Kelly v Daniel

Case [2004] FCAFC 14

FEDERAL COURT OF AUSTRALIA

Kelly v Daniel [2004] FCAFC 14

ADMINISTRATIVE LAW – medical practitioner – Professional Services Review Scheme under Pt VAA of the Health Insurance Act 1973 (Cth) – effect of 1999 amendments – investigative referral by Health Insurance Commission (“Commission”) to Director of Professional Services Review (“Director”) – adjudicative referral by Director to Professional Services Review Committee - whether investigative referral can be made in reliance upon s 106KA(1) alone – whether Commission failed to take into account relevant considerations before making investigative referral - referred services – length of referral period – whether Commission must refer to the Director particulars of a practitioner’s services over a full two-year period - whether two year period is merely an outer limit of the period for which particulars of services must be referred to and investigated by the Director – whether adjudicative referral can be made in reliance upon s 106KA(1) alone – whether Director failed to take into account relevant considerations before making adjudicative referral – procedural fairness

Health Insurance Act 1973 (Cth), ss 86, 89, 91, 92 and 106KA

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

Adams v Yung (1998) 83 FCR 248, referred to

Pradhan v Holmes [2001] FCA 1560, (2001) 125 FCR 280, considered

Health Insurance Commissionv Grey [2002] FCAFC 130; (2002) 120 FCR 470, cited

Kioa v West (1985) 159 CLR 550, cited

Project Blue Sky Inc. v Australian Broadcasting Authority (1998) 194 CLR 355, referred to

BERNARD RAYMOND KELLY (in his capacity as Acting Director of Professional Services Review), ALAN JOHN HOLMES (in his capacity as 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) AND HEALTH INSURANCE COMMISSION v STEVEN DANIEL

V657 OF 2003

MARSHALL, NORTH AND WEINBERG JJ
6 FEBRUARY 2004
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V657 OF 2003

ON APPEAL FROM A SINGLE JUDGE OF THE COURT

BETWEEN:

BERNARD RAYMOND KELLY (in his capacity as Acting Director of Professional Services Review)
FIRST APPELLANT

ALAN JOHN HOLMES (in his capacity as the Director of Professional Services Review)
SECOND APPELLANT

LYNETTE EDWARDS (in her capacity as a member of Professional Services Review Committee No. 324)
THIRD APPELLANT

CELIA SKLOVSKY (in her capacity as a member of Professional Services Review Committee No. 324)
FOURTH APPELLANT

JOHN TURNBULL (in his capacity as a member of Professional Services Review Committee No. 324)
FIFTH APPELLANT

HEALTH INSURANCE COMMISSION
SIXTH APPELLANT

AND:

STEVEN DANIEL
RESPONDENT

JUDGES:

MARSHALL, NORTH AND WEINBERG JJ

DATE OF ORDER:

6 FEBRUARY 2004

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.        The appeal be dismissed, with costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN…

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AGLC
Kelly v Daniel [2004] FCAFC 14
Case
[2004] FCAFC 14
Decision Date

CaseChat Overview and Summary

The case of Kelly v Daniel involved Dr Steven Daniel, a registered medical practitioner, challenging the validity of an investigative referral made by the Health Insurance Commission (the Commission) and the subsequent establishment of a Professional Services Review Committee to review his conduct. The referral was made on the basis of Dr Daniel's high volume of services, which exceeded the prescribed level. The primary judge found the investigative referral to be invalid and dismissed Dr Daniel's appeal. The central legal issue was whether Section 106KA(1) of the relevant legislation required the Commission to make an investigative referral upon showing a prima facie breach of the 80/20 rule, independent of any defences the practitioner might have. The court examined the structure and text of the Act, finding that Section 106KA(1) was not applicable to the Commission's investigative role but rather to the Committee's fact-finding role in response to an adjudicative referral. The court further concluded that the referral period was not a two-year period as Dr Daniel argued, but rather a specific timeframe between 13 August 2000 and 7 January 2001. The appeal was dismissed, with costs awarded to the respondent.

The reasoning of the court was grounded in a detailed analysis of the statutory provisions. The court rejected the contention that Section 106KA(1) required the Commission to make an investigative referral upon showing a breach of the 80/20 rule, emphasizing that such a referral could only be made by a Committee after considering any defences the practitioner might have. The court noted that the Commission's investigative role was distinct from the Committee's adjudicative role, and that Section 106KA(1) was specifically intended to guide the Committee's investigation in response to an adjudicative referral. The court also clarified that the referral period was not a two-year period but a specific timeframe, thereby rejecting Dr Daniel's argument on this point. The appeal was dismissed with costs, affirming the primary judge's decision.

Orders

Orders of the court

1. The appeal be dismissed, with costs.

Background

Background to the litigation

The second decision, referred to as “the adjudicative referral decision”, is described by the primary judge as one:“… made by the Acting Director to refer the question of [the respondent’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.”FACTUAL BACKGROUND The respondent, Dr Steven Daniel, has been a registered medical practitioner since 1995. He worked as a trainee physician for six years at the Alfred Hospital. During the calendar year January to December 2000 he was engaged in general practice at various locations in the western and inner suburbs of Melbourne. Dr Daniel received a letter from the Health Insurance Commission (“the Commission”), dated 8 May 2001, informing him that it 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.” In response to the correspondence, Dr Daniel telephoned the Commission. He spoke to Dr Raymond Mak, who was a medical practitioner employed by the Commission as a “Medical Adviser”. As an adviser, Dr Mak interviewed practitioners selected by the State Office of the Commission on the basis of an atypical “service profile” in comparison to other medical practitioners. In September Dr Mak telephoned Dr Daniel and told him that he would be counselled in the course of a meeting where the two gentlemen would “go through the issues”. The counselling meeting took place on 21 September 2001. Dr Mak informed Dr Daniel that statistics kept by the Commission showed that Dr Daniel’s practice had a high volume of services compared with other practices. He said that there were 12 days with more than 100 services and many days where there were more than 80 services. Most of the relevant days were between August 2000 and January 2001. Dr Mak informed Dr Daniel that his practice would be reviewed in three to six months and his statistics examined. Dr Daniel was told that if, on review, his “practice profile” did not change he may be referred to the Director of Professional Services Review (“the Director”). On 22 October 2001, Mr David Willson (Manager, Professional Services Review, Victorian Branch of the Commission) wrote to Dr Daniel and advised him that his “practice profile” would be reviewed in about six months. However, entirely independent of this review process, the General Manager, Professional Review Division, of the National Office of the Commission, Dr J Mould, sent Dr Daniel a letter dated 19 December 2001, stating that Dr Daniel’s conduct in the “referral period” (13 August 2000 to 7 January 2001) had been referred to the Director. The “investigative referral”, referred to at [3] above, was attached to the letter. On 20 December 2001, the Director wrote to Dr Daniel informing him that he had received an investigative referral from the Commission and that he was required to conduct an investigation. The Director invited Dr Daniel to make written submissions within 14 days, as to why the investigative referral should be dismissed.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

MARSHALL, NORTH AND WEINBERG JJ
We reject that submission. There is nothing in the language of the section to support that construction. Moreover, we agree with his Honour that if the Acting Director understood the section to operate in that way, he was under an obligation to afford Dr Daniel the opportunity to enter into such agreement. It follows that whether one characterises the Acting Director’s approach to s 92 as involving a fundamental error of law going to jurisdiction, or whether it be characterised as a denial of procedural fairness, jurisdictional error has been demonstrated. The adjudicative referral could therefore have been set aside on this ground as well.CONCLUSION In our view, no error has been shown in the primary judge’s conclusion that the investigative referral decision was invalid. In addition, save for his Honour’s finding that the “referral period” was a two-year period (which did not, in any event, invalidate the adjudicative referral), no error has been shown in his Honour’s reasoning concerning the invalidity of that referral on other grounds. It follows that the appeal must be dismissed, with costs.

Ratio Decidendi

Legal Principle Established

Established by: MARSHALL, NORTH AND WEINBERG JJ

Mrs Crennan QC, senior counsel for Dr Daniel, essentially relied upon the reasoning of the primary judge in resisting the appeal.CONSIDERATIONInvestigative referral decision It was contended by Mrs Hampel that under s106KA(1) the Commission is required to make an investigative referral once a prima facie breach of the 80/20 rule is shown. Any potential defence that a practitioner might have to an allegation that there has been a “prescribed pattern of services”, as referred to in that subsection, is irrelevant so far as the Commission is concerned. Such a defence can only be raised before a Committee, in accordance with s 106KA(2). Mrs Hampel’s submission depends, for its acceptance, upon the proposition that s 106KA(1) is applicable to the Commission in its investigative role. The primary judge rejected that contention. His Honour declined to read the expression “for the purposes of this Part” in the subsection as being applicable to the Commission’s task. He regarded the subsection as nothing more than an aid to the Committee’s fact finding role. He arrived at that conclusion only after analysing the structure and text of the Act in detail. He considered, in particular, the location of s 106KA in Subdivision C of Division 4. Division 4 of the Act is headed “Professional Services Review Committees”. Subdivision C is headed “Action to be taken by Committees”. Section 106G provides that Subdivision C applies for the purpose of the consideration by a Committee of the matters in respect of which an adjudicative referral has been made to the Committee. Section 106H deals with matters to be considered by a Committee, while s 106J provides that a Committee is not required to have regard to all services covered by the adjudicative referral. Section 106K provides that a Committee may have regard to samples of services. It is against the background of this constant reference to the “Committee” that his Honour found that s 106KA(1), which is headed “Patterns of services”, applies only to a Committee conducting an investigation in response to an adjudicative referral, and is not directly referrable to the earlier work of the Commission. That conclusion is reinforced by the express references in ss 106KA(2) and 106KA(7) to “the Committee”. It is improbable in the extreme that the expression “for the purposes of this Part” in s 106KA(1) was intended to render that subsection applicable to the investigative role undertaken by the Commission, notwithstanding the fact that the Commission’s functions are governed by the provisions of Pt VAA. In pressing her contention for a contrary interpretation of s 106KA(1), Mrs Hampel referred to the following passage, dealing with that subsection, at p 18 of the Explanatory Memorandum:‘The deeming point in no way represents some marker below which a practitioner is automatically considered to be practising appropriately and above which is automatically considered to have engaged in inappropriate practice. The deeming point does nothing more that to shift the evidentiary burden of the person under review. The only automatic outcome from reaching or exceeding the deeming point is that the practitioner will be referred to a Committee of his or her peers. The practitioner will be given the opportunity to demonstrate to the satisfaction of that Committee that exceptional circumstances prevailed during the referral period which allowed him or her to practice appropriately.’ (emphasis supplied)