Medical Benefits Fund of Australia Ltd v Pullinger, K

[1990] FCA 392

Re: MEDICAL BENEFITS FUND OF AUSTRALIA LIMITED
And: KAREN ANN PULLINGER; P.R. GRIFFIN; JANICE MAREE MURRAY; KENNETH WALLACE
MURRAY; COLIN GORDON CAMPBELL and BARBARA CAMPBELL
Nos. N G84-G86 of 1990
FED No. 392
Administrative Law - Statutory Interpretation

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Pincus(1), Burchett(1) and Gummow(2) JJ.

CATCHWORDS

Administrative Law - Judicial Review - Health Insurance Legislation - test required to be applied in certificate under s.3B of Health Insurance Act 1973.

Words and Phrases - 'nursing-home type patient' - 'acute care' - meaning of these expressions in Health Insurance Act 1973.

Statutory Interpretation - meaning of above expressions in context of legislation - effect of legislative history and scheme.

Health Insurance Act 1973, s.3B

National Health Act 1953, s.73BA

HEARING

SYDNEY

#DATE 31:7:1990

Counsel and Solicitors for the H.D. Sperling QC and
Appellant in each matter: M.B. Smith Esq. instructed

by Messrs Tress Cocks and Maddox

Counsel and Solicitors for the D.K. Catterns Esq. and
First Respondent in NG84 of 1990, R. Philipps Esq. instructed
and First and Second Respondents by Messrs Craddock Murray and
in NG85 and NG86 of 1990: Neumann

Counsel and Solicitor for the R.H. Macready Esq. instructed
Second Respondent in NG84 of 1990, by the Australian Government
and Third Respondent in NG85 and Solicitor
NG86 of 1990:

ORDER

The court orders that the appeal be dismissed with costs.

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

JUDGE1

These three appeals from decisions of Davies J. (which are reported sub nom. Murray v. Griffin (1990) 92 ALR 86) were heard together, as the original applications had been. All parties were agreed that there was no relevant distinction to be drawn between the cases. In each of them, Davies J. set aside upon judicial review a decision of the delegate of the Secretary to the Department of Community Services and Health, remitting the matter for reconsideration in accordance with law; while the appellant contends, in all three appeals, that upon the true construction of the legislation no error on the part of the Secretary had been shown.

1. Each case concerns the categorization, under the Health Insurance Act 1973, of hospital care provided for a very young child suffering from medical conditions so grave as to render constant attention a necessity to enable life to be sustained. To take Karen Ann Pullinger as sufficiently typical of the three (though she is now the only one still living), she was born on 16 April 1982, and since July 1983 has required full-time professional care. In that month, she was admitted to a hospital known as Allowah Babies' Hospital with a diagnosis of Smith-Lemli-Opitz syndrome. Her condition involves cerebral palsy, cortical blindness, epilepsy, and severe difficulty with eating and drinking. Her limbs tend to stiffen and contract into unnatural positions, requiring frequent physiotherapy, hand splints, special chairs, a neck brace, and other aids. She is very fragile and susceptible to infection, so that her continued life is under constant threat. Counsel for the appellant put it, and this was not disputed, that the outlook for her is inexorable deterioration and early death.

2. The legal problem may now be stated. By virtue of s.73BA of the National Health Act 1953 and paragraph (c) of the schedule to that Act, registered health benefits organizations, such as the appellant, are forbidden to offer health insurance in respect of nursing home care. By paragraph (e) of the same schedule, a ceiling is placed upon the amount of fund benefit payable in respect of hospital treatment for a person who is described as "a nursing home type patient". The court was informed in argument that, at the relevant time, this ceiling was about $80 per day, whereas the basic hospital rate was about $175 per day. Plainly, such a difference would in almost all cases produce the result that a person who was "a nursing home type patient" would, for economic reasons, be unable to remain for any lengthy period in a hospital, and would be forced to transfer to a nursing home. There can be no doubt that this is the intention of the legislation, so that it was a matter of the first importance, when parliament was considering it, that a definition should be provided by which a "nursing home type patient" might be identified, but which would not include any patient who ought properly to be treated in a hospital. Parliament attempted to achieve these purposes by s.3B (later supplemented, with regard to some cases, by s.3A which is not presently relevant) of the Health Insurance Act 1973. That section, as originally enacted by s.4 of Act No. 53 of 1979, was coupled with an interpretation provision inserted at the same time in section 3, as follows:
   

"'nursing-home type patient', in relation to a hospital, means an in-patient in a hospital who has been such an in-patient for a continuous period exceeding 60 days commencing on or after 1 July 1979, but does not include an in-patient in respect of whom there is in force a certificate given under section 3B."

Section 3B, in its then form, enabled a medical practitioner to furnish a certificate:

"that, in his opinion, a person who is an in-patient in a hospital is, and will continue to be ..., in need of -

(a) acute care;

(b) professional attention for an acute phase of the patient's condition;

(c) active rehabilitation; or

(d) continued management, for medical reasons, as an in-patient."

1. Clearly, s.3B in that form left a great deal of discretion to the medical practitioner asked to furnish a certificate: under para.(d) he could give a favourable certificate if continued management as an in-patient was needed "for medical reasons", which seems very broad. By Act No. 54 of 1983 the definition of "nursing-home type patient" was amended so as to refer to a continuous period exceeding 35 days instead of 60 days (after the events with which these appeals are concerned, yet more amendments were made by s.7 of Act No. 155 of 1988); and a redrafted s.3B was substituted.

2. By the new s.3B (as further amended by s.28 of Act No. 167 of 1985 by the insertion of subsec.(1A) and of references to it in subsecs.(4), (5) and (6)), it is provided:
   

"(1) A medical practitioner may give a certificate in writing in accordance with the approved form stating that, in his opinion, a person who is an in-patient in a hospital is, or will be, in need of acute care for at least the period specified in the certificate, being a period commencing not later than 14 days after the certificate is given and ending not later than 30 days after the commencement of the period.

(1A) A medical practitioner may give a certificate in writing in accordance with the approved form stating that, in the opinion of the medical practitioner, a person has been, or has been and is, in need of acute care as an in-patient in a hospital for at least the period specified in the certificate, being a period commencing before the certificate is given but not before 1 February 1984 and ending not later than 30 days after the commencement of the period. . . .

(5) Where a certificate has been given under sub-section (1) or (1A), the Secretary -

(a) may, of his own motion, within 14 days after he became aware of the giving of the certificate; and

(b) shall, within 14 days after an application in writing is made to him by a registered organization, being an application made within 60 days after the certificate was given, request a Committee to review the certificate.

(6) After reviewing a certificate given under sub-section (1) or (1A), the Committee shall, if it is of the opinion that the certificate should be varied or revoked, recommend to the Secretary accordingly.

(7) Upon the receipt of a recommendation for the variation or revocation of a certificate, the Secretary may, by writing signed by him, vary or revoke the certificate with effect from the date on which the certificate was given or such later date as he specifies, but nothing in this sub-section requires him to act in accordance with the recommendation.

(8) The Secretary may, in relation to each State and each Territory, establish a Committee or Committees to be known as the Acute Care Advisory Committee, or the Acute Care Advisory Committees, for the State or Territory. . . .

(11) In this section, "Committee" means an Acute Care Advisory Committee established under this section."

1. It will be noted that the basis of giving the certificate is now confined in substance to ground (a) of the former s.3B - the need of acute care. This change implies an intention to narrow or make more stringent the criterion to be applied by the medical practitioner when furnishing his certificate. The difficulty is to construe the phrase "in need of acute care", which states that criterion. The words "acute care" had no technical meaning in medicine at the time when they were introduced into s.3B. Nor do they form an expression in accepted usage of the English language.

2. However, the word "acute" is familiar in medical usage. Generally, it is applied to a disease or condition in order to distinguish the acute from the chronic. This is the relevant sense given in the Shorter Oxford English Dictionary (1980): "Of diseases: Coming sharply to a crisis, not chronic." In some medical dictionaries, two meanings are given, as for example in Blakiston's Gould Medical Dictionary 4th ed. (1979): "1. Sharp; severe. 2. Having a rapid onset, a short course, and pronounced symptoms. This term contrasts with or is complementary to chronic, subacute." Almost identically, Taber's Cyclopedic Medical Dictionary (1975) has an entry: "1. Sharp, severe. 2. Having rapid onset, severe symptoms and a short course; not chronic."

3. In s.3B, the draftsman appears to have transferred the adjective from the disease to the care appropriate for the sufferer. Transferred epithets are more often found in the pleasant obscurities of poetry; they are not always helpful in legislation, where precision is demanded. Here, a peculiar expression has been created, the true interpretation of which, in the context of the Act, poses a difficult question of construction.

4. One thing is clear. "Acute care" is not confined to "care in respect of an acute condition". There are at least three reasons for that conclusion: (1) If such a meaning had been intended, the legislature would surely have said so; (2) there is no limit to the number of certificates contemplated by s.3B, which indicates some sufferers from chronic conditions will be the subject of certificates; (3) The effect of the legislation is, in practical terms, to exclude from a hospital long term patients who cannot obtain a certificate, which makes it impossible to suppose parliament intended certificates to be confined to those suffering from acute conditions, since many chronic conditions do require hospital treatment for long periods.

5. The appellant's primary submission was that "acute care" is care ordinarily available only in a hospital as distinct from a nursing home. This submission has the merit of drawing attention to the integral connection between s.3B and the definition in s.3 of a "nursing-home type patient". Those words, "nursing-home type patient", are significant in themselves as indicating the work the expression "acute care" is intended to do in setting apart patients who should not be regarded as nursing-home type patients. For where there is no certificate that "acute care" is needed, subject to the other terms of the definition, the patient must be considered a "nursing-home type patient". However, it would do less than justice to parliament's attempt to provide a discrimen or criterion, for distinguishing between categories of patients, simply to eschew the task of construction and adopt a test so unrelated to the words of the section. Especially is this so, having regard to the legislative history. As that history shows, the words "acute care" were originally associated with the words "an acute phase of the patient's condition". In that context, there could be no doubt that the medical signification of the adjective "acute" was intended, however inappropriately it was linked with the noun "care".

6. The view which most naturally flows from the history and context of the provision, while giving full effect to its juxtaposition with the expression "nursing-home type patient", is to regard "acute care" as providing a test by analogy to the care appropriate for cases of acute disease. The expression requires the doctor to consider whether the need of the patient for care as an in-patient in a hospital may be compared with the need of a patient who requires hospital treatment for an acute condition. Identity of need is not called for, since the subsection covers cases where the patient's condition is not acute, but chronic. As the precise needs created by different conditions must be different, so that the statutory test is inexact, the doctor who is to apply it must draw upon accepted medical practice.

7. A need of "acute care" cannot simply be equated with an opinion of a treating doctor that the patient ought to be in hospital. The words chosen by parliament do not read that way. Furthermore, the amendment of the section in 1983 suggests parliament intended to fetter what it saw as too uncontrolled a medical discretion. The criterion expressed by the subsection sets to one side any idiosyncratic medical notion of a particular treating doctor. It is intended to require the doctor to apply an objective test, though a broad one. But if accepted medical practice dictates that a particular chronically ill patient ought to be in hospital, that is likely to be enough. On the other hand, where accepted medical opinion sees no real purpose to be served by further hospital treatment, and no continuing need which a nursing home could not supply, the case is unlikely to meet the test. In every instance, the question is ultimately one of fact and of medical assessment. As Northrop J. said in Jackson v. Secretary, Department of Health (1987) 75 ALR 561 at 575: "(W)hether a particular patient has a need for acute care depends upon the treating medical practitioner's clinical judgment."

8. In a world of limitless resources, every patient might receive total care. But we do not live in such a world. There is a limit to what can be devoted in reality to keeping in hospitals persons who derive no significant benefit from the standard of care supplied. The Act is designed by Parliament to draw the limit at the point which ensures that they find their place in nursing-homes rather than hospitals. Those responsible in relation to the furnishing of certificates have the duty of decision in accordance with the statutory criterion we have endeavoured to expound.

9. Once this broad approach to s.3B is accepted, it is plain these appeals must be dismissed. The Acute Care Advisory Committee and the delegate proceeded on a narrow view that, unless the need of the patient was related to "improvement" in the patient's medical condition, the requirements of s.3B could not be satisfied. That proposition treated "improvement" as concerned with getting well, or at least getting somewhat better. Such a construction would exclude a terminally ill patient, for whom, taking a wider view, "improvement" might be constituted by alleviation of painful or distressing symptoms, or the slowing or arresting for some time of deterioration. Whether, in a case of that kind, or in the present cases, "acute care" is needed is a question to be answered upon the full breadth of the statutory language, and in the context of all of the circumstances. Despair of ultimate remedy may legitimately be regarded as important, and sometimes even decisive, but cannot be taken as the sole test. The test is the statutory one, vague and unsatisfactory though the expression of it may be.

10. For these reasons the appeals should be dismissed with costs. It need hardly be said that on reconsideration, it will be necessary to apply the law as stated in these reasons, rather than those of the primary judge.

JUDGE2

The nature of these three appeals, which were heard together, is described in the joint judgment of Pincus and Burchett JJ. As their Honours point out, the Acute Care Advisory Committee and the Delegate proceeded on the view that unless the need of the patient was related to "improvement" in the patient's medical condition, the requirements of s. 3B of the Health Insurance Act 1973 ("the Health Insurance Act") could not be satisfied. In my view, that approach involved a misapplication of the legislation, which means that the Court should dismiss the appeals against the decision of the learned primary Judge remitting the matters for consideration in accordance with law.

1. However, I reach that conclusion by following a statutory path which differs both from that of the learned primary Judge and from that taken by Pincus and Burchett JJ.

2. Section 3B of the Health Insurance Act is concerned with persons who are in-patients in a hospital (so also is s. 3A, but nothing turns upon this provision for the purposes of the present appeals). An "in-patient in a hospital" relevantly means a person who occupies a bed in the hospital for the purposes of "hospital treatment", namely accommodation and "nursing care" (i.e. nursing care given by or under the supervision of a registerted nurse), for the purpose of permitting the provision of "professional attention" (i.e., relevantly, medical or surgical treatment by or under the supervision of a medical practitioner). This is the result of reading together various terms as defined in sub-s 3(1) of the Health Insurance Act.

3. Section 3B assumes that "hospital treatment" as so defined may fall short of "acute care" and that a person who is an "in-patient" in a hospital may continue to answer that statutory description in the absence of certification under s. 3B as one needing "acute care".

4. However, the registration of a registered health benefits organisation is subject to the conditions set out in the Schedule to the National Health Act 1953 ("the National Health Act") by s. 73BA of that Act. These include the following:
   

(c) The organization will not offer to the contributors to a health benefits fund conducted by it, whether on its own behalf or on behalf of another person or organization, health insurance in respect of nursing home care. . . .

(e) The amount of fund benefit payable by the organization to a contributor in respect of hospital treatment for a nursing home type patient will not exceed an amount equal to the fees or charges incurred in respect of that hospital treatment less the amount of the patient contribution in relation to the patient for each day on which the patient was an in-patient in the hospital."

1. The legislative purpose is that a person who is a nursing-home type patient will be expected to transfer from a hospital to a nursing-home, despite the circumstance that the person in question otherwise still answers the description of an in-patient in a hospital. The discrimen is provided by the definition in sub-s. 3(1) of the Health Insurance Act:
   

"'nursing-home type patient', in relation to a hospital, means an in-patient in a hospital who has been such an in-patient for a continuous period exceeding 35 days, but does not include an in-patient in respect of whom there is in force a determination under section 3A or a certificate given under section 3B . . ."

1. The result is that hospital in-patients who have been such for a continuous period exceeding 35 days are deemed to be nursing-home type patients, regardless of any continuing need for hospital care, unless there is in force a determination under s. 3A or a certificate given under s. 3B. The criterion for giving the certificate is the need for "acute care" as spelled out in s. 3B.

2. In using the word "acute" in this way, as Pincus and Burchett JJ. point out, Parliamentary Counsel appears to have transferred to the degree or quality of care appropriate for the patient an epithet better understood as describing the nature of the ailment or condition of the patient. But, in my view, the issue of construction is not resolved with sufficient certainty or clarity by any process which in effect retransfers the epithet and regards acute care as providing the criterion by analogy to the care appropriate for a case of acute disease.

3. The term "nursing home care" is defined in sub-s. 4(1) of the National Health Act as meaning accommodation and nursing care of a kind provided in a nursing home, and as including any prescribed service of a kind provided in a nursing home. The expression "nursing home" is defined in the same provision as follows:
   

"'nursing home' means premises -

(a) that are fitted, furnished and staffed for the purpose of providing accommodation and nursing care for patients who, by reason of infirmity or illness, disease, incapacity or disability, have a continuing need for nursing care; and

(b) in which patients of that kind are received and lodged exclusively for the purpose of providing them with accommodation and nursing care, but does not include -

(c) a hospital;

(d) an institution carried on exclusively or principally for the care and treatment of mentally ill or mentally defective persons, being an institution conducted by, or in receipt of a grant for maintenance from, a State; or

(e) premises the maintenance expenditure of which is provided for under an arrangement entered into under the Tuberculosis Act 1948 . . ."

1. It is apparent from the senses in which the expressions "hospital treatment" and "nursing home care" are used in the legislation that there may be patients who would qualify both as in-patients in a hospital, and as persons in need of nursing home care. The legislative scheme I have described seeks to place nursing-home type patients who are in hospitals on an equal footing with patients in nursing homes, by requiring them to pay a non-insurable patient contribution towards the cost of accommodation in the same way as is done by a patient in a nursing home. By this means, a limit is placed on the liability of the insurance funds as registered health benefits organisations under the National Health Act, so that long-term patients in hospitals who were nursing-home type patients may have more expensive hospital accommodation only at their own expense.

2. In my view, what is involved in the decision to issue a certificate under s. 3B of the Health Insurance Act is a judgment by the medical practitioner as to whether the hospital patient in question is in essence a nursing-home type patient. The patient will fall in that category if the patient is not in need of "acute care", interpreting that expression as identifying that care which is ordinarily available only in a hospital, as distinct from a nursing home. In this context, the term "acute" indicates care of a keenness and intensity (especially involving the utilisation of particular professional skills and equipment) which is ordinarily available in a hospital rather than a nursing home.

3. The appeals should be dismissed with costs.