The Consequences of a Failure To Consult
74 Non-compliance with a statutory requirement - including a requirement expressed in terms requiring that certain action "must" be taken - does not necessarily result in subsequent invalidity: cf. Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28, 194 CLR 355.
75 Whether or not a prior failure to comply with a statutory requirement exposes subsequent decision-making to invalidity is ultimately a matter of statutory construction. In Project Blue Sky there had been non-compliance with s 160(d) of the Broadcasting Services Act 1992 (Cth) which required the Authority to perform its functions in a manner consistent with Australia's obligations under any agreement between Australia and a foreign country. As to the consequences of that non-compliance, McHugh, Gummow, Kirby and Hayne JJ concluded:
Does the failure to comply with s 160 mean that cl 9 of the Australian Content Standard is invalid?
[91] An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is 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. Unfortunately, a finding of purpose or no purpose in this context often reflects a contestable judgment. The cases show various factors that have proved decisive in various contexts, but they do no more than provide guidance in analogous circumstances. There is no decisive rule that can be applied; there is not even a ranking of relevant factors or categories to give guidance on the issue.
[92] Traditionally, the courts have distinguished between acts done in breach of an essential preliminary to the exercise of a statutory power or authority and acts done in breach of a procedural condition for the exercise of a statutory power or authority….
[93] In our opinion, the Court of Appeal of New South Wales was correct in Tasker v Fullwood [(1971) 1 NSWLR 20 at 23-24] in criticising the continued use of the "elusive distinction between directory and mandatory requirements" and the division of directory acts into those which have substantially complied with a statutory command and those which have not. They are classifications that have outlived their usefulness because they deflect attention from the real issue which is whether an act done in breach of the legislative provision is invalid. The classification of a statutory provision as mandatory or directory records a result which has been reached on other grounds. The classification is the end of the inquiry, not the beginning. That being so, a court, determining the validity of an act done in breach of a statutory provision, may easily focus on the wrong factors if it asks itself whether compliance with the provision is mandatory or directory and, if directory, whether there has been substantial compliance with the provision. A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. This has been the preferred approach of courts in this country in recent years, particularly in New South Wales. In determining the question of purpose, regard must be had to "the language of the relevant provision and the scope and object of the whole statute". [Footnotes omitted.]
After reviewing the terms of the Broadcasting Services Act, it was concluded at [99] that "… the best interpretation of s 160 is that, while it imposes a legal duty on the ABA, an act done in breach of its provisions is not invalid".
76 In the present statutory context of the Health Insurance Act, and in the context of Part VAA in particular, a number of factors peculiar to that context point to the fundamental importance of the consultation there referred to. These factors include the following.
77 First, any inquiry as to whether the consequence of non-compliance with a particular statutory requirement is invalidity must necessarily at least start with the statutory language which imposes the requirement that has not been met. And, in the present context, ss 84 and 85 repeatedly employ the term "must". Although it may readily now be accepted that the use of such a term (previously regarded as imposing a "mandatory" requirement) may be but the start of the inquiry and not the conclusion, the statutory language in fact employed remains a valuable guide to resolving the inquiry. It remains a fact that the use of the imperative term "shall" - as opposed to the facultative and permissive term "may" - has long been recognised as usually imposing a duty to comply with the requirement imposed: Ward v Williams (1955) 92 CLR 496 at 508; Scurr v Brisbane City Council (1973) 133 CLR 242 at 255 per Stephen J. Although by no means determinative, the use of the term "must" in ss 84 and 85 can similarly be contrasted with the language employed in s 90 where it is stated that "the Director may consult" (inter alia) a Panel member or "any consultant or learned professional body that the Director considers appropriate". Differences in statutory language expressed elsewhere in the Act, it is considered, provide no reason to do anything other than to construe ss 84 and 85 within the context of Part VAA.
78 The starting point for the inquiry to be undertaken may thus be accepted as a legislative intention to impose upon the Minister a series of duties to "consult" and that the duties imposed were not intended to be "empty term[s]".
79 Second, ss 84 and 85 occur within Part VAA of the Health Insurance Act. And within that Part it is only a Professional Services Review Committee that can make a determination as to whether a medical practitioner has engaged in "inappropriate practice". The Director may not make such a determination, his function being confined to that of a "screening role": Carrick at [12]. A determination that a practitioner has engaged in "inappropriate practice" is not only in itself a serious adverse finding; it is also an adverse finding having the additional imprimatur of a medical practitioner's own peers. It is a finding which prejudicially affects the reputation and standing of the medical practitioner concerned. As Casio exclaimed in Othello:
Reputation, reputation, reputation! O, I have lost my reputation! I have lost the immortal part of myself, and what remains is bestial. My reputation, Iago, my reputation!
Others, of course, may disagree. Iago's response was thus:
As I am an honest man, I thought you had received some bodily wound; there is more sense in that than in reputation. Reputation is an idle and most false imposition: oft got without merit, and lost without deserving: you have lost no reputation at all unless you repute yourself such a loser. What, man! There are ways to recover the general again: you are but now cast in his mood, a punishment more in policy than in malice, even so as one would beat his offenceless dog to affright an imperious lion: sue to him again, and he's yours.
A medical practitioner who has lawfully been found to have rendered what was previously termed "excessive services", and who may now have been found to have engaged in "inappropriate practice", may well be expected to endure the damage to their reputation that such a finding may attract. But all practitioners are entitled to have their conduct reviewed by a Committee appointed in accordance with law.
80 Part VAA, not unexpectedly, details the manner in which inquiries may be initiated and the manner in which they are to be resolved. One essential aspect of that Scheme is the establishment of the Professional Services Review Panel and the opportunity for a practitioner whose practice is under scrutiny to have his conduct reviewed by both other practitioners and practitioners who have been appointed after consultation by the Minister.
81 Third, any requirement to "consult" with the AMA as to the appointment of Panel members cannot be regarded as a mere technicality or mere formality having little significance. Nor can the reappointment of practitioners who have previously been the subject of consultation with the AMA be regarded as a mere formality. The role played by the AMA, and as endorsed in Part VAA, is pivotal to the operation of Part VAA. It may readily be accepted that the Minister may have little (if any) knowledge as to the identity or suitability for appointment of individual medical practitioners. Central to the manner of operation of Part VAA was not the implementation of a bureaucratic structure of Panel members who so happened to be medical practitioners who sought appointment. Those qualified for appointment were not, for example, persons solely having particular qualifications: e.g., Administrative Appeals Tribunal Act 1975 (Cth), s 7. The practitioners to be appointed were to be persons presumably regarded by the AMA as suitable for appointment - although mere endorsement by the AMA did not preclude the Minister making a contrary decision. And, a medical practitioner previously appointed, may have proved (for whatever reason) to be inappropriate for subsequent reappointment. Panel members were persons appointed for a term of years, not exceeding 5 years: s 106ZG. A medical practitioner previously appointed may, during the period of his appointment, have proved to be manifestly inappropriate for reappointment. Or a medical practitioner previously appointed may no longer wish to be reappointed.
82 Given both the importance ascribed by the Legislature to an assessment as to "inappropriate practice" being made by those persons who have requisite knowledge as to current medical practice and the importance ascribed by the Legislature to assessments being made by a medical practitioner's own peers, the need for Committees to be properly constituted is itself fundamental to the very administration of Part VAA. The central role played by a medical practitioner's own peers in an assessment as to whether he has rendered what were previously termed "excessive services" or engaged in what is now termed "inappropriate practice" has long been recognised. Thus, in Minister for Health v Thomson (1985) 8 FCR 213 at 217, Fox J there said of the then Medical Services Committee of Inquiry:
It is not disputed that the Committee is one of experts. The Act requires that it comprise five medical practitioners. It seems reasonably clear that the intention of the Act is that the Committee sit as a Committee of the peers of the medical practitioner whose conduct is in question and exercise its own judgment in relation to the evidence before it, using its own collective knowledge in its evaluation.
Subsequently, in Tisdall v Health Insurance Commission [2002] FCA 97 Tamberlin J observed in respect to the Professional Services Review Committee:
[10] The Director must set up a Committee to consider whether a person under review has engaged in inappropriate practice unless satisfied that there are insufficient grounds on which a Committee could reasonably find that the person has engaged in inappropriate practice in connection with the referred service or that the Director has disqualified the person under review (s 93). Neither of those circumstances apply in the present case. The Committee set up under s 93 is to be composed of a Chairperson who is a Deputy Director and two other Panel members. Under s 95(2) the Chairperson and the other Panel members must be, (i) practitioners, (ii) who belong to the profession in which the practitioner was practising, (iii) when he or she rendered or initiated the referred services. The constitution of the Committee can therefore be seen as one of peer experts in general practice, who were engaged in practice at the time the services were rendered. In the present case the Committee consisted of three experienced general practitioners. Two members had general practices in country areas and one member conducted a general practice in an outer suburban area.
And Committee members are "entitled to consider and undertake their adjudicative function concerning the statutory factors against the background of their own professional experience as general practitioners especially having regard to s 95 of the Act which requires the Committee to be comprised of general practitioners in a case where a general practitioner is the person under review …": Tisdall v Webber [2011] FCAFC 76 at [86] per Greenwood J (Tracey J agreeing).
83 In the present context, it is concluded that a medical practitioner - and the general public - is entitled to assume that the consultation required by ss 84(3) and 85(3) has been undertaken. Whether or not there has been consultation is a matter very much within the knowledge and control of the Minister and the AMA - but not the medical practitioner appearing before a Committee (or the general public). Although it would be open to a medical practitioner appearing before a Committee to make inquiries as to the circumstances relevant to the appointment of each Committee member, it is concluded that a practitioner would generally be entitled to assume that the Minister has complied with the law. Facts peculiar to a particular case may put a medical practitioner on inquiry. In some circumstances a legislative intention may be discerned that a person who has secured a favourable administrative decision should not be denied the benefit of that decision unless he has undertaken his own "independent investigation" as to whether there has or has not been prior consultation: cf. Attorney-General v J N Perry Constructions Pty Ltd (1961) 79 WN (NSW) 235. But such is not the present case.
84 The importance ascribed by the Legislature to such matters is not only apparent from the terms of the legislation itself; it is an importance expressly referred to during the course of debate in the House of Representatives. Thus, during the course of the Second Reading Speech on 30 September 1993, the Parliamentary Secretary to the Minister for Health said when these provisions were introduced by way of the Health Legislation (Professional Services Review) Amendment Bill (Australia, House of Representatives, Debates (1993), p 1551):
The amendments to the Health Insurance Act outlined in this bill reflect the outcome of a close consultative process with the Australian Medical Association. The AMA has played a key role in the development of the new measures and, in so doing, has demonstrated that it takes seriously its expressed belief that it has a duty to cooperate in ensuring that the public resources earmarked for health care are appropriately utilised.
A little later it was also said:
The bill provides for the replacement of medical services committees of inquiry by professional services review committees. Whereas the basic composition of committees of inquiry remains constant regardless of the nature of the services that are subject to examination, the composition of the professional services review committees will vary according to types of services that are subject to review. For example, the empanelling of a committee to review the rendering or initiation of services by a specialist in a particular speciality would be on the basis that the majority of the committee would be specialists in the same speciality. This means that there should be little cause for a practitioner to question the committee's competence to deal with the matters referred to it.
A significant change in the bill is the replacement of the concept of excessive servicing with one of inappropriate practice. Whereas excessive servicing is currently defined as the rendering or initiation of services not reasonably necessary for the adequate care of the patient, the concept of inappropriate practice goes further. It covers a practitioner engaging in conduct in connection with the rendering or initiating of services that is unacceptable to his or her professional colleagues generally.
85 A fourth and further factor not to be ignored when considering the consequences that may follow where there has been a failure to consult as required by ss 84(3) and 85(3) is the fact that the administrative proceeding to be conducted has some of the characteristics of a disciplinary hearing, albeit an administrative process also directed to "protecting patients and the Commonwealth". Thus, in Pradhan v Holmes [2001] FCA 1560, 125 FCR 280 the question to be resolved concerned the consequences that followed from a failure to refer specified conduct to a Committee for investigation. Section 86(1) of the Health Insurance Act required the Commission to refer to the Director "the conduct" of the medical practitioner; s 93(6) referred to the writing of a report by the Director to the Committee "in respect of the services to which the referral relates"; s 93(7) referred to "services that may be specified in the … referral"; and s 93(1) required the Director to make a referral to a Committee "to consider whether conduct by the person under review … constituted engaging in inappropriate practice". In that context, Finn J observed:
[121] Again, in my view, the section ought be interpreted as requiring that the referral be of specified conduct - a conclusion reinforced by the s 93(6) procedural fairness requirement that the Director prepare a written report giving reasons why the Director considers that "conduct by the person under review ... may have constituted engaging in inappropriate practice". Significantly the emphasis upon the requirement of specification at the level of an adjudicative referral is emphasised in the need to identify the particular services that are referred: s 93(1) and s 93(7); and it is only in respect of these services that the Committee can make findings: s 106H(1). This is unsurprising. One is after all at the point in the disciplinary process where the boundaries of the case to be met by the person under review should be settled and fairly particularised: see Forbes, above, Ch 10. In saying this I do not overlook the powers of the Committee further to narrow the case to be met: see s 101(2) together with s 102(1) and s 102(3); s 106J.
The reference to Forbes was a reference to Forbes, JRS Disciplinary Tribunals (2nd ed., Federation Press, 1996). The conclusion of his Honour as to invalidity, it should be noted, was subsequently rejected by the Full Court in Health Insurance Commission v Grey [2002] FCAFC 130 at [179], 120 FCR 470 at 505.
86 The "disciplinary" aspect of an investigation conducted by a Committee, however, has been repeatedly referred to by other Judges of this Court. Albeit addressing the administrative scheme as then in place, in Yung v Adams (1997) 80 FCR 453 at 460, Davies J observed that "the proceedings are disciplinary in nature". His Honour went on to further observe, however, that the sanctions which may be imposed were not punitive in nature. The decision, according to his Honour:
"… 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 …"[(1997) 80 FCR 453 at 472]
On appeal, Burchett and Hill JJ stated that Davies J had "not inappropriately" referred to the proceedings as "disciplinary proceedings": Adams v Yung (1998) 83 FCR 248 at 294. Similarly in Health Insurance Commission v Grey [2002] FCAFC 130 at [173], 120 FCR 470 at 504, Beaumont, Sundberg and Allsop JJ stated both the disciplinary aspect of proceedings and the public purpose to be served as follows:
[173] … 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, Pts VAA and VA should not be narrowly interpreted …
Neither aspect of the legislation can be questioned, including the consequences to a medical practitioner of an adverse finding.
87 Common to the consultation required by both ss 84 and 85 is the appropriateness of the medical practitioners to discharge the functions entrusted to Professional Services Review Committees. The further requirement that there be separate consultation as to the appointment of a medical practitioner to be a Deputy Director is a recognition of the additional responsibilities entrusted to a Deputy Director as a member of a Committee. These additional responsibilities include:
being the Chairperson of a Committee (s 95(1)(a)) and presiding "at all meetings at which he or she is present" (s 99(1)); and
engaging consultants on behalf of the Commonwealth (s 106ZP(1)).
88 The particular statutory context of Part VAA, it is concluded, imposes upon the Minister a mandatory obligation - or "duty" - to consult with the AMA and the further conclusion that the failure on the part of the Minister to do so vitiates any purported decision that may have been made by a Committee constituted by any member who has not been appointed after the process of consultation required by the Health Insurance Act. It is also concluded that it is only a Panel member who has been appointed in accordance with law who may be appointed a Deputy Director. The failure to properly appoint the Panel members necessarily has the consequence that those Deputy Directors have also not been appointed in accordance with law and a further reason to vitiate any purported decision of a Committee over which such a Deputy Director has presided.
89 To resist these conclusions the Commonwealth sought to advance a number of discrete propositions.