Daniel v Kelly

Case [2003] FCA 772

FEDERAL COURT OF AUSTRALIA

Daniel v Health Insurance Commission [2003] FCA 772

ADMINISTRATIVE LAW – judicial review – medical practitioners – Professional Services Review under Part VAA Health Insurance Act 1973 (Cth) – investigative referral by Health Insurance Commission to Director of Professional Services Review – adjudicative referral by Director to Professional Services Review Committee – where adjudicative referral purportedly under s 86 on the basis of s 106KA(1) – whether s 106KA(1) confers powers or obligations upon the Director – whether the Director can have regard to the “80/20 rule” established by regs 10 and 11, Health Insurance (Professional Services Review) Regulations 1999 – Director not entitled to rely upon the “80/20” rule alone to make adjudicative referral

HEALTH LAW – medical practitioners – Professional Services Review under Part VAA Health Insurance Act 1973 (Cth) – “inappropriate practice” – s 106KA(1) does not absolve the Health Insurance Commission from inquiring whether a practitioner’s “conduct would be unacceptable to the general body of general practitioners” under subs 82(1)(a) – content and form of investigative referral – meaning of “referred services” into which the Director must inquire – subs 86(4)(a) requires that investigative referral contain particulars of all services during the referral period – “referral period” under s 81 and ss 86(2) or (3) means two years period prior to referral date – Director must investigate, as he or she thinks fit, all services rendered in the two year period – investigative referral not necessarily invalid if it does not contain particulars of every service – breach of the “80/20” rule does not relieve Director from need to consider entire two year referral period – such consideration important to exercise of discretion to enter s 92 agreements with practitioner – no requirement under the Act that an agreement can only be considered after a practitioner acknowledges guilt – failure to put to practitioner that silence could be seen as a refusal to acknowledge wrongdoing a breach of procedural fairness

WORDS AND PHRASES – “inappropriate practice” – “referral” – “referral period” – “80/20 rule”

Health Insurance Act 1973 (Cth) Part VAA ss 81, 82, 86, s 87(1), 89, 91, 92, 93A, 106KA.
Administrative Decisions (Judicial Review) Act 1977 (Cth) s 5.
Judiciary Act 1903 (Cth) s 39B

Health Insurance (Professional Services Review) Regulations 1999, regs 10 and 11

Health Insurance Commission v Grey [2002] FCA 130
Pradhan v Holmes [2001] FCA 1560
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Adams v Yung (1998) 83 FCR 248
Kioa v West (1985) 159 CLR 550

STEVEN DANIEL  -v-  BERNARD RAYMOND KELLY (in his capacity as Acting Director of Professional Services Review);  ALAN JOHN HOLMES (in his capacity as the Director of Professional Services Review);  LYNETTE EDWARDS (in her capacity as a member of Professional Services Review Committee No 324);  CELIA SKLOVSKY (in her capacity as a member of Professional Services Review Committee No 324);  JOHN TURNBULL (in his capacity as a member of Professional Services Review Committee No 324)…

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Details
AGLC
Daniel v Kelly [2003] FCA 772
Case
[2003] FCA 772
Decision Date

CaseChat Overview and Summary

In the case of Daniel v Kelly, the plaintiff, Dr Daniel, challenged the decisions of the Health Insurance Commission (the Commission) and the Acting Director of Professional Services Review to refer his conduct for adjudication. The court found that the Commission had failed to take into account relevant considerations when making the investigative referral and that the Acting Director was precluded from properly exercising his discretion due to a lack of information regarding the full period of two years relevant under the Act. Consequently, the court set aside the Commission's decision to refer Dr Daniel's conduct for adjudication, as well as the Acting Director's decisions to establish a committee and make an adjudicative referral.

The primary legal issues before the court were whether the Commission and the Acting Director failed to consider relevant factors in making their decisions and if such failures rendered those decisions invalid. The court held that the Commission had indeed failed to take into account relevant considerations, such as the fact that Dr Daniel's conduct had already been the subject of counselling and review, resulting in a decision to take no action at that time. Furthermore, the Acting Director's lack of information about the full two-year period relevant under the Act precluded him from properly exercising his discretion. The court concluded that both the Commission and the Acting Director had failed to consider relevant factors, leading to the invalidity of their decisions.

In light of the court's findings, the decisions of the Health Insurance Commission and the Acting Director were set aside. The matter was referred back to the Commission for further consideration in accordance with the court's reasons for judgment and generally in accordance with the law. The respondents were required to file and serve written submissions with respect to costs within seven days, and the applicant was to file and serve any written submissions in reply within a further seven days.

Orders

Orders of the court

1. The decision of the sixth respondent, Health Insurance Commission, (“the Commission’) made on or about 19 December 2001 to refer to the first respondent (“the Acting Director”) the question whether the applicant had engaged in inappropriate practice in connection with rendering of services between 13 August 2000 and 7 January 2001 be set aside.

2. The matter to which the decision referred to in paragraph 1 of this Order relates be referred to the Commission for further consideration in accordance with the reasons for judgment of the Court published this day and generally in accordance with law.

3. The decisions by the Acting Director made on or about 14 February 2002 to set up Professional Services Review Committee No 324 (“the Committee”) and to make an adjudicative referral to the Committee be set aside.

4. The respondents are to file and serve written submissions with respect to costs within seven days; and

5. The applicant is to file and serve any written submissions in reply within a further seven days.

Background

Background to the litigation

The second decision is that made by the Acting Director to refer the question of the applicant’s conduct during the referral period for adjudication and to establish, ad hoc, Professional Services Review Committee No 324 (“the Committee”) to deal with that adjudicative referral. For convenience, I shall refer to this decision as “the adjudicative referral decision”.Factual background The facts in this case are not relevantly in dispute. Dr Daniel became a registered medical practitioner in 1995, and from January 2000 to January 2001 he was engaged in general practice at a number of practices and health care centres. On 8 May 2001, Dr Houston, the Acting Manager Professional Services Branch at the Commission, wrote to Dr Daniel, stating that the Commission had reviewed his “practice profile” and that his “servicing pattern appears to have reached the prescribed level which may result in automatic referral to the Director of Professional Services Review”. Dr Daniel telephoned the Commission and spoke to Dr Raymond Mak about the process that appeared to have been commenced. Dr Mak told Dr Daniel that he would be counselling him in the course of a meeting where they would, in Dr Daniel’s words, “go through the issues”. On 21 September 2001 Dr Mak met with Dr Daniel at his surgery. That meeting and what followed is described by Dr Daniel as follows at [11]-[18] of his affidavit;‘We talked about a range of matters relating to my practice. Dr Mak told me that the statistics kept by the HIC showed that my practice had a high volume of services compared with other general practitioners. He noted that there were 12 days with more than 100 services and many days where there were more than 80 services. Most of these days were between August 2000 until January 2001. In addition Dr Mak raised some specific matters concerning the use of Medicare items for various services and he said it was important to use the correct item that related to the particular procedure. I explained to Dr Mak my work methods and how I saw patients. During the meeting he told me that I was an honest hard working doctor who was obviously not rorting the system. He told me that my practice would be reviewed in 3 to 6 months and the statistics reviewed and if the HIC were not content on the review then I might be referred to the Director of Professional Services Review. It was made clear to me that I would not be referred to the Director of Professional Services Review at that time but if on review my practice profile did not change, I may be referred at that time. … …On 22 October 2001 David Willson, Manager Professional Services Review Branch wrote to me about the counselling [provided by Dr Mak] and advised me that HIC had considered my case and had decided to review my practice profile in approximately 6 months. This letter confirmed my understanding that no action would be taken by HIC in relation to a referral to the Director of Professional Service Review pending a review in 6 months time. ……… Dr Mak also raised an issue about the use of certain Medicare items. Mr Willson wrote to me on 21 January 2002 requesting repayment of $1377.50. The amount requested was subsequent(sic) increased to $2,019.55 which I repaid and in respect of which I received a letter from Paul Hocking dated 8 April 2002. … ….By letter dated 6 June 2002, Mr Willson wrote to me advising me that HIC had reviewed my practice profile and that the concerns raised by Dr Mak and held by the HIC “appear to have been allayed to some extent during the period since the visit”. Mr Willson[’s letter] told me that no further action will be taken at this time by the HIC with regards to Professional Services Review. … …’

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

RYAN J
It is admitted in the present case that what was before the Acting Director was only material related to services rendered in the period of five months identified by the Commission in its referral. Accordingly, because he did not have information related to the full period of two years made relevant by the Act, the Acting Director was precluded from properly exercising the discretion entrusted to him. That defect was not capable of being remedied by a request for further information under s 86(4A). As explained above, consideration of particulars of all services rendered during the referral period, might have resulted in a different exercise of the discretion by, for example, offering the applicant a s 92 agreement.Conclusion For the reasons which I have endeavoured to explain, the Commission, in making the investigative referral failed to take into account relevant considerations. That decision must therefore be set aside and as a consequence the decisions of the Acting Director to establish a Committee and make an adjudicative referral to it are also invalid. It seems to be unnecessary, in view of the orders which I propose to make, to restrain the Committee from proceeding further on the adjudicative referral. I shall afford the parties an opportunity to make written submissions on the question of costs.

Ratio Decidendi

Legal Principle Established

Established by: RYAN J

For these reasons, a Director should have regard to the whole of the referred services in the relevant two-year period, although I should not be taken as holding that a failure to do so would, on that ground alone, invalidate an adjudicative referral. I enter that caveat for two reasons. The first is the curious result, noted by Finn J in Pradhan (supra), that “the specification so envisaged [from the Commission to the Director under s 87(1)] could clearly result in services being designated in the [investigative] referral (eg “specified services”) that were different from the services that are statutorily defined to be the “referred services” which the Director must consider under s 89(1). The result seems anomalous, though workable. However, I am not persuaded that failure to comply with one sub-section, but not the other, necessarily results in invalidity. The second, and more cogent, reason is that for the Court to impose a prescriptive and laborious duty upon a Director to consider, in every case, two years of material, would detract from the considerable discretion inherent in the words “in such manner as he or she thinks appropriate”, and, potentially, compel unnecessary or excessive expenditure of public funds in implementing legislation which has been framed to protect the public and the general revenue. Invalidity, however, could still result from a failure to take into account relevant considerations.Has there been a failure to take into account relevant considerations? The conclusions reached in the preceding part of these reasons reduce the remaining questions to:(1)did the Commission fail to take into account relevant considerations when making the investigative referral? and(2)did the Director fail to take into account relevant considerations when making the adjudicative referral?(i) The Commissioner’s investigative referral The applicant’s principal complaint against the Commission is that it may be inferred from the documents that it had a policy of “automatic referral” which was applied without consideration of the merits of an individual case. An element of that argument, or an alternative formulation of it was that the Commission had failed to consider the fact that Dr Daniel’s conduct in the period from August 2000 to January 2001 had already been the subject of counselling by Dr Mak and review by Mr Willson in October 2000 and January 2001, resulting in a decision to take no action at that time. These matters were plainly relevant to any decision to investigate Dr Daniel again for the same conduct. Counsel for the respondents contend that consideration of them did not arise, as the referral was an automatic consequence of the Act. I have already rejected that contention. If that had been the view taken by the Commission when it made the investigative referral, it was founded on an error of law. The relevant terms of the Commission’s referral are as follows;‘B. REASONS FOR INVESTIGATIVE REFERRAL Part VAA of the Act provides a scheme (the Professional Services Review Scheme) under which a practitioner's conduct can be examined to ascertain whether they have engaged in inappropriate practice as defined in section 82 of the Act. Section 106KA of the Act (which section commenced on 1 August 1999) also provides that, if during a particular period, the circumstances in which some or all of the referred services were rendered or initiated constituted a prescribed pattern of services, the conduct of the person under review in connection with rendering or initiating services during that period in those circumstances is taken to have constituted engaging in inappropriate practice. Dr Daniel is a medical practitioner (as defined in the Act) and, for present purposes, Part 3 of the Regulations (which part commenced on 1 January 2000) applies. Part 3 provides that, in relation to medical practitioners, the circumstance in which services that are professional attendances constitute a prescribed pattern of service is that 80 or more such services are rendered on each of 20 or more days in a 12 month period, where 'professional attendance' means a service of a kind mentioned in group A1, A2, A5, A6, A7, A13, A14 or A15 of Part 2 of the general medical services table (as defined in the Act). C. REFERRED CONDUCT AND PARTICULARS OF SERVICES In accordance with subsection 86(4)(b) of the Act the HIC considers Dr Daniel may have engaged in inappropriate practice because there is evidence that some of Dr Daniel's professional attendances constitute a prescribed pattern of services as defined in section 106KA of the Act and Part 3 of the Regulations. Specifically, the HIC's records for professional attendances rendered by Dr Daniel during the referral period show that Dr Daniel: · rendered 80 or more professional attendances per day on 24 occasions on and from 13 August 2000 to and including 7 January 2001. Further material in relation to the referred conduct and particulars of services is attached as part of this Investigative Referral.’ (original emphasis)