Government Employees Health Fund Limited v; Private Health Insurance Administration Council
[2000] FCA 772
•8 JUNE 2000
FEDERAL COURT OF AUSTRALIA
Government Employees Health Fund Limited v
Private Health Insurance Administration Council [2000] FCA 772ADMINISTRATIVE LAW – judicial review – whether irrelevant consideration taken into account – whether relevant consideration not taken into account – whether decision was within power of decision maker – use of policy in decision making – whether policy inconsistent with principles determined pursuant to statute – whether policy imposed arbitrary restriction on decision maker – whether decision maker was in a fiduciary relationship with the respondent.
National Health Act 1953 (Cth): s 73BC(5B), (5C) & (5E), s 73BC(6) & (8) s 73BC(12), s 82G(1)(r)
GOVERNMENT EMPLOYEES HEALTH FUND LIMITED v PRIVATE HEALTH INSURANCE ADMINISTRATION COUNCIL
V 391 of 1999GOLDBERG J
MELBOURNE
8 JUNE 2000
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
V 391 of 1999
BETWEEN:GOVERNMENT EMPLOYEES HEALTH FUND LIMITED
(ACN 003 683 298)
Applicant
AND:PRIVATE HEALTH INSURANCE ADMINISTRATION COUNCIL
Respondent
JUDGE:
GOLDBERG J
DATE OF ORDER:
8 JUNE 2000
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The application is dismissed.
2.The applicant pay the respondent’s costs of the application including reserved costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
IN THE FEDERAL COURT OF AUSTRALIA
DISTRICT REGISTRY
V 391 of 1999
BETWEEN:GOVERNMENT EMPLOYEES HEALTH FUND LIMITED
(ACN 003 683 298)
Applicant
AND:PRIVATE HEALTH INSURANCE ADMINISTRATION COUNCIL
Respondent
JUDGE:
GOLDBERG J
DATE:
8 JUNE 2000
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
Introduction
The applicant, Government Employees’ Health Fund Limited, has applied to the Court pursuant to the provisions of the Administrative Decisions (Judicial Review) Act 1974 (Cth) to review the decision of the respondent, Private Health Insurance Administration Council (“the Council”), made on 4 November 1998 under Private Health Insurance Administration Council Rule No 4. The Council’s decision was in the following terms:
“I refer to your submission to Council requesting that an adjustment be paid to your organisation for the 1996/97 financial year.
Council has considered the submission for an adjustment of $617,387.00 for the 1996/97 year, and has decided not to make a determination under the Private Health Insurance Administration Council Rule No. 4 that an adjusting amount be paid to your organisation.
Having regard to your submission, Council did not consider that exceptional circumstances as required under Council Rule No. 4 existed.”
The effect of the decision was that the Council decided not to exercise its power pursuant to clause 4 and clause 5 of Rule No 4 to make a determination under s 73BC(12) of the National Health Act 1953 (Cth) (“the Act”) that an amount be paid out of the Health Benefits Reinsurance Trust Fund (“the Trust Fund”) to the applicant.
The application was heard at the same time as applications to review similar decisions of the Council by Australian Unity Health Limited (V 393 of 1999) Queensland Teachers Union Health Fund Limited (V 392 of 1999) and Manchester Unity Friendly Society in NSW Limited (V 498 of 1999). The four applicants were represented by the same solicitors and counsel. The issues which are to be resolved are common to each application as in each case the Council’s decision was in the same terms save for the amount of the adjustment sought and the years to which the adjustments related.
Apart from the facts particular to the applicant the findings of fact, reasoning and conclusions I have reached in the application by Australian Unity Health Limited ([2000] FCA 769) apply equally to this application and I incorporate those findings of fact, reasoning and conclusions in these reasons for judgment.
Background
The applicant is a registered health benefits organisation (“RHBO”) and carries on a health insurance business. It operates under the registered trading name Australian Health Management Group (“AHMG”) and operates in all States and Territories of Australia. The applicant has always made payments to the Trust Fund and has never received payments from the Trust Fund as it has a comparatively small number of claims that are subject to reinsurance. The applicant’s membership has a low risk profile as it is predominantly young and healthy.
The applicant submitted returns to the Council containing data on membership and benefits paid to members on a quarterly basis as required. On 10 September 1998 the applicant lodged a draft submission with the Council seeking reinsurance adjustments for the 1996/97 and 1997/98 financial years. The adjustments sought by the applicant for the 1996/97 financial year were $617,387.05.
The submission of 10 September 1998 arose out of problems identified in May and June 1998 by AHMG’s internal audit department concerning the computer system used by the applicant to calculate the reinsurance amounts it would be eligible to claim from the Trust Fund. This system was supplied by Wacher Pty Ltd (now Sanderson Wacher Pty Ltd) (“Wacher”) and is specific to the health insurance industry and is now used by other health insurance funds. After several months of testing the systems, it was implemented by the applicant in February 1996 across some components of the membership. Internal audit procedures had not identified any problems with the new system at that time. The complete system was implemented in September 1996, encompassing the entire membership of the applicant.
It took some weeks after the discovery of the problems in May and June 1998 for the errors to be quantified and to determine the necessary action to correct them and make any claim against the Trust Fund. On 22 July 1998 the applicant informed the Council that it would be seeking an adjustment to the returns for the 1996/97 and 1997/98 financial years. The applicant instructed its chartered accountants to conduct an audit of the returns necessary for the submission for adjustments in relation to the 1996/97 and 1997/98 financial years.
On 10 September 1998 the applicant forwarded a draft submission in respect of the reinsurance sought by it for the 1996/97 and 1997/98 financial years, attaching the audit report in relation to the adjustment sought for the 1996/97 financial year. The adjustment to claims sought for the 1996/97 financial year was $617,387.05 as the applicant understated its reinsurance claims for the 1996/97 financial year by $617,387.05. The draft submission was accepted by the Council but, as noted earlier, by letter dated 4 November 1998 the Council informed the applicant that it had decided that an adjusting amount would not be paid out of the Fund in respect of any part of the 1996/97 financial year.
For the reasons given in the application by Australian Unity Health Limited against the Council ([2000] FCA 769) the application will be dismissed with costs.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. Associate:
Dated: 8 June 2000
Counsel for the Applicant: Mr J W K Burnside QC and Mr S Senathirajah Solicitor for the Applicant: Corrs Chambers Westgarth Counsel for the Respondent: Mr R R S Tracey QC and Mr T J Ginnane Solicitor for the Respondent: Phillips Fox Date of Hearing: 20 March 2000 Date of Judgment: 8 June 2000
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