Health Care Complaints Commission v Knowles

NCAT Occupational|2021-02-15

Introduction

In December 2019, the Health Care Complaints Commission (the Commission) referred a complaint (the Complaint) about pharmacist, Mr Darryl Knowles, to the New South Wales Civil and Administrative Tribunal (NCAT). The Complaint was listed for hearing in June 2020 but was adjourned to February 2021 because of the COVID-19 pandemic.
In August 2020, Mr Knowles notified the Australian Health Practitioner Regulation Agency (AHPRA) that he wished to surrender his registration. He ceased to be a registered pharmacist on 30 November 2020.
In January 2021, Mr Knowles applied to NCAT requesting that it exercise the discretion conferred by cl 12 of Sch 5D to the Health Practitioner Regulation National Law (NSW) (the National Law) not to conduct an inquiry into the Complaint.
Following a hearing on 15 February 2021, I refused to exercise that discretion. These are the reasons for that decision.

Issues to be determined

It is agreed that Mr Knowles has ceased to be a registered health practitioner and therefore cl 12(1)(a)(ii) of Sch 5D is satisfied. Accordingly, in determining Mr Knowles' application, two questions must be answered: 1. whether, in my opinion, it is not in the public interest for the inquiry to continue; and 2. if so, whether the discretion to decide not to conduct an inquiry should be exercised.

The Complaint

Mr Knowles was first registered as a pharmacist in 1982. In 2003, he established Australian Custom Pharmaceuticals (ACP), a large compounding pharmacy which dispensed prescriptions to patients throughout Australia. According to Mr Knowles, ACP was deregistered in July 2020.
The Complaint consists of 17 individual complaints. Many concern the compounding and dispensing of peptides, selective androgen receptor modulators (SARMs) and other drugs often associated with illicit or "off-label use" for performance and image enhancement. Other complaints involve the compounding and dispensing of substances not entered on the Australian Register of Therapeutic Goods (ARTG). Generally, therapeutic goods must be entered in the ARTG, or be specifically exempt, before they can be lawfully sold or advertised in Australia.
In Complaints 1 to 15, the Commission alleges, among other things, that in his capacity as sole proprietor of ACP, Mr Knowles: 1. between August 2014 and May 2015, dispensed about 300 prescriptions for ketamine in injectable form in circumstances where the directions for use contained in each prescription were inadequate; 2. between October 2013 and July 2014, dispensed nine prescriptions for ketamine cream in circumstances where the information required to be contained in those prescriptions was not in handwriting, in contravention of cl 80(2) of the Poisons and Therapeutic Goods Regulation 2008 (NSW) (the PTGR); 3. between September 2014 and May 2015, on about 300 occasions, compounded and dispensed ketamine for "treatment-resistant depression" in circumstances where the prescriptions were for "off-label use" and the available evidence was not of a sufficient quality to warrant ketamine being used to treat treatment-resistant depression; 4. between September 2013 and October 2014, dispensed hormones and peptides to Patient B in circumstances where he did not know what, if any, conditions Patient B suffered, for which the peptides were being prescribed; he did not have any reasonable basis for the belief that the peptides dispensed were prescribed for a proper therapeutic purpose; and the peptides dispensed were in a quantity and combination that was unlikely to be for Patient B's personal use; 5. in about October 2014, supplied Melanotan II, AOD-9604 and Thymosin beta-4 to Patient B without a prescription; 6. between October 2010 and July 2014, compounded and dispensed human chorionic gonadotrophin (hCG) on 12 occasions, purportedly for weight loss, in circumstances where the only "approved indication" for hCG was gonadotrophin deficiency (in men) and to trigger ovulation (in women); 7. between January 2014 and May 2016, compounded and dispensed about 8,000 prescriptions for peptides, in circumstances where he: did not know what, if any, conditions the patients suffered for which the peptides were being prescribed; did not have a reasonable basis for the belief that the peptides were prescribed for a proper therapeutic purpose; and where many of the subject prescriptions contained references to weight loss and/or body building, which are not proper therapeutic purposes for the peptides dispensed; 8. between December 2015 and February 2016, compounded and supplied phentermine to 184 patients, in circumstances where there was a commercially available ARTG-approved product that was not materially different to the product compounded by ACP; and compounding that product was in breach of the "Guidelines on the compounding of medicines" issued by the Pharmacy Board of Australia (the PBA Guidelines); 9. between September 2015 and October 2016, on 418 occasions compounded and dispensed testosterone with chrysin in circumstances where he had not done any clinical trials to satisfy himself of the safety and efficacy of the formulation; where there was a commercially available ARTG-approved product that was not materially different to the product compounded by ACP; and where compounding and dispensing that product was in breach of the PBA Guidelines; 10. between September 2015 and October 2016, on about 400 occasions compounded and dispensed testosterone with zinc in circumstances where there was a commercially available ARTG-approved product that was not materially different to the product compounded by ACP; compounding and dispensing that product was in breach of the PBA Guidelines; and he had no reasonable basis for the belief that the addition of zinc had any material effect on the therapeutic purpose of the product; 11. between July 2015 and April 2016, compounded and dispensed a topical preparation containing testosterone and SARMs s22 to seven patients in circumstances where there was a commercially available ARTG-approved product that was not materially different to the product compounded by ACP; compounding and dispensing that product was in breach of the PBA Guidelines; he had no reasonable basis for the belief that the addition of SARMs s22 had any material effect on the therapeutic purpose of that product; and there was no appropriate therapeutic purpose for the use of SARMs s22 in humans; 12. between July 2014 and November 2016, compounded and dispensed testosterone with DHEA (dehydroepiandrosterone) in circumstances where there was a commercially available ARTG-approved product that was not materially different to the product compounded by ACP; compounding and dispensing that product was in breach of PBA guidelines; he had no reasonable basis for the belief that the addition of DHEA had any material effect on the therapeutic purpose of that product; and there was no appropriate therapeutic purpose for the use of DHEA in humans.
The Commission alleges that the conduct the subject of each complaint amounts to unsatisfactory professional conduct within the meaning of s 139B(1)(a) and (l) of the National Law. In addition, in Complaint 16 the Commission alleges that Mr Knowles is guilty of professional misconduct under s 139E of the National Law on the basis of the conduct the subject of Complaints 1 to 15, taken together.
Complaint 17 concerns an alleged business arrangement between Mr Knowles and Mr Brian Sher, in place from 2002 to 2006. The Commission alleges that under that arrangement, Mr Sher referred prescriptions for compounded pharmaceutical products to Mr Knowles, or a pharmacist nominated by Mr Knowles, and profits generated from dispensing those products were paid to companies owned and controlled by Mr Sher. Apparently, Mr Sher was not a registered pharmacist. The Commission alleges that as a consequence of that arrangement, Mr Knowles contravened s 25 of the now repealed Pharmacy Act 1964 (NSW), which prohibited a person (not being a pharmacist), from carrying on "as owner or otherwise, the business of a pharmacist in a pharmacy" or otherwise having "a pecuniary interest, direct or indirect, in the business of a pharmacist carried on in a pharmacy."
The Commission alleges that by contravening s 25 of the Pharmacy Act, Mr Knowles is guilty of "professional misconduct": s 19A.

Mr Knowles' submissions

Mr Knowles submits that it is not in the public interest for the inquiry into the Complaint to be conducted for the following reasons.
First, he has ceased to practice as a pharmacist. In a statutory declaration filed in these proceedings, Mr Knowles gave an undertaking not to apply to practise again in Australia and acknowledged that if he were to apply to be registered, the conduct the subject of the Complaint could be taken into account by the authorities responsible for determining his application for re-registration. Mr Knowles contends that in those circumstances, it cannot be said that he poses a risk to the health and safety of the public. As further evidence that he does not pose a relevant risk Mr Knowles asserts that, throughout his 40 years of practice, no member of the public has been harmed by, or complained about, his practice of pharmacy. Further, he points to his long period of service to the pharmacy profession, which included acting as preceptor and mentor to hundreds of under-graduate and post-graduate students on a pro-bono basis.
Second, he contends that the Complaint is vexatious. He asserts that the Pharmaceutical Regulatory Unit (PRU) and its appointees on the Pharmacy Council of New South Wales (the Council) have subjected him to a "targeted vendetta", in circumstances where his only "crime" was to be the first and largest compounder of "modern complex compounded medicines" in Australia and a "tall poppy" in an environment where mainstream opinion is "fundamentally opposed" to modern complex compounded medicines. As part of this vendetta, he contends that the Council and the Commission have subjected former ACP staff to "uncalled-for treatment, public humiliation bullying and career-destroying actions".
Third, pointing to the age of the complaints, some dating back to 2002, he contends that this evidences that neither the Commission nor the Council considered the alleged conduct posed a risk to the health and safety of the public. He contends that it would not be in the public interest to "continue to prosecute these stale complaints".
Fourth, referring to Complaint 17, he contends that the arrangement between himself and Mr Sher has been reviewed by the Council and the PRU and he was found not to have contravened s 25 of the Pharmacy Act.
Fifth, pointing to the Commission's successful application to NCAT to withdraw the complaint in relation to pharmacist, Mr Alan Plummer, Mr Knowles contends that the Commission's opposition to his application not to conduct an inquiry into the Complaint smacks of inconsistency in decision-making. Mr Plummer was the pharmacist-in-charge of ACP between 2010 and 2016. Mr Knowles points out that in support of its application to withdraw the complaint in relation to Mr Plummer, the Commission relied upon factors which apply equally in his case. Both he and Mr Plummer are no longer registered pharmacists; neither sought renewal of their registration; each signed a statutory declaration undertaking not to seek registration as a pharmacist in the future; each is in his early sixties; and there is no evidence of either causing direct patient harm as a result of the conduct the subject of their respective complaints: see Health Care Complaints Commission v Plummer [2020] NSWCATOD 16 at [11]. In addition, Mr Knowles contends that there is a high degree of similarity between the conduct the subject of both complaints, and further, that most of the conduct the subject of the Complaint against him was in fact the conduct of Mr Plummer.
Finally, he submits that his personal circumstances are relevant. He contends that he is in ill health, lacks the means to fund legal representation and, as a consequence, will be prejudiced if the inquiry proceeds.

Whether it is not in the public interest for the inquiry to continue

The expression "in the public interest", when used in a statute, imports a value judgment to be made by reference to undefined factual matters, confined only "in so far as the subject matter and the scope and purpose of the statutory enactments may enable... given reasons to be [pronounced] definitely extraneous to any objects the legislature could have had in view": O'Sullivan v Farrer (1989) 168 CLR 210 at 216; [1989] HCA 61, quoting Water Conservation and Irrigation Commission (New South Wales) v Browning (1947) 74 CLR 492 at 505; [1947] HCA 21; Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal (2012) 246 CLR 379; [2012] HCA 36 at [42].
The meaning of the expression "public interest" in cl 12(1)(b) of Schedule 5D to the National Law was recently considered by Boland ADCJ in Health Care Complaints Commission v Grygiel (Termination Application) [2020] NSWCATOD 53. After reviewing the authorities and the statutory scheme in which cl 12 operates, Boland ADCJ concluded at [152]: [T]hat the scope and purpose of the legislation require that I consider s 3 (where relevant), s 3A and relevant provisions of Part 8 of the National Law. Inextricably intertwined with Part 8 are s 90B and s 90C of the Health Care Complaints Act.
Adopting that approach, in deciding whether it is not in the public interest for the Complaint to continue, I will consider the factors the Director of Proceedings of the Commission is required to consider in deciding whether to prosecute a complaint before NCAT and the objects of the National Law, together with the submissions advanced by Mr Knowles in support of his application.
In deciding whether a complaint should be prosecuted, s 90C of the Health Care Complaints Act 1993 (NSW) requires the Director of Proceedings to take into account: (a) the protection of the health and safety of the public, (b) the seriousness of the alleged conduct the subject of the complaint, (c) the likelihood of proving the alleged conduct, (d) any submissions made under section 40 by the health practitioner concerned.
For current purposes, I will assume but not decide that because Mr Knowles has surrendered his registration as a pharmacist and has given an undertaking not to apply to resume practice, he does not and will not pose a risk to the health and safety of the public.
However, this does not dispose of the consideration of the protection of the health and safety of the public. The authorities have consistently emphasised that the purpose of protective orders made in disciplinary proceedings is not confined to protecting the public from the risk posed by an individual practitioner. In Heath Care Complaints Commission v Do [2014] NSWCA 307 at [35], Meagher JA explained: The objective of protecting the health and safety of the public is not confined to protecting the patients or potential patients of a particular practitioner from the continuing risk of his or her malpractice or incompetence. It includes protecting the public from the similar misconduct or incompetence of other practitioners and upholding public confidence in the standards of the profession. That objective is achieved by setting and maintaining those standards and, where appropriate, by cancelling the registration of practitioners who are not competent or otherwise not fit to practise, including those who have been guilty of serious misconduct. Denouncing such misconduct operates both as a deterrent to the individual concerned, as well as to the general body of practitioners. It also maintains public confidence by signalling that those whose conduct does not meet the required standards will not be permitted to practise. (See also Prakash v Health Care Complaints Commission [2006] NSWCA 153 at [91].)
Mr Knowles contends that even if the Tribunal were to find the Complaint proven and proceeded to make protective orders, any deterrent effect would be moot because the regulatory environment governing pharmacy compounding in Australia has "totally changed" since the conduct the subject of the Complaint. He asserts that before March 2015 pharmacy compounding was largely unregulated, but now pharmacists practising in this area are subject to "Specific Codes of Conduct".
Mr Knowles is correct that over the past six years several significant changes have been made to the rules governing the practice of pharmacy compounding. These include the introduction of the PBA Guidelines in March 2015 which, among other things, provides that a compounded medicine should only be prepared where an appropriate commercial product is unavailable, the commercial product is unsuitable (e.g. if a patient experienced an allergy to an excipient in the commercial product), or when undertaking research sanctioned by a recognised human research ethics committee. In addition, throughout the period of the Complaint, several drugs were scheduled under the Poisons Standard, a legislative instrument made under s 52D(2)(b) of the Therapeutic Goods Act 1989 (Cth), as Schedule 4D drugs under the PTGR. For example, on 1 June 2015, AOD-9604, CJC-1295, growth hormone releasing peptides (GHRPs), GHRP-2, GHRP-6 and ipamorelin were scheduled as Schedule 4D drugs. This meant that those drugs were subject to the rules governing dispensing and compounding of Schedule 4D drugs.
While some of the conduct the subject of the Complaint predates these and other changes, it is not correct to say that the Complaint primarily deals with contraventions of rules and regulations that are no longer in operation and have no relevance to the current practice of pharmacy.

Seriousness of the alleged conduct the subject of the complaint

A review of the conduct the subject of the Complaint reveals that it includes conduct which is arguably of a serious nature and includes: 1. supplying to Patient B without a prescription, Melanotan II, AOD-9604 and Thymosin beta-4; 2. compounding and dispensing significant quantities of various restricted substances in circumstances where he did not have a reasonable basis for the belief that those substances were prescribed for a proper therapeutic purpose. Clause 54 of the PTGR prohibits a pharmacist from supplying any restricted substance "in a quantity, or for a purpose, that does not accord with the recognised therapeutic standard of what is appropriate in the circumstances"; 3. in contravention of the PBA Guidelines, compounding and dispensing substances in circumstances where an approved ARTG equivalent product was commercially available.
While some of the conduct the subject of the Complaint is of a less serious nature than the conduct summarised above (for example, Complaints 1 and 3), in my view much of the conduct the subject of the Complaint is of a serious nature. I reject Mr Knowles' contention that the conduct the subject of the Complaint is "at best procedural".

Likelihood of proving the alleged conduct

At this stage of the proceedings and without the benefit of submissions, it is difficult to assess the likelihood of the Commission proving the Complaint in part or whole. There appears to be evidence which, if accepted, would support at least some of the complaints. It does not appear that the Complaint is "so lacking in merit or substance as to be not fairly arguable": see Degiorgio v Dunn (No 2) (2005) 62 NSWLR 284; [2005] NSWSC 3 at [28].

Age of the Complaint

The age of the Complaint is likely to pose evidentiary problems for both parties, especially given that ACP is no longer in operation. Complaints 1 to 16 cover the period December 2013 to May 2016. Complaint 17 covers the period 2002 to 2006.

A targeted vendetta

Even if it is accepted, as Mr Knowles contends, that there were shortcomings in the way the Commission and other regulatory bodies have investigated and prosecuted the complaints made about him and his employees, nonetheless, the available material does not support a finding that in deciding to prosecute the Complaint, the Director of Proceedings was motivated by some improper purpose. Nor does the available material support a finding that the Complaint lacks substance.

Inconsistency in decision-making

Pointing out that Mr Knowles has not provided the Tribunal with a copy of the discontinued complaint concerning Mr Plummer, the Commission contends that it is not possible for the Tribunal to assess whether, as Mr Knowles contends, the conduct the subject of the Complaint is on all fours with the complaint made about Mr Plummer.
The Commission is correct that without the complaint about Mr Plummer, I am unable to properly determine whether, as Mr Knowles contends, the Complaint and the discontinued complaint made about Mr Plummer cover much the same subject matter. Nonetheless, the summary of the latter set out in Health Care Complaints Commission v Plummer at [3]-[7] supports Mr Knowles' contention that there is significant overlap between the two complaints.

Consideration

While relevant, the health and safety of the public is not the only factor relevant to the assessment of whether it is not in the public interest for the inquiry to continue. Also relevant are considerations relating to the proper administration of justice and fairness to Mr Knowles.
Favouring the conclusion that it is not in the public interest for the inquiry into the Complaint to continue is the passage of time since the conduct the subject of the Complaint took place. As a consequence, it is likely, if not probable, that witnesses, including Mr Knowles, will struggle to give reliable evidence about the alleged conduct. In addition, there may be difficulty obtaining documents relevant to the Complaint. However, the Commission's actions in obtaining records from ACP, Mr Knowles and third parties throughout the course of its investigation, which commenced in 2016, is likely to have mitigated that difficulty to some extent. The difficulty is most pronounced in relation to Complaint 17. Given its age and the lack of any explanation proffered by the Commission for the delay in bringing that complaint, if it were the only complaint I would be inclined to the view that it would not be in the public interest for the inquiry to continue.
A further consideration favouring a conclusion that it is not in the public interest for the Complaint to continue is the decision made by the Director of Proceedings to withdraw the complaint against Mr Plummer, and the subsequent decision of the Tribunal to exercise the discretion not to conduct an inquiry in relation to the Complaint about Mr Plummer. While not bound by the decision in Health Care Complaints Commission v Plummer, which of course turned on its own facts, in my view public confidence in NCAT's decision-making processes would not be enhanced if an inconsistent approach is taken to the exercise of the discretion conferred by cl 12 of Sch 5D to the National Law. While there appears to be similarities between the subject matter of the complaints concerning Messrs Plummer and Knowles, I accept, as argued by the Commission, that on the available material I could not be satisfied that there is no material difference.
While Mr Knowles' unfortunate personal circumstances may be relevant to the question of whether the discretion conferred by cl 12 of Sch 5D to the National Law should be exercised, it is not in my view directly relevant to the question of whether it is not in the public interest for the inquiry into the Complaint to continue.
Against these considerations, the seriousness and incidence of the alleged conduct, the lengthy period over which that conduct is said to have occurred, together with the public interest of having a complaint which raises serious allegations about a health practitioner determined in an open forum, favour the continuation of the inquiry. While the submissions advanced by Mr Knowles are not without merit, the balance of considerations favours the conclusion that it is in the public interest for the inquiry to continue. I am not of the opinion that it is not in the public interest for the inquiry to continue. It follows that the discretion not to conduct an inquiry cannot be exercised.

Whether the Complaint can be dismissed under s 55 of the NCAT Act

In the alternative, Mr Knowles urges the Tribunal to exercise the power to dismiss the complaint under s 55(1) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) on the ground that it is vexatious and/or lacking in substance.
Section 55 of the NCAT Act is subject to cl 12 of Sch 5D to the National Law: s 35 of the NCAT Act. While not the subject of considered submissions, I am inclined to the view adopted by Boland ADCJ in Health Care Complaints Commission v Grygiel (Termination Application) at [222] that s 55 of the NCAT Act and cl 12 of Schedule 5D to the National Law do not operate concurrently.
In any event, for the reasons given above, in my view the Complaint could not be characterised as being vexatious or lacking in substance. It follows, if available, that the power to dismiss the Complaint under s 55 of the NCAT Act cannot be exercised.

Orders 1. The application under clause 12 of Schedule 5D to the Health Practitioner Regulation National Law (NSW) is dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 April 2021

Pharmacy Act 1964(NSW)

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