Does the Act Require that Conduct be Specified?
93 As I earlier noted, prior to the introduction of the PSR Scheme in 1994 only one species of conduct in the rendering or initiating of services was policed. This was "excessive servicing". The 1994 amendments enlarged that concern to "inappropriate practice" - a concept, it was said in the Second Reading Speech, that went further than overservicing. It covered conduct in connection with the rendering or initiating of services that "is unacceptable to [a practitioner's] professional colleagues generally".
94 The referral scheme that existed from 1994 until the 1999 amendments was one, it has to be said, of greater coherence and simplicity than its successor. That scheme has been described in detail in some number of decisions of this Court, most notably by the Full Court in Adams v Yung,above. For present purposes, there is one matter of sharp differentiation between what I will call the 1994 scheme and the 1999 scheme that should be noted. In the 1994 scheme the only services that could be inquired into at all were those specified in the Commission's referral in accordance with s 87(1) of the Act. In the 1999 scheme as I have indicated, notwithstanding s 87(1), the Director can inquire into all of the services rendered or initiated in the referral period (s 86(4A); s 89(1)), but in making an adjudicative referral must specify the services referred to the Committee (s 93(1)). The Committee can only make findings in respect of those services (s 106H).
95 In relation to the referral powers themselves, in the 1994 scheme the Commission's power to make a referral to the Director was in the same s 86(1) terms as now obtain in the 1999 scheme. However the 1994 scheme did not contemplate an independent referral by the Director to a Committee. The four-corners of what the Director could refer to the Committee were set by the Commission's referral to the Director. For this reason Burchett and Hill JJ in Adams v Yung (at 298) could state that "a referral is not merely the instrument which initiates the series of administrative inquiries … . It also provides the framework in which those inquiries are to be held".
96 Turning to the significance of conduct as the subject-matter of a 1994 scheme referral, it should be noted that the s 82(1) definition of "inappropriate practice" in that scheme was for present purposes identical with that in the 1999 scheme. The definition was - and is - concerned with the making of a judgment about "conduct". Case law on the 1994 scheme has consistently held or assumed that what was referred under s 86(1) was such conduct of the person under review as was identified and described in the referral.
97 In Adams v Yung, Burchett and Hill JJ explained this conclusion as follows (at 298-299):
"The referral while expressed to be of conduct is not conduct in isolation. It is conduct relating to the issue whether the person has engaged in inappropriate practice in connection with rendering of services. Section 80(1) makes clear the legislative scheme is to examine whether inappropriate practice as defined in s 82 is involved. That inappropriate practice is conduct in connection with specified services. They are called "the referred services" - see ss 91, 93 and the definition in s 81(1). While those services may include all or some services within the referral period, the reference is not intended to open for consideration by a committee ultimately convened any aspect at all of the referred person's conduct in the referral period. What is contemplated is that it be an inquiry into specified conduct as dealt with in the reference rather than conduct at large.
This conclusion is reinforced by the legislative requirement that the practitioner conduct the hearing without real assistance from a legal adviser. Whilst it is true that a legal practitioner may advise the practitioner, given the fact that the legislature has seen fit to exclude a legal practitioner from either examining witnesses or making submissions, it must follow that the intended subject matter of the procedure before a committee be manifest to the practitioner prior to the time the Committee meets to consider it.
The conclusion follows also from the fact that the director receiving the referral must make various decisions on the referral from its contents. A director could hardly dismiss a referral if the possibility was that a committee could roam outside its terms. In making a decision to dismiss the referral the director has to form a view that there are insufficient grounds on which a committee could reasonably find that the person under review had engaged in inappropriate practice in connection with the referred services (see s 91)."
98 In Mercado v Holmes, above, in applying Adams v Yung, Heerey J commented (at [70]) that the "referral must identify the conduct being referred and the alleged inappropriate practice relevant to the specified services and contain sufficient detail to make the Committee review process workable": see also Tang v Holmes,above, at 127; Grey v Health Insurance Commission,above. Significantly for present purposes, His Honour also commented (at [66]) that a document similar in content to the one page "Investigative Referral" document used in the present case and which is set out at [61] above could not by itself "constitute a valid referral in accordance with the Act". It would lack the requisite identification of the conduct referred and the inappropriate practice alleged.
99 Unless the 1999 amendments have altered the PSR Scheme in ways that make inapposite the construction placed on the Act in the cases to which I have referred, I would of course be obliged to follow them.
100 Apart from the change made which allowed the Director to select the services to be referred to the Committee irrespective of how the Commission specified for s 87(1) purposes the services referred to the Director, the other significant amendments for present purposes were (i) those which made the adjudicative referral a distinct referral with its own characteristics and requirements; and (ii) those which significantly enhanced the statutory procedural fairness requirements for the benefit of the person under review.
101 The respondents in their submissions have invited me to look anew at the PSR scheme in consequence of the 1999 amendments without bringing to it preconceptions born of the 1994 scheme and its characteristics. Because I am being asked to consider the scheme in its totality, it is appropriate that I first set out in full the respondents' summary of argument on the PSR scheme generally. It is as follows:
"3. The respondents submit, in summary, that:
(a) the Professional Services Review (PSR) scheme is a disciplinary scheme designed to protect the integrity of the Commonwealth Medicare regime, thereby protecting patients, the community at large and Commonwealth revenue from the risk of inappropriate practice;
(b) the PSR Scheme is enabled through a staged process prescribed in Part VAA of the Health Insurance Act 1973 (the Act). In considering the meaning and intent of particular provisions, regard should also be had to the nature and intent of the overall scheme. Individual stages cannot be meaningfully interpreted in isolation, and should be examined within the context of their role within the entire process;
(c) the stages of the PSR process are linked by specified services rendered and/or initiated by a practitioner, rather than specified conduct. To restrict the process to specified conduct is to ignore the nature and intent of the overall scheme, and to deny the natural meaning of the individual provisions;
(d) the constant theme from the time of Investigative Referral by the HIC through to any reference by Adjudicative Referral to a Committee, is that the services must not be outside those services indicated in the Investigative Referral. The referrals and hearing before a Committee need not, however, be confined to the same conduct in respect to those services;
(e) the parameters of each level of investigation is governed by the services, not by the conduct. It is the services that are referred to in the Investigative Referral, the services that are referred in the Adjudicative Referral and the services which are considered by the Committee. Those services must be no greater than those referred to in the Investigative Referral and by the time it reaches the Committee the investigation cannot exceed the services in the Adjudicative Referral. The nature of the conduct is however not so confined;
(f) the reasons given by the Health Insurance Commission (HIC) and in turn by the Director of PSR gives [sic] some guidance at each level to matters which may point to inappropriate practice. They are not regarded as being the binding jurisdictional features;
(g) whilst services are intimately connected with conduct, that does not mean particular conduct. There are very many ways in which behaviour and actions of a practitioner take place in relation to services. For example, a particular procedure may be appropriate for a patient with a specific particular condition, with a particular level of gravity, it may be delivered in a particular way with particular instruments or levels of dosage or within a particular time frame. If each of these requirements are not carried out at all or are [sic] not carried out appropriately or render the service unnecessary or inappropriate treatment for a patient, the conduct may be regarded as inappropriate practice;
(h) if the practitioner does not modify conduct or practice patterns in accordance with HIC guidance, then the practitioner must expect that review of the services will take place. High servicing and high volume may be general indicators of underlying problems of delivery of professional services and an overt manifestation of a practice being appropriate in some way which can only later be identified with precision by the peer group itself in a PSR Committee;
(i) by statutory definition, and also as a matter of practice, the final determination of appropriate practice resides with the Committee. That is where the issue will be decided upon unless at some point along the way the HIC does not proceed, or the PSR Director dismisses the referral, or the practitioner makes admissions and an agreement is entered into. Unless it happens in that way, then it is for the Committee of peers to decide whether in fact the conduct of the practitioner with respect to the rendering of the service has been or amounts to inappropriate practice;
(j) the Act provides a complete and comprehensive code which has natural justice features built in at every stage. There is no warrant for implying additional natural justice requirements. The natural justice provisions even extend beyond the hearing as the Committee is obliged to provide a draft report on which the practitioner may make written submissions before a final report (section 106KD). Further, a draft determination by the Determining Authority is required to be sent to the practitioner and written submissions may again be made by the practitioner before a final determination is made (section 106T). Both of these procedures could quite appropriately be the subject of judicial review and give adequate protection to the practitioner.
(k) the practitioner therefore has 5 opportunities within the statutory scheme to be heard or make submissions as to whether of [sic] not he/she has been inappropriately practicing.
102 The respondents provided detailed textual submissions on the provisions in each of the second to fourth tiers of the PSR scheme to which I earlier referred. I will not set them out in full though I do acknowledge the assistance they provided in giving focus to the question of construction with which I am concerned. There are, though, four additional elements in the respondents' submissions to which I should refer.
103 The first is to emphasise the contention that the inquiry into services necessarily involves an inquiry into conduct and in that sense conduct is integral to what is referred. Emphasis in this is placed on the interconnecting statutory definitions relating to Medicare benefits that are payable for professional services that are "clinically relevant services", the latter being defined in s 3 to mean (inter alia):
"a service rendered by a medical practitioner … that is generally accepted in the medical … profession … as being necessary for the appropriate treatment of the patient to whom it is rendered."
What, though, is denied is that the specification of conduct is itself a "jurisdictional requirement" of an investigative or adjudicative reference.
104 The second matter is the respondents' acceptance that, as the conduct being inquired into can change from the investigative referral through the adjudicative referral to the Committee hearing, the focus of the statutory natural justice requirements likewise will change correspondingly. In this sense there is a "rolling" requirement of procedural fairness.
105 The third matter relates to the significant new investigative powers given to the Director in the 1999 amendments: see s 89A, s 89B. In light of the related amendments allowing the Director to examine all of the services rendered or initiated during the referral period irrespective of whether or not dealt with in the Commission's s 86(4)(b) reasons: s 89; it would be anomalous, it is said, to confine the Director in the conduct that he or she could inquire into by reference to what was specified in the investigative referral - the more so as now the Director, not the Commission, has the greater capacity to further identify conduct of the person under review that could constitute inappropriate practice.
106 The fourth matter relates to the powers of the Committee to "refer back" matters not related to the adjudicative referral made to it. Under s 106H(2), the Committee can refer to the Director for investigation conduct in connection with rendering or initiating services other than the specified services referred to it. Additionally, the Committee can notify the Director of any matter "not related to the referral" of which it becomes aware and considers to be of significant concern "to the profession" of which the practitioner is a member so that it may be considered by the Commission or another appropriate body: s 106KC(1). Together, it is said, these sections suggest that s 106H(2) (i) contemplates that conduct other than that specifically referred but which relates nonetheless to the services referred, can be inquired into by the Committee; but (ii) that conduct connected with rendering or initiating other services may not, though it may be referred to the Director for investigation.
107 The applicant's submission is that the amendments have not altered the central element of the PSR scheme from its inception in 1994. What is referred in both investigative and adjudicative referrals is specified conduct in respect of referred services. I mean no disrespect in not outlining this submission in detail.
108 For my own part I would have to say by way of preface that, as is so often the case with the interpretation of statutes, reasoned and reasonable arguments can be advanced in support of rival constructions of the statutory provisions now in issue. This state of affairs has been exaggerated by the imposition of amendments upon an existing statutory scheme that, though effecting significant changes, have left to suggestion and inference the full dimensions of the changes intended.
109 It is a matter of no little significance that the PSR scheme is a disciplinary one that can lead to significant sanctions being imposed upon a practitioner who has been found to have engaged in inappropriate practice: s 106U; Adams v Yung, above, at 294; on disciplinary proceedings see generally Forbes, Disciplinary Tribunals (2nd Ed, 1996). The 1999 scheme, much more so than the 1994 scheme, evidences a heightened legislative appreciation of the implications of this in the significantly enhanced procedural fairness safeguards introduced in the 1999 amendments. Those safeguards are now part of the skeletal structure of the PSR scheme and are, as will be seen, useful for the light they throw on the proper construction of the referral processes of the scheme itself.
110 Considered against the background of the disciplinary nature of the scheme and of the decision in Adams v Yung, the principal difficulties I have in accepting the respondents' submissions as to the effect of the 1999 amendments flow from (i) the explicit address of the question whether, in the investigative referral, the Director can address services beyond those specified by the Commission for s 87(1) purposes in its referral; (ii) the failure to amend the terms of the s 86(1) power enabling the Commission to make an investigative referral; and (iii) the terms used in amending s 93(1) to confer on the Director the power to make an adjudicative referral.
111 The present significance of Adams v Yung is this. The majority judgment of Burchett and Hill JJ characterised the referral made under s 86(1) in the 1993 scheme as being circumscribed in two ways: the one, by the services actually referred; the other, by the conduct specified in the referral. It was not open to the Committee to inquire into services not referred, nor conduct not so specified. As to the latter limitation, their Honours made plain that they were not merely considering how the "rules of natural justice" would impact on an inquiry into conduct that was in terms unlimited. Rather the limitation inhered in the statutory nature of a reference. What the statute contemplated was "that it be an inquiry into specified conduct as dealt with in the reference rather than conduct at large": above, at 298; see also Mercado v Holmes, above, at [66]-[70].
112 The 1999 amendments did not alter the terms in which the power to make an investigative referral was conferred on the Commission by s 86(1). The power remained one to "refer … the conduct of a person" etc (emphasis added). Contrary to the respondents' submission that this reference to conduct should be seen as no more than a generic description of conduct in respect of services, the Adams v Yung characterisation that what is referred under s 86(1) is specified conduct is, in my view, emphasised by the statutory imposition of a procedural fairness requirement on the Commission in making a referral. The referral must "set out the reasons why the Commission considers the person under review may have engaged in inappropriate practice": s 86(4)(b). When regard is had to the definition of "inappropriate practice" in s 82(1), those reasons necessarily must relate to identified conduct in relation to which the prescribed judgment is made - albeit it may be identified in terms of some generality (eg "high volume of rendered services": Mercado v Holmes, above).
113 The apparent curiosity created by this construction is that while the Director is to be confined as to the conduct into which he or she can inquire, the Director is not since the 1999 amendment confined as to the services in respect of which that conduct inquiry can be made. That inquiry can be into all services particularised in s 86(4)(a): see s 81 "referred services" and s 89(1); notwithstanding that the referral itself both specifies services for s 87(1) purposes and only provides s 86(4)(b) reasons in respect of those specified services: s 86(4A).
114 The respondents focus on this curiosity to suggest that s 86(4A) is indicative of a legislative intent not to limit the Director either in relation to the services, or in relation to the conduct, into which he or she may inquire. And they take comfort from the Explanatory Memorandum to the 1999 amendment which relevantly was in terms that:
"Subsection 86(4A) empowers the Director to request further information from the HIC. This makes explicit that any subsequent investigations conducted by the Director, although confined to the referral period, are not limited to the scope of the matters set out in the investigative referral. This is an important change as previously the referral by the HIC set the boundaries within which a Committee could examine a practitioner's professional conduct."
115 While the last sentence of this explanation may be taken as suggesting a wider legislative intent than merely enlarging the services that can be inquired into, such intent if such there was has not been realised in the language of the section considered as a whole. If the Parliament had intended to empower the Director to enquire at large into both services and conduct in the referral period it could readily and explicitly have done so. It has not in relation to conduct and there ought be no implication to that effect.
116 As it stands the s 86(4A) power even though limited to services does rather skew the statutory procedural fairness requirement of s 86(4)(b). The referral containing the s 86(4)(b) reasons is required to be sent to the person under review with the invitation that he or she make submissions stating why the Director should dismiss the referral: s 88. But notwithstanding the s 86(4)(b) reasons, the Director's inquiry may, in part at least, be into services (though not into conduct) not covered by the reasons.
117 I do not consider this to be a matter of major moment in the statutory scheme. The person under review has to make his or her submissions within, in effect, 16 days of the making of the investigative referral. The Director has between 6 to 9 months to investigate or complete an investigation into the referred services. But he or she is not subjected to any further statutory procedural fairness requirement unless and until an adjudicative referral is made. It is from that latter stage that procedural fairness is writ large in the statutory scheme.
118 Apart from having the person under review put on notice by the s 86(4)(b) reasons - if not by prior non-statutory counselling - as to the form of conduct that has invited attention, the statutory procedural fairness scheme at this early investigative stage seems best described as provisional and preliminary. But its limitations do not disadvantage the person under review should an adjudicative referral be made given the far more explicit statutory requirements to be observed at that later stage. As has often been said of staged decision-making, in judging whether the requirements of natural justice are satisfied one must consider whether the decision-making process in its entirety entails procedural fairness: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 578.
119 More surprising in light of the respondents' submission are the terms in which s 93 was recast in the 1999 amendments. The original s 93 required, subject to two provisos, that:
"[t]he Director must, by instrument in writing, set up a Committee to consider whether the person under review has engaged in inappropriate practice."
Notably the section did not refer to conduct as such, the Adams v Yung limitation being carried forward into it by virtue of the s 86(1) referral which the Director was not permitted to go beyond.
120 The new s 93(1) stated in contrast:
"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." Emphasis added.
Save for the omission of the definite article before the word "conduct", this subsection uses a relatively similar formula to that of s 86(1) to describe the subject (though not the purpose) of the referral.
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 (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 (3); s 106J.
122 Even if I were incorrect in holding that s 86(1) requires the conduct referred to be specified, I would still be satisfied that s 93(1) requires such specification. I do not consider that the statutory procedural fairness scheme envisages that, on an adjudicative referral, the Committee will range at large over the conduct of the person under review in connection with rendering or initiating the particular services referred subject only to its according procedural fairness to that person as and when it raises concerns with him or her.
123 Substance and direction are given to an adjudicative referral by the dual requirements that the particular services referred be specified and that the Director's report provide the reasons required by s 93(6). That report, in tying identified conduct to the particular services referred, is intended to reflect a judgment made in respect of the conduct of the person under review after an investigation in which significant investigative powers were available to be exercised.
124 The statutory natural justice scheme for the adjudicative referral stage proceeds, in my view, on the premise that an adjudicative referral has the same twin characteristics as a 1994 scheme referral. This is that a referral specifying both the conduct and services referred provides the framework in which the Committees' inquiry is to be held: cf Adams v Yung, at 298. The referral so dually specified embodies the "matters that are the subject of the referral": cf s 101(2); see also s 98(3); s 106G(1); s 106KC(1). The person under review is put on notice of what is referred: s 94; the referral providing in effect the statement of the case to be met in the disciplinary proceedings. The statutorily envisaged decisions then to be made and actions taken by the Committee relate to its consideration of the matters that are the subject of the referral and no other: see eg s 101(2); s 102(3); and s 106G.
125 Considered in this light, the scope of s 106H(2) and s 106KC(1) respectively, on which the respondents place some reliance, becomes the more apparent. Both relate to the manner in which the Committee is to deal with matters that might warrant further consideration, but which fall outside the matters referred. Section 106H(2) relates to conduct in respect of services not referred. The Committee can make what is in effect an investigative referral of that conduct and of those services to the Director. Any other matter not related to the referral falls to be dealt with under s 106KC(1). The apparent anomaly in this is that, if in the course of considering the referred services, the Committee considers that conduct other than that referred might constitute engaging in inappropriate practice, it cannot make an investigative referral of it under s 106H(2). It can only notify the Director of that matter under s 106KC(1). This anomaly, if anomaly it be, would expose a defect in the referring back provisions of the Act. It would be only one of several such anomalies that the 1999 amendments appear to have spawned: see eg the earlier consideration of s 86(4A); and not one that would raise any significant doubt as to the proper construction to be placed on s 93(1) of the HI Act.
126 Put shortly, in effectuating the legislative purpose enshrined in s 80(1) of the Act, the legislative scheme is one that refers, first, to the Director for investigation and, then, to the Committee for adjudication, identified conduct that the Commission and the Director respectively consider may have constituted engaging in inappropriate practice in connection with the rendering of the services the subject of the referral in question (ie investigative or adjudicative).
127 If Parliament had intended to mandate a roving commission into past service provision by medical and other practitioners (where those services attract Medicare benefits) circumscribed only by time limitations (2 years) and by the capacity of the Director to whittle down the services worthy of examination, it would - and should - have done so in language having far greater clarity and aptness for that purpose than that of the 1999 amendments. The respondents' submission requires in effect the deletion of references to the referral of 'conduct' in s 86(1) and s 93(1) and the recasting of those provisions so as to stipulate that the referral is of services for the purpose of investigating or considering whether the person under review engaged in inappropriate practice in rendering or initiating those services. Parliament could have done this. It did not.
128 Having regard to the conduct I have found was referred in the cases both of the investigative referral and of the adjudicative referral, and the requirement of the statute that referred conduct be specified, I conclude that, in the case of each referral, there has been a non-compliance with the requirements of s 86(1) and s 93(1) respectively. Given that both referrals are framework documents for the respective processes they initiate, and given the disciplinary setting and purpose of the referrals, that non-compliance must necessarily entail the invalidity of the references made: cf Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 388ff. The referrals were incapable of enlivening the respective jurisdictions of the Director and of the Committee to embark upon the inquiries envisaged by the HI Act.
129 Insofar as the investigative referral is concerned, my jurisdiction to grant relief in respect of the Commission's ultra vires act arises from s 39B(1A)(c) of the Judiciary Act. Dr Pradhan, as the person directly affected by that reference, has standing to complain of the non-observance by the Commission of the statutory limitations placed upon its power to make a referral and to seek at least declaratory relief: cf Bateman's Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247.
130 Insofar as the adjudicative referral is concerned, my jurisdiction as it relates to the relevant respondents (the first to the fourth) arises by virtue of s 39B(1) of the Judiciary Act. The applicant is entitled to appropriate relief against them.
131 There is a significant number of issues raised in this proceeding that I need not address in consequence of the conclusion at which I have arrived on the primary issue raised. They relate in the main to the superimposition of procedural fairness requirements on the existing statutory scheme and to the validity of the notice to produce. I refrain from expressing any views on these questions.
132 I will direct the parties to bring in minutes of order to give effect to these reasons.
I certify that the preceding one hundred and thirty-two (132) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.