Oreb v Willcock

THE COURT ORDERS THAT: 1. The findings of Committee 198, that Dr Oreb had engaged in inappropriate practice and that exceptional circumstances did not exist, be set aside. 2. The matter be referred back to the Director of Professional Services Review to consider whether it is appropriate to establish a differently constituted committee to determine, in accordance with law, whether Dr Oreb engaged in inappropriate practice during the referral period. 3. Brief argument on costs be heard in the week of 6 December 2004. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

established by s 106Q of the Health Insurance Act 1973 (Cth)

REASONS FOR JUDGMENT Introduction 1 Part VAA of the Health Insurance Act 1973 (Cth) ("the Act") established a peer review-based Professional Services Review Scheme ("the Scheme"). As a Full Court (Marshall, North and Weinberg JJ) observed in Kelly v Daniel [2004] FCAFC 14 ("Daniel") at [2], the scheme focuses upon the conduct of, inter alia, medical practitioners in connection with the rendering and initiation of services that attract payment of Medicare benefits. 2 The Scheme was described by Finn J in Pradhan v Holmes (2001) 125 FCR 280 ("Pradhan") at [6] as involving four separate tiers or stages. Pradhan was not followed by a Full Court (Beaumont, Sundberg and Allsop JJ) in Health Insurance Commission v Grey (2002) 120 FCR 470 ("Grey") but their Honours did not express disapproval of Finn J's description of the Scheme. 3 The first three stages of the scheme relate to the question of whether a medical practitioner has engaged in "inappropriate practice" in connection with the rendering or initiation of services for which Medicare benefits are payable. The fourth stage involves the imposition of a sanction on a practitioner who has been found to have engaged in "inappropriate practice". 4 The first stage of the scheme is the initiation of the process by the Health Insurance Commission ("the Commission") making an "investigative referral" under s 86 of the Act to the Director of Professional Services Review ("the Director"). 5 The second stage is the conduct of an investigation by the Director into the matters referred to him or her in the investigative referral. 6 The third stage is the decision by the Director to set up a Professional Services Review Committee ("the Committee") and to make an adjudicative referral to the Committee under s 93 of the Act to consider whether the conduct by the person under review constituted engaging in inappropriate practice. 7 The fourth stage of the scheme is, as Finn J said at [39], concerned primarily with the imposition of sanctions or penalties in the event that the Committee finds that the person under review engaged in inappropriate practice. 8 On 13 December 2001, the Commission, which is the third respondent in these proceedings, made Investigative Referral No 298 in respect of Dr Zelko Oreb ("Dr Oreb"). 9 The Commission stated that, in accordance with s 86(4)(b) of the Act, it considered that Dr Oreb may have engaged in inappropriate practice because of evidence that some of Dr Oreb's professional attendances constituted "a prescribed pattern of service" as defined in s 106KA of the Act and Regulation 10 of the Health Insurance (Professional Services Review) Regulations 1999 (Cth) ("the Regulations"). 10 The evidence to which the Commission referred was that Dr Oreb was said to have rendered 80 or more services on each of 20 or more days in the period from 1 January 2000 to 8 August 2000. 11 This was an application of the provisions of Reg 10 which Ryan J described at first instance in Daniel as the "80/20" rule; see Daniel v Kelly (2003) 200 ALR 379 at [8]. 12 On 5 March 2002, the fourth respondent, Dr Holmes, in his capacity as the Director, made Adjudicative Referral No 298. The Director established Professional Services Committee No 298 ("Committee 298"), which is the first respondent, and referred to it the conduct of Dr Oreb in connection with "the specified services". These specified services were described as engaging in inappropriate practice because of a breach of the 80/20 rule. 13 On 8 November 2002, Committee 298 handed down its final report regarding the conduct of Dr Oreb. The finding of Committee 298, in accordance with s 106L of the Act, was that Dr Oreb engaged in inappropriate practice by contravening the 80/20 rule. 14 By agreement between the parties, the Determining Authority, which is the second respondent, has refrained from imposing any sanction under s 106U of the Act pending determination of these proceedings. 15 On 27 October 2004, Dr Oreb filed a Further Amended Application under ss 5 and 6 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") and s 39B(1A) of the Judiciary Act 1903 (Cth) ("the Judiciary Act"). Dr Oreb seeks orders setting aside the investigative referral, the adjudicative referral and the report of Committee 298. He also seeks an order restraining the Determining Authority from taking any action as a result of the report of Committee 298. 16 The proceedings were commenced by an Application filed on 10 December 2002. The Application sought an order of review of the report of Committee 298 and was brought within the 28 day time limit contained in s 11(3) of the ADJR Act. 17 It was not until 22 August 2003 that the Amended Application was filed seeking review of the investigative referral and the adjudicative referral. The Amended Application and the Further Amended Application are outside the limitation period of the ADJR Act for review of the investigative referral and the adjudicative referral. 18 No time limitation is fixed for an application for review under s 39B(1A) of the Judiciary Act but the delay in seeking such relief raises discretionary considerations. 19 Dr Oreb's Further Amended Application seeks, to the extent necessary, an order extending time for the application for review of the investigative referral and the adjudicative referral. 20 I will deal with the substantive grounds raised by the Further Amended Application before turning to the question of whether an extension of time is necessary or ought to be granted. 21 Dr Oreb contends that the investigative referral is affected by jurisdictional eror and error of law on five separate bases It is unnecessary to set out all of the stated grounds. The nub of the application in relation to the investigative referral is that the Commission did not look beyond the provisions of the 80/20 rule and that it failed to take into account other relevant considerations. 22 The relevant considerations relied upon were that Dr Oreb had been counselled in relation to his rendering of services and that he had cooperated with the Commission. 23 There are nine grounds of jurisdictional error and error of law alleged to affect the adjudicative referral. 24 The principal grounds are that the Director failed to investigate Dr Oreb's conduct during the two year referral period other than in respect of a breach of the 80/20 rule and that the Director erroneously construed the Act as not requiring him to offer Dr Oreb an opportunity to enter into an agreement under s 92 of the Act. 25 I will refer to s 92 in more detail below, but it provides that the Director and the person under review may enter into an agreement in respect of the matters referred to the Director pursuant to which the person acknowledges inappropriate practice and provides for specified action to be taken. 26 Twelve errors of law are alleged in relation to the report of Committee 298. The principal ground is that Committee 298 misdirected itself in relation to what constituted "exceptional circumstances" under s 106KA(2), s 106KA(5) and Reg 11. 27 Section 106KA (2) provides that if the person under review satisfies the Committee that on particular days during the review period exceptional circumstances existed, those days are not taken to have constituted engaging in inappropriate practice. The Legislation 28 The scheme was introduced in 1994. It has been amended on a number of occasions. In these proceedings, as in Daniel, it is the 1999 version of the scheme which is relevant to the issues raised by the application. 29 The relevant provisions of the scheme were set out and described in Daniel at [23] - [40]. Finn J also explained the scheme in Pradhan at [5] - [41]. Nevertheless, it is convenient to repeat the salient provisions. 30 The scheme is described in s 80(1) of the Act which provides that:- "This part creates a scheme under which a person's conduct can be examined to ascertain whether inappropriate practice (see section 82) is involved. It also provides for action that can be taken in response to inappropriate practice." 31 Section 81 contains the following relevant definitions which apply unless a contrary intention appears:- "adjudicative referral means a referral made by the Director to a Committee under section 93." "Director means the Director of Professional Services Review appointed under section 83." "inappropriate practice has the meanings given in section 82." "investigative referral means: (a) a referral made by the Commission to the Director under subsection 86(1); or (b) a referral made by a Committee to the Director under subsection 106H(2)." "referral means an investigative referral or an adjudicative referral, as the context requires." "referral period means the period applicable under subsection 86(2) or (3) as the case may be." "referred services means: (a) in relation to an investigative referral - the services particulars of which are contained in the referral in accordance with paragraph 86(4)(a); or (b) in relation to: (i) an adjudicative referral; or (ii) the consideration by the Determining Authority of a report of a Committee on an adjudicative referral; the services to which the referral relates.". "service means: (a) a service for which, at the time it was rendered or initiated, medicare benefit was payable; or (b) a service rendered by way of a prescribing or dispensing of a pharmaceutical benefit by a medical practitioner or a dental practitioner." 32 The concept of "inappropriate practice" is at the heart of the scheme. It is defined, insofar as is presently relevant, in s 82(1)(a) as follows:- "A practitioner engages in inappropriate practice if the practitioner's conduct in connection with rendering or initiating services is such that a Committee could reasonably conclude that: (a) if the practitioner rendered or initiated the services as a general practitioner - the conduct would be unacceptable to the general body of general practitioners …" 33 The Office of the Director was established by s 83, which provides that the Minister may appoint a medical practitioner to be the Director of Professional Services Review. The Director is to be a person approved by the Australian Medical Association; see s 83(2). 34 Section 86 provides for referrals by the Commission to the Director relating to the question of whether the practitioner had engaged in inappropriate practice. 35 Section 86 provides relevantly as follows:- "(1) The Commission may, in writing, refer to the Director the conduct of a person relating to one or both of the following: (a) whether the person has engaged in inappropriate practice in connection with rendering of services; (b) whether the person has engaged in inappropriate practice in connection with initiation of services. (2) An investigative referral in relation to the rendering of services may only relate to services rendered during the 2 year period immediately preceding the referral, whether or not any or all of the services were initiated before the start of that period. (3) An investigative referral in relation to the initiation of services may only relate to services initiated during the 2 year period immediately preceding the referral. (4) An investigative referral must: (a) contain particulars of all services rendered or initiated during the referral period by: (i) the person under review; …". and (b) set out the reasons why the Commission considers the person under review may have engaged in inappropriate practice." 36 Finn J observed in Pradhan at [9] that s 86 envisages that an investigative referral will be preceded by the Commission's own inquiry into and examination of the conduct of the practitioner. 37 His Honour said at [10] that it was also envisaged by the architects of the scheme that a counselling process would be engaged in by the Commission with the practitioner, in which the practitioner would be told of the Commission's concerns and would be given an opportunity to consider his or her position. 38 As his Honour pointed out at [11], the Commission's examination will, ordinarily, be limited because it has no investigative powers. Nevertheless, such examination as the Commission makes must lead it to consider that the person may have engaged in inappropriate practice; see s 86(4)(b). 39 It will be noted that s 86(4)(b) provides for the Commission to set out the reasons why it came to that view. 40 Section 87 draws a distinction between "specified services" and the referred services stated in s 86. 41 Section 87 is as follows:- "(1) An investigative referral must specify whether it relates to one or both of the following: (a) specified services; (b) services rendered or initiated by a practitioner that are one or more of the following: (i) services of a specified class; (ii) services provided to a specified class of persons; (iii) services provided within a specified location; (iv) services provided within a specified period. (2) The content and form of the referral must comply with any guidelines made under subsection (3). (3) The Minister may, in writing, make guidelines about the content and form of investigative referrals. (4) Guidelines so made are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901." 42 Finn J observed at [18] that whatever the purpose of differentiating between the specified services in s 87(1) and the referred services in s 86, the intention of s 86(4A) (and also of s 89) was not to confine the Director's investigation to the "specified services". 43 Section 88 sets out the procedures for notifying the person under review of the investigative referral. It contains procedural fairness protections requiring the Commission to give the person an opportunity to put submissions as to why the Director should dismiss the referral without setting up a Committee. 44 Section 88 provides as follows:- "(1) The Commission must send a copy of the investigative referral to the person under review within 48 hours of sending the investigative referral to the Director. (2) The copy must be accompanied by a notice inviting the person under review to make written submissions to the Director, within 14 days, stating why the Director should dismiss the referral without setting up a Committee. (3) Within the 14 day period commencing on the day on which the person under review is sent the copy and notice, he or she may make such written submissions to the Director." 45 Section 89 requires the Director to conduct an investigation into the referred services when an investigative referral is made. The investigation may include services not dealt with in the reasons given by the Commission under s 86(4)(b). 46 Section 89B confers power on the Director, for the purposes of conducting the investigation, to require the person to produce relevant documents. 47 Subject to situations in which the Director may decide to take no action, the scheme gives three possible courses of action to the Director. 48 The first is to dismiss the investigative referral as lacking sufficient foundation. This is contained in s 91 which provides:- "The Director may dismiss the investigative referral if he or she is satisfied that there are insufficient grounds on which a Committee could reasonably find that the person under review has engaged in inappropriate practice in connection with rendering or initiating the referred services." 49 The second is to enter into an agreement with the practitioner as provided in s 92(1) as follows:- "(1) If the person under review is a practitioner, the Director and the person may enter into a written agreement in respect of the matters referred under subsection 86(1) under which: (a) the person acknowledges that conduct during the referral period by the person in connection with rendering or initiating specified services constituted engaging in inappropriate practice; and (b) specified action in relation to the person (being action of a kind mentioned in subsection (2)) is to take effect; and (c) the Director is to dismiss the referral." 50 The "specified action" referred to in s 92(1)(b) consists of a variety of sanctions or penalties set out in s 92(2). They include repayment of Medicare benefits received: s 92(2)(b) and disqualification of a person of up to three years from providing specified services: s 92(2)(f) and (g). Paragraph (f) does not provide for a total disqualification from practice as it is limited to the provision of services carrying the benefit of Medicare payments. Paragraph (g) seems to be similarly limited. 51 An agreement under s 92 can not take effect until it is ratified by the Determining Authority; see s 92(3). 52 The third course of action open to the Director is, if he or she decides not to follow one of the other possibilities, to set up a Committee to make an adjudicative referral to it. 53 Section 93 provides relevantly as follows:- "(1) The Director may, by writing, set up a Committee in accordance with Division 4, and make an adjudicative referral to the Committee, to consider whether conduct by the person under review in connection with rendering or initiating services specified in the adjudicative referral in accordance with subsection (7) constituted engaging in inappropriate practice. … (6) If the Director makes an adjudicative referral, the Director must: (a) prepare a written report to the Committee, in respect of the services to which the referral relates, giving the reasons why the Director thinks that conduct by the person under review in connection with rendering or initiating the services may have constituted engaging in inappropriate practice; and (b) attach the report to the adjudicative referral. (7) The services that may be specified in the adjudicative referral in accordance with subsection (1) are any of the services particulars of which were contained in the investigative referral under paragraph 86(4)(a), whether or not the services were dealt with in the reasons given by the Commission under paragraph 86(4)(b)." 54 As Finn J pointed out in Pradhan at [30], unlike an investigative referral, the services to be examined by the Committee are limited to those specified in the adjudicative referral; see s 93(7) and the definition of "referred services" in s 81. Finn J described the intention of this aspect of the scheme as being for the Director to "winnow out" the services referred to him or her, the rendering or initiation of which are considered not to warrant reference to the Committee. 55 Section 93A enables the Director to decide to take no action if he or she is unable to investigate or complete the investigation referred under the investigative referral. 56 Section 94 provides for the Director to give written notice of the decision to the person under review within seven days after making a decision on the investigative referral. 57 If the Director decides to make an adjudicative referral, the notice is required to be accompanied by the instrument making the adjudicative referral and the report referred to in s 93(6)(a) of the Act; see s 94(3). 58 If it appears to the Committee that the person under review may have engaged in inappropriate practice the Committee must hold a hearing; see s 101. 59 Notice of the hearing must be given to a person under review. The notice must give particulars of the matter to which the hearing relates and it must require the person to attend and give evidence; see s 102 and s 104. 60 Section 103 set out the rights of a person under review at a hearing. The rights include the right to attend the hearing and call evidence and the right to be accompanied by a lawyer. The lawyer may not question witnesses but may address on questions of law and make a final address to the Committee. 61 Section 106H provides that a Committee's power to make findings is limited to the matters specified in the adjudicative referral. 62 Section 106K(1) is as follows:- "The Committee may, in investigating the provision of services included in a particular class of the referred services, have regard only to a sample of the services included in the class." 63 Section 106KA is an important provision because it is concerned with patterns of services taken to constitute inappropriate practice and exceptions thereto. I will set it out in full:- (1) Subject to subsections (2) and (2A), if, during a particular period (the relevant period ), the circumstances in which some or all of the referred services were rendered or initiated constituted a prescribed pattern of services, the person under review in connection with rendering or initiating services during that period in those circumstances is taken, for the purposes of this Part, to have constituted engaging in inappropriate practice. (2) If the person under review satisfies the Committee that, on a particular day or particular days during the relevant period, exceptional circumstances existed that affected the rendering or initiating of services by the person, the person's conduct in connection with rendering or initiating services on that day or those days is not taken by subsection (1) to have constituted engaging in inappropriate practice. (2A) However, subsection (2) does not affect the operation of subsection (1) in respect of the remaining day or days during the relevant period on which the person rendered or initiated referred services even if the circumstances in which the referred services were rendered or initiated on that day or those days would not, if considered alone, have constituted a prescribed pattern of services. (3) The regulations may prescribe, in relation to: (a) a particular profession; or (b) an identified group or groups of practitioners in a particular profession; circumstances in which services of a particular kind or description that are rendered or initiated constitute, or do not constitute, a prescribed pattern of services for the purposes of subsection (1). (4) The circumstances that may be prescribed under subsection (3) as circumstances in which services that are rendered or initiated constitute a prescribed pattern of services include, but are not limited to, the rendering or initiation of more than a specified number of services, or more than a specified number of services of a particular kind, on each of more than a specified number of days during a period of a specified duration. (5) The circumstances that constitute exceptional circumstances for the purposes of subsection (2) include, but are not limited to, circumstances that are declared by the regulations to be exceptional circumstances. (6) This section only applies to services rendered or initiated after the commencement of this section. (7) This section does not preclude the Committee from making a finding under this Subdivision (other than section 106KB) in relation to the provision of services during a particular period without considering whether or not the circumstances in which the services were rendered or initiated constituted a prescribed pattern of services." 64 Regulations 10 and 11 are also important because they too are concerned with patterns of services taken to constitute inappropriate practice, and exceptions thereto. I will set them out in full as follows:- "10 The circumstance in which services that are professional attendances constitute a prescribed pattern of services is that 80 or more such services are rendered on each of 20 or more days in a 12 month period. 11 For subsection 106KA (5) of the Act, the following circumstances are declared as constituting exceptional circumstances: (a) an unusual occurrence causing an unusual level of need for professional attendances; (b) an absence of other medical services, for patients of the person under review during the relevant period, having regard to: (i) the location of the practice of the person under review; and (ii) characteristics of the patients of the person under review." 65 If a final report of a Committee contains a finding by all, or by a majority of the Committee, that the person has engaged in inappropriate practice, the Determining Authority is to make a draft determination as to the sanctions to be imposed and give a copy to the person under review; s 106T(1). 66 Procedural fairness protections are found in s 106T(2) and (3) under which the person is given an opportunity to make written submissions within 14 days. I will set out s 106T(2) and (3) in full as follows:- "(2) The copy of the draft determination given to the person under review must be accompanied by a statement inviting the person to make written submissions, within 14 days after the day on which the copy of the draft determination is given to the person, suggesting changes to any directions contained in the draft determination in accordance with section 106U. (3) The person under review may, within the 14 day period referred to in subsection (2), make written submissions to the Authority suggesting changes to the directions contained in the draft determination." 67 Section 106U contains the range of sanctions that may be imposed. They include a reprimand, repayment of Medicare benefits received and disqualification for up to three years from providing services for which a Medicare benefit is payable. At [40] of Pradhan, Finn J emphasised the possible severity of the latter of these sanctions. 68 In Grey at [173] the Full Court described the powers under the scheme as disciplinary but said that the purpose or object of the scheme is to protect both patients and the Commonwealth against abuse of the system. 69 In Daniel at [36] the Full Court noted that an important change to the scheme appearing in the 1999 amendment was to redefine the process of referral in terms of progressive action comprising several discrete stages, including an expanded role of the Director by increasing his or her investigative, case preparation and negotiation powers. 70 The Full Court in Daniel referred at [38] to the Explanatory Memorandum to the Health Insurance Amendment (Professional Services Review) Bill 1999, introduced on 2 June 1999, which states that the effect of the powers conferred on the Director by the insertion of s 89(1) may mean that a subsequent referral to a Committee becomes unnecessary. The Factual Background 71 On 7 September 2000, Dr Lynda Bates of the Professional Review Branch of the Commission wrote to Dr Oreb confirming an appointment for her to discuss with Dr Oreb his provision of medical services. 72 The particular services which Dr Bates wished to discuss included high total volumes and high daily volumes. 73 The letter attached two brochures explaining the principal features of the scheme. The first brochure was from the Professional Services Review Branch of the Commission. This branch is separate from the Office of the Director of Professional Services Review established by s 83 of the Act. 74 The brochure from the Commission included a description of inappropriate practice as defined by the Act and referred in particular to conduct in connection with the rendering of services which would be unacceptable to the general body of members of the profession. Importantly, the brochure also drew attention to the 80/20 rule, which was set out. 75 The second brochure was on the letterhead of the "Professional Services Review". This document was a brochure which was produced by the office of the Director. That is to inferred from the fact that the contact address which is given is the address in the ACT which appears on the correspondence from the Director to which I will refer later. Also, the brochure refers to the Director's annual report to the Minister about the scheme. 76 The Director's brochure describes the concept of inappropriate practice, the participants in the scheme, and the stages of the process comprised in the scheme. After referring to the Director's power to dismiss a referral, the following statement is set out: "Negotiating an agreement: The practitioner may approach the Director to negotiate a conclusion of the matter. The Determining Authority must approve any agreement for it to become effective." 77 On 12 September 2000, Dr Bates attended Dr Oreb's practice at Newtown and counselled him about the high number of his daily services. She told him of the possibility of the special circumstances exception contained in s 106KA(2) of the Act, but she said that if the Commission's concerns continued after counselling, the Commission may have to refer Dr Oreb for peer review under the scheme. 78 Dr Bates also informed Dr Oreb at the meeting of the terms of the 80/20 rule which had become effective from January 2000. 79 Dr Bates produced a written report of her interview. It referred to the matters which I have described in the preceding paragraph. 80 The written report concluded as follows:- "To summarise, whilst Dr Oreb suggested a number of reasons for the high total services and daily volumes the Commission still has serious concerns. It was explained that the Chairperson of the NSW Case Management Committee would write to inform him of its decision with regards further action." 81 Dr Bates sent a copy of the report to Dr Oreb under cover of a letter dated 19 September 2000. The letter thanked Dr Oreb for his cooperation and help at the meeting. 82 On 2 November 2000, Mr Tony Green, the Manager of the Professional Review Branch, NSW, of the Commission wrote to Dr Oreb. The letter stated that the case management committee determined on 26 October 2000 that concerns with inappropriate practice by Dr Oreb remained in the areas of high total services and high daily volumes. 83 The letter also stated:- "Of particular concern was that you have provided more than 80 professional attendances on each of twenty or more days since January 2000 and this is in breach of amendments to the Health Insurance Act. The amendments are described at Paragraph 8.1.8 of the Medicare Benefits Schedule. The Case Management Committee determined that the issues raised by Dr Bates were of a significant concern. This matter will now be forwarded to the Manager, Professional Services Branch for consideration of referral to the Director of Professional Services Review." 84 On 6 December 2000, Dr Oreb attended a counselling session with the Director. A written record of the session was prepared by the Director on 20 December 2000. 85 The counselling session was a consequence of, and related to, an earlier referral of Dr Oreb's conduct for the period from 1 July 1995 to 30 June 1996 which were considered by Professional Services Review Committee No 66 ("Committee No 66"). The Director stated that the professional concerns of Committee No 66 in its report of December 1998 were discussed and Dr Oreb explained how he intended to address those concerns. 86 The Director recorded Dr Oreb's statement that he had made significant changes since his earlier referral to address concerns identified by Committee No 66. These concerns included very high volumes of services. 87 The Director also recorded that he had explained to Dr Oreb the recent amendments regarding patterns of services provided for in s 106KA and the 80/20 rule. 88 The Director stated in his written record that:- "Dr Oreb gave the impression that he intended to adapt his professional behaviour in light of the concerns identified by the Committee." 89 On 9 February 2001, Dr Bates forwarded to Dr Oreb a summary of statistics of his consultations for the period from January 2000 to December 2000. The statistics appear to show some reduction in the number of daily services but they do not show whether Dr Oreb was within or outside the 80/20 rule. 90 On 2 July 2001, the Acting Manager of the Professional Services Branch wrote to Dr Oreb informing him that a review of his practice profile indicated that his servicing pattern appeared to have reached the "prescribed level" under s 106KA, that is the 80/20 rule, which may result in automatic referral to the Director. 91 On 23 July 2001, the Commission made an investigative referral to the Director. Investigative Referral 260 covered the same period and the same services subsequently referred to the Director under the investigative referral, which are the subject of these proceedings (ie Investigative Referral 298). However, Investigative Referral 260 was in a form which Finn J found in Pradhan to be invalid under the Act. 92 On 26 July 2001, the Director wrote to Dr Oreb. The letter stated:- "On 23 July 2001 I received a referral from the Health Insurance Commission (HIC) regarding your conduct in relation to the Medicare program. I understand that the HIC has delivered to you a copy of the referral documentation and the relevant sections of the Health Insurance Act 1973 (the Act). In accordance with section 89(1) of the Act I must carry out an investigation of this referral. Following the investigation, I have the option to: · dismiss the referral for the reasons set out in section 91 of the Act, · enter into an agreement with you as set out in section 92 of the Act, or · refer the matter to a Professional Services Review Committee as set out in section 93 of the Act. Section 88(3) of the Act provides that you may make written submissions to the Director, within 14 days of the day when you were sent the referral, as to reasons why the Director should dismiss the referral without setting up a Professional Services Review Committee. I would be pleased to receive a submission from you and would give it careful consideration along with other relevant documents or materials I may decide to obtain." 93 Dr Oreb responded by a letter received in the Director's office on 7 August 2001. The letter stated that Dr Oreb operated as a sole practitioner in Newtown, that he bulk billed all his patients and that, until recently, he ran his practice without appointments. 94 The letter also stated:- "My patients are comprised mainly of ethnic Australians from all areas of Sydney and in particular many refugees from Bosnia and the former Yugoslavia. These refugees are being referred to my practice by relevant agencies and Government Departments due to Croatian being my second language but I am also able to understand Macedonian and Serbian languages. The refugees I see do not speak English and often present with multiple medical problems particularly depression and P.T.S.D. (Post Traumatic Stress Disorder), financial, social and housing problems, hence the high demand on my services and that also of associated consultants in particular Psychiatrists. Following my meeting with Dr Holmes I have painstakingly restructured my Practice to run by appointments ONLY and I see only extremely sick patients or children without an appointment. The restructuring of my practice has given me greater control over:- (i) The number of patients I see on any given day (ii) The time that I am able to leave the surgery at the end of the day." 95 The letter included the following statement:- "I must emphasise that the advice given to me by Dr Holmes was accepted and I invite the HIC to review my statistics following our meeting this year. I do however disagree with the validity of some of the statistics …." 96 On 27 August 2001, the Director wrote to Dr Oreb enclosing a notice to produce documents under s 89B of the Act. 97 On 24 September 2001, Dr Oreb's solicitors wrote to the Director objecting to the production of medical records. 98 The Director replied by letter dated 25 September 2001, indicating that he had decided not to press for the production of documents. 99 By a document dated 7 November 2001, Dr Oreb made a submission to the Director, purportedly pursuant to s 88(3) of the Act. The submission relied on exceptional circumstances relating to the location of Dr Oreb's practice and the characteristics of his patients. 100 The submission concluded by stating that Dr Oreb intended to adduce evidence before a Committee of the existence of exceptional circumstances during the referral period. 101 On 7 December 2001, the Director wrote to Dr Oreb stating that in light of the recent decision of Finn J in Pradhan, Investigative Referral 260 may have been invalid. The letter stated that, accordingly, the Director had decided, pursuant to s 93A of the Act, to take no further action in respect of Investigative Referral 260. 102 However, on 12 December 2001, the acting medical director of the Professional Review Division of the Commission wrote to Dr Oreb informing him of a decision to again refer his conduct to the Director. 103 The letter referred to the recent notification from the Director of his decision to take no further action on Investigative Referral 260. 104 The letter concluded as follows:- "This decision not to proceed was made because of concerns with the format of the referral not because of reconsideration of your conduct. The HIC's concerns regarding your conduct remain." 105 On 13 December 2001, the Commission made Investigative Referral 298. I described the referred conduct at [12] above. 106 The reason the Commission considered that Dr Oreb may have engaged in inappropriate practice by a prescribed pattern of services was stated as follows:- "Specifically, the HIC's records for professional attendances rendered by Dr Oreb during the referral period show that Dr Oreb: · Rendered 80 or more professional attendances per day on 33 occasions on and from 24 January 2000 to and including 8 August 2000." 107 On 18 December 2001, the Director wrote to Dr Oreb. Save for the statement in the opening paragraph stating that "On 14 December 2001 I received Investigative Referral No 298", the letter is identical to the letter set out in [92] above, which was concerned with Investigative Referral 260. 108 Dr Oreb did not reply to the letter of 18 December 2001. 109 On 5 March 2002, the Director decided to set up Committee 298 and made the adjudicative referral. 110 The adjudicative referral included the following statements:- "Pursuant to subsection 89(1), I conducted an investigation into the referred services. I did not dismiss the referral under section 91 of the Act as I was not satisfied that there were insufficient grounds on which a Committee established under section 93 of the Act could reasonably find that Dr Oreb had engaged in inappropriate practice in connection with rendering the referred services. Pursuant to subsection 93(1) and in accordance with Division 4, on 5 March 2002 I set up a Committee ('PSRC No. 298') to consider whether the conduct of Dr Oreb in connection with rendering the services specified in paragraph 5 below constituted engaging in inappropriate practice. Pursuant to subsection 93(1), I hereby make this adjudicative referral to PSRC No 298 to consider whether the conduct of Dr Oreb in connection with rendering the following services ('the specified services') constituted engaging in inappropriate practice because the circumstances in which some or all of the specified services were rendered constituted a prescribed pattern of services as defined in section 106KA of the Act and Part 3 of the Regulations: · All professional attendances (as defined in Regulation 7) rendered by Dr Oreb within the referral period within specified locations, namely 369 King Street Newtown NSW 2042" 111 By letter dated 5 March 2002, the Director notified Dr Oreb of the adjudicative referral and provided him with a copy of it. 112 On 22 May 2002, Committee 298 held a hearing at which Dr Oreb gave evidence. 113 Dr Oreb described to Committee 298 his language skills and background and some aspects of his patients' backgrounds. His evidence may be summarised as follows:- · He speaks the Croatian language, which encompasses Serbo-Croatian; he also understands 'a little bit of Macedonian'; · He was born in Dalmatia, an area which, although Croatian, is viewed as neutral by Bosnians and Serbs; · 20% of his patients are refugees or victims of torture or trauma; and · the majority of his patients come from non-English speaking backgrounds, but not as many as 95-99%. 114 Dr Oreb gave evidence of particular features of his practice during the referral period. This evidence may be summarised as follows:- · He did not open his practice on Wednesdays or weekends during the referral period. He said that if patients contacted him on Wednesdays he often referred them to the hospital system; · He did not have an appointments system during the referral period, but had recently introduced one; · There is a lack of other Serbo-Croatian speaking doctors in his area; his patients come 'from Liverpool, from Mona Vale, from all over Sydney', he does not know of any Serbo-Croatian doctors in those patients areas, and has not had the need to inquire. 115 Committee 298 invited the Applicant to identify exceptional circumstances with regard to any of the days in the referral period. He indicated that he could not think of anything other than the matters he had already raised regarding himself and his patients, which he said related to all of the days. 116 After the hearing, on 4 July 2002, Dr Oreb's solicitors sent further written submissions to Committee 298. The submissions dealt largely with the question of exceptional circumstances. 117 Committee 298 provided a draft report to Dr Oreb in accordance with s 106KD of the Act. Dr Oreb responded with written submissions dated 30 September 2002. Dr Oreb noted in his submission that in his evidence before Committee 298 he did not dispute that he had rendered 80 or more attendances per day on 20 or more days during the referral period. The submission contended that Committee 298 was misdirecting itself as to the meaning of the term "exceptional circumstances". 118 Committee 298 made its final report on 8 November 2002. It forwarded a copy to Dr Oreb under cover of a letter dated 11 November 2002. 119 In [30] to [46] of the final report, Committee 298 considered the proper interpretation of "exceptional circumstances" in s 106KA and Regulation 11. 120 Committee 298 was of the view that the "scope of the exceptional circumstances defence" was unclear on the face of the legislation. It looked at extrinsic material for guidance. The extrinsic material included the Report of the Review Committee of the Professional Services Review Scheme, to which reference was made in the Second Reading Speech and the Explanatory Memorandum to the Health Insurance Amendment (Professional Services Review) Bill 1999, introduced on 2 June 1999. 121 Committee 298 noted that s 106KA(2) of the Act refers to exceptional circumstances existing on "a particular day or particular days" which might be thought to describe intermittent or episodic events, whereas Regulation 11(b) appears to include what might be understood as on-going circumstances. 122 Reference was then made to examples of exceptional circumstances given in the Report of the Review Committee. 123 Committee 298 continued as follows:- "41. The Review Committee gave examples of exceptional circumstances as being such things as an exceptional event or a very extreme geographic circumstance. It said regard should be had to the availability of alternative medical services or unusual occurrences causing unusual levels of need for medical services. The Review Committee also said: 'The Review Committee believes high levels of skill, competence and organisational arrangements are worthwhile and important. However, while they may have a great effect in a practitioner's ability to provide 50 rather than 20 consultation services regularly in a day, they have little effect at the 80 consultation services a day mark. It is, therefore, expected that argument that a practitioner's ability or organisation provides an exceptional circumstance is unlikely to be sustained.' 42. This Committee considers that these examples and comments confirm that 'exceptional circumstances' were seen as being generally intermittent or episodic situations beyond the practitioner's control but necessitating the provision of medical services as well as practicable. 43. In relation to exceptional circumstances, the Explanatory Memorandum for the Health Insurance Amendment (Professional Services Review) Bill 1999, introduced on 2 June 1999, states: '… The deeming provision in s 106KA(1) will not apply in respect of a particular day or days where a person under review satisfies a committee that services on that day or days were rendered or initiated under exceptional circumstances. This approach recognises that while the exceptional circumstances may relate only to specified services on a particular day they nevertheless impact on the whole day. This gives the person under review the benefit of any doubt, and also avoids the need to examine individual services on the day in question.' 44. The Explanatory Memorandum also gave, as examples of exceptional circumstances, the absence of alternative medical services to the practitioner's patients or unusual circumstances causing unusual levels of need for consultation services' and said this gave effect to Recommendation 5 of the Review Committee. 45. This Committee considers that this confirms that 'exceptional circumstances' were seen as most likely to be of an intermittent or episodic nature, rather than a predictable on-going situation. The Committee does not see that some extreme on-going circumstance is totally ruled out (if 'particular days' can be 'many days') - although the general body of general practitioners would ordinarily expect a practitioner to manage their practice to promptly bring patient attendance rates down to acceptable levels such that proper clinical care can be provided to all patients. (emphasis added) 46. In summary, it appears to the Committee that ss 106KA(1) and the Regulations implement a view of the legislature that it is most unlikely that 80 or more professional attendances can be rendered satisfactorily within one day. The '20 or more days' proviso acknowledges that the exigencies of normal practice may occasionally require a doctor to provide more attendances in a day than would other wise be considered satisfactory. But by ss 106KA(2), exceptional circumstances will be required to justify 20 or more such days. Thus, the exception may be read as excusing lower standard services on particular days because of exceptional circumstances - and it will be difficult to justify this on an on-going basis." (emphasis added) 124 Dr Oreb submitted to Committee 298 that there were exceptional circumstances which applied to his practice during the referral period. What was said at [51] of the final report may be summarised as follows:- · Patient demand · Patient profile, ie many were refugees from former Yugoslavia · His own ethnicity and linguistic skills which enabled him to communicate with the patients. · His inability to attract and retain sufficient medical services to the practice · His work patterns. 125 The effect of the findings made by Committee 298 on this question was that these circumstances were not "exceptional" because they were foreseeable and should have been managed so as to bring attendance records down to acceptable levels; see eg at [59]. 126 The findings made by Committee 298 in respect of Dr Oreb's attendance on the 33 days of the referral period were stated at [75] as follows:- "The Committee reached the findings that: · Dr Oreb engaged in inappropriate practice by rendering 80 or more professional attendances on each of the 33 days, as this constituted a prescribed pattern of services under ss.106KA(1) of the Act; and · the Committee does not consider that exceptional circumstances existed that affected the rendering of services by Dr Oreb on any of the 33 days in question." The Director's Evidence 127 The Director swore an affidavit on 11 May 2004 which was read in the proceedings. He was not cross-examined. 128 The affidavit dealt with a number of formal matters. It concluded in [7] as follows:- "I refer to the affidavit of Zelco Francis Oreb sworn on 7 April 2004 in these proceedings. Dr Oreb states at paragraph 34 that at no time did I invite him to discuss entering into an agreement pursuant to section 92 of the Act. I referred to section 92 in annexures AJH-1 and AJH-3. I did not then and do not now believe that the Act obliges me to invite Dr Oreb to enter into an agreement, nor that I was required to initiate negotiations with Dr Oreb regarding the exercise of my discretion under section 92." 129 Annexure AJH-1 to the affidavit was the letter of 26 July 2001 which I referred to at [92] above. 130 Annexure AJH-3 was the substantially identical letter dated 18 December 2001 which I referred to at [107] above. The Decision in Daniel 131 Dr Oreb's contention that the investigative referral and/or the adjudicative referral ought to be set aside depended in large measure on the decision of the Full Court in Daniel. 132 The Full Court set out in some detail the reasoning of Ryan J at first instance. Ryan J analysed the powers and duties of the Commission in considering and making an investigative referral. His Honour also analysed the powers and duties arising upon an investigation by the Director of Professional Services Review and the decision to make an adjudicative referral. 133 Ryan J at [26] and [34] found that the investigative referral had to be set aside by reason of the failure by the Commission to take into account a relevant consideration. The consideration which the Commission had failed to consider was that different officers of the Commission had counselled Dr Daniel about his breach of the 80/20 rule. 134 The Full Court at [81] upheld his Honour's finding. I will set out the passage in full later but it is important to note that the Full Court's consideration of this issue makes it plain, in my view, that the decision in Daniel turned upon the fact that different arms of the Commission took different views of Dr Daniel's conduct. The initial view, expressed to Dr Daniel in counselling sessions, was that no action would be taken to refer his case to the Director, and this view was not taken into account by the Acting Director, Dr Kelly ("Dr Kelly"). 135 Having made that finding, Ryan J said that in case he was wrong about the investigative referral he would consider the validity of the adjudicative referral. 136 Two questions were raised in relation to the adjudicative referral. The first was whether Dr Kelly had made an error of law going to jurisdiction, or had denied Dr Daniel procedural fairness, in relation to Dr Kelly's discretion to enter into a s 92 agreement. 137 This question turned upon Dr Kelly's evidence on the s 92 issue which Ryan J set out at [27] as follows:- "Before making [the] Adjudicative Referral … … I considered whether this might be an appropriate case to enter into an agreement with Dr Daniel under s 92. I did not consider this was an appropriate case to enter into an agreement under s 92. At no stage did I receive any indication Dr Daniel wished to enter into an agreement under s 92. No submissions were made by Dr Daniel in that respect. It is a precondition of a s 92 agreement that the person under review acknowledge his or her conduct constitutes inappropriate practice. I received no indication that Dr Daniel was prepared to make such an admission." 138 Ryan J said at [28] that this evidence made it clear that Dr Kelly regarded it as a prerequisite for the exercise of his discretion that the person under investigation be prepared to concede guilt of inappropriate practice or otherwise invite him to resort to s 92. 139 His Honour said, on that approach, the discretion under s 92 was only enlivened by a general admission of guilt which could not be evidenced by a submission that the referral be dismissed, because that impliedly denied wrongdoing. 140 Ryan J found no support for such a construction of s 92. His Honour said at [28]:- "A s 92 agreement, logically, has to be considered before the Director makes a referral to a Committee. The willingness of a practitioner to enter a s 92 agreement might legitimately inform that decision. Nothing in Dr Daniel's submission to the Acting Director indicates a refusal to acknowledge inappropriate practice of a kind that it would have made it pointless to consider a s 92 agreement. In its context, that document suggested that the author had seen the error of his ways and had accepted the need for counselling and further professional education in relation to the future conduct of his practice." 141 His Honour went on to find at [29] that Dr Kelly's approach to the construction of s 92 resulted in a denial of procedural fairness. This was because it should have been put to Dr Daniel that his failure to show contrition and his failure to invite recourse to s 92 would exclude him from an agreement under that section. 142 I will set out the whole of what Ryan J said at [29] as follows:- "Had the Acting Director thought that a refusal by Dr Daniel to make an admission would preclude entry into a s 92 agreement, that matter should, as a mater of procedural fairness, have been put to him to allow him to comment upon it. Similarly, if the Acting Director had proposed to treat as crucially prejudicial the fact that the applicant had not himself proposed a s 92 agreement, he should have afforded the applicant an opportunity to explain his silence on the point: Kioa v West (1985) 159 CLR 550. It does not appear to have been put to the applicant that a failure to show contrition, or specifically to invite recourse to s 92, would exclude him from an agreement under that section. Accordingly, I have concluded that the applicant was denied procedural fairness in relation to the exercise of the Director´s discretion under s 92. I observe, in passing, that a s 92 agreement is in no sense tantamount to a merely formal reprimand; it is a serious disciplinary option which may involve repayment of medical benefits and the total or partial disqualification of the practitioner for up to three years from the provision of services. It is, therefore, a mechanism which the Director should consider in appropriate cases, even if recourse to s 92 is not first raised by the practitioner." 143 The Full Court saw no error in his Honour's reasoning on the s 92 question. 144 The second question in relation to the adjudicative referral was whether, upon the proper construction of the definition of "referral period" in s 81 and the provisions of s 86(4)(a), Dr Kelly was bound to investigate all of Dr Daniel's services during the two year period before the referral. 145 Ryan J found at [32] that these provisions required the Director to investigate, as was considered appropriate, the referred services being all of the services rendered or initiated during the two year referral period. However, his Honour was of the view that that a failure to do so did not of itself invalidate the adjudicative referral; see at [17], [23] and [32]. 146 The Full Court did not endorse his Honour's views of the obligation to investigate the referred services for the entire two year period; see at [101], [102] and [107]. 147 I turn then to the decision of the Full Court. The reasons given by their Honours for upholding Ryan J's finding as to the validity of the investigative referral were stated at [81] as follows:- "We consider that the primary judge correctly held that the Commission is not entitled to make an investigative referral decision by reference to s 106KA(1) alone. That subsection is directed to the Committee, and not to the Commission. To the extent that the Commission may have regard to patterns of services in determining whether to make an investigative referral, that is but one of a number of matters that it may take into account. In our opinion the fact that Dr Daniel's conduct had already been the subject of counselling and review by the Commission, and that no action had been taken to refer his case to the Director as a consequence, was plainly relevant to the exercise of the Commission's discretion under s 86 to make an investigative referral. The Commission obviously did not take that matter into account. It instead proceeded upon the erroneous assumption that merely because there appeared to have been a breach of the 80/20 rule, it was required to make an investigative referral." 148 Their Honours observed at [82] that s 86 confers a broad discretion on the Commission to refer to the Director the question of whether a practitioner has engaged in inappropriate practice. They said that the Commission is obliged to take into account any explanation offered by the practitioner and that its task is not merely to calculate whether the number of services exceeds the 80/20 rule. They also said at [82]:- "The Commission is certainly entitled, in our view, to exercise its discretion having regard to the fact that the practitioner has been counselled, and his conduct subsequently reviewed, without any apparent repetition of the breach, or likelihood of that breach recurring." 149 The Full Court's endorsement of Ryan J's finding about the investigative referral made it unnecessary to consider the other two issues, namely the s 92 question and the "referral period" question. However, their Honours set out their views briefly. 150 As to the Director's powers of investigation and referral, the Full Court said at [94]:- " In our view, the Director's powers, once a breach of the 80/20 rule has been demonstrated to his satisfaction, are at least as extensive as those of the Commission. He is not obliged to refer the case to a Committee, although he may decide, ultimately, to do so. He must have regard to any submissions made to him under s 88(2) inviting him to dismiss the referral without setting up a Committee. He must take into account any relevant considerations that bear upon whether or not a Committee should be constituted. These would obviously include the fact that the Commission had counselled and reviewed the practitioner's conduct, and that there had been no repetition of the breach of the 80/20 rule." 151 I have commented, above at [146], upon the Full Court's rejection of the primary judge's reasons in relation to the two year period. 152 The Full Court dealt with the s 92 question at [105] - [106] as follows:- "It is clear, as the primary judge concluded, that the Acting Director regarded it as a prerequisite for the exercise of his discretion for the person under investigation to be prepared to concede guilt of inappropriate practice or otherwise invite the Director to resort to s 92. Mrs Hampel [counsel for the Acting Director], submitted that, in the event that her primary submission regarding his limited role was rejected, the Acting Director acted correctly in approaching the section in that way. We reject that submission. There is nothing in the language of the section to support that construction. Moreover, we agree with his Honour that if the Acting Director understood the section to operate in that way, he was under an obligation to afford Dr Daniel the opportunity to enter into such agreement. It follows that whether one characterises the Acting Director's approach to s 92 as involving a fundamental error of law going to jurisdiction, or whether it be characterised as a denial of procedural fairness, jurisdictional error has been demonstrated. The adjudicative referral could therefore have been set aside on this ground as well." Subsequent authorities dealing with Daniel 153 In Freeman v Health Insurance Commission [2004] FCA 453 ("Freeman"), North J said at [54] - [55]:- "The issue fatal to validity in Daniel was the failure of the Commission to take into account a relevant consideration, namely the fact that, apparently unknown to officers of the Commission responsible for making the referral, Dr Daniel's conduct had already been considered and the issues resolved between other officers of the Commission and Dr Daniel. In order to rely on Daniel in this case, the applicant must point to some error of law in the decision to make the investigative referral. It is not enough that the Commission had regard only to the conduct falling within the 80/20 rule, unless, in so doing, the Commission failed to have regard to some other relevant matter, or made some other identified error of law. The applicant has not referred to any such relevant matter or error of law. Consequently, the decision in Daniel is of no assistance to the applicant in this case." 154 In Crowley v Holmes [2004] FCA 521 ("Crowley v Holmes"), Sundberg J dealt with an urgent application for interlocutory injunctive relief. The applicant sought to restrain a Professional Services Review Committee from proceeding with a hearing. One of the allegations made before Sundberg J was that the Commission had failed to take into account relevant considerations in making its investigative referral. 155 Sundberg J took the same view as North J of the effect of the decision in Daniel. His Honour commented at [11] as follows:- "As was said in Freeman, it is not enough to show error of law that the Commission had regard only to the conduct falling within the 80/20 rule. This complaint does not raise a serious question." 156 There was a second ground of relief put before Sundberg J, namely that in making his investigative referral the Director had failed to consider whether it would be appropriate to enter into a s 92 agreement. 157 Sundberg J dismissed the second ground as follows at [13]:- "There is no evidence that the Director failed to consider the possibility of a s 92 agreement. His letter to the applicant of 4 June 2001 lists the options available to him, including entering into such an agreement. Accordingly the possibility of an agreement was plainly in his mind. Section 92 makes clear that an agreement can only be entered into if the practitioner acknowledges that his or her conduct constitutes inappropriate practice, and agrees that "specified action" falling within sub‑s (2) is to take effect. The applicant made no such acknowledgment or agreement in his written submission. Nor did he ask that a s 92 agreement be made. His very generally expressed hope, in his submission of 24 December 2001,'that some resolution to the HIC concerns can be made', does not amount to a request that the Director pursue the agreement option. In the circumstances, the Director was under no obligation further to consider whether a s 92 agreement would be appropriate. I do not consider that this ground gives rise to a serious question." The Investigative Referral 158 It is clear enough from the reasons stated by the Commission in its investigative referral that it had regard to the provisions of ss 82, 106KA and 86 of the Act. The Commission stated that under the scheme a practitioner's conduct can be examined to ascertain whether there has been inappropriate practice as defined under s 82. The Commission then referred to the deeming provisions of s 106KA and went on to say, that in accordance with s 86(4)(b) of the Act it considered that Dr Oreb may have engaged in inappropriate practice because of a prescribed pattern of services. 159 The effect of what the Full Court said in Daniel is that the Commission can refer to the Director the question of whether a person has engaged in inappropriate practice by reason of a prescribed pattern of services under s 106KA, that is to say, by reference to the 80/20 rule. What the Commission cannot do is to make a referral by reference to s 106KA alone where other relevant circumstances exist which should have been taken into account. 160 In my view, North J in Freeman correctly stated the effect of Daniel when he pointed out that to establish error, it is not enough to show that the Commission had regard only to conduct falling within the 80/20 rule. It is necessary to point to an error of law or failure to take into account a relevant consideration. Dr Oreb's principal ground of attack on the investigative referral was his submission that the Commission had failed to take into account the fact that he had been counselled by Dr Bates in September 2000 and by the Director in December 2000. 161 Counsel for Dr Oreb submitted that this amounted to a jurisdictional error analogous to the error found by Ryan J and affirmed on appeal by the Full Court in Daniel. 162 The counselling which took place in the present case preceded the decision to make Investigative Referral 260 on which no action was taken. Some aspects of the counselling session with the Director in December 2000 dealt with Referral 66, concerning services rendered or initiated by Dr Oreb in 1995 - 1996. 163 However, in my view, nothing turns upon whether the counselling was related to Investigative Referral 260 or the investigative referral which is the subject of these proceedings. Furthermore, I cannot accept the submission that these counselling sessions constitute a relevant consideration which the Commission failed to take into account. 164 This is because, by contrast with the position in Daniel, the persons who counselled Dr Oreb in September and December 2000 did not resolve with him that no action would be taken on his existing practice profile. Instead, Dr Bates' report made it plain that the Commission still had serious concerns about Dr Oreb's high service volumes and the Director's report said nothing to the contrary. 165 It is true that Dr Oreb was cooperative and helpful in his meeting with Dr Bates and that the Director had the impression that Dr Oreb intended to reduce the volume of services. But that is in no way analogous to the position in Daniel where the practitioner was told by different officers of the Commission that he would not be referred on his existing profile. 166 Finn J in Pradhan at [10] observed that the scheme envisaged a counselling process and the Full Court in Daniel at [82] recognised that the Commission was entitled to take into account the fact of counselling. However, there is nothing to suggest that the Commission failed to take into account that Dr Oreb had been counselled or what was said in the counselling sessions. Failure to refer to this in the investigative referral merely leads to an inference that the Commission did not consider it to be material ; see Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 ("Yusuf") at [69] (McHugh, Gummow and Hayne JJ). 167 In any event, in my opinion, it is insufficient to point merely to the existence of counselling and to assert a failure to have regard to it. What is necessary is that there be some aspect of the counselling session, as in Daniel, which suggests to the practitioner that the Commission has made a decision that it is not appropriate to refer the practitioner to the next stage of the peer review process. That consideration was not present here. 168 None of the other grounds of attack on the investigative referral have been made out. They consisted of four contentions. The first was that the Commission erroneously construed the Act as requiring automatic referral once there was a prescribed pattern of service under s 106KA. The second was that the Commission applied an inflexible policy of referral once a breach of the 80/20 rule was identified. The third was that the Commission failed to give proper, genuine and realistic consideration to the merits. The fourth was that the Commission failed to consider whether Dr Oreb had engaged in inappropriate practice as defined in s 82. 169 As to the first of these grounds, the decision of the Full Court in Daniel establishes in my view that the Commission is entitled to refer by reference to s 106KA alone unless there are other relevant considerations which the Commission has failed to take into account. Here there were none. 170 As to the second ground, Dr Oreb has not satisfied me that the Commission slavishly followed a policy of referring practitioners who breached the 80/20 rule: see Braganza v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 170 at [36]; see also Elias v Commissioner of Taxation (2002) 123 FCR 499 (Hely J); and see MLC Investments Ltd v Commissioner of Taxation (2004) 205 ALR 207 at [25] - [26] (Lindgren J). 171 Nor has it been established that the Commission failed to give "proper, genuine and realistic consideration" to the merits of the case; see Khan v Minister for Immigration and Ethnic Affairs (1987) 14 ALD 291 at 292 ("Khan") (Gummow J). 172 The test stated by Gummow J in Khan probably means no more than that the decision-maker's discretion is not to be confined by an inflexible application of policy. If his Honour intended to go beyond that, the test would be open to the criticism stated by a Full Court in Minister for Immigration and Multicultural Affairs v Anthonypillai (2001) 106 FCR 426 at [59] - [66]; see also Bruce v Cole (1998) 45 NSWLR 163 at 186 (Spigelman J). Thus, the third ground must be dismissed. 173 As to the fourth ground, s 106KA(1) deems a practitioner who has rendered a prescribed pattern of services to have engaged in inappropriate practice as defined by s 82. This ground therefore fails because the Commission was entitled to refer Dr Oreb by reason of an apparent contravention of s 106KA, there being no other relevant consideration. The Adjudicative Referral 174 There are nine grounds of alleged jurisdictional error by the Director. Only one requires lengthy consideration. This is that the Director erroneously construed the Act as not requiring him to afford Dr Oreb an opportunity to enter into an agreement under s 92 of the Act. 175 This ground also embraces the ground of denial of procedural fairness arising from a misconstruction of the section as found by Ryan J in Daniel and affirmed on appeal by the Full Court. The ground as stated in the Further Amended Application is that the Director denied Dr Oreb procedural fairness by making the adjudicative referral without affording Dr Oreb an opportunity to enter into an agreement under s 92. 176 This ground, which I will call "the s 92 ground" turns upon whether I make the same findings of fact and law as were made by Ryan J in Daniel and as were affirmed on appeal by the Full Court. 177 Ryan J found that the Director was under an obligation, in an appropriate case, to consider the mechanism provided by s 92 even if the practitioner does not invite recourse to the section. His Honour was apparently of the view that Daniel was an appropriate case for the Acting Director to consider resort to s 92. He found that upon the proper construction of the section it was not for the practitioner to approach the Acting Director and that if that was the Acting Director's view it was incumbent upon him to put it to the practitioner and give him an opportunity to explain his silence. 178 The Full Court upheld this approach. It rejected the submission that, as a prerequisite for the exercise of the Director's discretion, the person under review must concede guilt of inappropriate practice or otherwise invite the Director to resort to s 92. 179 The Full Court also agreed with Ryan J that if the Acting Director understood the section as operating in that way he was under an obligation to afford Dr Daniel an opportunity to enter into such an agreement. 180 Naturally, I would pay the greatest respect to Ryan J's views and to the views of a Full Court. The Full Court's views were, strictly speaking, obiter and I am not bound by them. 181 It seems to me that, as Sundberg J said in Crowley v Holmes, s 92 makes it clear that an agreement can only be entered into if the practitioner acknowledges guilt of inappropriate practice and agrees to specified action. So much is plain from the express words of s 92(1)(a) and s 92(1)(b). 182 Ryan J accepted that the Act does not stipulate who should initiate consideration of a s 92 agreement. But if, as his Honour said at [28], the willingness of a practitioner to enter into a s 92 agreement might legitimately inform the decision, it is difficult to see how the section does not depend upon an approach first being made by the practitioner. 183 Moreover, in the present case, the Director's letter of 18 December 2001 to Dr Oreb specifically informed him of the Director's options under the Act. They were, to dismiss the referral under s 91, to enter into an agreement under s 92 or to refer the matter to a committee. 184 The Director's letter of 18 December 2001 specifically invited Dr Oreb to make written submissions as to why the referral should be dismissed without setting up a committee. Section 92(1)(c) states that under a s 92 agreement the Director is to dismiss the referral. 185 It is difficult to see how, the option of a s 92 agreement having been put to Dr Oreb as an option on which submissions were invited, there can be any denial of procedural fairness. 186 Indeed, in the Director's brochure sent to Dr Oreb under cover of the letter from the Commission of 7 September 2000, Dr Oreb's attention was drawn to the relevant provisions of the Act. The brochure also informed Dr Oreb that a practitioner may approach the Director to negotiate an agreement which would conclude the matter. 187 This, in my opinion, is further evidence which negates any suggestion of a denial of procedural fairness. It is true that the brochure was sent as a part of the communications which culminated in Investigative Referral 260. But the letter of 7 September 2000 and the brochure were tendered by Dr Oreb as part of his case, and it would be to ignore his own evidence to suggest that the Director's view was not put to him. 188 Accordingly, I do not see how it can be said that the provisions of s 92 and the Director's view that it was for the practitioner to approach the Director were not put to Dr Oreb. With respect to the decisions of Ryan J and the Full Court in Daniel, I am unable to find any denial of procedural fairness, on the s 92 question. 189 In my respectful opinion, Sundberg J was correct in finding that in the absence of an acknowledgment of guilt and a request for a s 92 agreement, the Director was under no obligation to consider whether a s 92 agreement would be appropriate. Here, there was no such acknowledgment or request by Dr Oreb, who did not respond to the Director's letter of 18 December 2001. 190 Even if the Director was bound to consider Dr Oreb's s 88(3) submission of 7 August 2001 in response to the Director's letter of 26 July 2001 on Investigative Referral 260, the submission did not contain any acknowledgment of inappropriate practice. Nor did it invite recourse to s 92. 191 It is true that Dr Oreb's s 88(3) submission of 7 August 2001 stated that he had painstakingly restructured his practice and that he had accepted the Director's advice. But I can see nothing in the letter which amounted to a request to the Director to pursue a s 92 agreement. 192 In my opinion it follows, as was found by Sundberg J in Crowley v Holmes, that the Director, having raised the possibility of a s 92 agreement in the letter of 18 December 2001, was under no obligation to further consider whether a s 92 agreement would be appropriate. 193 Counsel for Dr Oreb submitted that I was not bound by Crowley v Holmes because it was an interlocutory judgment. However, whether I am bound by it or not, his Honour's approach was, in my respectful view correct, and I have therefore applied it to the present case. 194 Counsel for Dr Oreb also submitted that I should not find that the Director considered the possibility of a s 92 agreement, it having been mentioned in a "standard form letter". He drew attention to the fact that the letter of 18 December 2001 was in the same form as the letter of 26 July 2001 and other letters which are in evidence in other proceedings which I have heard. He also relied upon the rule in Jones v Dunkel (1959) 101 CLR 298 ("Jones v Dunkel"). 195 As to the first proposition, namely that the letter was in standard form, I do not see that this prevents me from inferring that the Director considered the possibility of a s 92 agreement when he sent the letter. The fact that it was in standard form suggests no more than the Director had a standard practice of drawing attention to the three options open to him, including resort to s 92. Whether he would further consider the s 92 option depended upon the practitioner's response. 196 As to the second submission, that Jones v Dunkel is applicable, there is ample authority for the proposition that the rule is applicable to judicial review proceedings; see Minister for Aboriginal Affairs v State of Western Australia (1996) 67 FCR 40 at 61-62 (Black CJ, Burchett and Kiefel JJ); Abernethy v Deitz (1996) 39 NSWLR 701 at 706-707 (Mahoney P). 197 Here, there may be scope for the application of an analogous principle to the rule in Jones v Dunkel because the director gave evidence without addressing the question of whether he did in fact consider the possibility of a s 92 agreement. In his affidavit the Director merely said that he referred to s 92 in his letters of 26 July 2001 and 18 December 2001 without saying that he considered resort to s 92. 198 Where a party calls a witness and fails to ask the witness a question in chief, the natural inference is that the party feared to do so; see Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 419 (per Handley JA); see also J D Heydon, Cross on Evidence (7th Aust ed) at [1215]. 199 Moreover, in the adjudicative referral the Director made no mention of s 92. He referred to only two of the options which were available to him. He said he did not dismiss the referral under s 91 because he was not satisfied that there were insufficient grounds on which a committee could find inappropriate practice. He also said that pursuant to s 93 he set up Committee 298 to consider the question. 200 I am entitled to infer from the Director's failure to refer to s 92 in the Adjudicative Referral that he did not consider this to be a material matter; see Yusuf at [69]. 201 However, in my view, none of the inferences which Dr Oreb asks me to draw in his favour on the s 92 question can make good his case. This is because in my opinion the Director correctly construed s 92 and, in any event, he accorded Dr Oreb procedural fairness by fairly and squarely offering the opportunity to raise the possibility of negotiating a s 92 agreement. The Director was under no obligation to further consider whether a s 92 agreement was appropriate. 202 It seems to me that the decision in Daniel must be confined to its own facts. Ryan J found that Dr Daniel had seen the error of his ways. The effect of this was that Dr Daniel accepted that a s 92 agreement would be appropriate. That was not the case here. 203 I will then turn briefly to the other alleged grounds of jurisdictional error. I will not set them out. 204 There was nothing in the evidence which supported the first four grounds. Those grounds raised the contention that the Director failed to investigate the question of whether Dr Oreb had engaged in inappropriate practice as defined by s 82. It is clear as the Full Court said in Daniel that the Director is not obliged to refer a case to a Committee once a breach of the 80/20 rule is established and that he or she must investigate and consider whether it is appropriate to do so; see [94]. The terms of the Director's adjudicative referral, albeit short, seem to me to indicate that he did investigate and consider the question. 205 The fifth ground was that the Director failed to consider Dr Oreb's conduct over the entire two years of the referral period. That proposition was rejected by the Full Court in Daniel. The Full Court's reasoning makes it plain that the two year period is the outer limit for investigation beyond which the Director may not have regard. However, that does not compel the Director to have regard to, or to consider whether to investigate, all services initiated or rendered in the two year period; see [101] - [105]. 206 The sixth ground seeks to raise as a ground of jurisdictional error the Director's failure to consider Dr Oreb's changed pattern of services after the referral period. 207 This ground must be rejected for the reasons given by Sundberg J in Crowley v Holmes. There, his Honour said at [4] that the fact that a practitioner has not engaged in a prescribed pattern of service in a period after the referral period is not relevant to the question of whether he or she has engaged in such a pattern during the referral period. 208 I should add, that what I have said is not to be taken as a finding that Dr Oreb did not engage in a prescribed pattern of service after the referral period. 209 The seventh ground was failure to have regard to the counselling which took place in September 2000 and December 2000. I cannot, on the evidence, find that the Director did not consider it; see Yusuf at [69]. 210 I have considered grounds eight and nine which raised the s 92 question and have found against Dr Oreb on that question. 211 Counsel for Dr Oreb sought to agitate another ground of error. He submitted that the Director failed to take into account Dr Oreb's s 88(3) submissions filed in relation to Investigative Referral 260. He submitted that Investigative Referral 260 was in substance the same as the investigative referral which was made on 13 December 2001. He said it was quite artificial to treat them separately and that the Director was bound to consider what Dr Oreb said in his letter of 7 August 2001 (See [97] above) and his submission of 7 November 2001 (see [102] - [103] above). 212 This ground was not included in the Further Amended Application and I do not think it is appropriate to consider it. However, even if I were to deal with this issue in my opinion it can be answered shortly. 213 As the Full Court pointed out in Daniel, s 106KA applies to the Committee, not the Director. Thus, as Sundberg J said in Crowley v Holmes, matters relevant to the question of whether exceptional circumstances exist are not matters which the Director is bound to consider. Here, Dr Oreb's submissions on Referral 260 went to the issue of exceptional circumstances. That was not a matter which the Director was bound to determine. The Report of Committee 298 214 The gravamen of Dr Oreb's attack on the report was that Committee 298 misdirected itself as to the proper construction of what constitutes "exceptional circumstances" under s 106KA(2) and Reg 11. 215 Committee 298 thought that the meaning of "exceptional circumstances" was unclear. It seemed to the Committee that s 106KA(2) limited the type of circumstances which would be exceptional to those which were of an episodic or intermittent nature whereas Reg 11(b) seemed to include events of an ongoing nature. It sought to resolve this apparent ambiguity by reference to extrinsic material. This led it to the view that exceptional circumstances would ordinarily be intermittent and that it would be "difficult to justify" circumstances of an ongoing nature. 216 However, in my view, there is no ambiguity in s 106KA(2) or Reg 11(b) and the approach taken by the Committee placed an unwarranted gloss on the meaning of those provisions. 217 In approaching the construction of s 106KA(2) and Reg 11, it is necessary to bear in mind that the effect of s 106KA(5) is to elevate Reg 11 to the status of a provision of the Act. This is because s 106KA(5) provides that the circumstances which constitute exceptional circumstances for the purposes of s 106KA(2) include those that are declared by the regulations. Thus, it is necessary to construe s 106KA and Reg 11 together. The regulation will only give way if there is an irreconcilable conflict; see Institute of Patent Agents v Lockwood [1894] AC 347 at 360 per Lord Herschell LC; see also Pearce & Geddes, Statutory Interpretation in Australia (5th ed) at [3.38]. 218 Section 106KA(2) introduces the concept of "exceptional circumstances" as an exception to the application of the 80/20 rule. The terms "exceptional circumstances" or "special circumstances" are gateways to the exercise of a discretion and are to be found in many statutes. They have been said to be elastic instructions and that all that is contemplated is for there to be something unusual or different to take the matter out of the ordinary; see Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531 at 535-536. 219 There is nothing in s 106KA(2) to reduce the breadth of the discretion, other than that the circumstances must exist on a particular day or days. The amplitude of the power is then defined in Reg 11. The reference to an "unusual occurrence" in Reg 11 (a) would restrict that paragraph to intermittent or episodic events. But Reg 11(b) is broader and speaks of an absence of other medical services during the relevant period, being the period referred to in s 106KA(1) which must embrace the whole of the period to which the referral relates. 220 Exceptional circumstances under Reg 11(b) therefore include an absence of other medical services during that period, having regard to the location of the practice and the characteristics of the patients. There is nothing in the language which restricts this to episodic events. Indeed, Reg 11(b) seems to have been deliberately drawn so as to broaden the category of circumstances beyond those contemplated by Reg 11(a). 221 Is it possible then to reconcile the circumstances which fall within Reg 11(b) with the requirements of s 106KA(2) that the exceptional circumstances must have existed on a particular day or days? It seems to me that it is. If the circumstances exist on an ongoing basis "during the relevant period" they will exist on a particular day or days. That is not to say that the Committee must find ongoing circumstances to be exceptional. It will be for the Committee to decide whether they take the case out of the ordinary. That will be a question of fact for the Committee which will, ordinarily, be immune from judicial review. 222 There is nothing in the language of s 106KA(2) or Reg 11(b) which suggests that where the circumstances are ongoing the person under review has a heavier onus of satisfying the Committee that the circumstances are exceptional. Yet in my opinion this is the effect of the Committee's approach to construction of these provisions. In my view it was not open to the Committee to have regard to the extrinsic material to cut down the plain meaning of the Act and the Regulations. 223 The Committee found that the matters put forward by Dr Oreb, which included the location of his practice and the characteristics of his patients, were foreseeable and did not constitute exceptional circumstances. The question of whether there were exceptional circumstances was a question of mixed fact and law, but it seems to me that Committee 298 reached its conclution on the basis of its incorrect interpretation of the "exceptional circumstances" provision. That is to say it approached its finding on the basis that Dr Oreb had a heavier onus of satisfying the Committee in relation to ongoing circumstances than in a case of an episodic or unusual event. 224 It follows in my view that the finding was affected by an error of law going to jurisdiction and must be set aside. 225 None of the other grounds of jurisdictional error alleged in relation to the report of Committee 298 have been made out. There were two such grounds. The first was that the prescribed pattern of services to which the Committee had regard covered a period of only about seven months, from 1 January 2000 to 8 August 2000. It was said that the effect of s 106KA(4) and Reg 10 was that the Committee was bound to consider Dr Oreb's pattern of services over the full twelve month period. 226 This submission must be rejected. It is analogous to the submission that the Director is bound to consider the full two year period as the referral period. However, as the Full Court said in Daniel the two year period sets the outer limit. Similarly, the period of twelve months is the outer limit for the determination of whether there is a prescribed pattern of services within s 106KA and Reg 10. 227 The second ground was failure to give proper, genuine and realistic consideration to the question of whether Dr Oreb had engaged in inappropriate practice. Dr Oreb has failed to make good the submission that the Committee slavishly followed a policy of finding inappropriate practice by reason of a contravention of the 80/20 rule. The submission must therefore be rejected for the reasons referred to at [170] to [172]. Discretion to extend time 228 The issue of whether an extension of time ought to be granted under the ADJR Act or whether I ought to exercise my discretion under s 39B(1A) notwithstanding the delay in challenging the investigative referral and the adjudicative referral does not arise. This is because I have found that neither of the decisions was affected by jurisdictional error. 229 It is therefore unnecessary for me to deal with the submissions which were put to me as to the breadth of my discretion under the ADJR Act; see Peko-Wallsend Ltd v Minister for Aboriginal Affairs (1985) 5 FCR 532 at 561 (Sheppard J). His Honour's approach was not criticised on appeal; see Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1985) 162 CLR 24 at 31,47,67, and 71-72. However, the issue does not arise. 230 Nor is it necessary to consider whether there was unwarrantable delay; see Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at [150] - [152] (McHugh J). Orders 231 I will order that the findings of Committee 198, that Dr Oreb had engaged in inappropriate practice and that exceptional circumstances did not exist, be set aside. 232 I will also order that the matter be referred back to the Director to consider whether it is appropriate to establish a differently constituted committee to determine, in accordance with law, whether Dr Oreb engaged in inappropriate practice during the referral period. 233 The Determining Authority abided by the outcome of these proceedings. It is unnecessary to order injunctive relief against it. 234 I will hear brief argument on costs in the week of 6 December 2004. I certify that the preceding two hundred and thirty-four (234) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson