THE COURSE OF AUTHORITY ON THE INTERPRETATION OF PARTS VAA AND VA
96 In order to understand the parties' respective arguments here, it is necessary to refer, inevitably (for reasons which will appear) at some depth, to the reasoning in the decided cases in this area, some of which were decided after the judgment of the primary Judge in this matter.
(1) Yung v Adams (1997) 80 FCR 453 (Davies J)
97 This was an appeal from the Tribunal to this Court under s 124A on a question of law only. The Tribunal had affirmed in part a final determination of the Determining Officer, made, as the statute required, after the Committee had reported. (It will be recalled that, in the present case, this stage has not been reached and that only a draft report has been provided to Dr Grey by the Committee). Davies J observed (at 454) that, having regard to the submissions made, it was necessary, however, to discuss also the Commission's referral, the Committee's decision under s 106L and the Determining Officer's determination under s 106T, adding (at 455) that "[s]ome of these reasons necessarily express obiter dicta about interesting irrelevancies".
98 In addressing the issue "Natural justice", his Honour noted (at 455) that one question of law there was whether the law required that procedural fairness be provided to the practitioner throughout the processes which led to the Tribunal. Another such question was whether the procedures actually adopted satisfied the law's requirements of procedural fairness insofar as the Tribunal's findings were concerned.
99 Davies J held (at 455) that the proceedings "were in effect disciplinary proceedings", and the law required "substantial procedural fairness", that is, adequate notice of the findings which might be made and a fair opportunity to respond.
100 (It may be noted here that the Commission accepts the validity of these general propositions, which were thus not put in issue before us.)
101 Davies J went on to say (at 458):
"… although the process undertaken by a Professional Services Review Committee is essentially investigative and the Committee does not in itself make an order of a disciplinary nature, the principles of natural justice apply so that, except in a simple case where the ambit of the investigation and the subject matter of possible findings are defined by the reference which has initiated the inquiry, the Committee should at some stage make it clear to the medical practitioner whose affairs are under investigation what are the possible findings which are the subject of the investigation and what are the grounds on which those findings might be made. The medical practitioner should be given a fair opportunity to explain why those findings should not be made.
In a complex case such as the present, where 17,331 services were the subject of the referral, it would be very desirable that, at some stage, the issues and the grounds being investigated should be formulated in writing so that there be no misunderstanding about them. The formulation of such matters in writing would also be useful to give a structure to the investigation and so avoid problems such as those which arose in Freeman's case.
Section 102 of the Act provides that the notice of hearing 'must give particulars of the matter to which the hearing relates.' However, compliance with that requirement does not end the responsibility of the Committee to provide information in the nature of particulars. At the beginning of the inquiry, the Committee may well not have formulated likely or possible findings or the grounds upon which they might be made. As the inquiry proceeds, the Committee should give such further particulars or information of a like nature as is necessary to make it clear to the medical practitioner what are the matters to which he or she should respond." (Emphasis added)
102 (Again, as we followed the Commission's arguments, these general propositions were not disputed before us.)
103 Turning next to the topic "Inappropriate practice", Davies J, observing (at 459) that, under Pt VAA, the power to discipline in this connection must be understood as a power to discipline in relation to conduct which is related to the payments which are made by way of medical benefits and the like, said (at 459):
"Accordingly, the reference to 'inappropriate practice' in s 82 refers to conduct in relation to which Commonwealth benefits were paid or payable and in respect of which the medical practitioner failed in some way to meet the standards of the general body of the members of the profession in which the services were rendered. The Commonwealth's interest is to see that the services which are provided by a medical practitioner and for which a Commonwealth benefit is or may be claimed are services in respect of which the medical practitioner provides due care and skill, that a claim if made is brought under the correct item and that overservicing does not occur." (Emphasis added)
104 (Again, as we followed the arguments, these matters were, in principle, accepted by both sides.)
105 Davies J went on to say (at 459 - 460):
"Because the proceedings are of a disciplinary nature, it clearly would not be appropriate for a decision maker merely to conclude that the medical practitioner engaged in inappropriate practice some time during the period which is specified in relation to some of the referred services. The services in respect of which the finding of inappropriate practice is made must be identified. I do not suggest that, where 17,331 services were the subject of the reference, it was necessary for the decision-makers to examine each and every service and to make a finding of 'inappropriate practice' about each. When dealing with issues of excessive servicing, the Court has rejected that approach and has taken the view that if, for example, 3 attendances would have been sufficient during a period to deal with a particular complaint, whereas the medical practitioner attended the patient 6 times, then a finding of excessive servicing could be made without identifying which of the 6 attendances were excessive. See eg. Taylor v Minister for Health (1989) 23 FCR 53 at 58-9. But what must be done is to examine at least an appropriate sample of services in detail, to identify the elements of 'inappropriate practice' arising from the services in that sample and to apply the findings statistically to the whole of the referred services, provided of course, that it be statistically valid to do so." (Emphasis added)
106 (Our understanding is that neither side disputes this approach here.)
107 Later in his reasons, in considering the statutory function of the Determining Officer in giving a "disciplinary" direction under s 106U, Davies J referred to Clyne v Bar Association (NSW) (1960) 104 CLR 186 at 201 - 202, and Bar Association (NSW) v Evatt (1968) 117 CLR 177 at 183 - 184, and said (at 472):
"As those cases show, directions under s 106U with respect to a reprimand, counselling, the repayment of benefits and disqualification are not imposed as a punishment. They are imposed with a view to protecting patients and the Commonwealth against abuse of the system. Any reformation which the medical practitioner has made in the nature of his practice therefore is a highly relevant factor to which regard should be had in exercising the discretion which s 106U confers." (Emphasis added)
108 Turning then to the topic of the referral, Davies J noted that it mentioned that in one year, the general practitioner had provided 19,622 services of which 17,331 were provided over three days; that one guideline postulated average times of not less than ten minutes; and that using this guideline, in order to provide 100 services, the practitioner should have worked continuously for at least 16.7 hours. The referral went on to state that, for these reasons, the Commission "is concerned that the appropriate level of clinical input could not be maintained for such long hours on a regular and continuing basis…".
109 Davies J said (at 461):
"… the referral turned its attention to a relevant matter, namely, whether Dr Yung had given the appropriate level of clinical input in the services which he had rendered. However, the referral contained an inherent defect. The concern of the Commission that the appropriate level of clinical input could not be maintained on a regular and continuing basis for the long hours worked by Dr Yung could not readily be translated into an allegation of 'inappropriate practice' in relation to specified services. The fact that Dr Yung saw what was considered to be an excessive number of patients a day was not a basis for concluding that Dr Yung gave inadequate care and attention to all his patients, to any particular proportion of patients or to any particular patient. Where, as in the present case, a referral relates to all the services rendered by the medical practitioner within defined premises, it may be difficult to investigate the matter referred unless the content of the reasons for referral shows that the cause of the concern is a matter relating to all patients, such as inadequate or dirty premises or records which were wholly inadequate or some like matter. That was not the present case." (Emphasis added)
110 (It will be recalled that similar language was used in the Referral in the present case. It may be noted here that the subject Referral contained a definition provision which, inter alia, defined "clinical input" as meaning "… an approach to common and serious conditions which is broadly consistent with approaches adopted by the wider profession.".)
111 Davies J added (at 462 - 463) that the referral stated that Level "B" ($24.30) consultations were by far the major part of the 17,331 services. However, the Commission did not purport to identify any particular service in respect of which the item may have been inappropriate, and did not suggest overservicing. Although statistical material was attached, the Commission did not engage in, or recommend, a process of sampling. The referral did no more than point to a fact which suggested that "inappropriate practice" in the nature of insufficient clinical care in relation to at least some of the services would have occurred. The referral suggested, in effect, that the practitioner was a "suspicious person".
112 Davies J said (at 463):
"Dr Yung would have been unable to glean from the referral what were the details of inappropriate care which he ought to answer. It is common for a referral by the Commission to set out what are, in effect, the allegations in respect of which the disciplinary proceedings are brought. That did not occur in this case. Unless examples of cases in respect of which it is alleged that the medical practitioner has failed to provide a sufficient level of clinical input are pointed to, so that the medical practitioner can analyse and explain what occurred and thereby respond to the allegation of inappropriate practice, it is almost impossible for a medical practitioner to deal with the matter." (Emphasis added)
113 Turning then to the role of the Committee, Davies J observed (at 465) that its notice of its hearing did not direct Dr Yung's attention to any specific issue, and would not have assisted him to understand the matters to which he had to respond. Moreover, at the hearing, the Committee did not formulate in writing any issues or charges, and did not engage in statistical sampling in accordance with the sampling procedures dealt with in s 106G to s 106K.
114 Davies J went on (at 466 - 467) to note that the Committee's Report stated, inter alia, that Dr Yung was -
"… grossly at variance with both adjacent area practitioners [as shown by (the Commission's) statistics] the general body of practitioners, with world opinion, with what the Committee considers to be reasonable and what it believes to be the opinion of Dr Yung's peers in good standing."
115 Observing that the Committee did not relate these comments to specific services, but rather to Dr Yung's practice as a whole, Davies J said (at 467):
"I would have expected in the present case that any finding of inappropriate practice in the nature of insufficient care and attention would be related to identified services, save where it was appropriate to adopt a proportion, as where a sampling process was undertaken in accordance with s 106G to s 106K of the Act, in which case the sampling procedure adopted would identify the class or proportion of cases to which the findings drawn from an examination of a sample could be applied."
116 For this, and other particular reasons then given (at 467 - 470), his Honour concluded (at 470) that procedural fairness had not been accorded in the Committee's proceedings and report.
117 (As has been said, it is common ground here that, in principle, Dr Grey was entitled to procedural fairness from the Committee.)
118 Davies J went on to hold (at 482) that the Tribunal's reasons were inadequate; and further (at 483), that it was fundamental to the validity of the Tribunal's decision that it is based on findings in respect of which the principles of natural justice have been satisfied, which was not the case there.
119 Accordingly, his Honour (at 487) set the Tribunal's decision aside and remitted the matter to a differently constituted Tribunal, to be heard and decided again.
120 (It will be noted that his Honour made no declaration of invalidity of the referral. If that had been his view, there would have been no live issue remaining to be remitted to the Tribunal, as, on that hypothesis, the whole of the proceedings would have been a nullity.)
(2) Tang v Holmes (1998) 51 ALD 121 (Sundberg J)
121 After the decision of Davies J in Yung, and before the appeal in that matter (explained below) was dealt with, Sundberg J decided this application for judicial review of a decision of a Director to set up a Committee. The referral there was also expressed in language similar to that here, and in Yung. It suggested that by taking the number of services rendered in a year (17,926), Dr Tang, who was a general practitioner, would have to spend between 10.2 and 16.7 hours of direct patient contact per surgery working day to provide quality care at a standard acceptable to the Royal Australian College of General Practitioners. The referral then stated that the Commission believed that the appropriate level of clinical input may not be able to be maintained at this servicing rate on a regular and continuing basis.
122 Turning to the terms of the referral, Sundberg J said (at 127):
"It was contended for the applicant that the decision to set up the Committee was not authorised by s 89 because the document containing the referral did not refer any 'conduct' of the applicant to the Director. It was submitted for the applicant that the referral consists only of the material appearing under the headings 'Referral' and 'Referred Services', and since that material does not specify, describe or otherwise identify any behaviour, actions or practice of the applicant, no conduct of his has been referred to the Director. There is no substance in this submission. In my view the referral consists of the whole of Books 1 and 2. At the very least it consists of the first twenty‑six pages of Book 1. It is on page 26 that the Director signs and dates the reference introduced under the 'Referral' heading on page 1. When those pages are read as a whole (especially the material under the 'Reasons' heading), it is clear that the applicant's conduct that is referred is described in terms of behaviour engaged in during the referral period. Indeed the contrary was barely suggested by the applicant's counsel." (Emphasis added)
123 His Honour considered, and rejected, a number of suggested grounds for judicial review, including a "no evidence" ground, saying, of this ground (at 130):
"It was submitted for the applicant that there was no evidence to support the decision to refer because it was based on the false premise that the applicant could not have satisfied the ten minute standard. The applicant rendered 17,926 services in the referral period. Based on his working week of 61.75 hours (giving available consultation time of 3145.7 hours or 188,742 minutes a year), he devoted an average of 10.5 minutes to each consultation. But this approach is in my view unsound. The Director's case that on numerous occasions the applicant could not have satisfied the ten minute standard is not answered by showing that if the services be spread over a whole year the standard is satisfied. That approach obscures the fact, for example, that on particular dates the applicant rendered 81 services in an available consultation time of 10.5 hours, giving an average time of 7.77 minutes.
There was material before the Director on the basis of which the view could reasonably be formed that on 89 days the applicant had rendered more services than were consistent with the ten minute standard. That represents about 34 per cent of the full days he worked in the relevant year. The Director also had before him the transcript of an interview in which the applicant said that he could 'push through ten patients per hour if he was busy'. On the basis of all this material it was in my view open to the Director not to be satisfied that there were insufficient grounds on which a Committee could reasonably find that the applicant had engaged in inappropriate practice in connection with the referred services. In those circumstances he was obliged by s 93 to set up a Committee."
124 Noting that the applicant placed considerable reliance upon Yung, Sundberg J said (at 131):
"In the course of his judgment Davies J made observations relevant to decisions of Committees and Tribunals. But their tasks and powers differ from those of the Director under s 93, and I have not found Yung of assistance in relation to the attack on the Director's decision in the present case."
125 The application for judicial review was accordingly dismissed.
(3) The Full Federal Court appeal in Yung: Adams v Yung (1998) 83 FCR 248 (Beaumont, Burchett and Hill JJ)
126 The majority (Burchett and Hill JJ) identified (at 294) several questions of law arising on the appeal, two of which are presently material, as follows.
127 The first was, accepting as the Committee did, a requirement to afford natural justice, whether the Tribunal had, in fact, afforded the doctor natural justice and whether the Tribunal was restricted to considering the subject matter of the referral, or rather could consider any matter affecting conduct in the referral period, without the need to give particulars or prior notice.
128 Burchett and Hill JJ, noting (at 297) a submission by counsel for the Determining Officer that the Committee "could range outside the matters in the referral, for its role was investigatory", said (at 298) (in a passage which, as has been seen (see [53], above), was cited and relied on by the primary Judge here):
"However a referral is not merely the instrument which initiates the series of administrative inquiries which in the present case were undertaken. It also provides the framework in which those inquiries are to be held. While it is true that the legislation confers upon the Health Insurance Commission no enforceable investigatory powers, the legislation does not contemplate that the Health Insurance Commission will make a reference under s 86 without making some inquiry. It did so in the present case, both in the process of counselling it adopted and in the information technology application which identified what was thought by the Commission to involve too high a level of consultation.
The referral while expressed to be of conduct is not conduct in isolation. It is conduct relating to the issue whether the person has engaged in inappropriate practice in connection with rendering of services. Section 80(1) makes clear the legislative scheme is to examine whether inappropriate practice as defined in s 82 is involved. That inappropriate practice is conduct in connection with specified services. They are called 'the referred services' - see ss 91, 93 and the definition in s 81(1). While those services may include all or some services within the referral period, the reference is not intended to open for consideration by a committee ultimately convened any aspect at all of the referred person's conduct in the referral period. What is contemplated is that it be an inquiry into specified conduct as dealt with in the reference rather than conduct at large." (Emphasis added)
129 Their Honours went on to say (at 298 - 299) that this conclusion was reinforced from the fact that the Director must make various decisions on the referral (including its dismissal) based on the contents of the referral.
130 Burchett and Hill JJ said (at 299) that the function of the Committee is limited to considering the matters that "are the subject of the referral" (citing the wording of s 101(2) in relation to a hearing).
131 (It may be noted that the Commission has not sought to argue before us that it can "roam" beyond the subject of the Referral. For his part, Dr Grey, in his notice of contention, contends that the Referral was invalid because, inter alia, it was too wide and uncertain.)
132 Their Honours went on to say (at 299):
"The fact that the doctor in the present case is in the 99th percentile of doctors in comparable positions clearly enough raised a question for consideration, for that statistical outcome involves comparing the time that he spent (under 10 minutes per patient) with the time spent on average by other practitioners. But it does not follow from the fact that an adverse conclusion might well be drawn that it necessarily must be. It will be the task of the Committee to examine the practitioner's conduct in respect of those services and to determine the issue. Sampling will be the obvious mode of proceeding. No question of burden of proof arises in the context.
In the present case, the Committee did not attempt to make any useful sample analysis. Indeed it appears to have considered only the patients seen on one day in the whole 12 month period although it asked the doctor questions about patients treated in two months." (Emphasis added)
133 On this first issue, Burchett and Hill JJ expressed their conclusion thus (at 300):
"In our view the proceedings before the Committee miscarried not so much because it failed to particularise various matters against the doctor in respect of conclusions which it reached or that it failed to indicate adverse conclusions which might be reached, although both these matters occurred. Rather it failed to confine itself to the very reference which was before it. It also failed to consider the issue in that reference which related to conduct in respect of the referred services by only considering the one day which it did." (Emphasis added)
134 (It will be noted that their Honours did not hold, nor was it argued, that the referral was invalid.)
135 The second issue identified by their Honours (at 294) was whether the Tribunal was bound to investigate specified services and whether its task was to consider conduct; and whether the Committee could look at the matter in a generalised way, without considering either the whole of the services or a statistically acceptable sample.
136 Burchett and Hill JJ said (at 300):
"It is true that the sampling procedure introduced in the 1993 Bill to which the Second Reading Speech was addressed, permits necessary extrapolation from a sample to the referred services. It does not follow from that that a committee is not required to reach an ultimate conclusion about specified services. Its task is to consider the matter in the referral which is the conduct in respect of specified services. Although no doubt inferences can be made from a sample to a totality of services, that does not take away from the requirement of the ultimate conclusion to relate the issue of conduct either to some or all of those services. That is not a matter to which the Committee addressed itself. Nothing in the explanatory memorandum which accompanied the Health Legislation (Professional Services Review) Amendment Bill 1993 suggests the contrary." (Emphasis added)
137 As to the appropriate form of order on the appeal, whilst Burchett and Hill JJ agreed with Davies J (at 302 - 303) that the Tribunal's decision be set aside, at least on the ground that its reasons were inadequate, their Honours did not agree with Davies J's order for remitter. On the contrary, Burchett and Hill JJ held that because of the statutory time limits in this area, the matter should not, as a matter of discretion (not validity) be referred back. To this limited extent, the appeal was allowed.
138 Beaumont J, noting (at 278) that it had not been suggested that the referral or the Director's decision to set up the Committee were invalid, said (at 279 - 280):
"[T]he Referral and the Director's decision to set up the Committee should, in the absence of any contrary suggestion, and in accordance with the ordinary presumptions of regularity and validity, be treated as legally effective.
As has been seen, the learned primary Judge noted that the Referral 'turned its attention to a relevant matter, namely, whether Dr Yung had given the appropriate level of clinical input...'. I respectfully agree. For this reason, the Referral was, in my view, valid.
However, his Honour went on to mention 'an inherent defect' in the Referral, namely that '[t]he concern of the Commission that the appropriate level of clinical input could not be maintained on a regular and continuing basis for the long hours worked... could not readily be translated into an allegation of 'inappropriate practice''. If by 'inherent defect' his Honour meant that the Referral was invalid for this reason, then I could not agree. No authority was cited for this proposition. But, in contrast, his Honour's statement should not, perhaps, be understood in that way. In any event, the question is, with all respect, not one of law, but a factual issue: if Dr Yung regularly saw an excessive number of patients working excessive hours, as a matter of ordinary logic, the conclusion would be open on the facts that there had been professional conduct which peer review may assess or judge to amount to 'inappropriate practice' in the statutory sense. The Referral was not, in my view, bad in law on this account. His Honour's reasons appear to proceed upon the footing that the legislative scheme may only operate upon an inquiry into specific, individual services. With respect, I cannot accept this. In my view, it is possible, subject to statutory safeguards, for there to be an inquiry into conduct in a more general fashion. This question has been considered in other jurisdictions in analogous contexts, and reference is made below to these cases. Moreover, the approach taken in other jurisdictions is consistent with one of the objects of the present legislation as explained in the Second Reading Speech."
139 (The authorities cited below (at 285 - 287) included Peatfield v General Medical Council (1986) 1 WLR 243, 248 (PC); and Duncan v Medical Practitioners Disciplinary Tribunal (1986) 1 NZLR 537, 546, 549 (NZCA).)
140 With respect to the Committee's notice of its hearing, Beaumont J said (at 280):
"Did the present notice of hearing give particulars of the subject matter of the Referral? In my opinion, it did. It specified the relevant services as those rendered at the Kirrawee Medical Centre in the year commencing 1 January 1994. They were particulars of the matter for the purposes of s 102(3), so that its provisions were complied with."
141 Beaumont J went on to say (at 280 - 281):
"[I]t is common ground between the parties that a person under review was entitled to the protection of the rules of natural justice. In my opinion, it is both explicit and implicit in the Act, properly construed, that before the Committee the practitioner will be treated fairly in the natural justice sense: the procedures laid down in the statute are clearly designed to achieve a fair treatment of the practitioner, consistently with the need to protect the public interest in the proper discharge of the practitioner's professional responsibilities to patients. Moreover, in assessing whether a person under review has been fairly treated, it will no doubt be borne in mind that in some cases, at least, the exact details of the facts to be examined will, to some extent, lie within the knowledge of the practitioner, and would not be known to the Commission, and not even be readily available, in detail, to the Commission or to the Committee. In the present context, it could hardly be seriously supposed that fairness required that the detail of the treatment of each of some 17,000 patients be scrutinised."
142 Beaumont J observed (at 283 - 284) that, in the context of that case, "generally expressed" or "global" findings were "legally appropriate" as a matter of approach.
143 Beaumont J, agreeing with Davies J that the Tribunal was bound to give adequate reasons, said (at 288):
"I am further of the view that the Tribunal did not adequately explain the basis for Dr Yung's disqualification for six months, as distinct from another period; or whether a reprimand or counselling were appropriate penalties."
144 Beaumont J would have dismissed the appeal accordingly (at 289).
(4) Retnaraja v Morauta (1999) 93 FCR 397 (von Doussa J)
145 The Full Court decision in Adams v Yung was considered here, in an appeal under s 124A from a Tribunal decision, where, inter alia, challenge was made to the validity of the referral on the ground (not here material) that the relevant location was not adequately specified.
146 Dr Retnaraja also contended (at 410) that the Committee had not been procedurally fair, by failing to give him adequate notice of the specified services about which it might make adverse findings.
147 Von Doussa J referred to the observations of Burchett and Hill JJ at 300 (cited above at [136]) and said (at [55]):
"The references in this passage to 'specified services' relate back to s 87(1). I do not understand their Honours to mean that the ultimate conclusion of the Committee must relate the issue of conduct to individual services to identified patients. Such a requirement would be inconsistent with the sampling process provided for in ss 106G to 106K enacted by the 1993 Bill." (Emphasis added)
148 Von Doussa J went on (at 411) to note that Beaumont J had held (at 283 - 284) that it was not necessary that the Committee's Report relate findings of "inappropriate practice" to specific services.
149 Von Doussa J said (at [58] - [59]):
"In my opinion the Committee was not required to relate its finding of inappropriate practice to specific services, or to the provisions of services to specific patients. The Committee was entitled to approach its task by making more general findings of the type which it did make in relation to each of the categories of service about which the Commission expressed concern in the referral. It follows, in my opinion, that it was not incumbent upon the Committee before making adverse findings of inappropriate practice to notify Dr Ratnaraja that it had identified particular services, or specific patients to whom services had been rendered, that could be the subject of adverse findings.
The obligation resting on the Committee was to ensure that in the circumstances of the case the hearing which it conducted was procedurally fair. That required the Committee to ensure that Dr Ratnaraja had notice of findings that might be made against him, and an opportunity to respond." (Emphasis added)
150 Von Doussa J went on (at 418) to hold that it was a "prerequisite" to the exercise of the power under s 106U(1)(c) to identify by number, or by a percentage of a total, services which constitute the "inappropriate practice". This identification provided the starting point for the calculation of Medicare benefits which should not have been paid. His Honour said (at [87]):
"Where a Committee follows a sampling process and bases general findings about a practitioner's conduct on the findings in the sample, the nature and extent of the sample may in the circumstances of the case justify a finding by the Committee that, as a matter of probability, a particular percentage of services rendered in a particular category of service were not medically justified, or were charged at one rate rather than another. A finding of this kind would enable the necessary quantification of wrongly paid benefit for the purpose of s 106U(1)(c)…" (Emphasis added)
(5) Mercado v Holmes [2000] FCA 620 (Heerey J)
151 In Mercado at first instance, Heerey J observed (at [70]) that the referral "must identify the conduct being referred and the alleged 'inappropriate practice' relevant to the specified services and contain sufficient detail to make the Committee review process workable". In observations relied upon by the primary Judge here (see [70] above), Heerey J said (at [72]) that the referral there "identified high volume of rendered services as the subject matter of the enquiry … [which is something] … substantially different from … overservicing - the rendering of … services that are not reasonably medically necessary for the care of the patient". Yet the notice of hearing there gave overservicing as one of the Committee's "concerns", and (at [73]) it had never been suggested that the practitioner had obtained Medicare benefits for non-existent services. Since the referral was on its face, "confined to high volume of services", the Committee had "failed to recognise the limits of its jurisdiction" (in embarking upon a consideration of the question of overservicing).
152 Heerey J went on to consider and uphold, a claim by Dr Mercado that there was a reasonable apprehension of bias (which is not, of course, an issue in the present case).
153 Turning then to the question of relief, Heerey J (without, it seems, considering that the referral was invalid, but rather approaching the question as one of discretionary relief, presumably upon the basis of a denial of natural justice or procedural fairness in the particular circumstances of that case) said (at [94] - [95]):
"The initiating application sought a number of declarations and orders. But because of the course the litigation took the essential question became whether a permanent injunction should go to restrain further hearings. Therefore I think it will be sufficient if relief is granted in those terms. The first respondent did not raise as a possible outcome an injunction limiting the Committee to the high volume of services matter. But in any case, my findings as to reasonable apprehension of bias strengthen the case for a permanent injunction against any further hearings.
There will be an order that the second, third and fourth respondents be restrained from hearing any referral under the Health Insurance Commission Act 1976 (Cth) involving the applicant." (Emphasis added)
(6) Holmes v Mercado [2000] FCA 1848 (on appeal from Heerey J) (Full Court: Wilcox, Merkel and Weinberg JJ)
154 The Director successfully appealed to the Full Court, but only in relation to the ruling on bias - there was no challenge to Heerey J's determination of the ambit of review (see Holmes v Mercado [2000] FCA 1848 at [36]).
(7) Pradhan v Holmes [2001] FCA 1560 (Finn J)
155 In submitting that the primary Judge should have held that the referral here was invalid, counsel for Dr Grey relies principally upon the reasoning of Finn J here, a case (decided after the first instance judgment here) concerned with the operation of Part VAA, but (as distinct from the present case) after amendments to that Part in 1999. Accordingly, it will be necessary to analyse the case in some depth.
156 In Pradhan, the referral expressed two concerns (at [63]). The first related to Dr Pradhan's high volume of rendered services with high daily servicing - total services were above 99th percentile of all active ophthalmologists. The concern expressed was that Dr Pradhan "may not be able to provide an appropriate level of clinical input when consistently rendering a high volume of services on a regular and continuing basis". The second concern was that some of the services rendered "may not be reasonably medically necessary for the care of [Dr Pradhan's] patients".
157 The material attached to the referral included a summary of an "Analysis of Appropriateness of Practice" as follows (at [64]):
". The results of this analysis has shown that for most item numbers the services provided were excessive, were not evidence based and were not consistent with the incidence of the disorder in the population ie inappropriate practice.
. Dr Pradhan's mode of practice showed a significantly greater likelihood of providing a service for specific conditions compared to other ophthalmologists. In particular for certain items the data suggest that services were provided for other than the item descriptor ie fraud.
. There is evidence that unnecessary services were provided for relatively minor disorders for which a simpler less invasive method was appropriate. A major concern is whether by unnecessarily exposing patients to a greater risk of adverse outcomes Dr Pradhan is failing to exercise an accepted degree of professional skill and learning ie malpractice." (Emphasis added)
158 Finn J considered (at [89]) the effect of s 93(6), inserted in 1999, which provides that if the Director makes an "adjudicative referral" to a Committee, the Director will, inter alia, prepare a written report giving reasons why the Director thinks that conduct in connection with rendering (etc.) the services may have constituted engaging in "inappropriate practice". Finn J held that both the report and the reasons "necessarily require the identification of the conduct that may have constituted engaging in 'inappropriate practice'".
159 With respect to the 1994 referral scheme (i.e. the scheme applicable in our case) Finn J said (at [95]):
"The four-corners of what the Director could refer to the Committee were set by the Commission's referral to the Director. For this reason Burchett and Hill JJ in Adams v Yung (at 298) could state that 'a referral is not merely the instrument which initiates the series of administrative inquiries…. It also provides the framework in which those inquiries are to be held'."
160 Finn J found (at [83]) that the conduct referred by the referral was "unspecified and unlimited".
161 Noting (at [96]) that case law on the 1994 scheme "has consistently held or assumed that what was referred under s 86(1) was such conduct of the person under review as was identified and described in the referral", Finn J cited (at [97]) the observations by Burchett and Hill JJ in Yung at 298 - 299 previously quoted (at [128] above).
162 Finn J next (at [98]), referring to Mercado, Tang and the present case, said:
"In Mercado v Holmes, above, in applying Adams v Yung, Heerey J commented (at [70]) that the 'referral must identify the conduct being referred and the alleged inappropriate practice relevant to the specified services and contain sufficient detail to make the Committee review process workable': see also Tang v Holmes,above, at 127; Grey v Health Insurance Commission,above. Significantly for present purposes, His Honour also commented (at [66]) that a document similar in content to the one page 'Investigative Referral' document used in the present case and which is set out at [61] above could not by itself 'constitute a valid referral in accordance with the Act'. It would lack the requisite identification of the conduct referred and the inappropriate practice alleged."
163 Finn J said (at [109]):
"It is a matter of no little significance that the PSR scheme is a disciplinary one that can lead to significant sanctions being imposed upon a practitioner who has been found to have engaged in inappropriate practice: s 106U; Adams v Yung, above, at 294; on disciplinary proceedings see generally Forbes, Disciplinary Tribunals (2nd Ed, 1996). The 1999 scheme, much more so than the 1994 scheme, evidences a heightened legislative appreciation of the implications of this in the significantly enhanced procedural fairness safeguards introduced in the 1999 amendments. Those safeguards are now part of the skeletal structure of the PSR scheme and are, as will be seen, useful for the light they throw on the proper construction of the referral processes of the scheme itself."
164 (His Honour's reference to Yung was to the following passage in the reasons of Burchett and Hill JJ:
"The steps which were taken in what the learned judge below referred to, not inappropriately, despite submissions to the contrary by counsel for the determining officer, as 'disciplinary proceedings' commence with s 86 of the Act."
165 Forbes, op. cit. at 152 - 153, explains the principle that disciplinary orders are "protective sanctions", citing (as Davies J had done (see [107] above)) Clyne and Evatt.)
166 After noting the Commission's submission that the earlier authorities cited need to be understood in the light of the 1999 amendments, Finn J said (at [111] - [112]):
"The present significance of Adams v Yung is this. The majority judgment of Burchett and Hill JJ characterised the referral made under s 86(1) in the 1993 scheme as being circumscribed in two ways: the one, by the services actually referred; the other, by the conduct specified in the referral. It was not open to the Committee to inquire into services not referred, nor conduct not so specified. As to the latter limitation, their Honours made plain that they were not merely considering how the 'rules of natural justice' would impact on an inquiry into conduct that was in terms unlimited. Rather the limitation inhered in the statutory nature of a reference. What the statute contemplated was 'that it be an inquiry into specified conduct as dealt with in the reference rather than conduct at large': above, at 298; see also Mercado v Holmes, above, at [66]-[70].
The 1999 amendments did not alter the terms in which the power to make an investigative referral was conferred on the Commission by s 86(1). The power remained one to 'refer … the conduct of a person' etc (emphasis added). Contrary to the respondents' submission that this reference to conduct should be seen as no more than a generic description of conduct in respect of services, the Adams v Yung characterisation that what is referred under s 86(1) is specified conduct is, in my view, emphasised by the statutory imposition of a procedural fairness requirement on the Commission in making a referral. The referral must 'set out the reasons why the Commission considers the person under review may have engaged in inappropriate practice': s 86(4)(b). When regard is had to the definition of 'inappropriate practice' in s 82(1), those reasons necessarily must relate to identified conduct in relation to which the prescribed judgment is made - albeit it may be identified in terms of some generality (eg 'high volume of rendered services': Mercado v Holmes, above)." (Emphasis added)
167 Having held (at [124]) that a referral "specifying both the conduct and services referred provides the framework in which the Committee's inquiry is to be held" and that the Act did not "mandate a roving commission", Finn J said (at [128]):
"I conclude that, in the case of each referral, there has been a non-compliance with the requirements of s 86(1) and s 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."
(In Project Blue Sky, McHugh, Gummow, Kirby and Hayne JJ observed (at 389) that, in deciding whether an act done in breach of a condition regulating the exercise of a statutory power is invalid "depends upon whether there can be discerned a legislative purpose to invalidate … ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. … There is no decisive rule that can be applied…". Their Honours referred (at 389) to the distinction, traditionally recognised, between acts done in breach of "an essential preliminary to the exercise" of a statutory power (regarded as "going to jurisdiction", and "mandatory", and failure to comply "will result in invalidity) on the one hand; and, on the other, acts done in breach of "a procedural condition for the exercise" of a statutory power (regarded as "directory rather than mandatory"). Their Honours went on to remark (at 392) that "courts have always accepted that it is unlikely that an act done in breach of a statutory provision should be invalid if public inconvenience would be a result of the invalidity …" (emphasis added). However, their Honours added (at 393) that "[a]lthough an act done in contravention of the legislative provision is not invalid, it is a breach of the [statute] and therefore unlawful. Failure to comply with a directory provision 'may in particular cases be punishable'. That being so, a person with a sufficient interest is entitled to sue for a declaration that the [authority] has acted in breach of the [statute] and, in an appropriate case, obtain an injunction restraining that body from taking any further action based on its unlawful action".)
168 Finn J went on to make declaratory orders that the Investigative Referral was invalid for non-compliance with s 86(1); and that the Adjudicative Referral was invalid for non-compliance with s 93(1).
(8) Tisdall v HIC [2002] FCA 97 (Tamberlin J)
169 Reference should also be made to Tisdall, another case decided after the judgment at first instance here. Tisdall was decided under the 1994 scheme, and presumably for that reason, Pradhan was not referred to. The referral in Tisdall expressed the "concern" of the Commission that "the high total volume of services, services per patient and prescribing may be inappropriate, contain insufficient clinical input, or may not be reasonably, medically necessary for the care of his patients" (at [30]).
170 In rejecting Dr Tisdall's argument that the referral fell outside the Act, Tamberlin J said (at [62] - [63]):
"In the reasons for referral, the delegate of the Commission has given detailed particulars of the high volume of rendered services, the high average number of services per patient and the high level of prescribing. These matters are said to provide the basis for considering that there has been inappropriate conduct referred to in s 86. The three specific headings which are in the Referral together with the numerous annexures express the detailed concerns to be investigated only in so far as they constitute conduct in connection with the matters referred to in s 86. The attachments are part of the Referral: see Ratnaraja v Morauta (1999) 93 FCR 397, Mercado v Holmes [2000] FCA 620, on appeal [2000] FCA 1848. The concerns referred to in the headings, namely, the high volume of rendered services, the high average number of services per patient and the high level of prescribing, are not referred for investigation as conduct which is itself inappropriate in its own right but rather only in so far as they have the necessary connection with the rendering and initiating of defined services.
Accordingly, I do not accept the submission that the Referral in terms is outside power or invalid. It does not, in terms or substance travel beyond the provisions of the Act."
171 Tamberlin J went on (at [72] and following) to consider an argument by Dr Tisdall, relying upon the decision at first instance here, that in its inquiry, the Committee went outside the terms of the Referral and the particulars provided in the notice of hearing. Tamberlin J said (at [75] - [77]):
"In the present case Counsel for the Commission submits that the inquiries were within the terms of the reference, which was broader than that in the Grey case and, in addition, the consideration of record keeping, rendering necessary services and charging for work which had not been carried out were incidental and appropriate to consider when addressing the question posed. Alternatively, Counsel submits that Grey was wrong in law. In view of the difference of the facts in this case it is not necessary for me to express an opinion on this. Counsel for the Commission points out that in the present case the Commission did not find that charges had been made in respect of any item or circumstances where no work had been carried out.
In this case the Referral extended beyond the referral in Grey in so far as the concerns in that case expressed related only to the high volume of rendered services. In Grey, the referral did not express concern as to any of the services being rendered or initiated which were not reasonably necessary. The Grey referral did not refer to any concern by the Commission that the high rate of prescription of drugs might be excessive. In the present case these concerns were spelt out as being the reasons as to why the practitioner's conduct in connection with the rendering of medical services may constitute inappropriate practice. The Commission submits that the inquiries made in the present case were appropriate to determine whether the conduct of the applicant was within the language and substance of the particulars. It submits that inquiry into the quality and quantity of the services and the level of prescriptions was proper and reasonably incidental to enable the Committee to perform its function in making a determination as to the appropriateness of the conduct. The investigations made were incidents of the main inquiry and were not themselves independent inquiries into behaviour and non-performance in their own right. In the present case, for reasons given, I consider that the inquiries made did not travel beyond the Referral or the particulars and that the inquiries were sufficiently related to the principle function of the Committee.
Both the Referral and the particulars make reference to the notion of 'clinical input'. This is a wide, undefined expression capable of including quantity, quality and the need for, or appropriateness, of the service in respect of which a claim is made. So long as there is this nexus with the subject matter of the inquiry it is open, in my view, for the Committee to make inquiry into these matters."
172 (It will be recalled that in the Referral in the present case, "clinical input" was defined to mean "an approach to common and serious conditions which is broadly consistent with approaches adopted by the wider profession".)
173 As has been seen from the foregoing analysis, the cases record consensus in the interpretation of this legislation in the following areas at least:
(1) Although disciplinary powers are conferred under the legislative scheme, the purpose or object of the statute is to protect both patients and the Commonwealth against abuse of the system. That is to say, as "public protective" legislation, Parts VAA and VA should not be narrowly interpreted.
(2) At the same time, at all stages of the process, the legislation ensures that the practitioner is afforded procedural fairness and, in particular, is given an adequate opportunity to meet any concerns that may be raised. This, for instance, is the rationale of s 102(3), requiring that the Committee's notice of hearing "must give particulars of the matter to which the hearing relates". Moreover, as Davies J observed in Yung (at 458), responsibility does not end there. As the inquiry proceeds, the Committee may need to provide further information on an ongoing basis. This obligation would extend to amending particulars previously provided, should further and better information come to hand. With the exception of Pradhan, where the referral was held invalid from its inception, in all other cases where relief has been granted, the cause of action has been a failure, after the reference is made, to provide procedural fairness, contrary to the specific statutory requirements.
(3) Making a claim under an incorrect item is capable of constituting conduct which amounts to "inappropriate practice".