5.2.4 Is the repayment direction legally unreasonable?
158 The applicant contended that it was unreasonable for the Determining Authority to observe that Dr Selia had engaged in a "very high proportion of inappropriate practice" in circumstances where the inappropriateness derived only from one aspect of the service, namely, its billing. However, as the Commonwealth submitted, that finding does no more than reflect the PSR Committee's finding of inappropriate practice in connection with 74% of the MBS item 85011 services and 100% in relation to the three remaining MBS item services.
159 The applicant also submitted that it was unreasonable for the Determining Authority to make a repayment direction in respect of services that were provided and were clinically appropriate, and in circumstances where he had paid out money to third parties for equipment in connection with the rendering of those services. Underlying this submission is the proposition that if Dr Selia had billed the services after they had been provided, there would have been no question as to his entitlement to the payment of benefits for the provision of those services. Added to this, the applicant submitted that he had understood the practice of pre-billing to be acceptable and that Dr Dalton's inspection had confirmed this belief.
160 I do not accept those submissions and consider that the applicant has not demonstrated that the decision of the Determining Authority to make the repayment direction was legally unreasonable, even though the amount of the repayment direction is substantial and may be regarded as harsh.
161 First, the Determining Authority found at [40] of its reasons that it was not satisfied that the Commonwealth should have to bear the cost of services in respect of which Dr Selia has been found to have engaged in inappropriate practice. That view reflects the protective purpose intended to be served by directions under s 106U as explained above. Relevant to this finding among other things was what the Determining Authority considered to be the "serious nature" of the inappropriate practice disclosed in the PSR Committee's final report, and specifically that the pre-billing of services was "a matter of significant professional concern" (at [21] and [22] respectively). The Determining Authority's findings in this regard align with the findings by the PSR Committee in its reasons that the general body of dentists would regard pre-billing as "a gross departure" from the standard expected of dentists in claiming Medicare benefits (at [42]). In this regard, the Determining Authority specifically noted that the PSR Committee considered pre-billing by itself constituted inappropriate practice and observed that the practice is inconsistent with the Act and reflected in the commentary in the Medicare Benefits Schedule Dental Services during the review period (at [23]). Furthermore, the Determining Authority found at [38] that:
The Determining Authority considers that the practitioner bears responsibility for ensuring that clinical input is adequate, avoiding billing practices that are inconsistent with the Act, meeting the requirements of these MBS services, and keeping adequate and contemporaneous records detailing sufficient clinical information. In this regard, the Determining Authority notes the Committee's finding that Dr Selia should have familiarised himself with the requirements for billing the Commonwealth (both generally and with respect to specific MBS items) prior to making claims.
162 Secondly, the applicant submitted that it was disproportionate for the pre-billing to be given such prominence "[b]ecause it's an administrative practice engaged in by the dentistry practice". However, that submission ignores the PSR Committee's finding that post-service billing was a legal requirement, not merely an administrative nicety, and a matter bearing upon the lawfulness and financial integrity of the Medicare scheme (at [70]). As the PSR Committee found, there is no entitlement under the Act to payment of a Medicare benefit until a service is rendered. No issue was taken with that finding. Accordingly, Dr Selia had no entitlement as a matter of law to the benefits which he claimed and was paid with respect to the services in connection with which the findings of inappropriate practice were made.
163 Against this, Dr Selia submits that the purpose of a direction under s 106U is limited to that identified by von Doussa J in Retnaraja v Morauta (1999) 93 FCR 397 (Retnaraja) at 418 [81], namely "to enable the recovery of Medicare benefit which should not have been paid, and to prevent payment where Medicare benefit is not rightly due." Relying upon this passage, the applicant submits that the fact that the services were subsequently provided meant that the wrongful payment of the benefit in each case was effectively 'cured' such that they became "rightly due" and that, therefore, a direction that they be repaid was unreasonable. However, no provisions of the Act are pointed to by which the wrongful payment of the benefit is 'cured'. Furthermore, the submission ignores the different wording of s 106U(1)(cb) as it stood before the amendment by the Health Insurance Amendment Act (No 1) 1997 (Cth) and as considered in Retnaraja. The provision then provided for a determination to contain a direction:
(c) that the person under review repay to the Commonwealth an amount equivalent to any medicare benefit payable for inappropriate services (whether or not the medicare benefit was paid to the person), and that any medicare benefit that would otherwise be payable for those services cease to be payable.
164 Moreover, in Retnaraja the repayment direction was found to be wrong in law in circumstances where among other things, it directed repayment of a percentage of all benefits paid for four categories of services, but the reduction from 100% was not based upon any distinction between those services that were appropriate and those which were not, or between payments of benefit rightfully paid and those wrongfully paid (Retnaraja at 419 [89]). That is not the present case where the percentage of benefits directed to be partially repaid equated to the percentage of inappropriate practice undertaken in connection with the referred MBS item services, utilising using the sampling provisions of Part VAA. Thus, given that there was no issue that there had been sampling as authorised by s 106K, the Determining Authority was authorised to impose a repayment direction for the class of the item 85011, 85615, 85661 and 85672 services.
165 Dr Selia also relied on s 129AC which provides that where, as a result of the making of a false or misleading statement, an amount is paid purportedly by way of benefit in excess of the amount that should have been paid, the amount of the excess (and only the amount of the excess) is recoverable as a debt due to the Commonwealth. However, the section with respect does not assist the applicant's argument. Section 129AC is in different terms from s 106U and achieves different ends, it is not in Part VAA and therefore the objects in s 79A do not apply to its construction, and in any event it does not overcome the difficulty that no provision "curing" the wrongful payment on provision of the pre-billed services has been identified. Further, under s 129AEA an administrative penalty may be paid in addition to the recovery of the amount under s 129AC where certain criteria are met.
166 Thirdly, the applicant relies upon the finding by the Determining Authority at [26] that it gave "little weight" to Dr Selia's submission that he was entitled to rely on what was described as the implicit endorsement by Dr Dalton of Dr Selia's pre-billing practice. In this regard, counsel for the applicant submitted that "it's inconceivable... that he didn't see the client's billing practices. It's inconceivable because that's what Medicare is about…" However, the finding by the Determining Authority that it gave "little weight" to Dr Selia's submission at [26] was based upon its finding at [25] as to the findings made by the PSR Committee:
The Determining Authority noted that it had been submitted to the Committee that Dr Dalton had examined three patient records and recorded that "All treatment plans were fully set out and signed by the patient". The Committee also noted that '[t]he Committee does not know what particular records were shown to Dr Dalton and does not know whether or not Dr Dalton appreciated that patients were pre-billed."
167 Furthermore, the Determining Authority found that "[t]he Committee was unequivocal in its view that pre-billing, in the circumstances in which Dr Selia pre-billed patients, constituted inappropriate practice" (at [27]). The findings by the Determining Authority as to what the PSR Committee found and why, were therefore open to it; indeed, it is difficult to see how issue could be taken with the Determining Authority's findings in this regard. The applicant's submission ultimately, therefore, seeks impermissibly to take issue with the merits of the PSR Committee's findings and fails to grapple with the fact that it was not open to the Determining Authority to revisit the PSR Committee's findings.
168 Fourthly, the applicant submitted that it was unreasonable for the Determining Authority to make a repayment direction when he had made payments to third-party providers for equipment for some of the services. In his submission to the Determining Authority, Dr Selia submitted that he had incurred fees in the vicinity of $240,000 in relation to laboratory fees, and for the costs of implants, crowns and models. The applicant did not however point to evidence before the Determining Authority in support of that amount but rather submitted in this application that support for that amount should be inferred on the following basis:
For three of the four categories, it involves the insertion or implanting of teeth, and my client doesn't make teeth implants. That is not - it's not part of his practice … So in all of the categories of the second and third and fourth categories of MBS items in the MBS list - not the oral examination one but all of the others - your Honour can find that he had to make payments to outsider providers to make the teeth that he implanted.
169 The reasons of the Determining Authority must be fairly read bearing in mind that that they were written by decision-makers who are not legally trained. As Mortimer J said in Sevdalis at [132], "'[f]airness' in this context includes reading the reasoning as a whole, because it is only by doing so that a reviewing court can gain a balanced appreciation of how the decision maker understood and applied the statutory concepts." In this regard, the applicant's submission among other things overlooks the fact that, fairly read, the Determining Authority did take this consideration into account in adjusting the amount of the repayment notwithstanding the absence of evidence verifying the precise amount claimed. The Determining Authority specifically noted at [42] "the nature of dental practice, which required Dr Selia to make payments directly to third party providers of items such as models, bridges and implants." When the structure of the reasoning is considered, it is apparent that that factor was then taken into account by the Determining Authority in determining that a direction on repayment should be made for part only of the Medicare benefit paid for the proportion of those services in connection with which Dr Selia engaged in inappropriate practice and in setting the percentage at 60% (at [45] and [46]): see further at [172] below.
170 In the fifth place, the applicant submitted that the Determining Authority failed to take into account his submission that he had made repayments in an amount of approximately $200,000 to Medicare for services ultimately not provided or where the patient did not return within a reasonable timeframe for completion of the proposed treatment. In response, the Commonwealth submitted that the $200,000 figure was not limited to repaying amounts relating to services the subject of the PSR Committee's findings of inappropriate practice, referring to the broader concerns initially raised with Dr Selia which ultimately led to the referral under s 93: see above at [22] - [25]. Thus, it is possible that part only of the amount which was said to have been repaid related to the services which were the subject of the findings by the PSR Committee. However, the short point (also made by the Commonwealth) is that the Determining Authority expressly took into account Dr Selia's repayments to Medicare where they had been substantiated by evidence but that, despite being invited to give evidence of further repayments in the Draft Determination, Dr Selia had provided no further information in his submissions on the Draft Determination (at [42]-[43]).
171 The applicant also submitted that he did not obtain any monetary advantage from pre-billing "except that he got the money a little bit earlier". However, there was no evidence to that effect. Indeed, it is difficult to reconcile that submission with the submission that the monies were used to purchase equipment from third parties in relation to the services subsequently rendered.
172 Finally, as I have mentioned the Determining Authority did not require repayment of 100% of the amount of the Medicare benefit paid to Dr Selia for the proportion of services in connection with which he was found to have engaged in inappropriate practice, but only 60% of that amount. That figure of 60% was neither inexplicable nor baseless. Rather, it is apparent that, in deciding upon that percentage, the Determining Authority took account of various mitigating factors on which Dr Selia relied including his financial position, his repayments to Medicare and the changes which he made to his practice in light of the PSR Committee's findings, as well as such matters as the seriousness of the findings of inappropriate practice (at [46]). That process is not one susceptible to a precise mathematical calculation, as counsel for the applicant accepted in oral submissions. Rather, fairly read, the Determining Authority reached the figure of 60% by weighing the different factors in an evaluative process akin to the process of intuitive synthesis in sentencing in criminal law, as the Commonwealth submitted.
173 It follows that neither individually nor cumulatively do the matters relied upon by the applicant demonstrate that the Determining Authority's decision to make the repayment direction lacks an intelligible foundation or is otherwise irrational or arbitrary so as to make good the contention that it is legally unreasonable. While reasonable minds might differ as to the direction that might have been appropriate, the decision by the Determining Authority to make the repayment directions here fell within the range of possible lawful outcomes of the exercise of the discretion in s 106U and was not obviously disproportionate or unjust in the circumstances.