Applied Medical Australia Pty Ltd v Minister for Health
[2016] FCA 35
•5 February 2016
FEDERAL COURT OF AUSTRALIA
Applied Medical Australia Pty Ltd v Minister for Health [2016] FCA 35
File number: NSD 457 of 2015 Judge: ROBERTSON J Date of judgment: 5 February 2016 Catchwords: ADMINISTRATIVE LAW – private health insurance – Private Health Insurance (Prostheses) Rules – source of power to vary or revoke Rules for prostheses already listed – decision not to vary or revoke Rules for the relevant subgroup – whether decision of an administrative character or of a legislative character – whether duty to consider submission to vary or revoke Rules for prostheses already listed – whether decision made without any, or any adequate, evidence – whether decision so unreasonable that no reasonable decision-maker could have so exercised the power – whether decision-maker took into account irrelevant considerations or failed to take into account relevant considerations – whether methodology or policy in setting a minimum benefit for comparable products lawful – whether improper exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case – Private Health Insurance Act 2007 (Cth) ss 72-10, 333-20 – Private Health Insurance (Prostheses) Rules 2015 (No 1) (Cth)
HEALTH LAW – private health insurance – Private Health Insurance (Prostheses) Rules – source of power to vary or revoke Rules for prostheses already listed – decision not to vary or revoke Rules for the relevant subgroup – whether decision of an administrative character or of legislative character – whether duty to consider submission to vary or revoke Rules for prostheses already listed – whether decision made without any, or any adequate, evidence – whether decision so unreasonable that no reasonable decision-maker could have so exercised the power – whether decision-maker took into account irrelevant considerations or failed to take into account relevant considerations – whether methodology or policy in setting a minimum benefit for comparable products lawful – whether improper exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case – Private Health Insurance Act 2007 (Cth) ss 72-10, 333-20 – Private Health Insurance (Prostheses) Rules 2015 (No 1) (Cth)
Legislation: Acts Interpretation Act 1901 (Cth) ss 2(2), 33(1), 33(3)
Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5, 7, 16
Evidence Act 1995 (Cth) s 55
Judiciary Act 1903 (Cth) s 39B
Legislative Instruments Act 2003 (Cth) s 13
Private Health Insurance Act 2007 (Cth) ss 72-10, 333-20
Private Health Insurance (Prostheses Application and Listing Fees) Act 2007 (Cth)
Private Health Insurance (Prostheses Application and Listing Fee) Rules 2008 (No 1) (Cth)
Private Health Insurance (Prostheses) Rules 2015 (No 1) (Cth)
Cases cited: Anderson v Minister for Environment, Heritage and the Arts [2010] FCA 57; 182 FCR 462
Argos Pty Ltd v Corbell [2014] HCA 50; 254 CLR 394
Braemar Power Project Pty Ltd v Chief Executive, Department of Mines and Energy in his Capacity as the Regulator Under the Electricity Act 1994 (Qld) [2008] QSC 241
Braemar Power Project Pty Ltd v Chief Executive, Department of Mines and Energy in his Capacity as Regulator under the Electricity Act 1994 (Qld) [2009] QCA 162; 1 Qd R 403
British Oxygen Co Ltd v Minister of Technology [1971] AC 610
Chumbairux v Minister for Immigration and Ethnic Affairs (1986) 74 ALR 480
Harbour Radio Pty Ltd v Australian Communications and Media Authority [2012] FCA 614; 202 FCR 525
Howells v Nagrad Nominees Pty Ltd [1982] FCA 177; 66 FLR 169
Minister for Industry and Commerce v Tooheys Ltd [1982] [1982] FCA 128; 60 FLR 325
NEAT Domestic Trading Pty Ltd v Wheat Export Authority [2000] FCA 1866; 64 ALD 29
NEAT Domestic Trading Pty Ltd v AWB Ltd [2003] HCA 35; 216 CLR 277
Orthotech Pty Ltd v Minister for Health [2013] FCA 230; 211 FCR 241
Plaintiff M64/2015 v Minister For Immigration and Border Protection [2015] HCA 50
Re Findlay [1985] AC 318
Queensland Medical Laboratory v Blewett [1988] FCA 423; 84 ALR 615
R v Port of London Authority, Ex parte Kynoch Ltd [1919] 1 KB 176
R v Secretary of State for the Home Department; Ex parte Venables [1998] AC 407
RG Capital Radio Ltd v Australian Broadcasting Authority [2001] FCA 855; 113 FCR 185
Roche Products Pty Ltd v National Drugs and Poisons
Sea Shepherd Australia Ltd v State of Western Australia [2014] WASC 66; 313 ALR 184
Schedule Committee [2007] FCA 1352; 163 FCR 451
SAT FM Pty Ltd v Australian Broadcasting Authority [1997] FCA 647; 75 FCR 604
Schwennesen v Minister for Environment and Resource Management [2010] QCA 340
Skoljarev v Australian Fisheries Management Authority [1995] FCA 1732; 133 ALR 690
Visa International Service Association v Reserve Bank of Australia [2003] FCA 977; 131 FCR 300
Yasmin v Attorney-General of the Commonwealth of Australia [2015] FCAFC 145
Aronson M and Groves M, Judicial Review of Administrative Action (Lawbook Co, 5th ed, 2013) pp 86-87
Dates of hearing: 14 and 15 December 2015 Date of last submissions: 29 January 2016 Registry: New South Wales Division: General Division National Practice Area: Administrative and Constitutional Law and Human Rights Category: Catchwords Number of paragraphs: 130 Counsel for the Applicant: Dr A Bell SC with Dr RCA Higgins and Mr A O’Brien Solicitor for the Applicant: Jones Day Counsel for the Respondents: Dr S Pritchard SC with Mr C Lenehan Solicitor for the Respondents: Sparke Helmore Lawyers ORDERS
NSD 457 of 2015 BETWEEN: APPLIED MEDICAL AUSTRALIA PTY LTD
ApplicantAND: MINISTER FOR HEALTH
First RespondentKIRSTY FAICHNEY
Second Respondent
JUDGE:
ROBERTSON J
DATE OF ORDER:
5 FEBRUARY 2016
THE COURT ORDERS THAT:
1.The application be dismissed.
2.The applicant pay the respondents’ costs as agreed or taxed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
ROBERTSON J:
Introduction
By these proceedings, Applied Medical Australia Pty Ltd (Applied Medical), a manufacturer and supplier of medical devices for surgical procedures, seeks judicial review of what it identifies as one decision and one failure to decide.
The decision, said by Applied Medical to have been made on or about 19 or 20 February 2015, is described by Applied Medical as a decision to reject its “Benefit Amount Application”, namely, an application to lower the minimum group benefit amount applying to the Prostheses List subgroup “3. General and Miscellaneous 3.8 – Closure Devices, 3.8.3 – Ligating Devices – 3.8.3.3 – Clips with Disposable Applier – Laparoscopic” (the Relevant Subgroup) in the Private Health Insurance (Prostheses) Rules 2015 (No 1) (Cth) from $412 to $99. This decision was made by the second respondent, the Acting First Assistant Secretary, Medical Benefits Division, Department of Health, Ms Kirsty Faichney, as delegate of the first respondent, the Minister for Health (the delegate). This decision was the primary focus of Applied Medical’s application for judicial review. It should go without saying that the Court is not concerned with the merits of the decision.
The claimed failure to decide is described by Applied Medical as the failure of the Minister for Health to make a decision in relation to its “Delisting Applications”, said by Applied Medical to have been made on various occasions between 23 July 2014 and 19 February 2015, namely whether all listings in the Relevant Subgroup should be revoked, and whether the listings of sponsors in the Relevant Subgroup who continued to advocate for a minimum group benefit amount greater than $99 should be revoked.
Applied Medical is one of five sponsors of laparoscopic clip appliers listed in the Relevant Subgroup in the Private Health Insurance (Prostheses) Rules. More specifically, the parties agreed that Applied Medical sponsors two laparoscopic clip appliers which are in the Prostheses List contained in the Private Health Insurance (Prostheses) Rules: (a) “DIRECT DRIVE” 10 mm laparoscopic clip applier, with billing code MH014; and (b) “EPIX” 5 mm laparoscopic clip applier, with billing code MH015. These products perform the same clinical function as the prostheses identified in paragraph 72 of the Statement of Claim, which are included in the Relevant Subgroup.
There is in evidence a minute dated 17 February 2015 and approved on 19 February 2015 by the second respondent. The minute asked the delegate to sign Private Health Insurance (Prostheses) Rules 2015 (No 1). The 17 February 2015 minute also referred to and attached a separate minute (the Minute) seeking the decision of the delegate on a submission from Applied Medical, received on 21 October 2014, to Professor John Horvath, Chair, Prostheses List Advisory Committee and Mr Shane Porter, Assistant Secretary, Private Health Insurance Branch, Department of Health.
Since the Minute became the focus of the parties’ submissions, it is convenient to set it out in full. It appears to have been misdated 20 February 2015, rather than 17 February 2015.
SUBMISSION FROM APPLIED MEDICAL AUSTRALIA PTY LTD
Purpose
1.To ask that you to (sic) NOTE the submission from Applied Medical (Applied Medical) to change the group benefit for a group of prostheses on the February 2015 Prostheses List; and
2.To ask that you AGREE not to make the change submitted by Applied Medical in the February 2015 Prostheses List.
Issue
Applied Medical made a submission to the Assistant Secretary, Private Health Insurance Branch and the Prostheses List Advisory Committee (PLAC) Chair dated 21 October 2014, requesting consideration of a reduction in the group minimum benefit for all products listed in subgroup 03.08.03.03 – Closure Devices, Ligating Devices, Clips with Disposable Applier, with the suffix “Laparoscopic” for the February 2015 Prostheses List. This sub-group on the Prostheses List contains products supplied by Applied Medical and a number of other suppliers. The original submission is at Attachment 1.
Subsequent to the submission dated 21 October 2014, Jones Day (acting on behalf of Applied Medical) has made a number of submissions to various Committees involved with Medical Devices, Departmental staff and the Minister requesting implementation of their submission as part of making of the February 2015 Prostheses List. A complete list of correspondence sent by Jones Day is at Attachment 2. A number of letters have also been received from other interested parties, such as private health insurers, supporting the implementation of this submission. Copies of these letters are at Attachment 3.
Background
The benefits for prostheses on the Prostheses List have evolved since the first Prostheses List was made in 1985. In 2001, benefits were deregulated and subject to negotiation between the medical device sponsors and the private health insurers. In 2004, the then government responded to concerns about unacceptably high increases in prostheses benefits expenditure since deregulation by announcing reforms to the prostheses listing arrangements. As part of the reforms, benefits applying to all private health insurers were negotiated centrally and set by the minister.
Most of the prostheses on the Prostheses List, particularly those accounting for the highest prostheses benefits expenditure, were reviewed and grouped according to their relative clinical effectiveness. Benefits for these prostheses were then negotiated between the sponsors and the Prostheses and Devices Negotiating Group (PDNG) (on behalf of the Prostheses and Devices Committee – the predecessor of the PLAC).
Following the HTA Review in 2009, the negotiation of benefits was discontinued and the PLAC developed a methodology for recommending group minimum benefits. The methodology is to set a minimum benefit price for comparable products performing a similar clinical role at the lowest price for a product which has a market utilisation rate of at least 25%.
In 2013, the PLAC implemented a new sub-committee, the Health Economists Sub- Committee (HESC) to assist with minimum benefit validation for new products applying for listing. This committee has experts in both health economics and clinical care to support recommendations on minimum benefits to the PLAC and ultimately the minister.
Product sponsors who submit applications for new groups and/or new or increased minimum benefit prices are expected to provide financial evidence to support their request. Product sponsors are able to request for the minimum benefit for their product be reduced.
History of the “laparoscopic” subgroup
The listing and benefits of ligating clips with disposable applier has undergone extensive review over the past couple of years. Firstly, this group of products was reviewed as part of a wider review of listing and benefits for all prostheses resulting from recommendations from the HTA review, and most recently this group was reviewed following stakeholder concerns regarding this group.
At the outset of the HTA review in 2009, all ligating clips which had the “endoscopic” suffix were reviewed together. The benefits for these products varied, ranging from $145 to $435. Assuming that the prostheses were grouped together correctly, the PLAC made recommendation (sic) to the minister to list the minimum benefit for these products at $412.
Concerns were raised by stakeholders about this increase in benefit for this group. The PLAC undertook to review that group of products and the benefits. The clinicians again reviewed the group and product sponsors were asked to provide submissions regarding these products including information regarding appropriate minimum benefit for these products.
It became apparent that products within this group were not clinically equivalent. Sponsors were asked to provide additional information about their prostheses to enable clinicians with appropriate expertise on the Panel of Clinical Experts (“the PoCE”) to provide advice on the comparative clinical effectiveness of the prostheses. This analysis revealed that there were two distinct types of prostheses within the group – devices used in endoscopic surgery and devices used in laparoscopic surgery.
When the methodology for determining group benefits was applied to the two subgroups, it was recommended that the minimum benefits for the “endoscopic” subgroup was $142 and the minimum benefit for the “laparoscopic” subgroup was $412.
Before amending the groupings and benefits for the two subgroups on the Prostheses List, the Prostheses Secretariat consulted with all of the sponsors affected. Applied Medical expressed concern at the time that the benefit of $412 for the “laparoscopic” group was too high, and they would be satisfied with the benefit of $99. The Prostheses Secretariat advised Applied Medical that they could request that their prostheses be listed with a lower benefit of $99. To date, Applied Medical has not made such a request and their product remains at the group minimum benefit price of $412.
Discussion
The original submission from Applied Medical raises concerns about the pricing of prostheses and how, in some cases, the benefits on the Prostheses List do not reflect the net prices paid for prostheses. In essence, the Submission calls for a change in policy with respect to the setting of minimum benefits for Laparoscopic clip appliers.
While Applied Medical is only arguing for a change to the minimum benefit for a single sub-group, from a policy perspective, the same methodology needs to be implemented across the entire list. This means that any change in the methodology to calculate minimum benefits will need to be applied to the more than 10,000 items that are currently listed. Implementation of this type of change would require extensive industry wide consultation. Sponsors of other products would need to be given an opportunity to comment on the proposed change to policy. There is no evidence that this proposed change advocated by Applied Medical would be supported by the vast majority of other product sponsors.
The Medibank Private Sale prospectus (paragraph 2.3.13) which is at Attachment 4, identifies Government policy priorities for PHI and states that:
“Consideration may be given to…… and to proposals developed from within Government and industry. Any significant reforms will be the subject of industry, consumer and stakeholder consultation. If reforms are supported, implementation will not occur before 1 July 2015. …”
There are currently a number of reviews being undertaken by Government regarding reduction of red tape and regulation which may have implications for the prostheses listing arrangements. Any changes to the listing arrangements should be considered together, to ensure that the evaluation, assessment and listing of medical devices uses a solid evidence based policy platform which is not considered detrimental to any stakeholders and ensures that high-quality cost-effective prostheses devices which provide good patient outcomes are available for patients in the private healthcare sector.
Recommendation
It is recommended that the minimum benefits for all prostheses for subgroup 03 General Miscellaneous – 03.08.03 Ligating Devices – 03.08.03.03 Clips with Disposable Applier – Laparoscopic are not altered in accordance with Applied Medical’s submission.
Attachments:
1.Original Submission from Jones Day (OBO Applied Medical Resources Corporation) dated 21 October 2014.
2.List of Submissions sent by Jones Day (obo Applied Medical)
3.Letters supporting the submission.
4.Medibank Private Share Offer (2014) Section 2 – Industry Overview, page 36 paragraph 2.3.13
(Original italics.)
The delegate did two things: she noted the submission by Applied Medical; and, she agreed with the recommendation not to make the change submitted by Applied Medical in the February 2015 Prostheses List, as shown by her signing and dating the Minute on 19 February 2015 in relation to both recommendations, and by circling the word “AGREED”.
The issues
In broad terms, Applied Medical contended that the rejection of its “Benefit Amount Application” in relation to the minimum benefit amount for the Relevant Subgroup was invalid by reason of: (1) not being authorised by the Private Health Insurance Act 2007 (Cth), having been made on the basis of a “policy” which was also not authorised by the Private Health Insurance Act; (2) being an improper exercise of the power by reason of failing to take into account certain relevant considerations and taking into account certain irrelevant considerations or because the decision was made in accordance with the rule or policy; (3) the decision being so unreasonable that no reasonable decision-maker could have so exercised the power; and (4) the decision being made without any, or any adequate, evidence.
Applied Medical submitted that the central challenge was that the rejection of its “Benefit Amount Application” was made by the application of a purported “methodology”, the 25% Utilisation Policy, which was extraneous to, found no warrant or justification in, and was contrary to, the statutory and regulatory regime. As stated in the Minute, this methodology was to set a minimum benefit price for comparable products performing a similar clinical role at the lowest price for a product which had a market utilisation rate of at least 25%. Applied Medical submitted that the 25% Utilisation Policy operated arbitrarily to prevent the minimum benefit amounts for prostheses being set below a certain level, in a manner that was inconsistent with the purpose, objects and policy of the Private Health Insurance Act generally and Pt 3-3 in particular.
As to Applied Medical’s claims concerning the failure to decide its “Delisting Applications”, Applied Medical contended that the Minister or her delegate were bound to consider those applications and had not done so. Applied Medical sought an order requiring the respondents to consider the “Delisting Applications” according to law.
Another issue is the relevant basis of the Court’s judicial review jurisdiction. Applied Medical sought review under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (AD(JR) Act) and s 39B of the Judiciary Act 1903 (Cth). The underlying issue is whether either or both of the claimed decision or failure to decide were administrative decisions made under legislation. The answer to that question affects the scope of judicial review.
The statutory provisions
The Private Health Insurance Act relevantly provided as follows:
Division 72—Benefit requirements for policies that cover hospital treatment
72‑1 Benefit requirements
(1)An insurance policy that *covers *hospital treatment meets the benefit requirements in this Division if:
(a)the policy meets the requirements in the table in subsection (2); …
…
(2)These are the requirements that a policy must meet for the purposes of paragraph (1)(a):
…
Requirements that a policy that “covers” hospital treatment must meet Item There must be a benefit for … The amount of the benefit must be … 4 (a) *hospital treatment *covered under the policy; and
(b) if the policy covers *hospital-substitute treatment—hospital‑substitute treatment covered under the policy;
that is the provision of a prosthesis, of a kind listed in the Private Health Insurance (Prostheses) Rules, as described in either of the following paragraphs:
(c) the prosthesis is provided in circumstances in which a *medicare benefit is payable, and, if those Rules set out conditions that must be satisfied in relation to the provision of the prosthesis in those circumstances, those conditions are satisfied;
(d) the prosthesis is provided in other circumstances set out in those Rules, and, if those Rules set out conditions that must be satisfied in relation to the provision of the prosthesis in those circumstances, those conditions are satisfied.
(a) at least the amount set out, or worked out using the method set out, in the Private Health Insurance (Prostheses) Rules as the minimum benefit, or method for working out the minimum benefit, for the prosthesis; and
(b) if the Private Health Insurance (Prostheses) Rules set out an amount, or a method for working out an amount, as the maximum benefit, or method for working out the maximum benefit, for the prosthesis—no more than that amount or the amount worked out using that method.
…
Note:If a private health insurer provides an insured person with, or arranges for an insured person to be provided with, treatment, it is treated as a benefit for the purposes of this Division (see subsection 69‑5(3)).
72‑5 Rules requirement in relation to provision of benefits
(1)For the purposes of paragraph 72‑1(1)(d), the *rules of the private health insurer that issues the policy meet the rules requirement in this section if the rules have the effect required by subsection (2).
(2)The effect required is that if, under an agreement or arrangement with a private health insurer, a particular *health care provider (other than a *medical practitioner) provides particular *hospital treatment or *hospital‑substitute treatment to people insured under the same *complying health insurance product of the insurer, any charge for the treatment:
(a) that is payable by an insured person; and
(b) which is not recoverable by a benefit under the product;
must be the same for all of the people insured under the product, irrespective of:
(c)the frequency with which that provider provides that particular treatment to people insured under that product; or
(d) any other matter.
(3)The Private Health Insurance (Complying Product) Rules may modify the effect required by subsection (2) in relation to all or particular kinds of *complying health insurance products, benefits, treatments or *health care providers. To the extent the Rules do so, the rules requirement is taken to be met if the conditions in the Rules are met.
72‑10 Minimum benefits for prostheses
(1)Private Health Insurance (Prostheses) Rules made for the purposes of item 4 of the table in subsection 72‑1(2) must only list a kind of prosthesis if:
(a)an application has been made under subsection (2) in relation to that kind of prosthesis; and
(b)the Minister has granted the application.
(2)A person may apply to the Minister to have the Private Health Insurance (Prostheses) Rules list a prosthesis of the kind to which the application relates.
(3)The application must be:
(a)in the *approved form; and
(b)accompanied by any application fee imposed under the Private Health Insurance (Prostheses Application and Listing Fees) Act 2007.
(4)The Minister must inform the applicant in writing of the Minister’s decision whether or not to grant the application. If the Minister decides not to grant the application, the Minister must also inform the applicant of the reason for that decision.
(5)If:
(a)the Minister grants the application; and
(b)the applicant pays to the Commonwealth any initial listing fee imposed under the Private Health Insurance (Prostheses Application and Listing Fees) Act 2007 within 14 days of being informed of the Minister’s decision to grant the application;
the Minister must, on the next occasion when the Minister makes or varies the Private Health Insurance (Prostheses) Rules:
(c)list the kind of prosthesis to which the application relates in those Rules; and
(d)set out in those Rules a minimum benefit for the prosthesis; and
(e)if the Minister considers it appropriate—set out in those Rules a maximum benefit for the prosthesis.
(6)The Private Health Insurance (Prostheses) Rules may set out criteria (listing criteria) to be satisfied in order for an application (a listing application) made under subsection (2) to be granted. The Rules may provide for different listing criteria to apply in different circumstances.
(7)The Minister must not grant a listing application if any applicable listing criteria are not satisfied in relation to the application.
Note:The Minister may refuse to grant a listing application even if the applicable listing criteria are satisfied.
72‑15 Ongoing listing fee for prostheses
(1)This section applies if the Minister lists a kind of prosthesis in the Private Health Insurance (Prostheses) Rules as a result of an application under subsection 72‑10(2).
(2)The applicant must pay to the Commonwealth the ongoing listing fee for which the applicant is liable under the Private Health Insurance (Prostheses Application and Listing Fees) Act 2007, within 28 days of each day specified under that Act as an ongoing listing fee imposition day.
(3)If the applicant fails to pay an ongoing listing fee in accordance with subsection (2), the Minister may remove the kind of prosthesis from the list in the Private Health Insurance (Prostheses) Rules.
72‑20 Other matters
The Private Health Insurance (Prostheses) Rules may, in relation to application fees, initial listing fees or ongoing listing fees imposed under the Private Health Insurance (Prostheses Application and Listing Fees) Act 2007, provide for, or for matters relating to, any or all of the following:
(a)methods for payment;
(b)extending the time for payment;
(c)refunding or otherwise applying overpayments.
By the Dictionary:
approved form is a form that meets the requirements in section 333‑10.
Section 333 provided:
333‑10 Approved forms
(1)A statement, notice, application or other document is in the approved form if:
(a)it is in the form approved in writing by the person specified in the table as the approver of that form; and
(b)it contains a declaration signed by a person or persons as the form requires (see section 333‑15); and
(c)it contains the information that the form requires, and any further information, statement or document required by the approver, whether in the form or otherwise; and
(d)it is given in the manner (if any) required by the approver.
Person who approves forms Item This person ... is the approver of these forms ... 1 the Secretary of the Department forms for which there is no other approver specified in this table. 2 the Chief Executive Medicare forms under Part 2‑2. 3 … …
(2)Despite subsection (1), a document that satisfies paragraphs (1)(a), (b) and (d) but not paragraph (1)(c) is also in the *approved form if it contains the information required by the approver. The approver must specify the requirement in writing.
(3)The approver may combine in the same *approved form more than one notice, statement, application or other document.
(4)The approver may approve a different *approved form for different kinds of private health insurers.
(5)The Chief Executive Medicare must not approve a form that requires a person to provide:
(a)the *tax file number of any person; or
(b)information about the physical, psychological or emotional health of any person.
333‑15 Signing approved forms
A person who is required to do something in an *approved form must, if the form requires it, sign a declaration, or (if allowed by the form) have a declaration signed on the person’s behalf.
333‑20 Private Health Insurance Rules made by the Minister
(1)The Minister may, by legislative instrument, make Private Health Insurance Rules, specified in the second column of the table, providing for matters:
(a)required or permitted by the corresponding Chapter, Part or section specified in the third column of the table to be provided; or
(b)necessary or convenient to be provided in order to carry out or give effect to that Chapter, Part or section.
Private Health Insurance Rules made by Minister Item Private Health Insurance Rules Chapter/Part/section … … … 4 Private Health Insurance (Prostheses) Rules Part 3‑3 … … …
(2)If, under this Act, Private Health Insurance Rules made by the Minister may modify a provision of this Act or another Act (including by modifying the effect, or the requirements, of such a provision), the Rules may do so by adding, omitting or substituting provisions (including effects or requirements of provisions).
The Private Health Insurance (Prostheses Application and Listing Fees) Act 2007 (Cth) relevantly, by s 3 imposed as a tax an application fee for applications made under s 72-10, and by s 4 imposed as a tax an initial listing fee for the purposes of s 72‑10(5). Section 4 also authorised the Private Health Insurance (Prostheses Application and Listing Fee) Rules to specify an ongoing listing fee for the purposes of s 72‑15 of the Private Health Insurance Act and imposed that fee as a tax. By ss 7 and 8:
7Person liable for fee
(1)A person who makes an application under section 72‑10 of the Private Health Insurance Act 2007 is liable to pay the application fee for the application, at the time the application is made.
(2)A person who makes an application under section 72‑10 of the Private Health Insurance Act 2007 is, if the Minister grants the application, liable to pay:
(a)the initial listing fee for the application, at the time the person is informed of the Minister’s decision to grant the application; and
(b)the ongoing listing fee, on each subsequent ongoing listing fee imposition day.
(3)If there is no applicant in relation to a kind of prosthesis because the prosthesis was listed in the Private Health Insurance (Prostheses) Rules in accordance with section 12 of the Private Health Insurance (Transitional Provisions and Consequential Amendments) Act 2007, then the person who was, immediately before the commencement of the Private Health Insurance Act 2007, the sponsor of that prosthesis for the purposes of the National Health Act 1953 is liable to pay the ongoing listing fee on each ongoing listing fee imposition day.
8Private Health Insurance (Prostheses Application and Listing Fee) Rules
The Minister may, by legislative instrument, make Private Health Insurance (Prostheses Application and Listing Fee) Rules, providing for matters:
(a)required or permitted by this Act to be provided; or
(b)necessary or convenient to be provided in order to carry out or give effect to this Act.
The Private Health Insurance (Prostheses Application and Listing Fee) Rules 2008 (No 1) (Cth) relevantly provided:
4. Definitions
In these Rules:
Act means the Private Health Insurance (Prostheses Application and Listing Fees) Act 2007.
…
Private Health Insurance Act means the Private Health Insurance Act 2007.
revocation and relisting has the meaning given by subrule 5(4).
Part 2 Fees
5. Application fees
(1)For subsection 3(1) of the Act, the application fee for an application made under subsection 72-10(2) of the Private Health Insurance Act is:
(a)in relation to a human tissue prosthesis – nil; and
(b)in relation to any other prosthesis, except where subrule (2) applies – $600.
(2)If an application under subsection 72-10(2) of the Private Health Insurance Act to list a prosthesis would result in, if granted:
(a)a revocation and relisting; or
(b)a duplicate listing,
the application fee is, and is taken always to have been, nil.
(3)If the approved form for an application permits more than one application for listing of a kind of prosthesis to be made on the same form, the application for each kind of prosthesis is a separate application and each listing, if granted, is a separate listing.
(4)An application will result in a revocation and relisting only in the following circumstances:
(a) where the application:
(i)if granted, would involve revocation of an existing listing of a prosthesis; and
(ii)is for the listing of:
(A)exactly the same prosthesis for the new applicant; or
(B)the same kind of prostheses which are different only in size or materials, or both, but have the same action, function and clinical outcomes;
…
The Private Health Insurance (Prostheses) Rules 2015 (No 1), made 19 February 2015, relevantly provide as follows:
Part 1 Preliminary
1.Name of Rules
These Rules are the Private Health Insurance (Prostheses) Rules 2015 (No. 1).
2.Commencement and authority
(1) These Rules commence on 18 March 2015.
(2)These Rules are made under item 4 of the table in section 333-20 of the Private Health Insurance Act 2007.
3.Revocation
These Rules revoke the Private Health Insurance (Prostheses) Rules 2014 (No. 2).
4.Definitions
In these Rules:
…
Act means the Private Health Insurance Act 2007.
…
gap permitted prosthesis means a prosthesis of a kind listed in the Schedule where an amount is set out for that kind of prosthesis in the column under the heading ‘Minimum Benefit’ and a different amount is set out in the column under the heading ‘Maximum Benefit’.
…
listed prosthesis means a kind of prosthesis listed in the Schedule to these Rules.
listing application has the same meaning as in subsection 72-10(6) of the Act.
listing criteria has the same meaning as in subsection 72-10(6) of the Act.
…
no gap prosthesis means a prosthesis of a kind listed in the Schedule where an amount is set out for that kind of prosthesis in the column under the heading ‘Minimum Benefit’ and no amount is set out in the column under the heading ‘Maximum Benefit’.
…
Schedule means the Schedule in these Rules.
Note:Terms used in these Rules have the same meaning as in the Act―see section 13 of the Legislative Instruments Act 2003. These terms include:
complying health insurance policy
hospital-substitute treatment
hospital treatment
medicare benefit
Part 2 Benefit requirements
5.Listing of, and benefits for, prostheses
For item 4 of the table in subsection 72-1(2) of the Act:
(a) the Schedule lists the kinds of prostheses:
(i)in relation to which the Minister has granted an application for listing under subsection 72-10(5) of the Act; or
(ii)which are listed in accordance with section 12 of the Private Health Insurance (Transitional Provisions and Consequential Amendments) Act 2007; and
Note:Section 12 of the Private Health Insurance (Transitional Provisions and Consequential Amendments) Act 2007 deals with the listing of a prosthesis that was a no gap prosthesis or a gap permitted prosthesis for the purposes of the National Health Act 1953 immediately before the commencement of the Act.
(aa)circumstances in which a listed prosthesis is provided for the purposes of paragraph (d) of item 4 of the table in subsection 72-1(2) are set out in rule 5A; and
(ab)conditions that must be satisfied in relation to the provision of a listed prosthesis for the purposes of paragraphs (c) and (d) of item 4 of the table in subsection 72-1(2) are set out in rule 5B; and
(b)rule 6 sets out the method for working out the minimum benefit and maximum benefit for hospital treatment, covered under a complying private health insurance policy, that is the provision of a listed prosthesis; and
(c)rule 7 sets out the method for working out the minimum benefit and maximum benefit for hospital-substitute treatment, covered under a complying private health insurance policy, that is the provision of a listed prosthesis.
5B. Conditions in relation to the provision of listed prostheses
For the purposes of paragraphs (c) and (d) of item 4 of the table in subsection 72-1(2) of the Act, conditions that must be satisfied in relation to the provision of a listed prosthesis in the circumstances covered by paragraph (c) or (d) of that item, as the case may be, are:
(a)in relation to any kind of prosthesis where there is a statement of a requirement under the heading ‘Condition’ in the Schedule under the listing for that kind of prosthesis, that requirement; and
(b) …
Note:Item 4 of the table in subsection 72-1(2) of the Act states other requirements in relation to benefits for the provision of prostheses that a policy that covers hospital treatment must meet. These requirements relate to benefits for hospital treatment and, if the policy covers hospital-substitute treatment, to the benefits of that coverage as well.
6.Benefits for prostheses provided as part of hospital treatment
(1)For a no gap prosthesis provided as part of an episode of hospital treatment in a private hospital, the minimum benefit and the maximum benefit are each the amount for that prosthesis listed in the column in the Schedule under the heading ‘Minimum Benefit’.
(2)…
(3)For a no gap prosthesis provided as part of an episode of hospital treatment in a public hospital:
(a)the minimum benefit is the lesser of the following amounts:
(i)the amount for that prosthesis listed in the column under the heading ‘Minimum Benefit’ in the Schedule; or
(ii)the amount of the insured person’s liability to the public hospital for that prosthesis; and
(b)the maximum benefit is the amount for that prosthesis listed in the column under the heading ‘Minimum Benefit’ in the Schedule.
(4)…
Note:Paragraphs (d) and (e) of subsection 72-10(5) of the Act deal with the fixing of minimum and maximum benefits when the Minister is making or varying the Private Health Insurance (Prostheses) Rules.
…
Part 3 Other
8.Timing of applications to have a prosthesis listed
As a matter of normal administrative practice, applications made under subsection 72-10(2) of the Act will be considered after they have been received and, if the Minister decides to grant the application, the kind of prosthesis will be listed in the Schedule the next time the Minister makes or varies the Rules.
Note 1:Under subsection 72-10 (5) of the Act the Minister must list the kind of prosthesis, set out the minimum benefit and, if the Minister considers it appropriate, the maximum benefit for the prosthesis in these Rules on the next occasion that the Minister makes or varies the Rules after he or she grants an application and the applicant has paid to the Commonwealth any initial listing fee within 14 days of being informed of the Minister's decision to grant the application.
Note 2:Under subsection 72-15(3) of the Act, the Minister may remove a kind of prosthesis from the list in the Rules if the applicant fails to pay an ongoing listing fee.
9.Minister may have regard to recommendations and advice
In making the decision under subsection 72-10 of the Act, the Minister may have regard to a recommendation from the Prostheses List Advisory Committee.
…
Part A-Prostheses List
…
03 - GENERAL MISCELLANEOUS
…
03.08.03.03 - Clips with Disposable Applier
…
Billing Code
Product
Description
Size
Minimum Benefit
Laparoscopic Applied Medical Australia Pty Ltd MH014 Direct Drive laparoscopic clip with applier with TiGold titanium clips … … $412.00 MH015 Epix™ Disposal Laparoscopic Clip Applier w/ TiGold M/L titanium clips 5 mm … … $412.00 ConMed Linvatec Australia Pty Ltd LV076 Reflex ELC 530 Automatic Clip Applier … … $412.00 LV086 Reflex 5mm Automatic Clip Applier … … $145.00 Covidien Pty Ltd AS073 ENDOCLIP*; Acuclip Single use Endoscopic Multiple Clip Applier … … $412.00 AS074 ENDOCLIP* … … $412.00 AS137 Endo Clip III … … $412.00 Johnson & Johnson Medical Pty Ltd JJ186 Ligaclip Endoscopic Multiclip … … $412.00 JJ482 LIGAMAX 5mm Endoscopic Clip Applier … … $412.00 N Stenning & Co Pty Ltd NG043 Weck Hem-o-lok … … $412.00
…
The list of prostheses covers over 1000 pages. Part A deals with prostheses, Part B contains the human tissue list; and Part C is entitled “Other Prostheses”. As at February 2015, over 10,000 products were on the list.
It is also convenient to set out the relevant provisions of the Acts Interpretation Act 1901 (Cth), as follows:
33 Exercise of powers and performance of functions or duties
Powers, functions and duties may be exercised or must be performed as the occasion requires
(1) Where an Act confers a power or function or imposes a duty, then the power may be exercised and the function or duty must be performed from time to time as occasion requires.
…
Power to make instrument includes power to vary or revoke etc. instrument
(3)Where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by‑laws) the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.
…
Submissions and consideration
The “Benefit Amount Application”
The Minute
The Minute (mis)dated 20 February 2015 should not be considered as a formal statement of reasons. It is clear that the decision-maker, the delegate, was not purporting to “inform the applicant of the reason for that decision” within s 72-10(4).
In Plaintiff M64/2015 v Minister for Immigration and Border Protection [2015] HCA 50, French CJ, Bell, Keane and Gordon JJ said, at [25]:
It is well settled that in the context of administrative decision-making, the court is not astute to discern error in a statement by an administrative officer which was not, and was not intended to be, a statement of reasons for a decision that is a broad administrative evaluation rather than a judicial decision. It is possible that error of law on the part of the Delegate might be demonstrated by inference from what the Delegate said by way of explanation of his decision; but it must be borne in mind that the Delegate was not duty-bound to give reasons for his decision, and so it is difficult to draw an inference that the decision has been attended by an error of law from what has not been said by the Delegate. Further, “jurisdictional error may include ignoring relevant material in a way that affects the exercise of a power”; but here the plaintiff does not show that relevant material was ignored simply by pointing out that it was not mentioned by the Delegate, who was not obliged to give comprehensive reasons for his decision. Further, the Delegate’s letter is “not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed”.
(Original emphasis. Citations omitted.)
Gageler J said, at [72]:
… The letter was not a formal statement of the reasons for the decision: it was not a document devoted to setting out, exclusively and exhaustively, the findings of fact made by the delegate and the process of reasoning which the delegate adopted to reach the conclusion that there were no compelling reasons for giving special consideration to granting the visas. It was somewhat informally expressed.
The source and character of the power to decide
One important issue which divided the parties was the source and character of the power to decide.
Each party also referred to authority. The respondents referred particularly to Roche Products Pty Ltd v National Drugs and Poisons Schedule Committee [2007] FCA 1352; 163 FCR 451 and Applied Medical referred particularly to Orthotech Pty Ltd v Minister for Health [2013] FCA 230; 211 FCR 241.
Roche concerned judicial review proceedings to challenge the decision or conduct of the National Drugs and Poisons Schedule Committee to reconsider the inclusion of orlistat in Appendix H of the Poisons Standard and the decision or conduct of the Committee of 22 February 2007 deciding to remove orlistat from Appendix H. Section 52D(2) of the Therapeutic Goods Act 1989 (Cth) as it stood in 2007 gave the Committee power to amend the current Poisons Standard or to prepare a new document in substitution for it. The relevant provisions were:
52D Poisons Standard
(1)On the commencement of this Part, the first Poisons Standard is taken to have been prepared and made available by the Committee.
(2)Subject to this Act and the regulations, the Committee has power:
(a)to amend the current Poisons Standard; or
(b)to prepare a document (a new Poisons Standard) that includes schedules containing the names or descriptions of substances, in substitution for the current Poisons Standard.
(3) As soon as practicable after a new Poisons Standard is prepared, the Committee must cause a notice to be published in the Gazette stating:
(a)that a new Poisons Standard has been prepared; and
(b)the date on which the new Poisons Standard comes into effect; and
(c)a place from which copies of the new Poisons Standard can be purchased.
(4)As soon as practicable after an amendment is made to the current Poisons Standard, the Committee must cause a notice to be published in the Gazette stating:
(a)that an amendment has been made to the Poisons Standard; and
(b)the date on which the amendment comes into effect; and
(c)a place from which copies of the amendment can be purchased.
(5)In this section:
amend, in relation to the current Poisons Standard, means:
(a)alter any provision (including a reference to a substance) in the current Poisons Standard; or
(b)omit any provision (including a reference to a substance) from the current Poisons Standard; or
(c)insert any provision (including a reference to a substance) in the current Poisons Standard.
52E Matters to be taken into account in exercising powers
(1)In exercising its powers under subsection 52D(2), the Committee must take the following matters into account (where relevant):
(a)the toxicity and safety of a substance;
(b)the risks and benefits associated with the use of a substance;
(c)the potential hazards associated with the use of a substance;
(d)the extent and patterns of use of a substance;
(e)the dosage and formulation of a substance;
(f)the need for access to a substance, taking into account its toxicity compared with other substances available for a similar purpose;
(g)the potential for abuse of a substance;
(h)the purposes for which a substance is to be used;
(i)any other matters that the Committee considers necessary to protect public health, including the risks (whether imminent or long‑term) of death, illness or injury resulting from its use;
and may take into account the labelling, packaging and presentation of a substance.
(2)In taking into account the matters referred to in subsection (1), the Committee must comply with any guidelines of the Australian Health Ministers’ Advisory Council or the subcommittee of the Council known as the National Co‑ordinating Committee on Therapeutic Goods, notified to the Committee for the purposes of this section.
Branson J concluded that an exercise of power under s 52D(2) of the Therapeutic Goods Act was legislative, rather than administrative in character.
Although certain considerations are traditionally regarded as relevant for the purpose of characterisation, as Branson J noted at [28], the task ultimately is an evaluative one; a judgment must be made taking into account all relevant considerations, but no single consideration is likely to be decisive. If there were a close similarity between s 52D(2) of the Therapeutic Goods Act and s 72-10 of the Private Health Insurance Act, my approach might be different. As it is, Roche can be no more than an example. I note her Honour’s summary at [27] and [29], as follows:
As the Full Court observed in RG Capital Radio Ltd v Australian Broadcasting Authority (2001) 113 FCR 185 at [40] (RG Capital), there is no simple rule for determining whether a decision is of an administrative or legislative character. At [44] the Court cited the following passage from the judgment of the Full Court in Minister for Industry and Commerce v Tooheys Ltd (1982) 60 FLR 325 at 331; 42 ALR 260 at 265:
The distinction is essentially between the creation or formulation of new rules of law having general application and the application of those general rules to particular cases: Commonwealth v Grunseit [(1943) 67 CLR 58]; Hamblin v Duffy No 2 [(1981) 50 FLR 308; 34 ALR 333] and de Smith’s Judicial Review of Administrative Action 4th ed, p 71. In Commonwealth v Grunseit, Latham CJ expressed … the distinction in these terms: “The general distinction between legislation and the execution of legislation is that legislation determines the content of a law as a rule of conduct or a declaration as to power, right or duty, whereas executive authority applies the law in particular cases”.
…
In Visa International Service Association v Reserve Bank of Australia (2003) 131 FCR 300 at [592] Tamberlin J summarised the matters which were regarded as relevant in RG Capital as follows:
ŸWhether the decisions determined rules of general application or whether there was an application of rules to particular cases.
ŸWhether there was Parliamentary control of the decision.
ŸWhether there was public notification of the making of the regulation.
ŸWhether there has been public consultation and the extent of any such consultation.
ŸWhether there were broad policy considerations imposed.
ŸWhether the regulations could be varied.
ŸWhether there was power of executive variation or control.
ŸWhether provision exists for merits review.
ŸBinding effect.
Orthotech did concern the Private Health Insurance Act and the Private Health Insurance (Prostheses) Rules 2012 (No 2) (Cth). Orthotech sought judicial review of a decision to revoke the listing of the components of a certain device “in the Prostheses List forming part of the Private Health Insurance (Prostheses) Rules 2012 (No 2)”.
The decision was expressed to be: “To revoke, in accordance with section 330-20 of the Private Health Insurance Act 2007 (the Act) … the listings in the Private Health Insurance (Prostheses) Rules 2012 (No 2) of the prostheses specified below by revoking, under subsection 72-10 of the Act … the grants of the listings for those prostheses on 5 January 2011.”
Orthotech claimed that the delegate was not empowered by the Private Health Insurance Act (with or without reading relevant provisions of that Act with the Acts Interpretation Act) to make the decision revoking the listing of the device in the Prostheses Rules in the absence of a change in the facts upon which the original decision to list was made. See [40] of the judgment.
That contention failed and Collier J held that the delegate was empowered to revoke the listing. Collier J, at [49], gave as her first and primary reason that s 72-10 is subordinate to s 333-20 for the purposes of construing the relevant legislative scheme in the Private Health Insurance Act. Section 333-20 empowered the Minister to make relevant legislative instruments, including the Prostheses Rules. It was not s 72-10 which so empowered the Minister. Her Honour held, at [50], that the work of s 72-10 was to provide a supportive structure for the Minister to make the relevant legislative instrument, with other sections in Div 72 of the Private Health Insurance Act (for example, s 72-1). Her Honour gave as an example s 72-10 permitting the Minister, on application of an applicant, to either grant or not grant the application for listing of the relevant prosthesis. It was clear, her Honour said, that the sole purpose of the Minister in assessing the application, as required by s 72-10, was to determine whether the relevant prosthesis should be included in the Prostheses List made by the Minister pursuant to s 333-20. It was not in dispute in Orthotech that when the Minister approved applications for new prostheses for listing on the Prostheses List, a new legislative instrument was required to be made by the Minister pursuant to s 333-20 (namely a “new” version of the Prostheses Rules), and that generally this occurred twice every year in February and August. Collier J rejected, at [58], the submission on behalf of Orthotech that there was a contrary intention to the application of s 33(3) for the purposes of s 2(2) of the Acts Interpretation Act or, it seems, s 13 of the Legislative Instruments Act 2003 (Cth). Part of her Honour’s reasoning in this respect was as follows, holding that it was:
… a clear intention of the Private Health Insurance Act in relation to the power of the Minister to make rules listing prostheses which are within the scope of operation of that Act — namely to ensure that prostheses which are approved by the Minister are clinically effective and safe. To the extent that Orthotech submits that this is not a purpose of the Private Health Insurance Act, I reject that submission. The purpose of Pt 3-3 of the Private Health Insurance Act is to set out the requirements that a private health insurance policy must meet in order to be a complying health insurance policy (s 60-1). More fundamentally, it is clear from s 3-1 that the intention of Parliament is that the Act regulate private health insurance in Australia and provide incentives to members of the public to contribute to private health (s 3-1). While the statute deals specifically with the machinery of the private health insurance system, there is an important balance to be struck between premiums, benefits payable to insureds, and the quality of products provided under private health insurance. Public policy and the health concerns of patients are entwined with the exercise of the Minister’s power under s 333-20 to make rules relating to the listing of prostheses (including the approval of the Minister to prostheses to be listed in the Prostheses Rules). In this respect, there is a strong policy dynamic in ensuring that the Minister has power to revoke or rescind decisions concerning prostheses on the Prostheses List. In my view any proposition to the contrary poses a risk that the Minister would be forced to continue to list outdated prostheses, resulting in potential harm to both patients and insurers, and ineffective administration of the private health insurance system under the legislation. I do not consider such a proposition is supported by the structure of the Private Health Insurance Act.
(Original emphasis.)
In my opinion, while the Private Health Insurance Act provides incentives to encourage people to have private health insurance, Ch 3 sets out rules governing private health insurance products and requires insurers who make private health insurance available to people to offer products that comply with the Act. As s 50-1 notes, health insurance made available to the public must meet the requirements in Ch 3, including that the insurance must be in the form of a complying health insurance product. Part 3-3 provides that health insurance that is made available to the public must be in the form of a complying health insurance product (which is made up of complying health insurance policies). As s 60-1 explains, complying health insurance products (complying health insurance policies) are the only kind of insurance that private health insurers are allowed to make available as part of their health insurance business. A complying health insurance product is a product made up of complying health insurance policies: see s 63-5. By s 63-10, a complying health insurance policy is an insurance policy that, if the policy covers hospital treatment, meets the benefit requirements in Div 72. Such an insurance policy meets the benefit requirements in Div 72 if the policy meets the requirements in the table in s 72-1(2), the relevant provision being item 4. The requirements that a policy that covers hospital treatment must meet are, relevantly, that there must be a benefit for hospital treatment covered under the policy that is the provision of a prosthesis of a kind listed in the Private Health Insurance (Prostheses) Rules, and if the prosthesis is provided in circumstances in which a Medicare benefit is payable and the Rules set out conditions must be satisfied, those conditions are satisfied. A further requirement is that the amount of the benefit must be at least the amount set out in the Private Health Insurance (Prostheses) Rules as the minimum benefit for the prosthesis. (The present case does not involve the Rules setting out an amount as the maximum benefit.)
By s 333-20, the Minister may, by legislative instrument, make Private Health Insurance Rules providing for matters required or permitted by, relevantly, Pt 3-3, or necessary or convenient to be provided in order to carry out or give effect to Pt 3-3.
This is the immediate context for s 72-10. The Rules made for the purposes of item 4 of the table in s 72-1(2) must only list a kind of prosthesis if an application has been made by a person to the Minister to have the Rules list a prosthesis of the kind to which the application relates and the Minister has granted the application.
It is significant, in my opinion, that the list referred to is the listing which is done by, and contained in, the Private Health Insurance (Prostheses) Rules. The application to the Minister is to have those Rules list a prosthesis of the kind applied for.
Plainly, as s 72-10(4) makes express, the Minister may either grant the application to have the Rules list a prosthesis or the Minister may decide not to grant the application.
It seems to me that while the making of the Private Health Insurance (Prostheses) Rules is to be characterised as legislative, as also would be varying or revoking those Rules in whole or in part, deciding to grant or deciding not to grant an application under s 72-10(2) is of an administrative character. It is a decision to grant such an application which, by s 72-10(1), is the gateway to a kind of prosthesis being listed in the Private Health Insurance (Prostheses) Rules, but this suggests that the Minister’s decision to grant the application or not to grant the application is sufficiently distinct from the making of the Rules as to have its own character as administrative.
This conclusion is supported by observations in Minister for Industry and Commerce v Tooheys Ltd (1982) 60 FLR 325, Queensland Medical Laboratory v Blewett [1988] FCA 423; 84 ALR 615 and Anderson v Minister for Environment, Heritage and the Arts [2010] FCA 57; 182 FCR 462.
In Tooheys, the Full Court considered the statutory power granted to the Minister by s 273 of the Customs Act 1901 (Cth) to make determinations, by instrument in writing, whereby an item of a Customs Tariff that was expressed to apply to goods as prescribed by by-law shall apply to the particular goods specified in the determination. That power was separate to the powers conferred on the Minister by ss 271 and 272 to make by-laws. The Full Court observed, at 264, that in the case before the Court, the Minister’s decision not to make a determination under s 273 meant that no by-law was made for the purposes of item 19; so that duty was payable on the relevant goods at the rate of 30%. At 265, the Full Court described as unsound the proposition that by-laws were essentially legislative in character and agreed with the conclusion of the primary judge that determinations under s 273 were administrative in character. Their Honours noted, at 267, that it was important to bear in mind that the decision the subject of the proceedings was not a decision to make a determination under s 273; rather it was a refusal to make such a determination. Their Honours left open the possibility of cases where a refusal to make such a determination under s 273 would not assume the same character as a decision to make such determination.
In Queensland Medical Laboratory, the Court was concerned with the power vested in the Minister by s 4A of the Health Insurance Act 1973 (Cth) to make a determination varying the pathology services table set out in Sch 1A of the Act. Gummow J observed, at 634, that the primary characteristic of the activities of administrators in relation to enactments of the legislature was to maintain and execute those laws, as was indicated by the terms of s 61 of the Constitution itself. It was in this context that Gummow J said at 635-636:
The Schedules to the Act plainly are parts of that statute (the Interpretation Act, s 13) and upon the coming into effect of a determination made under s 4a(8) of the Act (as was purportedly the case here) the result is that the old table in Sch 1a ceases to have effect and the new table has effect as if it were set out in Sch 1a in place of the old table. Medicare benefits will thenceforth be calculated by reference to the fees set out in the new table (s 9) and the quantum of the entitlement to payment to Medicare benefits will be modified accordingly: ss 10, 20, 20a. The result is the same as if the Schedule had been changed by an amending statute (see Air Caledonie International v Commonwealth (1988) 82 ALR 385 at 392), but subject to the procedures for parliamentary disallowance of the determination, as provided for in s 4bc (1) of the Act.
In this setting, it may be true to say that if the Minister decides not to make a determination, he is executing or administering a law of the Commonwealth. His consideration of the subject is one which he would not have entertained but for the presence of s 4a(8) of the Act. If he decides not to make a determination, then the matter stops there and it may be accurate to say that his decision was of an administrative character; cf Minister for Industry and Commerce v Tooheys Ltd, supra. And it has to be borne in mind that there may be review under s 6 of the ADJR Act in respect of conduct for the purpose of making a decision to which the Act applies: Gunaleela v Minister for Immigration and Ethnic Affairs (1987) 74 ALR 263 at 276–7.
Nevertheless, in my view, when the Minister makes a determination that the table specified in the determination be substituted for the pathology services table then set out in Sch 1a of the Act, he is making a decision of a legislative rather than an administrative character. This is because, to adapt the expression of Dixon J, s 4a(8) has reposed in him an authority of an essentially legislative character: Dignan’s case supra, at 100-1. The Minister is in a sense executing a law of the Commonwealth because were it not for s 4a(8), he would lack competence to make the determination. But that law was a permitted delegation by the Parliament of legislative authority and to decide to exercise the power conferred by the law is to act as delegate of the Parliament and thus to act legislatively.
(As explained in Sea Shepherd Australia Ltd v State of Western Australia [2014] WASC 66; 313 ALR 184 at [76] per Edelman J, what Gummow J said as to the Minister acting in a manner which had “the immediate effect of changing the content of a law as a rule of conduct or declaration of power, right or duty” should not be treated as a test for “legislative effect”.)
In Anderson, the applicants sought judicial review of two decisions made by the Minister. By the first decision, the Minister declined to make an emergency declaration pursuant to s 9 of the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth). By the second decision, the Minister declined to make a declaration pursuant to s 10 of that Act. Section 9 provided that in certain circumstances the Minister “may, by legislative instrument, make a declaration”. Section 10 made similar provision. The Minister’s primary submission to the Court was that both decisions were legislative in character. Foster J agreed that the making of a declaration under s 9 or s 10 was legislative in character but held, at [52], that the s 9 and the s 10 decisions were both administrative in character. Having referred to Tooheys and to Queensland Medical Laboratory, his Honour said as follows, at [51]:
A decision to refuse to make a declaration under s 9 or s 10 of the Act leaves the declaration applicant without a result and the citizenry without any rule of law of general application. Furthermore, a refusal is not required to be made the subject of a legislative instrument. All that has to be done is that that Minister must take reasonable steps to notify the applicant of the Minister’s refusal to make the declaration.
The first issue in the present case, however, is whether altering what it is that the Private Health Insurance (Prostheses) Rules list is within s 72-10. This is because by its correspondence seeking to lower the minimum group benefit amount applicable to all items in the Relevant Subgroup, Applied Medical was not applying to have the Rules list a prosthesis of the kind to which its “application” related.
In my opinion, such an application to vary the Rules list or to revoke it in whole or in part but not so as to list a kind of prosthesis stands outside s 72-10, which is directed to putting a kind of prosthesis on the Rules list. The Minister may of course make the Private Health Insurance (Prostheses) Rules and may vary them, as referred to in s 72-10(5), but the source of the power to do so is s 333-20, that power including a power to repeal, rescind, revoke, amend or vary the Rules by virtue of s 33(3) of the Acts Interpretation Act. In my opinion, this construction is consistent with the conclusion of Collier J in Orthotech. I do not accept that s 72-10, when read with s 33(3) of the Acts Interpretation Act is the source of the power to make a decision to revoke, vary or amend an existing listing.
The second issue, however, is whether deciding not to act under s 333-20 to vary the list in the Private Health Insurance (Prostheses) Rules is of an administrative character or of a legislative character, accepting as I do that there is an overlap between the two characters.
In my opinion, deciding not to act under s 333-20 is of an administrative character, for the following reasons.
First, a decision not to make or a refusal to make Private Health Insurance (Prostheses) Rules does not involve making a legislative instrument.
Secondly, if the Minister decides not to make a legislative instrument, the Minister is executing or administering a law of the Commonwealth. If the Minister decides not to make a Rule, then the matter stops there.
Thirdly, it is a decision not to act in relation to a specific number or class of goods: see Tooheys at 331-332.
Fourthly, I also take into account the following indicators of a legislative decision, that is, whether the challenged matter:
(i)creates new rules of general application, rather than applying existing rules to particular cases;
(ii)must be publicly notified in the Gazette or similar publication;
(iii)cannot be made until there has first been wide public consultation;
(iv)incorporates or has regard to wide policy considerations;
(v)can be varied or amended unilaterally by its maker, the analogy being to primary legislation;
(vi)cannot be varied or amended by the executive;
(vii)is not subject to merits review in a tribunal;
(viii)can be reviewed in Parliament (for example, as a disallowable instrument);
(ix)triggers the operation of other legislative provisions; and
(x)has binding effect.
See Schwennesen v Minister for Environment and Resource Management [2010] QCA 340 at [8] setting out these indicators of legislative decision in the form expressed in Braemar Power Project Pty Ltd v Chief Executive, Department of Mines and Energy in his Capacity as the Regulator Under the Electricity Act 1994 (Qld) [2008] QSC 241 at [21] per Philip McMurdo J, derived from the analysis in Aronson, Dyer and Groves, Judicial Review of Administrative Action (Lawbook Co, 4th ed, 2009) at pp 75-76 of SAT FM Pty Ltd v Australian Broadcasting Authority (1997) 75 FCR 604; RG Capital Radio Ltd v Australian Broadcasting Authority [2001] FCA 855; 113 FCR 185; Visa International Service Association v Reserve Bank of Australia (2003) 131 FCR 300 at 424; and Roche. Braemar Power was affirmed on appeal: Braemar Power Project Pty Ltd v Chief Executive, Department of Mines and Energy in his Capacity as Regulator under the Electricity Act 1994 (Qld) [2009] QCA 162; [2010] 1 Qd R 403. Aronson and Groves, Judicial Review of Administrative Action (Lawbook Co, 5th ed, 2013) repeat the analysis at pp 86-87, adding a reference to Harbour Radio Pty Ltd v Australian Communications and Media Authority [2012] FCA 614 at [127]-[140]; 202 FCR 525 at 561-563.
In my opinion, deciding not to make or vary the Private Health Insurance (Prostheses) Rules does not create new rules of general application. The decision need not be publicly notified in the Gazette or similar publication. It is not the case that the decision cannot be made until there has first been wide public consultation. It may be that the decision incorporates or has regard to wide policy considerations. Because the present decision is a decision not to make or vary, the decision can be varied or amended unilaterally by its maker; it can be varied or amended by the executive. The decision cannot be reviewed in Parliament as a disallowable instrument. The decision does not trigger the operation of other legislative provisions. The decision does not have binding effect.
It does not follow that the Minister is under an obligation to consider an application. Where a decision is not made, the refusal or failure to make a decision is only reviewable if there was a duty to make the decision. That is unnecessary to decide in the present case in relation to the application to reduce the minimum benefit applicable to all items in the Relevant Subgroup since the Minister’s delegate did consider Applied Medical’s application.
As explained in Yasmin v Attorney-General of the Commonwealth of Australia [2015] FCAFC 145 at [124], the AD(JR) Act contemplates that a decision which was made is reviewable whether or not there was a duty to make the decision and that a decision which was not made is only reviewable if there was a duty to make the decision.
In summary, while I accept the respondents’ submissions as to the source of the relevant power, I conclude that the decision to reject Applied Medical’s application to lower the minimum group benefit amount applicable to all items in the Relevant Subgroup was of an administrative character. If my conclusion is incorrect in this respect, and the character of the decision was legislative, then Applied Medical’s application for judicial review of this decision fails for substantially the reasons which follow. Put differently, if, as I find, the application fails on the basis that the decision was of an administrative character, it fails a fortiori if in truth the decision was of a legislative character, since the scope of judicial review would then be narrower.
While it could be said, as the respondents submitted, that the only relevant exercise of power took place pursuant to s 333-20, that, in my view, fails to distinguish between the decision not to amend the Rules in a particular respect and the making of the Rules without the amendment.
History of Applied Medical’s application to lower the minimum group benefit amount
The history of the correspondence on behalf of Applied Medical, including references to the so-called methodology or policy, is as follows.
Although it does not appear that this letter was before the decision-maker in February 2014 as it is not on the list which is Attachment 2 to the Minute to the delegate, by letter dated 10 June 2014, Jones Day, acting for Applied Medical, wrote to Professor Ian Harper, Competition Policy Review Secretariat. The letter contended that giving significant focus to reforming the private health insurance rebate Prostheses List arrangements, in particular, could lead to significant advances in Australia’s economic performance and patient health outcomes. The letter submitted that as a result of regulatory policy settings which restricted optimal competitive outcomes, products listed on the Prostheses List were being sold at prices that were in some cases multiple times more expensive than the prices at which they were sold in the public health system and in other jurisdictions. There was scope for very substantial efficiencies to be created through the introduction and extension of principles of competition to the regulatory structure that underpinned the Prostheses List. The letter said that in response to specific recommendations from the Review of Health Technology Assessment in Australia conducted by the Department of Health and Ageing in conjunction with the Department of Finance in 2009 (HTA Review), the Prostheses List Advisory Committee (PLAC) had sought to establish and maintain a single price for groups of products on the Prostheses List with similar clinical effectiveness. The letter also attached the preliminary views of Deloitte Access Economics on the potential competition issues in the market.
By letter dated 23 July 2014, Jones Day wrote to Professor Horvath, PLAC, with a copy to Mr Porter, Assistant Secretary, Private Health Insurance Branch and to Ms Lyndall Moore, Director, Prostheses Section in the Department of Health. That letter began by referring to a previous submission dated 10 July 2014, which is not in evidence. Having described as appropriate Applied Medical’s two laparoscopic clip applier models being in a sub-classification together with those of Johnson & Johnson and Covidien, Jones Day said the following:
We also understand from discussions with your officers that the August 2014 Prostheses List will set a minimum benefit of $412 for these items unless submissions are received from the suppliers of the relevant products that the minimum benefit limit should be lower. We understand that the figure of $412 has been selected in the same way that the limits are generally set for the Prostheses List – that being a consideration of the lowest price at which 25% of prostheses in any given sub-group are being supplied under the Prostheses List framework.
Having expressed Applied Medical’s “serious reservations regarding the PLAC process to date”, which appear to have centred on the Private Health Insurance (Prostheses) Rules 2013 (No 1) (Cth) and what was described as the February 2014 Prostheses List, the letter contained what was described as a submission on behalf of Applied Medical. It appears that at that time, Applied Medical’s benefit limit had been set at $145. The letter concluded as follows:
Therefore it is Applied Medical’s submission that:
1.All the products in the sub-group should have the same minimum benefit. This is more important than any of the points below.
2.Based on the evidence supplied, the most equitable and affordable way to deliver access to the cost-effective health technologies needed to manage the health of Australians is to set that minimum benefit at $99 for all laparoscopic clip appliers. At that price Applied Medical would be willing and able to supply as many clip appliers as are needed across the private health system.
3.An international comparison exercise would reveal that the minimum benefit of $99 is in much better alignment with international prices for clip appliers than $412.
4.If any other supplier in the sub-group has provided submissions to the PLAC that a $412 benefit is justified, Applied Medical should be given an opportunity to respond to the substance of those submissions before they are accorded any weight in decision making because the effect of setting the limit at such an inflated level is preventing Applied Medical from selling significant volumes of clip appliers at more affordable, efficient prices and is thus adverse to its interests.
In summary, Applied Medical considers the benefit for the whole group should be set at $99 but if that submission is not accepted, the most important interim principle (until a full review is conducted) is for all suppliers to have the same minimum benefit whatever it may be.
On 21 October 2014, Jones Day sent a letter, referred to above, attaching a submission to the Minister for Health and to the PLAC on behalf of Applied Medical. The body of the letter was as follows, so far as relevant:
Applied Medical seeks the implementation, in the next iteration of the Prostheses List in February 2015, of a significant decrease to the benefit applicable to all items on the Prostheses List sub-group 03 General Miscellaneous – 03.08.03 Ligating Devices – 03.08.03.03 Clips with Disposable Applier – Laparoscopic. That contains laparoscopic clip appliers supplied by:
ŸApplied Medical (Billing Codes MH014 and MH015);
ŸJohnson & Johnson (Billing Codes JJ482 and JJ186); and
ŸCovidien (Billing Codes AS073, AS074 and AS137).
Applied Medical’s submission advances information on the basis of which the Department can immediately remedy the demonstrable over-charging that occurs in respect of laparoscopic clip appliers. It also supports a broader reform agenda that Applied Medical contends ought apply to the entire List in the longer term.
It is clear from the provisions of the Private Health Insurance Act 2007 that the primary concern of Parliament in introducing measures such as the Prostheses List is to encourage people to take out, and continue to hold, private health insurance. Indeed an entire Chapter is dedicated to measures to provide incentives to address these concerns such as the Premiums Reduction Scheme and Lifetime Health Cover protections. The Prostheses List, as it currently operates, is clearly anomalous to the objectives of the legislation and it is incumbent upon the Minister and the Department to bring about reforms to remedy the situation.
…
Applied Medical will separately write to the Department indicating the manner in which the current system is open to abuse by incumbent device suppliers and ways in which this situation could be ameliorated or remedied on a List-wide basis.
Applied Medical supports the maintenance of the current grouping for laparoscopic clip appliers. In the event of any proposal to alter the structure of the group (by addition, deletion, group splitting or amalgamation or otherwise), the Department will be required to accord procedural fairness to Applied Medical and enable it to comment upon the proposal and any material put by the party advancing the alteration.
Applied Medical has commissioned Deloitte Access Economics to provide an independent economic review of the prostheses listing process. The report is provided alongside the submission, to assist the Minister in understanding the economic issues germane to listing decisions.
…
(Footnotes omitted.)
Attached to the letter was a submission to the Minister for Health and the PLAC of some 15 pages. Attached to that submissions was: first, a document “The legal framework within which the Minister makes his decision”; secondly, consultation term sheets setting out Johnson & Johnson’s standard terms with a number of hospital groups, Covidien contract terms with major private hospital groups, and typical private hospital supplier template provisions; and thirdly, a document of some 45 pages by Deloitte Access Economics “Economic review of the prostheses listing process”.
The submission stated that the current allocation of benefits on the Prostheses List was affected by various distorting factors. They were summarised as follows:
i.the benefits set do not reflect net prices paid for prostheses;
ii.the method of determining group benefits restricts competitive and innovative prostheses suppliers from constraining incumbent suppliers through pricing behaviour; and
iii.the benefits set, and net prices paid by hospitals for prostheses, are substantially higher than those found in comparable international markets and the Australian public healthcare system.
The starting point must be a consideration of the purpose of fixing a minimum benefit. I accept the respondents’ submission that having regard to the matters that appear from the scope and object of the relevant provisions, it cannot be the case that the Minister or the delegate was bound to adopt the lowest existing benefit within the group, or the lowest price at which a particular group member was willing to sell their product. Broader matters such as consumer choice and safety and efficacy are matters to which the Minister may have regard, and therefore the decision ceases to be one necessarily dictated solely by cost or by price. But that submission, as it was put, goes more to the lawfulness of the methodology or policy, which I have accepted.
The respondents also submitted that in making a single instrument of a legislative character, it can hardly be a ground for invalidity that the decision-maker seeks to achieve a measure of consistency across that instrument by applying a consistent methodology. Again, this goes to the point of whether or not a policy may be adopted and not directly to the present question.
Another of the respondents’ submission on this point was that all that would be required is that the delegate not “shut their ears” to those “applications”: British Oxygen Co Ltd v Minister of Technology [1971] AC 610 at 624-625 (per Lord Reid); NEAT Domestic Trading at [26] per Gleeson CJ. The respondents submitted that the delegate did not do so. Her attention was specifically drawn to them.
It is necessary again to consider what the reasoning of the delegate was, bearing in mind that the Minute does not constitute a formal statement of reasons (see [19] – [20] above). The essence of the reasoning was that while Applied Medical was arguing for a change to the minimum benefit for the Relevant Subgroup, a single subgroup, such that the minimum benefit reflected the net prices paid for those prostheses, that was not how minimum prices were set and therefore the submission called for a change in policy (for the setting of minimum benefits for laparoscopic clip appliers). How minimum prices were set had been earlier described in the Minute by reference to the methodology being to set a minimum benefit price for comparable products performing a similar clinical role at the lowest price for a product having a market utilisation rate of at least 25%. The next step in the reasoning was that the same methodology (whatever it was) needed to be implemented across the entire list. Implicitly, the reasoning was that whatever the worth of setting the minimum benefit for the Relevant Subgroup to reflect the net prices paid for those prostheses, that could not be done except across the entire list. Therefore, as the Minute said, any change in the methodology to calculate minimum benefits would need to be applied to the more than 10,000 items that were then listed. To do this would require extensive industry wide consultation and sponsors of other products would need to be given an opportunity to comment on the proposed change to policy. (I assume that it is implicit in this reasoning that the sponsors of other products within the Relevant Subgroup would also need to be given an opportunity to comment on the proposed change.) There was no evidence that the proposed change would be supported by the vast majority of other product sponsors, and if reforms were supported, implementation would not occur before 1 July 2015. It is to be recalled that what the delegate agreed to was not to make the change submitted by Applied Medical in the February 2015 Prostheses List.
Essentially, in my view, the reasoning had two elements. Whatever the worth of setting the minimum benefit for the Relevant Subgroup to reflect the net prices paid for those prostheses (as contended for by Applied Medical), this could not be done as a matter of good administration (“from a policy perspective”) because, first, the same methodology needed to be implemented across the entire list and, secondly and consequently, there would need to be extensive consultations, including providing procedural fairness to sponsors of other products. The delegate concluded, therefore that the change should not be made to the Private Health Insurance (Prostheses) Rules 2015 (No 1).
In my opinion, this does not constitute a refusal or failure to consider the exercise of the discretion conferred by s 333-20 of the Private Health Insurance Act according to its terms.
Applied Medical submitted that what was being sought was not a change to the methodology or policy but its non-application on the facts of the instant case. That, it was submitted, would leave the methodology/policy otherwise intact. Further, to say that the same methodology/policy needed to be implemented across the entire list was tantamount to saying that it could never be departed from. This was illegitimate rigidity. I do not accept this submission.
The first point, in my opinion, in the present circumstances is a distinction without a difference. Applied Medical was asking for a departure from the policy or methodology so far as it applied to the Relevant Subgroup: it does not matter whether the departure is called a “non-application” or not. Applied Medical submitted that there was a crucial distinction between arguments as to why a policy should not have application in any given case and the type of arguments contemplated in British Oxygen which were arguments attacking the policy. In my opinion, this is not always so. In some cases, of which this is one, an individual application is not required to be considered in isolation. While the HTA Review contemplated, at page 94, that a sponsor requesting a lower benefit would trigger a review of the group benefit by the then Prostheses and Devices Committee, this said nothing about differential methodology or policy in setting minimum benefits across the groups or subgroups of prostheses.
As to the second point, I do not accept Applied Medical’s submission that the delegate’s reasoning, that the same methodology/policy had to be implemented across the entire list, is the same as saying that the methodology/policy can never be departed from. What the delegate was saying was that the same policy needed to be applied, and the present methodology/policy could not be changed without consultation and procedural fairness. This is made clear in the submission which the delegate is to be taken to have accepted that: “[a]ny changes to the listing arrangements should be considered together, to ensure that the evaluation, assessment and listing of medical devices uses a solid evidence-based policy platform which is not considered detrimental to any stakeholders and ensures that high-quality cost-effective prostheses devices which provide good patient outcomes are available for patients in the private healthcare sector.” The temporal element (“never”) central to this point is not made out and the claim “illegitimate rigidity” fails.
As explained in Plaintiff M64/2015 at [58] per French CJ, Bell, Keane and Gordon JJ, while the policy could not lawfully be applied rigidly so as to preclude the consideration by the delegate of the circumstances of the applicant, Applied Medical, the reasoning does not demonstrate that the policy was applied rigidly without regard to the particular circumstances of the case. The reasoning recognised what it was that Applied Medical wanted and the effect of the reasoning was that, whatever the merits of the approach for which Applied Medical contended, the merits of its application could not adequately be considered by reference to the circumstances of Applied Medical alone: see Plaintiff M64/2015 at [68] per Gageler J. The reasoning was that the circumstances of Applied Medical did not warrant departure from the application of the policy or methodology.
In my opinion, the relevant law has at its centre a failure, actual or constructive, to exercise a discretion. Here the discretion is to make the Rules. The relevant part of the Rules is to give effect to Pt 3-3 and specify as one of the requirements that an insurance policy that covers hospital treatment must meet, being the minimum benefit for the provision of a prosthesis: item 4 of s 72-1.
Gleeson CJ said in NEAT Domestic Trading at [24]:
There is nothing inherently wrong in an administrative decision-maker pursuing a policy, provided the policy is consistent with the statute under which the relevant power is conferred, and provided also that the policy is not, either in its nature or in its application, such as to preclude the decision-maker from taking into account relevant considerations, or such as to involve the decision-maker in taking into account irrelevant considerations. The policy, and its application, must be measured against those requirements, having regard to the matter presented for decision, and the information and arguments, if any, advanced for or against a particular outcome.
At first instance, NEAT Domestic Trading Pty Ltd v Wheat Export Authority [2000] FCA 1866; 64 ALD 29, Mathews J reviewed the authorities, including British Oxygen; R v Port of London Authority, Ex parte Kynoch Ltd [1919] 1 KB 176; Ex parte Venables; Chumbairux v Minister for Immigration and Ethnic Affairs (1986) 74 ALR 480; and Howells v Nagrad Nominees Pty Ltd (1982) 66 FLR 169, and said at [50]:
It is clear from these authorities that adherence to policy is permissible, and in some cases desirable, provided the policy is not too inflexibly applied. What is too inflexible will depend on the circumstances of each case, including the nature of the decision, the nature of the policy, the rationale for the policy, and the extent to which a consideration of individual circumstances might justify a departure from the policy.
In Howells, Fox and Franki JJ said, at 194-195:
The interface between policy and discretion in the exercise of statutory powers is a difficult one. Leading statements on the subject are found in R. v Port of London Authority; Ex parte Kynoch Ltd. [1919] 1 KB 176, at p. 184 per Bankes L.J.; British Oxygen Co. Ltd. v. Minister of Technology [1971] AC 610; R. v. Anderson; Ex parte Ipec-Air Pty. Ltd. (1965) 113 CLR 177, at pp. 188-190; Ansett Transport Industries (Operations) Pty. Ltd. v. Commonwealth (1977) 139 CLR 54, at pp. 82-83; Bread Manufacturers of New South Wales v. Evans (1981) 56 ALJR 89 and in the setting of administrative review, see Drake v. Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409. No one test can be articulated for all cases.
Where the power given relates to the consideration of individual cases, it is not to be denied that the predominant aspect must be the consideration of the particular case. The merits of that case must be considered genuinely and realistically; there must always be a readiness to depart from policy. The policy does a disservice to those who have to measure it against the individual situation if it is expressed in dogmatic or mandatory terms.
In Skoljarev v Australian Fisheries Management Authority (1995) 133 ALR 690 (appeal dismissed (1996) 41 ALD 481), Davies J said, at 696:
… It should no longer be necessary for a decision-maker to indicate at any length the considerations which support the application of policy. Rules and standards are important, both as a means of giving effect to lawful policy which a government or an authority has determined and wishes to be implemented and as a means of ensuring that decisions, because they have been taken by reference to rules or settled standards, are fair, consistent and not arbitrary.
Policy does not constitute a binding rule, unless a statute so provides, as does s 17(1) of the [Fisheries Management Act 1991 (Cth)]. Absent a statutory provision requiring compliance with policy, a decision-maker may depart from policy and, in an appropriate case, should do so. It is impossible to define or delineate the circumstances in which departure from policy is justified. Much depends upon the nature and context of the decision to be made, the nature of the policy to which regard is to be had and the nature of the individual circumstances to which attention is directed. …
Here, the nature and context of the decision to be made was whether, in light of the matters put by Applied Medical, there should be a differential treatment for the minimum benefit for the Relevant Subgroup (involving either/or non-application of the methodology/policy or a departure from that methodology/policy) in the making of a Rule covering all of the prostheses in the list. The nature of the policy was that it applied uniformly and applied to setting the minimum benefit for each group or subgroup assessed against a market utilisation rate. The nature of the individual circumstances was that Applied Medical submitted that it was willing to supply prostheses listed in the Relevant Subgroup at a much lower price ($99) than the prescribed minimum benefit and that the Rule for that subgroup should be set so that the suppliers of the other prostheses in the Relevant Subgroup should also be subject to the same much lower minimum benefit.
Applied Medical submitted that s 5(2)(f) of the AD(JR) Act, making improper an exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case, was not a surrogate for British Oxygen; it was the language of the statute that was to be applied. Applied Medical emphasised the statutory language requiring attention to be paid to the merits of the particular case and submitted that this required a consideration as to whether a departure from the policy was justified in the particular circumstances of the case. I accept that the words of the statute are to be applied, although I am not convinced that those words mean anything different from what Lord Reid said in British Oxygen at 624-625. More importantly, the application of the expression “without regard to the merits of the particular case” is to be read in the context of it being an improper exercise of the power to exercise a discretionary power in accordance with a rule or policy without regard to the merits of the particular case. It is the inflexibility of the application of the rule or policy which has the result that the discretion has either not been exercised at all or the width of the discretion has been misunderstood by the decision-maker. But this does not mean that there needs to be a detailed analysis of the particular circumstances of the application either in a formal statement of reasons or, as here, in a less formally expressed Minute. As I have explained, at [99]-[100] above, the decision-maker is to be taken to have reasoned that the change in the amount of the minimum benefit for the Relevant Subgroup should not be made for the February 2015 Private Health Insurance (Prostheses) Rules because the Relevant Subgroup could not be considered by itself and wide consultation and procedural fairness would be required. The delegate was aware of what it was that Applied Medical wanted and why, but concluded that it could not be achieved, whatever its worth.
In my opinion, this does not constitute the exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case. Applied Medical knew what the methodology/policy was. It contended that the methodology/policy should not apply to the Relevant Subgroup. The decision-maker did not refuse to consider the application or “shut her ears” to the application but, as I have said, decided that the methodology/policy should not be departed from for a single subgroup out of the many dozens to which the Rules would apply. Once the repository of a discretionary power has considered an application for the non-application of the policy or a change in policy and has given a reason, other than the bare restatement of the policy, for rejecting that application, it is difficult to conclude that the discretionary power has been exercised inflexibly in the relevant sense.
At the risk of repetition, I find that the decision-maker, the delegate, did consider the submission made by Applied Medical. The letter dated 30 March 2015 said so. More importantly, the delegate was requested to note the submission attached to the (misdated) 20 February 2015 Minute. I do not conclude otherwise: there is no basis for doing so. See Plaintiff M64/2015 at [55] per French CJ, Bell, Keane and Gordon JJ. It is trite to observe that the fact that the submission was not accepted does not mean that it was not considered on its terms. I reject the submission made on behalf of Applied Medical that the Minute, and therefore I assume the delegate, gave “no consideration, let alone genuine consideration, of the arguments advanced in favour of the application”.
To the extent that Applied Medical submitted that the Minister may not permissibly adopt a policy, I reject that submission. Whether or not the Minister needs to have a policy to assist in the exercise of a statutory power is not to the point. And there is no basis for concluding that a policy may only be adopted where there are competing applications or where the decision-maker proposed to discriminate between applicants, as was in fact the case in Plaintiff M64/2015. To the extent that a policy promotes equality of treatment between or among those affected, the nature of the power does not matter, it seems to me, unless the statutory duty were to be construed as not permitting a policy: Re Findlay [1985] AC 318 at 335.
In the present case, the terms of the policy or methodology did not preclude the delegate from departing from it, nor prevent the delegate from taking into account particular circumstances. Neither, in my view, was it inconsistent with the Private Health Insurance Act or with its purpose. I do not construe that Act as requiring that the minimum benefit for the Relevant Subgroup must be the lowest price at which a supplier in the Relevant Subgroup is willing to supply the prostheses such that a policy which did not have that result was impermissible.
If, contrary to my opinion at [103] above, there is a relevant distinction between an application that the policy not be applied in a particular case and an application that the policy should be changed, and if the present case involved the former, an application that the policy not be applied, I reject Applied Medical’s submission that the delegate failed or refused to consider it.
The failure to decide the “Delisting Applications”
Applied Medical submitted that it requested that all listings in the Relevant Subgroup be revoked or, alternatively, that the listings of sponsors in the Relevant Subgroup who continued to advocate for a minimum group benefit amount in excess of $99 be revoked. Applied Medical submitted that the Minister was required to consider the “Delisting Applications” under, or incidental to, s 72-10(4) (sic) of the Private Health Insurance Act. Applied Medical submitted that the briefing note recorded no consideration by the respondents of the “Delisting Applications”. Neither respondent had informed Applied Medical in writing of any decision in respect of the “Delisting Applications” or of the reasons for any such decision as required by s 72-10(4). Further, Applied Medical submitted, each respondent had engaged in unreasonable delay in failing to do so. Applied Medical sought an order, pursuant to s 16(3)(a) of the AD(JR) Act, directing that the Minister, or a delegate, to make a decision in relation to the “Delisting Applications”, or, alternatively, mandamus, pursuant to s 39B of the Judiciary Act, directing the Minister, or a delegate, to decide the matter to which the “Delisting Applications” related, according to law.
The respondents submitted that Applied Medical made no “Delisting Application” and there was no duty in any event for the delegate to consider such applications. What Applied Medical referred to as “applications” involved no more than lobbying for a change to policy in relation to the group minimum benefit amount. The respondents submitted there was and is no duty to consider any such applications, and the relief sought in paragraph 120 of the statement of claim was not available in those circumstances. Even if there were such a duty, there was in fact nothing that would constitute an “application” submitted by Applied Medical; any such requirement extended no further than a requirement that the material be considered by the persons to whom it was addressed and Applied Medical had not alleged that those persons failed to do so; and, to the extent that one of the “applications” was directed to the revocation of the listing of certain of Applied Medical’s competitors, Applied Medical lacked standing to seek relief in respect of any failure to make such a decision. In that respect the respondents submitted that, unlike Argos Pty Ltd v Minister for the Environment and Sustainable Development [2014] HCA 50; 254 CLR 394, there was no evidence before the Court sufficient to establish that Applied Medical would be affected by such a decision to the requisite degree. Applied Medical was, rather, in the same position as the first appellant in Argos: see at [36] and [57]-[58].
At a factual level, the relevant particulars to the statement of claim at paragraph 78(b) identified, first, a letter from Jones Day dated 21 October 2014 to Professor Horvath, Chair, Prostheses List Advisory Committee, and to Mr Porter, Assistant Secretary, Private Health Insurance Branch, Department of Health, attaching a report from Dr Ric Simes of Deloitte Access Economics; secondly, a letter from Jones Day to the Minister dated 28 January 2015; and thirdly, an email from Mr Greg Maloney of Applied Medical to Mr Porter dated 5 February 2015. Applied Medical also pleaded at paragraph 79 of the statement of claim that it had separately proposed to the Secretaries of the Departments of Health and Finance a broader reconsideration of the prostheses list arrangements in the long term and identified, first, a meeting on 25 September 2014, secondly, a meeting on 7 October 2014; and, thirdly, a letter from Jones Day to the Secretary, Department of Health and the Secretary, Department of Finance.
The respondents submitted that the material said to comprise the “Delisting Application” was a passing observation in the submission dated 21 October 2014; an email dated 5 February 2015 addressed to Mr Porter which was not in the agreed tender bundle; and a letter to the Minister dated 28 January 2015. The respondents submitted that those items of correspondence contained nothing that could be meaningfully said to constitute an “application” of the nature alleged. The respondents submitted that the October 2014 submission was not such an application, and the letter to the Minister appeared to envisage action against the competitors of Applied Medical if they engaged in some form of “advocacy”. In any event, the respondents submitted, that “application” may be taken to have been considered by the Minister.
It was common ground that a refusal or failure to make a decision was reviewable only if the person concerned was under a duty to make a decision: see, for example, s 7 of the AD(JR) Act. Applied Medical identified the source of the duty as under, or incidental to, s 72-10(4) of the Private Health Insurance Act. Applied Medical submitted that the Minister was required to inform Applied Medical whether or not she had granted the application, and, if deciding not to grant it, the reasons for that decision. Applied Medical submitted that the mandatory character of the obligation to notify a decision predicated an anterior duty to decide. Applied Medical submitted the duty in question was suitably public in character. Further, the making of the decision under s 72-10(2) was distinct from, and occurred prior to, the making of the Private Health Insurance Rules under s 333-20.
Consideration
In my opinion, the respondents were not under a duty to consider Applied Medical’s so‑called “Delisting Applications”. In so concluding, I first assume that the Minister had power to repeal, rescind, revoke, amend, or vary the list or Rules referred to in s 72-10. However, any duty to consider may attach only to an application contemplated by that provision. There is no suggestion that the correspondence on which Applied Medical relied on this part of its case answered the description of an application within s 72-10(3) in that the application was neither in the approved form nor accompanied by any application fee imposed under the Private Health Insurance (Prostheses Application and Listing Fees) Act. I construe those requirements as prerequisites to the making of an application for the purposes of s 72-10. It was not for those considering the correspondence to waive that requirement. Indeed, as I read the correspondence, those to whom it was addressed did not consider that they were dealing with an application under s 72-10 so no question of waiver on their part arose. As to “any application fee”, if the correspondence did constitute an application under s 72-10(2) to list a prosthesis, in my opinion it would not result in a revocation and relisting, within the meaning of subrule 5(4) of the Private Health Insurance Prostheses Application and Listing Fee) Rules 2008 (No 1). That subrule exhaustively lists the circumstances in which an application will result in a revocation and relisting. In my opinion, any application, if granted, would not be for the listing of exactly the same prosthesis for the new applicant or the same kinds of prostheses which are different only in size or materials, or both, but have the same action, function and clinical outcomes: see subrule 5(4)(a).
In my opinion, the proper characterisation of Applied Medical’s correspondence is as follows.
The 21 October 2014 letter contained no reference to s 72-10 of the Private Health Insurance Act.
Page one of the letter refers to Applied Medical “also support[ing] a broader reform agenda that Applied Medical contends ought to apply to the entire List in the longer term”. This is what is referred to at paragraph 68 of the submission as follows:
Applied Medical understands that there is a work stream under way to reduce the number of items covered by the Prostheses List and supports the removal of relatively low value consumables from the List. That would include clip appliers provided the whole group was removed and that the products for which they can be substituted are also not on the list.
A letter to the Minister dated 28 January 2015 made reference to the same issue. It referred back to the 21 October 2014 letter and described it as a detailed submission to the Department “under the existing legislation and policy framework in relation to products in the … relevant subgroup” and further described the submission as being that the benefit amount for products in the group should be reduced from $412 to $99. The 28 January 2015 letter continued as follows:
Although this decision will save millions of dollars, this is but a small fraction of the items on the current Prostheses List. To the extent that any of the four other suppliers in the relevant subgroup continue to advocate for an unreasonable benefit amount, which is not justifiable in view of international and public sector prices, we submit that you exercise your power as Minister to revoke those product listings.
(Original underlining.)
In my opinion, it is clear that this does not constitute an application under s 72-10: it has the character of a submission to the Minister as to what she should do in certain events and argues that, in those events, the Minister should act. Although s 333-20 is not mentioned, in my opinion it was the relevant power.
For completeness and although not necessary to decide, in my opinion, leaving aside an application made under s 72-10 to which s 72-10(5) would apply, that power does not sufficiently concern the peculiar interests of a particular person but the vindication of a public right having regard to government policy (see Yasmin at [69]) and, therefore, there was no duty to consider Applied Medical’s request to amend the Private Health Insurance (Prostheses) Rules.
Although I admit into evidence, as having sufficient relevance, MFI 1 as Exhibit B, I place no weight on the correspondence of 28 July 2015 and 12 August 2015 from Jones Day to Mr Porter and to the “Prostheses Section” respectively, written after the commencement of these proceedings, and, in my view, purporting to give a new character to Applied Medical’s earlier submission for the revocation of the listings. (The third paragraph of that letter contains a reference to an application made by Applied Medical on 19 February 2015 but no such correspondence is particularised and it is probably an error for the letter of 28 January 2015 which I have considered above. In my opinion, there was no duty on the part of the Minister to consider it.)
Rulings on evidence
As indicated at [128] above, I admit into evidence MFI 1 as Exhibit B. The respondents’ objection was on the basis of relevance but in my view the material has sufficient relevance within s 55 of the Evidence Act 1995 (Cth).
Orders
The application should be dismissed, with costs.
I certify that the preceding one hundred and thirty (130) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson. Associate:
Dated: 5 February 2016
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