in the attachments, stated that it did not in any way intend to limit the conduct referred … the statement is an unqualified one indicating both the significance to be attributed to the attached material - it was provided for information only (notwithstanding that parts of what was provided were required by s 86(4) to be provided) - and the effect to be given it insofar as it specified conduct that might be inquired into. There is no ambiguity in what is stated. Nor is it contradicted by other parts of the document. Rather, it is consistent with the description of the "Investigative Referral" in the first paragraph of the same document which was "of the conduct of" Dr Pradhan etcetera.' 83. I find, then, that while the Commission has specified two species of conduct that (a) have provided the stimulus to the referral and (b) are the subject of the s 86(4) reasons why the Commission considers Dr Pradhan may have engaged in inappropriate practice, the conduct referred is unspecified and unlimited.' 29 His Honour concluded (at [126] - [128]) that the legislative scheme is one for the reference of identified conduct that the Commission and the Director respectively consider. It could not be said that there was a clear parliamentary intention to mandate a 'roving commission' into past services provided by medical practitioners. His Honour went on (at [128]): 'Having regard to the conduct I have found was referred in the cases of both of the investigative referral of the adjudicative referral, and the requirement of the statute that referred conduct be specified, I conclude that, in the case of each referral, there has been a non‑compliance with the requirements of ss 86(1) and 93(1) respectively. Given that both referrals are framework documents for the respective processes they initiate, and given the disciplinary setting and purpose of the referrals, that non‑compliance must necessarily entail the invalidity of the references made: cf Project Blue Sky Inc v Australian Broadcasting Authority(1998) 194 CLR 355 at 388ff. The referrals were incapable of enlivening the respective jurisdictions of the Director and of the Committee to embark upon the inquiries envisaged by the HI Act.' 30 The primary judge in this case assumed, in the applicant's favour, that Finn J was correct in the approach which he adopted. However, even on that assumption, in his view the applicant could not succeed because the terms of the investigative referral were distinguishable from those in Pradhan v Holmes, where the central vice lay in the failure to specify the conduct referred to the Director. The conduct was described in the operative part of the referral as the conduct of Dr Pradhan 'relating' to whether he had engaged in inappropriate practice within the meaning of s 82 of the Act. By contrast in the present case Dr Freeman's conduct was described by reference to there being a prescribed pattern of services. The attached material further explained the number of services which had been rendered by Dr Freeman and the date upon which they had been provided. The relevant conduct in the present case, his Honour held, was precisely specified. 31 As to the impact of the concluding sentence, his Honour regarded Finn J's approach to have had regard to the failure to provide the required specification. When the sentence in question was read with the operative paragraph they provided no limit to the conduct which the Director was to investigate. His Honour went on to refer to the present case (at [23] and [24]): '23. … By contrast, in the present case, the operative paragraph of the referral describes the conduct referred in specific terms, namely, the provision of a specified number of services over a specified number of days within a defined limited period. The attached material, then, identifies the nature of each of the services on each of the days. Because the reference focuses on conduct amounting to the provision of a prescribed pattern of services, there is no lack of specification of the conduct as occurred in Pradhan. What then is the purpose of the concluding sentence? 24. In the context of this referral, the concluding sentence ensures that full scope is given to the terms of the operative referral. In other words, if there is any omission in the attached material of the details of any service constituting the prescribed pattern of services, the omission is not to cut down the extent of the conduct referred. The concluding sentence, in the context of this referral, is used to guarantee that the operative paragraph has a paramount effect.' 32 In relation to the Determining Authority's final determination, his Honour noted the applicant's submission that the Determining Authority had failed to take into account a relevant matter when making the determination. That relevant matter was that the applicant had mistakenly believed that the matter before the Committee had been resolved on an agreed basis when it in fact had not. Another basis for impugning the Determining Authority's determination was said to be a want of procedural fairness. This was argued before his Honour, but not dealt with by his Honour in his reasons. 33 After dealing with the applicant's agreement with the Committee, and the Committee's recommendations in its final report which were based upon it, his Honour discussed the different functions of the Committee and the Determining Authority. His Honour noted that the Scheme of the Act does not allow the Committee to make a recommendation that Medicare benefits be repaid but that the Determining Authority could do so. His Honour then dealt with the considerable correspondence which ensued and then turned to the Determining Authority's reasons. 34 His Honour did not accept the applicant's argument that his submissions or arguments which had been made to the Determining Authority were set out but not taken into account by it. In his Honour's view it was clear from the Determining Authority's reasons that it understood that the applicant agreed not to contest the Committee's findings on the mistaken view that no penalties other than those recommended by the Committee would be imposed, and that the applicant did not now support the Committee's recommendation. In his Honour's view, the Determining Authority understood the applicant's position - that no determination should be made which included the repayment of Medicare benefits. It was clear, in his Honour's view, that the Determining Authority rejected the applicant's submission in that regard. It imposed the Medicare repayment because of the conclusions it reached as to the seriousness of the conduct in question. Arguments put forward by the applicant were bound to be of limited significance and it was entitled to give what weight it wished to them.

Grounds of appeal 35 The grounds of appeal were recast and shortened to two at the commencement of the hearing of the appeal. No objection was taken to this course. The appeal points were said to be: '1. The investigative referral to the Director of Professional Services Review, purportedly made under s.86(1) of the Health Insurance Act, was invalid and the consequent consideration of the matters referred miscarried or, alternatively, were voidable at the suit of the appellant on normal administrative law grounds pleaded in the application. 2. The determining authority should not have proceeded to determine to impose sanctions, including an order to repay to the Health Insurance Commission, once it became aware that Dr Freeman had laboured under the misunderstanding that the agreement into which he had entered with the committee would result in only the agreed sanctions being imposed and that once disabused of this misunderstanding he had determined to withdraw the concessions which had been made by him as part of the agreement.' 36 During the course of the appeal the appellant was asked to further explain the second ground. The following further 'summary submissions on second appeal point' were then produced: '1. The Determining Authority denied procedural fairness to the appellant by proceeding to make a determination which included a direction that the appellant repay Medicare benefits without first affording him the opportunity (either before it or in further proceedings before the Professional Services Review Committee) to advance evidence and submissions in support of the contention that the relevant services were rendered under exceptional circumstances. 2. Further, and in the alternative, the Determining Authority erred in law in failing to consider and rule on the submission that it should not proceed to make a determination which included a direction that the appellant repay Medicare benefits without first affording him the opportunity (either before it or in further proceedings before a Professional Services Review Committee) to advance evidence and submissions that the relevant services were rendered under exceptional circumstances.'

Ground 1 37 The appellant did not suggest that the investigative referral in this case was in the same terms as that in Pradhan v Holmes. It was accepted in argument that, were it not for the sentence in question, the conduct referred would have been sufficiently specified. In the appellant's submission the sentence has the effect that the conduct is no longer specified. It enlarges the reference to 'any other conduct' and creates the 'roving inquiry' to which Finn J referred. It is important, in the appellant's submission, that a practitioner knows what is the subject of referral. The practitioner receives the referral and attachments so that consideration can be given to arguments against it. This tends to support a view of invalidity. 38 The respondents submitted that Pradhan v Holmes should not be followed for two reasons. The interpretation of the sentence in question was made in the absence of any analysis of the powers of the Director and the Committee under the Act. Secondly, and assuming for present purposes that the sentence was to be interpreted in the way his Honour did, the result should not be invalidity. A Full Court had disapproved of this aspect of his Honour's decision in Health Insurance Commission v Grey (2002) 120 FCR 470. 39 There is no doubt, in my view, that the conduct of the person the subject of the investigation referral under s 86(1) must be specified. The reasons which the Commission is obliged to provide under s 86(4)(b), as to why it considers the person under review may have engaged in inappropriate practice, necessarily requires identification of the conduct involved. In the present case the conduct was specified, as the appellant concedes. The concession is well made. The conduct was identified in the operative part of the referral as '… the rendering of services constituting a prescribed pattern of services within the meaning of section 106KA(1) …'. The attached material further particularised the conduct as being the provision of more than 80 consultations in professional attendances per day on 92 days from 1 January 2000 to and including 19 June 2000. The reason why the Commission thought that this constituted inappropriate practice was because it fell within the prescribed pattern of services in s 106KA of the Act and Part 3 of the Regulations. 40 This is far removed from the reference to conduct in the referral in Pradhan v Holmes. It contained no specification of the 'conduct' of Dr Pradhan and the subject of the referral was services over a two year period. In the attached material concerns were expressed concerning the lack of the services provided by the practitioner and the need for them. In this context the statement that the information provided was not intended to 'limit' the conduct referred reflected the fact that what was being included was a general inquiry of the services provided over the two year period. In my view his Honour the primary judge was correct in finding the conduct to have been identified for the purpose of s 86(1) of the Act. 41 On one view the statement that the '… attached material … is not intended to limit in any way the conduct referred' is so unclear as to be meaningless. Here the conduct the subject of the Commission's referral has been identified. The statement could not have the effect of altering the specification of the conduct. Rather the statement is addressed to the Director and refers to what the Director may do in undertaking his task. There is substance to the respondents' submissions that the statement is directed to the Director's powers of inquiry. In particular s 89(1) of the Act enables the Director to consider services not referred to in the Commission's reasons, when determining whether a Committee could reasonably find that there has been inappropriate practice. The Director may identify other relevant conduct by reference to the services and the focus of the inquiry might shift. The nature of the Director's inquiry may extend beyond the matters referred to in the Commission's reasons. There is however no denial of procedural fairness were the Director to identify other conduct as relevant. The Director's report is required to identify that conduct to the person under review: see ss 93(6) and 94(3). 42 The ability of the Director to consider conduct other than that specified by the Commission and its relevance to the meaning of the statement were not considered in Pradhan v Holmes. Understood in the context of the Act, the statement did no more than remind the Director of the extent of his powers of inquiry. It follows, in my respectful view, that the construction given by his Honour to the statement should not be applied. In any event, in the context of specified conduct, the only alternative approach would seem to be to regard the statement as meaningless. 43 If the statement did have the effect that the conduct was not specified, as s 86(1) impliedly requires, it does not follow that the referral is invalid. In Health Insurance Commission v Grey at [179] it was held that it was unlikely that Parliament intended that result, given that an object of the Act is the protection of the public and that such an outcome would occasion public inconvenience. In so doing it disapproved that aspect of the decision in Pradhan v Holmes.

Ground 2 44 In essence the appellant argues that he ought to have been given an opportunity, by the Determining Authority, to present his case concerning 'exceptional circumstances'. The fact that the Authority did not rule on a submission to this effect would not seem to add anything to that contention. An opportunity should have been given to him, it is submitted, because he had not presented that case before the Committee since he was not aware that the Determining Authority might make directions which went beyond the Commission's recommendations. It may be assumed, for present purposes, that neither he nor his legal representatives were aware of s 106U of the Act. 45 The Determining Authority did what it could when it received the appellant's complaint. It called for submissions from him and there is no reason to doubt that it took them into account. It knew that he contended that no additional penalties or sanctions should be made beyond those recommended by the Committee but it was of the view that the case for repayment of benefits was a strong one and the penalty necessary. 46 The Determining Authority could not however undertake the task that the appellant contends it was obliged to do, namely to hear his case relating to exceptional circumstances. In the Scheme of the Act that role is given to the Committee. It is charged with the duty to make a finding as to whether there has been inappropriate practice. In that process it considers what the person under review puts forward as constituting exceptional circumstances. The Determining Authority's role is to consider the sanctions and penalties to be imposed, by one or more of the directions referred to in s 106U. It does so if the Committee's final report contains a majority or a unanimous finding of inappropriate practice. There is no provision which permits the Determining Authority to itself make that finding or to revisit the question of whether there has been inappropriate practice except so far as is relevant to the question of penalty. The Authority is obliged, by s 106T, to make a draft determination and to do so within one month of being given the report. It must then proceed to a final determination. It has no power to remit the matter where such a finding has been made. 47 The requirements of procedural fairness are determined by reference to the statutory framework within which the decision is made. In National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296 at 326 Brennan J said : 'The terms of the statute which creates the function, the nature of the function and the administrative framework in which the statute requires the function to be performed are material factors in determining what must be done to satisfy the requirements of natural justice …'. 48 It does not seem possible to hold that the Determining Authority should have offered the opportunity of which the appellant speaks if it is not in a position to do so. The Determining Authority had no authority to deal with the appellant's case on exceptional circumstances. It may have taken his submissions in that regard into account in determining penalty, but the appellant did not provide any such submissions. Steps might have been undertaken to restrain the Authority making a decision, whilst the Committee's finding was sought to be reviewed, but they were not. 49 There is another aspect of the appellant's case concerning procedural fairness which has relevance to the Determining Authority and may have had relevance to the Committee if its decision had been the subject of application for review. It concerns the nature of the mistake which led to the appellant foregoing his right to defend and the cause of that mistake. Neither the Determining Authority nor the Committee played any part in the wrong assumption made by the appellant and his legal advisers. Indeed the Committee had alerted him to the existence of other sanctions under section 106U(1) and advised that its power of recommendation did not extend to all of them. 50 There is maybe a divergence in the approaches taken by the English courts and the High Court of Australia on the question whether there needs to be something approaching personal responsibility for the unfairness in question, on the part of the decision-maker, before orders would be made affecting the decision. In Al-Mehdawi v Secretary of State for the Home Department [1990] 1 AC 876 ('Al-Mehdawi') the appellant failed to receive notice of the hearing of his appeal due to his solicitors' mistake and his appeal was dismissed. The House of Lords did not consider that there was a breach of natural justice. To recognise a breach as arising from the fault of persons other than the decision-maker was considered likely to undermine the finality of decisions (at 885, 889 and 894). However in R v Criminal Injuries Compensation Board, Ex parte A [1999] 2 AC 330 ('Ex parte A') a breach was found where police officers had failed to give the Criminal Injuries Compensation Board a police medical report which supported the applicant's case in circumstances where the applicant had been told that she could not ask for police statements. Lord Slynn (at 345) said that it was sufficient if, objectively, there was unfairness. The decision in Al-Mehdawi was not discussed, perhaps because it was thought that Ex parte A turned on its own special facts. 51 Sackville J has observed that Ex parte A has not been greeted with 'unalloyed enthusiasm' by the High Court: O'Sullivan v Repatriation Commission [2003] FCA 387; 74 ALD 407 at [52]. In Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicants S134/2002 (2003) 195 ALR 1 at 10, Ex parte A was distinguished. Although the majority of the High Court found it unnecessary to decide the questions examined in Ex parte A, they expressed doubts whether the case would be decided upon procedural fairness grounds in Australia. Rather the ground in s 5(1)(b) of the Administrative Decisions (Judicial Review) Act 1977 (Cth), which refers to the non-observance of procedures required by law to be observed, might be invoked. 52 In the context of administrative decision-making there would not appear to be support in Australia for the view that problems which arise in the conduct of the case of the person to be the subject of the decision, through their mistaken view or that of their legal advisers, could amount to procedural unfairness. There would seem to be strong policy grounds why this should not be the case. And it may be that the position formerly stated in England with respect to a mistake of this nature still maintains.

Conclusion 53 The appeal should be dismissed with costs. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

DR ALAN JOHN HOLMES (as the Director of Professional Services Review)

DR MICHAEL RICE (as Chairperson of Professional Services Review Committee No 224)

DR BOB BROWN (as a Member of Professional Services Review Committee No 224)

DR BRUCE INGRAM (as a Member of Professional Services Review Committee No 224)

DR NICHOLAS RADFORD (as Chairperson of the Determining Authority)

DR MORRIS WILLIAMS (as a Member of the Determining Authority)

MS JANE PHELAN (as a Member of the Determining Authority)

MARSHALL J: 54 I agree generally with the reasons for judgment of Kiefel J. I agree that the orders which her Honour proposes are appropriate ones to be made in the circumstances. I certify that the preceding paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

DR ALAN JOHN HOLMES (as the Director of Professional Services Review)

DR MICHAEL RICE (as Chairperson of Professional Services Review Committee No 224)

DR BOB BROWN (as a Member of Professional Services Review Committee No 224)

DR BRUCE INGRAM (as a Member of Professional Services Review Committee No 224)

DR NICHOLAS RADFORD (as Chairperson of the Determining Authority)

DR MORRIS WILLIAMS (as a Member of the Determining Authority)

MS JANE PHELAN (as a Member of the Determining Authority)

REASONS FOR JUDGMENT DOWNES J: 55 I have had the opportunity to read the reasons for judgment prepared by Kiefel J. I agree with her Honour's conclusion and I broadly agree with her reasons. However, I propose to briefly record my own reasons for rejecting the two arguments presented on the appeal. I adopt the balance of Kiefel J's reasons for judgment.

Ground 1 56 The investigative referral was a one page document with more than two hundred pages of attachments. The referral document contained the following: "Investigative Referral Pursuant to section 86(1) of the Health Insurance Act 1973 ("the Act"), I Janet Wendy Mould, Manager, Professional Services Branch, Professional Review Division, Health Insurance Commission ("the Commission"), a delegate of the Commission for the purposes of s86(1) of the Act, hereby refer to the Director of Professional Services Review the conduct of Dr Jack Freeman relating to · whether he has engaged in inappropriate practice in connection with the rendering of services constitution a prescribed pattern of services within the meaning of section 106KA(1) of the Act and Part 3 of the Health Insurance (Professional Services Review) Regulations 1999 ("the Regulations"). … The attached material is provided to assist the Director of Professional Services Review, but is not intended to limit in any way the conduct referred." The second part quoted (which I will call the attached material statement) was the last paragraph. I will call the first part the investigative referral paragraph. 57 In Pradhan v Holmes (2001) 125 FCR 280 the subject of the investigative referral was identified as follows (291; [62]): "… whether he has engaged in inappropriate practice within the meaning of section 82 of the Act in connection with rendering and initiation of services." The investigative referral in Pradhan was otherwise relevantly identical to the referral in this matter. It included the attached material statement. 58 Finn J held in Pradhan (297; [83]) that "the conduct referred is unspecified and unlimited". In so concluding he proceeded on the basis that the attached material statement had the effect that the attached material "specified conduct that might be inquired into." His Honour held that the failure properly to specify the conduct rendered the reference invalid. The appellant asks us to come to the same conclusion. 59 The attached material statement addresses "the conduct referred". It does not purport to define it. It does not purport to extend it. It provides that the attached material does not limit it. 60 The first step to understanding the attached material statement is identifying "the conduct referred" to which it relates. That takes one back to the investigative referral paragraph. Read alone that paragraph is a sufficient specification of the conduct for the purpose of subs 86(1). So much was conceded before us. If the attached material statement is read on the basis that the reference there to "the conduct referred" is a reference to the investigative referral paragraph it does not seem to me that it can be said that the conduct referred is unspecified or unlimited. The conduct referred is specified in the investigative referral paragraph, particulars and information relating to that conduct appear in the attached material but that material is not to be read to limit or restrict the conduct which, by the investigative referral paragraph, has been referred. 61 The investigative referral paragraph in Pradhan is much less specific than the present paragraph. It simply referred to s 82 which defined inappropriate practice in general terms such as "conduct … unacceptable to the general body of general practitioners". Reference needed to be made to sections such as s 106KA to find, for example, that where services constitute a prescribed pattern of services there can be conduct constituting inappropriate practice. Finn J must have proceeded on the basis that the investigative referral paragraph before him did not satisfy the obligation under subs 86(1) to specify the conduct referred. 62 Once it was accepted that the conduct referred was unspecified and unlimited in the investigative referral paragraph then the attached material statement assumed a different meaning. If the conduct referred was to be found it must be found from the material generally, including the attached material. So understood the attached material statement does leave the conduct referred at large. 63 The matters which concerned Finn J in Pradhan are not present here. The operation of the attached material statement here was simply to provide that the attached material did not limit the specification of the conduct referred in the investigative referral paragraph. There was no failure to specify the conduct referred, to the extent that that was required by subs 86(1) (see Health Insurance Commission v Grey (2002) 120 FCR 470 at 504ff; [174]ff). 64 That is enough to dispose of the first ground. However, the respondent submitted that failure to comply with subs 86(1) did not render an investigative referral invalid. I pause to note that this matter was not raised by notice of contention. Nevertheless the point seems to me to be well taken. The Full Court (Beaumont, Sundberg and Allsop JJ) in Grey at 270; [179] did not accept the general approach taken by Finn J to invalidity in Pradhan. They cited the well known passage of McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 389; [91] requiring an inquiry "… whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the … condition regulating the exercise of a statutory power." Since I have concluded that subs 86(1) was relevantly complied with it is difficult for me to say whether the referral would have been invalid if it had not. However, because the investigative referral does not involve any charge and because there are many steps following the referral before any conclusion is reached, I do not think any failure to comply with subs 86(1) which might have been found here would have resulted in the invalidity of the process (see Grey at 505; [179]).

Ground 2 65 The following appears in the letter dated 7 September 2001 from the solicitors representing the Professional Services Review Committee in reply to the letter dated 4 September 2001 from the appellant's junior barrister stating that the appellant "would not object to disqualification from participation in the scheme of a period of two years and six months": "Fourth, although section 106KD(2) of the Health Insurance Act 1973 provides for a Committee recommendation as to a period of disqualification, it makes no provision for any recommendation in relation to other sanctions envisaged under section 106U(1) of the Health Insurance Act 1973. Nor does the Determining Authority appear to be bound by such a recommendation". 66 This communication seems to me to be fatal to the second ground however it is put. To the extent to which denial of procedural fairness is relied upon it cannot be said that the necessary element of unfairness was present (Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; NAFF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] HCA 62). To the extent to which failing to consider and rule on the appellants submission is relied upon there was no obligation to consider and rule on it and, if there was, relief would be refused in the exercise of discretion. 67 In addition, I agree with Kiefel J's reasons relating to Ground 2 although it does not seem to me that it is necessary to refer to the cases relating to unfairness caused by the conduct of third parties. Here there was no unfairness for which any of the relevant investigating or adjudicating persons or bodies was responsible even if some of them might have been regarded as third parties. 68 The appeal must be dismissed with costs. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Downes.

Associate: Dated: 22 December 2004 Counsel for the Applicant: Mr RRS Tracey QC and Mr HA Aizen

Solicitor for the Applicant: Valos Black & Associates

Counsel for the Respondent: Ms F Hampel SC and Mr MD Murphy

Statutes Administrative Decisions (Judicial Review) Act 1977(Cth)

Health Legislation (Professional Services Review) Amendment Act 1994(Cth)

Health Insurance Act 1973(Cth)ss 80(1), 86(1), 81, 86(2), 86(4), 87, 88, 86(4A), 89, 89(1), 91, 93(1), 93A, 101(2), 102, 106KD(1), 106KD(3), 106L(1), 106L(4), 82(1), 106KA(3), 106KA(1), 106KA(2), 106KA(5), 106KA(7), 106T(1), 106TA, 106U, 106V(1), 106U(1)(ca), 82, 86(4)(b), 106KA, 93(6), 94(3), 106T, 106U(1)

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