Bupa HI Pty Ltd v Andrew Chang Services Pty Ltd

In Bupa HI Pty Ltd v Andrew Chang Services Pty Ltd, Bupa, a private health insurer, brought an action against Andrew Chang Services Pty Ltd, a medical services provider, in the Federal Court of Australia. The dispute centred on whether a private hospital was entitled to charge for the second tier default benefits payable by a private health insurer in respect of item 42739 of the Medicare Benefits Schedule when an ophthalmic surgeon, during an intravitreal injection, administered alprazolam where it was medically necessary to do so, and no other anaesthetic service was administered to the patient. This matter also involved issues surrounding the pleading of conscious wrongdoing and the contractual obligations of reasonableness in the deregistration of a medical practitioner from an insurer’s “gap scheme.”

The court was required to determine several legal issues. Firstly, whether the private hospital was entitled to charge for the second tier default benefits under the circumstances described. Secondly, the necessity to plead any allegation of conscious wrongdoing in the context of the applicant pursuing an “all or nothing” case and the forensic consequences of this election. Thirdly, the content of the obligation of reasonableness in the contractual provision providing a mechanism for the deregistration of a medical practitioner from an insurer’s “gap scheme.” This included assessing whether the mechanism required the formation of a reasonable opinion, followed by notice and then a decision, and if there was a breach of contract.

The court held that it was unnecessary to proceed to a separate hearing to assess damages, as the order at the commencement of the hearing had already bifurcated all issues of liability and damages. The court rejected the notion that it was unnecessary to proceed to a separate hearing to assess damages. The court found that the originating application filed by Bupa should be dismissed and a declaration be made. The matter was to be stood over for a further hearing to determine if Dr Chang was entitled to relief by way of damages and, if so, the quantification of such damages. The court also proposed making an order for mediation before a Registrar of the Court prior to 1 March 2019. All issues of costs associated with the liability hearing were reserved until the conclusion of any further hearing on damages. The court found that Bupa’s contention that only an anaesthetist could administer an anaesthetic service was not persuasive and did not accord with the expert evidence provided.