Minister of State for Health v Peverill, R.E
[1991] FCA 215
•02 MAY 1991
Re: MINISTER OF STATE FOR HEALTH
And: RICHARD EDWIN PEVERILL
No. Q G12 of 1989
FED No. 215
Health Insurance
100 ALR 73
29 FCR 262
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Black C.J.(1) Wilcox(1) and Foster(1) JJ.
CATCHWORDS
Health Insurance - Investigation by Medical Services Committee of Inquiry of alleged excess servicing by specialist pathologist - Services provided by the pathologist at the request of another practitioner - Whether such services may constitute excessive services - Effect of undertaking given by pathologist - Power of Minister's delegate to instigate inquiry.
Health Insurance Act 1973, ss.3, 16A, 16B, 16C, 79, 82, 104, 105, 106, 106AA.
Federal Proceedings (Costs) Act 1981, s.6
HEARING
SYDNEY
#DATE 2:5:1991
Counsel for the Appellant: G.L. Davies, QC and D.J. McGill
Solicitors for the Appellant: Australian Government Solicitor
Counsel for the Respondent: D.M.J. Bennett, QC and R.G. Bain
Solicitors for the Respondent: Morris Fletcher and Cross
ORDER
1. The appeal be allowed.
2. The declaration and orders made by Einfeld J be set aside and, in lieu thereof, it be ordered that the Application be dismissed with costs.
3. The respondent, Richard Edwin Peverill, pay to the appellant his costs of the appeal.
4. Pursuant to s.6 of the Federal Proceedings (Costs) Act 1981 a costs certificate be granted to the said respondent in respect of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
This appeal raises some important issues concerning the operation of the Health Insurance Act 1973. The appeal is brought by the Minister for Health against orders and declarations made by the learned primary Judge, Einfeld J, in a proceeding instituted under the Administrative Decisions (Judicial Review) Act 1977.
The history of the litigation
The respondent, Richard Edwin Peverill, is a specialist medical pathologist who, at material times, conducted pathology laboratories at six locations in Queensland and the Northern Territory. On 3 February 1987, Peter Elliott Gunton, a delegate of the Minister, issued a reference under s.82 (b)(i) and (ii) of the Health Insurance Act to the Medical Services Committee of Inquiry for the State of Queensland whereby he required that Committee to inquire and report upon the question:
"... whether Dr Richard Edwin PEVERILL complied with an undertaking given by him and accepted by the Minister under section 16C of the said Act, and which further arise out of the rendering of professional services in the State of Queensland after 15 April 1977, namely, whether each professional service rendered to a patient by Dr Richard Edwin PEVERILL, particulars of which are set out in Annexures 'B1' to 'B251', being a service for which Medicare benefit became payable, was an excessive service within the meaning of section 79(1B)(a) of the said Act."
Mr Gunton was the fifth respondent to the proceeding before Einfeld J.
The matter came before the Medical Services Committee of Inquiry, whose members were also respondents before Einfeld J. The Committee commenced to take evidence on 10 June 1987 and continued to do so on a number of evenings before 30 March 1988. On that day, Einfeld J heard an application for a rule nisi for prohibition. The application was adjourned part heard until 8 April 1988, when the learned Judge gave leave to amend the Application. In fact, the applicant filed a new Application, pursuant to the Administrative Decisions (Judicial Review) Act. The issues were decided by his Honour in that second proceeding. The application for prohibition was not pursued.
It appears that, when the matter first came before the Court, the Committee suspended its investigation. Einfeld J commented on that fact:
"Because the Committee's deliberations have now been suspended pending the outcome of this case, the matter no longer possesses the urgency originally conceived. I have previously drawn attention to the undesirability and unfairness of using urgency procedures when Government or Government-appointed bodies are involved. They can normally be expected to agree that, pending a Court decision on a matter going to their current activities, the activities in question will not proceed. As urgency to one litigant will normally displace another who may be equally or more deserving of a hearing, it is my opinion that applications for urgency should ordinarily be supported by evidence indicating that the body involved has been approached and refused a voluntary delay of the relevant proceedings or activity to permit the Court to consider the applicant's suit."
We do not criticise the Committee's decision to suspend its investigation, in this particular case, pending resolution by the Court of the issues raised by Dr Peverill. And we agree with Einfeld J about the cost to other litigants of acceding to applications for an urgent hearing. But we would not wish his Honour's comment to be taken as an indication that it will always, or even ordinarily, be appropriate for a body such as the Committee to suspend an investigation merely because a person affected by that investigation has commenced a proceeding in the Court. To adopt such a principle would be to enable such a person to obtain a suspension, virtually at will, by the mere act of filing process and without a Judge even being aware of the situation. In many cases a suspension will cause inconvenience and additional expense. In some cases the resultant delay may prejudice other people or jeopardise the quality of the investigation. Unless the wisdom of suspension is obvious, as for example where serious harm would be caused to a party if the investigation continued and it was later held that what was being done was not justified in law, the better course will usually be for an investigating body to continue its work until such time, if ever, as the Court otherwise orders. If it is left to the Court to make a judgment as to the desirable course, regard may be had to all relevant matters: the effect of continuance on the individual concerned, the effect of any suspension upon the efficacy of the investigation and upon other people and the earliest date upon which the issues confronting the Court can satisfactorily be determined. Appropriate orders may, of course, be sought at the initial directions hearing in the Court or earlier in cases of urgency.
This comment has particular significance in the present case. As we have said, the matter first came before the Court on 30 March 1988. The fresh Application was filed on 13 April 1988. Einfeld J heard the case in May 1988 and delivered judgment on 21 October 1988. But, on that day, he made no formal orders as he wished the parties to have the opportunity to consider his reasons. The formal orders and declarations were made on 13 February 1989. On 6 March 1989 the Minister filed a Notice of Appeal. Thereafter an inordinate delay ensued. It was not until January 1991, nearly two years later, that the appellant's solicitor filed the appeal papers. In the result, it is now over three years since the first application to the Court, during which time the work of the Committee has been suspended. This situation is highly unsatisfactory, especially because much the greater part of the delay is attributable to the party, the Minister, whose delegate precipitated the inquiry in the first place.
The relevant factsAs will appear, his Honour disposed of the case by addressing himself to three questions of law raised by the parties and by making declarations embodying his responses to those questions. Those questions may be considered without reference to the facts of any particular case. But it will help to put the questions into context if we refer to the background facts found by Einfeld J. We have already mentioned that, at material times, the respondent conducted six pathology laboratories. In doing so, he was assisted by two partners and a number of employed practitioners. References were received from general practitioners scattered throughout Queensland and the Northern Territory, predominantly in rural areas.
It appears from Einfeld J's findings that there were some distinctive aspects of the respondent's practice. His Honour described them in this way:
"The applicant provides a considerable service to this large number of medical practitioners. The evidence shows that he has a number of collection points all over Queensland to which samples of blood and other human tissue and produce can be delivered for the purpose of transport to and analysis by his laboratory. The applicant has published a book, in evidence, which is widely supplied to the practitioners in his catchment area and which provides information for general practitioners on the indications in patients for particular types of diseases or testing. In addition, members of his practice apparently travel around these country areas informing resident and visiting practitioners about the latest learning in various types of diseases and conditions, especially those which are more likely to afflict patients in the areas concerned, many of them tropical. When a referring practitioner first uses the applicant's practice, a person called a 'doctor liaison officer' is normally sent to the practitioner's surgery to explain which tests the laboratory performs and to answer any queries the practitioner may have. All this indicates an involvement of the applicant in the diagnosis and treatment of diseases and illnesses to a considerably greater degree than is apparently normal for pathologists.
One of the features of the applicant's publications and information service is that the practitioners wishing to use his services are advised, even encouraged, to ask for tests in certain groupings. A number of generic headings is given, and a series of tests for various diseases are included under the headings so grouped. For example, one group heading used for multiple tests is 'agglutination'. If a practitioner requests the applicant's pathology practice to conduct this group of tests, the performance of seventeen tests is taken to be desired. These tests include tests for such wide-ranging and differential diseases as Rubella (German Measles), herpes of two varieties, hepatitis of three varieties, chlamydia, measles, mumps and salmonella poisoning. It is not necessary to have too much medical knowledge to understand the immense difference between these diseases. A diagnosis by a general practitioner that a patient might be suffering from such a broad and varied form of diseases as those that I have mentioned (and these are only some of those listed under the heading of 'agglutination') has certainly not closely identified an actual illness of the patient. Whether this is a legitimate demonstration of the specialty of pathology is not for me to say. It does seem to call for peer or expert examination."
We hold no opinion about the propriety of the aspects of practice mentioned by his Honour. That is not a matter for our determination. But, if we are correct in believing that some of the actions taken by Dr Peverill are unusual, that fact may explain the reference by Mr Gunton to the Committee.
Einfeld J noted that the inquiry of the Committee embraced more than 1,000 professional services provided by Dr Peverill. He went on:,
"There is no dispute that the applicant in general terms does not see patients nor has anything to do with their diagnosis and treatment. The general procedure seems to be that he supplies blank forms of request to, and receives completed forms from, various general practitioners instructing him to perform certain tests. Almost invariably the tests are carried out without question, although there are occasions when he speaks to the general practitioner. In his affidavit of 13 April 1988, the applicant states that such occasions occur when a request form is ambiguous or the treating practitioner has not previously referred requests to the practice. In such cases, a telephone call is made to ascertain what precise tests are required. Of the matters originally referred to the Committee, just over 130 particular requests remain open for decision. This is because the other matters have been dealt with in favour of the applicant to the satisfaction of the Committee. The two main groups still for investigation are:
1. Patients numbers 1-61 who have undergone glucose tolerance tests. These patients have suspected diabetes.
2. Patients numbers 115-186 who have undergone viral serology tests for suspected viral illness.
In particular the evidence subdivides these matters in this way:
(a) Due to the contents of the applicant's book and other publications, the applicant's practice always conducts five insulin tests whenever requested simply to conduct a glucose tolerance test. The evidence establishes that on some sixty occasions in the relevant period the applicant was asked by different practitioners to conduct the glucose tolerance test. The applicant's book and the covering explanatory sheet to the request form he also hands to practitioners, indicate that if this test is asked for, there will be conducted routinely an insulin test. In monetary terms, the substance of the fees for the glucose tolerance test is considerably expanded for a full range tolerance test, is further expanded for the first three insulin tests, and still further for the fourth and fifth tests. Hence, what might appear to be a request for a relatively low cost service turns out to involve the Medicare scheme in a substantial payout.
(b) If the general practitioner asks for the viral serology tests or the agglutination tests, what might appear to be services costing Medicare a small sum turns out for similar reasons to cost a far greater amount.
The applicant argues that he has merely been carrying out what has been requested of him by general practitioners. He says that he cannot possibly be guilty of overservicing - i.e. providing services not reasonably necessary for the adequate medical care of the patients - because he does not know about the conditions of the patients or the reasons for any testing. He therefore claims, pointing to section 16A of the Act, that the appropriate person to look to in this respect is the person who refers the patient in the first instance. He describes himself as a non self-determining pathologist with no role to play in assessing the extent of services actually needed by the patient. There is no evidence that he is even competent to do so, although I am not for a moment to be taken as suggesting that he is not. It is certainly clear that the system of requests from general medical practitioners to pathologists, and the supply of pathological services, would become distorted if every time a test was requested, the pathologist had to telephone or otherwise contact the general practitioner to ascertain why the tests were requested and to obtain the full medical history of the patient. It would be impossible, especially in the geographical circumstances of the applicant's practice, and having regard to the confines of the specialty of pathology, if the pathologist had personally to interview and examine each patient. In other words, the supply of pathology services as we know them could not function if the pathologist had to make a separate independent decision as to whether all the tests requested by all referring practitioners should be carried out.
On the other hand, the respondents assert that the applicant is more than a remote bystander. He promotes the agglomeration of tests, he publishes the books and cover sheets to the referral form, and he prints the referral form which is governed by regulations that make it a requirement to set out the referrals in the hand writing of the referring practitioner. They point to the fact that he sends representatives around the countryside explaining, advising and inserting into the minds of the listening medically trained audience the possibilities and ranges of tests that are available and perhaps ought to be availed of. The respondents therefore argue that this is not a simple case of a referring practitioner and a totally disinterested pathologist but a much closer and more involved arrangement."
The questions of law
It is against this background that the parties, at his Honour's direction, framed three agreed questions of law:
"1. Whether on the true construction of the Health Insurance Act 1973, a pathology test can be an excessive service, as defined in section 79(1B)(a) of the Act, if it has been requested by a medical practitioner under section 16A(1)(a) of the Act.
2. Whether, on the true construction of the undertaking given by the applicant, the performance by the applicant of a pathology test which had been requested by a medical practitioner under section 16A(1)(a) of the Act could be a breach of that undertaking if the test was not in fact reasonably necessary for the adequate medical care of the patient concerned.
3. Whether the Minister can, under section 82(b) of the Act, refer to a Medical Services Committee of Inquiry the question of whether certain specified pathology services were not reasonably necessary for the adequate medical care of the patient concerned."
There was a fourth question, submitted by the respondent, with which it is unnecessary to deal.
The relationship between s.16A and s.79(1B)
The parties agree that the first question is central to the dispute between them. Section 16A is one of three consecutive sections (ss.16A, 16B and 16C) added to the Health Insurance Act by the Health Insurance Amendment 1977. They were inserted in Part II of the Act, then entitled "Medical Benefits". (A predecessor of s.16A was introduced by the Health Insurance Amendment Act (No.2) 1976 but ss.16B and 16C were entirely new). The three sections dealt specifically with pathology services, the increasing cost of which was then concerning the Government. In his Second Reading Speech on the Bill for the 1977 Act the Minister for Health, the Honourable R. Hunt MP, stated that medical benefits expenditure for pathology services had risen from $22 million in the half year ended December 1974 to $53 million in the half year ended December 1976. He said:
"The Government is determined that medical benefits expenditure on pathology services will be restrained. Accordingly it has accepted and acted upon proposals submitted by the pathology services working party, the final report of which was tabled on 25 May 1977."
See House of Representatives Debates, 27 May 1977, p 2035.
Mr Hunt then explained the terms of the Bill, the principles of which he said had been devised by that working party. When he came to the new s.16A, Mr Hunt said, at the same reference:
"The new section provides that a medical benefit is not payable in respect of a pathology service unless the service was, firstly, determined by a practitioner to be necessary; secondly, with one exception to which I will refer shortly, was rendered by or on behalf of an approved pathology practitioner; and finally, when rendered as a result of a request, the practitioner made the request in writing. The precise details that will be required to be included in the request will be set out in regulations, but in general will be: name and address of the patient's doctor and the practitioner requested to perform the service; the date of the request; the name and address of the patient; and the pathology services to be rendered by the approved pathology practitioner. I should emphasise that the written request which each requesting practitioner must use and complete will not be a standard form. The form of the request will be up to the individual practitioner. The only requirements are that it must be in writing, signed personally by the practitioner, and include such details as I have just specified."
Section 16A was amended between 1977 and the date of Mr Gunton's reference, but not so as to affect the scheme outlined by the Minister. As at that date, and omitting merely evidentiary provisions, it read:
"16A. A medicare benefit is not payable in respect of a pathology service unless a practitioner determined that the service was necessary and -
(a) in the case of a pathology service (other than a prescribed pathology services or a service to which paragraph (b) applies) - the service was rendered by or on behalf of an approved pathology practitioner in pursuance of a request addressed to that approved pathology practitioner -
(i) by the practitioner who determined that the service was necessary; or
(ii) by another approved pathology practitioner who is not the practitioner who determined that the service was necessary,
being a request made in writing as prescribed or, if made otherwise than in writing, subsequently confirmed in writing as prescribed;
(b) in the case of a pathology service, other than a prescribed pathology service, determined to be necessary by an approved pathology practitioner (being a medical practitioner) or by the employee (being a medical practitioner) of an approved pathology practitioner in the course of that employment - the service was rendered by or on behalf of that approved pathology practitioner; or
(c) in the case of a prescribed pathology service - the service was rendered by or on behalf of a medical practitioner other than an approved pathology practitioner (in this paragraph referred to as 'the first-mentioned practitioner') and -
(i) the service was determined to be necessary by the first-mentioned practitioner; or
(ii) the service was rendered in pursuance of a request made by the person who determined that the service was necessary, being a medical practitioner (other than an approved pathology practitioner) who, at the time the request was made, was a member of a group of practitioners of which the first-mentioned practitioner was then a member.
(2A) The reference in paragraph (1)(a) to a request made in writing or to a confirmation in writing of a request shall be read as including a reference to a request or a confirmation, as the case may be, in such other form as the Minister approves, in writing, from time to time.
(3) Where a pathology service has been rendered by or on behalf of an approved pathology practitioner in pursuance of a request made or confirmed as described in paragraph (1)(a), then -
(a) if the approved pathology practitioner fails to retain the written request or the written confirmation of the request for a period of 18 months after the date on which the service was rendered; or
(b) if, on being served as prescribed, at any time within 18 months after the date on which the service was rendered, with a notice in writing signed by the Minister requiring the approved pathology practitioner to produce the written request or the written confirmation of the request to an officer of the Department of Health, or an officer of the Commission, specified in the notice, the approved pathology practitioner fails to comply with the requirement within 14 days after being serviced with the notice, the approved pathology practitioner is guilty of an offence and is punishable on conviction by a fine not exceeding $1,000.
(4) ...
(4A) ...
(5) For the purposes of this section -
(a) where a service is rendered by a person (in this paragraph referred to as 'the employee') in the course of his employment by another person, then, except in a case to which paragraph (b) applies, it shall be deemed to be rendered by that other person, and not by the employee;
(b) where a person (in this paragraph referred to as 'the employee') is employed by two or more persons jointly and a service is rendered by the employee in the course of that employment, it shall be deemed to be rendered by the employer principally responsible for the matter being dealt with by the employee, and not by the employee;
(c) a service shall be taken to be rendered on behalf of a person if, and only if, it is rendered by another person, not being an approved pathology practitioner, by arrangement with that person;
(d) a member of, or a member of the staff of, an authority (being a corporation) established by a law of the Commonwealth or of a State or internal Territory shall be taken to be employed by that authority;
(e) where two or more practitioners -
(i) provide professional services as partners; or
(ii) share amongst them all, or a substantial part of, the income from providing professional services, those practitioners shall be deemed to constitute a group of practitioners; and
(f) a reference to determining a service to be necessary is a reference to determining that the service is reasonably necessary for the adequate medical care of the patient concerned.
(6) This section does not apply in relation to a service in relation to which section 21 applies."
Section 21 related to services rendered outside Australia.
Section 16B authorised the Minister to draw up forms of undertaking to be given by persons who wished to become approved pathology practitioners. Section 16C dealt with the giving of undertakings by pathology practitioners. Sections 16A, 16B and 16C were repealed, and a new s.16A substituted, by s.15 of the Health Legislation Amendment Act 1986 which took effect from 1 August 1987. Other amendments were also made but it is not necessary to refer to them.
The 1977 Act also amended s.3 of the Principal Act so as to insert a definition of "approved pathology practitioner". The effect of this definition was to limit that term to the Commonwealth and Commonwealth authorities and to persons in respect of whom an undertaking was in force. The result was that, for a private practitioner, a current undertaking was essential to his or her ability to perform a pathology service which would attract a medical benefit.
The second section referred to in the first question, s.79, is contained in Division 3 of Part V of the Act dealing with Medical Services Committees of Inquiry. The section is, and has always been, a definition section for the purposes of that Division. But by the 1977 Act a new subs.(1B) was added, so as to insert a definition of "excessive services". The subsection reads:
"(1B) In this Division -
(a) a reference to excessive services is a reference to professional services, being services in respect of which medicare benefit has become or may become payable and which were not reasonably necessary for the adequate medical or dental care of the patient concerned; and
(b) a reference to the initiation of a pathology service is a reference to the making of the decision by reason of which the service is rendered; ..."
The argument of the respondent in respect of the first question is that a service cannot be regarded as an "excessive service", so as to warrant investigation by a Medical Services Committee of Inquiry, if it has been rendered by an approved pathology practitioner pursuant to a request made by a practitioner, or another approved pathology practitioner, who determined that the service was necessary. This argument is relevant to the respondent's position since he was at all material times an approved pathology practitioner and each of the services the subject of Mr Gunton's reference was a service rendered at the request of a general practitioner. If the respondent's contention is correct, none of the services rendered by him is even arguably excessive; and, accordingly, so it was argued, the Committee's investigation should be terminated.
Einfeld J accepted the respondent's submissions on this point. His Honour thought that the word "necessary" in s.16A had a meaning indistinguishably similar to "reasonably necessary for the adequate medical care" of the patient in s.79B. He commented:
"Thus the fundamental decision of fact posed by both sections, viz. whether the relevant pathology service was not medically necessary for the patient, is made by the requesting practitioner, not by the pathologist. However, the legislation not only poses the test of whether a medical practitioner has duly requested a service of a pathologist. It also requires that the requesting practitioner determine that the service was necessary. How the pathologist is to learn of this determination, other than by expression, implication or assumption from the bland form of request for the service, is not addressed. The Act does not require the requested pathologist to determine or even consider the necessity."
Einfeld J was concerned about the position of the requested pathologist. He referred to ss.104 and 105, which are also contained in Division 3 of Part V of the Act. Those sections deal with reports of Medical Services Committees of Inquiry. Relevantly they read:
"104. After completion by a Committee of a hearing in relation to a matter, the Committee shall report to the Minister its opinion on the matter and, in a case where the Committee, in the report, expresses the opinion -
(a) that a practitioner specified in the report has rendered excessive services;
(b) that a person specified in the report has caused or permitted a practitioner -
(i) who is employed by the person so specified; or
(ii) who is employed by a body corporate of which the person so specified is an officer,
to render excessive services;
(c) that a practitioner specified in the report has initiated excessive pathology services;
(d) that a person specified in the report has caused or permitted a practitioner -
(i) who is employed by the person so specified; or
(ii) who is employed by a body corporate of which the person so specified is an officer,
to initiate excessive pathology services,
the report shall identify the excessive services.
105.(1) Where a report by a Committee under section 104 relates to a question referred to the Committee under section 16C, the Committee shall, in the report -
(a) recommend to the Minister that he accept the undertaking concerned; or
(b) recommend to the Minister that he refuse to accept the undertaking concerned.
(2) Where -
(a) a Committee has, in a report under section 104, expressed the opinion that a practitioner has rendered excessive services or that a practitioner has initiated excessive pathology services, and has identified those services; and
(b) a medicare benefit is payable, or has been paid, in respect of any of those services, the Committee may, in the report, make one or more of the following recommendations:-
(c) that the practitioner, being a practitioner other than a body corporate, be reprimanded;
(ca) that the practitioner, being a practitioner other than a body corporate, be counselled;
(d) in the case of the rendering of excessive pathology services - that the Minister revoke his acceptance of the undertaking given under section 16C by the practitioner;
(e) where the medicare benefit is payable, but has not been paid, to the practitioner - that the medicare benefit or a specified part of the medicare benefit cease to be payable;
(f) where the medicare benefit has been paid to the practitioner or has been paid, or is payable, to another person, (including another practitioner or another person by whom the first-mentioned practitioner is employed) that the amount of the medicare benefit or a specified part of that amount be payable by the practitioner to the Commonwealth.
(2A) ... -
(3) Where a Committee has, in a report under section 104, expressed the opinion that a practitioner has failed to comply with an undertaking given by him and accepted by the Minister under section 16C, the Committee may, in the report, make one or more of the following recommendations:-
(a) that the practitioner be reprimanded;
(aa) that the practitioner be counselled;
(b) that the Minister revoke his acceptance of the undertaking;
(c) that, where a medicare benefit is payable, but has not been paid, to the practitioner in respect of a pathology service and the Committee is of the opinion that the practitioner failed to comply with that undertaking in relation to that service, the medicare benefit or a specified part of the medicare benefit cease to be payable;
(d) that, where a medicare benefit has been paid to the practitioner, or has been paid, or is payable, to another person, in respect of a pathology service and the Committee is of the opinion that the practitioner failed to comply with that undertaking in relation to that service, the amount of the medicare benefit or a specified part of that amount be payable by the practitioner to the Commonwealth.
(4) Where, in its report, a Committee recommends under sub-section (1) the refusal of the acceptance of an undertaking, or makes a recommendation under sub-section (2), (2A) or (3) it shall send to the Minister with the report a transcript of the proceedings at the hearing to which the report relates, and shall return any documents that accompanied the reference.
(5) In this section, a reference to a practitioner does not include a reference to the Commonwealth or to an authority established by a law of the Commonwealth."
Einfeld J pointed out that, if a pathology service might be regarded as an excessive service notwithstanding that it was rendered at the request of a practitioner, the pathologist rendering the service might have his or her undertaking revoked under s.105(2)(d), thereby effectively putting the pathologist out of practice. His Honour thought that such a result would be particularly anomalous because no such drastic step could be taken against any general practitioner who had initiated the service. Not being a pathologist, that practitioner would not have needed to give any undertaking under s.16C.
Einfeld J considered that the key to avoiding unfairness to the pathologist was to treat ss.16A, 16B and 16C as evincing "an intention to codify at least some of the requirements of pathologists". After referring to the three situations envisaged by s.16A, his Honour commented that para.(b) of s.16A(1), which deals with services which are both determined to be necessary and rendered by an approved pathology practitioner, seemed to indicate a Parliamentary intention to subject pathologists to investigation (s.104) and potential penalty (s.105) " only when they made the determination of necessity themselves". He went on:
"If this same pathologist then conducted the test (category
(c) above), there might follow adverse findings both of the initiation and the rendering of excessive services and a recommendation to revoke acceptance of the undertaking. If another pathologist conducted the tests (category (b)), the first pathologist could only be liable to a finding of initiation, and the second pathologist (i.e. the one performing the service) could not be liable to any adverse finding at all or to the revocation recommendation. Similarly, if a general practitioner determined necessity and sent the patient or the patient's tissue or blood to a pathologist for testing (category (a)), the general practitioner would be liable to a finding of excessive initiation but the pathologist could not be liable to any adverse finding at all or to the recommendation to revoke acceptance of the undertaking.
I therefore answer the first question: No."
(Original emphasis).
In their argument before us, counsel for the respondent support his Honour's reasoning. But their task in so doing has been made more difficult by a decision given since the judgment of Einfeld J and which seems to set to rest the concern which principally led his Honour to the conclusion which he adopted. We refer to Tiong v Minister for Community Services (1990) 93 ALR 308, a decision of a Full Court of this Court given on 4 May 1990.
Tiong was a case arising out of an investigation by a Medical Services Committee of Inquiry concerning two practitioners, Dr S.J. Tiong, a radiologist, and Dr T.S. Tiong, an ear, nose and throat specialist. There was evidence that Dr T.S. Tiong had referred numerous patients to Dr S.J.Tiong for radiological services, which had been performed. The Committee found many of those services to be excessive. It recommended that Dr T.S. Tiong be reprimanded and made to repay $760.55 to the Commonwealth and that Dr S.J. Tiong be counselled and required to repay $22,797. A Review Tribunal reduced each of these money sums but otherwise upheld the Committee's decision. Both practitioners unsuccessfully challenged the Review Tribunal's decision on procedural grounds. Dr S.J. Tiong also challenged the recommendation for repayment, contending that she could not be made liable to repay the cost of excessive services which were rendered by her at the request of another practitioner. None of the members of the Full Court was prepared to go so far. However, each agreed that it was not enough that the Committee determine, in an objective sense and without reference to the position of the practitioner rendering the service, that a particular service was not reasonably necessary for the adequate medical care of the patient. The matter of necessity must be looked at from the viewpoint of the practitioner against whom the complaint is made.
Davies J, who presided, expressed the position in this way, at p 315:
"However, the issue before both the committee and the Review Tribunal was whether professional services performed by Dr S.J. were excessive, that is to say, not reasonably necessary for the adequate medical care of the patient concerned. Medical services are not excessive for the purpose of the HI Act unless they constitute unnecessary servicing by the medical practitioner at the expense of the health system. The terms of s.105 of the HI Act, which refer to a reprimand, to counselling and to a decision that the practitioner repay certain fees received, necessarily imply a disciplinary proceeding. They require personal fault on the part of the practitioner. This issue must be examined having regard to the facts which were known or available to the practitioner and must take into account the practitioner's perception of the patient's condition and care required. Regard should also be had to acceptable practice in the medical profession.
The words 'reasonably necessary' in the definition of 'excessive services' refer to services which are reasonably appropriate: see per Higgin J. in Commonwealth and Postmaster-General v Progress Advertising and Press Agency Co Pty Ltd (1910) 10 CLR 457 at 469 and per Latham C.J., Rich, Dixon, McTiernan and Webb JJ. in Ronpibon Tin (NL) and Tongkah Compound (NL) v F.C.T. (1949) 78 CLR 47 at 56. Thus, if a practitioner rendered services which, in his view, were not reasonably appropriate for the adequate medical care of the patient, but did so, eg for the purpose of enhancing his own income, the services rendered would not be reasonably necessary for the care of the patient. On the other hand, if the practitioner performed a service which, in his view, was appropriate for the adequate care of the patient concerned, his belief would be relevant as to whether the service was not reasonably necessary but it would not determine the matter. The committee, the Minister and the Review Tribunal each have the function of making up its or his own mind on the issue as to whether the service was reasonably necessary."
At p 317 his Honour said that the Review Tribunal "approached the matter on a wrong basis, for it found excessive servicing by Dr S.J. on the basis that Dr T.S. had ordered services which were, having regard to the information before him, excessive. That was not the question. The issue was whether Dr S.J. had provided excessive services. A finding on this point could not be made without a finding of fault on Dr S.J.'s part. The Review Tribunal did not address this issue". Accordingly, Davies J thought that the Review Tribunal's decision as to Dr S.J. Tiong should be set aside and the matter remitted to the Review Tribunal for reconsideration.
The other two members of the Court also dealt with the position of a practitioner who renders services at the request of another. At p 318 Spender J referred to s.105(2) and concluded that it was inherent in the provision that "a personal fault on the part of the practitioner" was necessary. He continued:
"The scheme of the Act is not to make a practitioner vicariously liable in respect of services which have been ordered by another medical practitioner, which services are, on the material available to the ordering practitioner, not reasonably necessary for the adequate medical care of the patient. Sections 104 and 105 and the determinations by the Minister under s.106 are all directed at the practitioner who rendered excessive services and not at a practitioner who ordered or requested those services to be provided. Whether a practitioner, in rendering a specific service, has rendered excessive service is to be judged from the viewpoint of the practitioner rendering the service."
His Honour said at p 320 that the Review Tribunal failed to apply the true test: "whether viewed from the position of the practitioner rendering the service, the service was reasonably necessary for the adequate medical care of the patient". He agreed that the case should be returned to the Review Tribunal for further consideration.
Burchett J also agreed with the order proposed by Davies J. At pp 320-321 he said:
"I agree with Davies J that the conclusion of the Review Tribunal in respect of Dr S.J. Tiong was vitiated by an error of law. That conclusion embraced the proposition that a radiologist, acting upon an apparently normal request for radiology services on behalf of a patient, would be guilty of providing 'excessive services' within the meaning of s.79(1B) of the Health Insurance Act 1973 (Cth) if the ear nose and throat specialist, who requested the provision of the service to enable him to diagnose and treat the patient's condition, lacked sufficient justification for making his request. I cannot accept that the legislature intended to heap upon an entirely innocent specialist the onerous consequences of a finding of over-servicing upon any such basis.
The criterion contained in s.79(1B) is whether a professional service is 'not reasonably necessary for the adequate medical or dental care of the patient concerned'. The necessity for the provision of a service must be considered from the viewpoint of the provider of the service. The sub-section is concerned with his actions, and it would be incongruous to evaluate them from the viewpoint of someone differently placed and possessed of different information. What is necessary to be done by a consultant, asked to perform a test or furnish an opinion on a patient currently under treatment directed by someone else, may be quite different from what would be necessary if the consultant were the first doctor seen by a previously untreated patient. For a specialist requested to carry out a test, one thing may be necessary - to carry out that test. It will be reasonably necessary to do so for the adequate medical care of the patient, so far as he is concerned, if the request comes from an appropriate practitioner and is not on its face an inappropriate request. In a profession divided into specialties, any other approach would disrupt the activities which are intended to work together to effect diagnosis and cure."
(Original emphasis)
There are some differences between the various judgments in Tiong. But, as we read those judgments, all of their Honours would support four propositions. Firstly, the question whether particular services are excessive, within the meaning of s.79(1B), is a matter which must be determined having regard to the information available to the practitioner whose conduct - whether initiation or rendering of services - is under examination. Secondly, in determining that question, the view of that practitioner, as to necessity, will be relevant but not decisive. The view of the practitioner will not be decisive because the question is an objective one and not dependent upon the personal view of the particular practitioner. Thirdly, in the case of an allegation that an unnecessary service has been rendered, it is not a complete answer that the service was rendered at the request of another practitioner. Although a request is a very material matter, which under normal circumstances may be acted upon without further inquiry, cases may occur in which even a requested practitioner may be found to have rendered excessive services. However, and this is the final proposition, such cases will be confined to those involving some "personal fault", to use the term of Davies J and Spender J, or lack of innocence, to adopt the concept of Burchett J.
As it seems to us, the first major element in the Tiong decision was inevitable. Section 79(1B) provides the test for determining excessiveness; namely, whether the services "were not reasonably necessary for the adequate medical ... care of the patient concerned". But a judgment as to what measures are necessary to achieve a particular end is not something which may be made in isolation from the circumstances in which the judgment is made. Logically, s.79(1B) offers two possibilities: the circumstances which existed at the time when the question of provision of services arose; or the circumstances as they later appeared, perhaps at the time of an investigation by a Medical Services Committee of Inquiry. However, when one considers the policy of the legislation, it is obvious that the former of these two alternatives must have been intended by Parliament. Not only would it be grossly unfair to practitioners to evaluate necessity by reference to subsequently available information; such an interpretation might deter practitioners from giving to their patients the benefit of any doubt as to the utility of a service, and so tend to defeat the Act's evident policy of making a reasonable level of medical service generally available.
Once it be accepted that the question of necessity must be judged in the light of the circumstances as they were at the time the service was rendered, it is a small step to say that it must be evaluated in the light of the information available to the practitioner at that time. Once again, this approach accords with both fairness and the evident policy of the Act.
If the Act had remained in its original form, the second aspect of Tiong - the necessity for some element of personal fault before a finding of excessive service could be made - might not have been apparent. In its original form, s.105 made no reference to reprimanding or counselling a practitioner or, of course, to revocation of a s.16C undertaking - at that time, there were no such undertakings. Section 106 provided that, if the Minister accepted a Committee's recommendation for repayment of a medical benefit, the amount of the repayment should be recoverable as a debt. But there was no provision for publicity about such matters. The matter was likely to remain confidential to the Minister, and his advisers, and the practitioner concerned. There was no disciplinary or deterrent element in the recommendation or its acceptance. These could be regarded as being related only to the protection of public funds.
However, since the original enactment of the Health Insurance Act, not only has s.105 been amended to include provision for disciplinary measures; s.106AA has been added. This section, added by the 1977 Act, requires the Minister to prepare, and table before each House of Parliament, a statement setting out particulars of any decision under s.106 to accept a Committee's recommendation. The section also provides that the statement may be published in the Gazette, if the Minister thinks fit. It follows that the acceptance of even a recommendation merely to withhold, or require the repayment of, a benefit may become a matter within the public domain. It may attract publicity. As any such publicity is almost certain to be damaging to the practitioner, we cannot think that Parliament intended that this should occur in cases where the practitioner was not personally at fault.
In the light of Tiong, it seems to us that the matter which understandably concerned Einfeld J is of little significance. The application of the principles enunciated in Tiong to this case would mean that no finding of excessive servicing could be made against Dr Peverill unless the Medical Services Committee of Inquiry reached the conclusion that, looking at the situation from the viewpoint of Dr Peverill and having regard to the circumstances which existed at that time, one or more of the rendered services was not reasonably necessary for the adequate medical care of the relevant patient. In considering that question the Committee would be obliged to take into account Dr Peverill's knowledge as to relevant facts. This would include his knowledge that the patient's general practitioner had requested the service; but this would not necessarily be determinative of the matter. If the Committee found that Dr Peverill believed that the general practitioner's request was inappropriate or that he had reason to believe that the requesting practitioner did not genuinely or reasonably consider the requested service, or all of the requested services, to be necessary, or that Dr Peverill knew that there was doubt about one of these matters but deliberately refrained from inquiry, it would be entitled to find excessive servicing and to make appropriate recommendations under s.105. Any of the assumed situations would involve "personal fault" in the rendering of the service. Of course, the existence of "personal fault" would not itself be enough; there must be a conclusion that the rendered services were not reasonably necessary for the adequate medical care of the patient.
Once one puts aside the concern felt by Einfeld J, the case put by the respondent in relation to the first question becomes untenable. On its face s.79(1B) provides a definition of excessive services for use throughout Division 3 of Part V, including in ss.104 and 105. That definition refers to "professional services" in general terms. "Professional services" are defined by s.3(1) in such a way as to include pathology services. Section 79(1B) does not exclude pathology services, a course which Parliament could readily have taken if it had wished ss.16A-16C to govern the excessiveness of pathology services. Nor is there anything in s.104 or s.105 to exclude pathology services. On the contrary, s.104(c) and (d) specifically refer to the initiation of excessive pathology services and, even more telling, s.105(2)(d) refers to "the rendering of excessive pathology services". As a matter of ordinary language, there is nothing anywhere in Division 3 of Part V to exclude from the operation of s.104 or s.105 the case of a person who renders excessive pathology services at the request of another practitioner.
Neither do we think that anything in ss.16A-16C supports such a conclusion. In terms, these sections merely impose limitations on the payment of medical benefits for pathology services and provide for, and then subject private pathologists to the requirements of, undertakings. They say nothing about the rendering of unnecessary or excessive services or the disciplining of, or recovery of payments from, pathologists. Particularly in the light of the history of the sections, there is no warrant for attributing to Parliament an intention to deal in these sections with that matter. We have already referred to the genesis of these provisions. The Government was concerned about the increasing cost of pathology services. It reacted by proposing greater restraints on both the medical parties to pathology services: the initiators and the renderers. For the first time, the 1977 amendments made the initiator of excessive pathology services liable to disciplinary action, including an order for repayment of the medical benefits attributable to such services. And, in future, pathologists who rendered excessive services would not merely be liable to forego or to repay benefits; they would put their livelihood as pathologists at risk. The undertaking, which henceforth would be critical to their entitlement to receive medical benefits, could be revoked. It would have been quite inconsistent with this aggressive strategy for the Government to propose legislation which prevented even recovery action against pathologists who rendered services which they knew to be unnecessary. When it enacted the 1977 amendments the Parliament was contemplating additional weapons against unnecessary pathology services; it was not wishing to give away a weapon that already existed.
In our view the purpose of s.16A of the Health Insurance Act was to impose controls over the circumstances under which medical benefits would become payable in respect of pathology services. The section was not intended to affect the operation of Division 3 of Part V of the Act in regard to the investigation or punishment of any pathologists who might engage in excessive servicing. In our view s.16A did not limit the operation of s.79(1B). Question 1 should have been answered "yes".
Section 16A and the undertakingAs we have already indicated, the respondent furnished an undertaking to the Minister pursuant to s.16C of the Act. That undertaking included the following provision:
"Excessive Services
9. The Practitioner will not render, or request to be rendered, an applicable pathology service that would constitute excessive services as referred to in Division 3 of Part V of the Act. Sub-section 79(1B)(a) of the Act provides that a reference to excessive services is a reference to professional services, being services in respect of which medical benefit has become or may become payable, that are not reasonably necessary for the adequate medical care of the patient concerned)."
Consistently with his view about the first question, Einfeld J held that the performance by the respondent of a pathology test which had been requested by a medical practitioner under s.16A(1)(c) could not be a breach of this part of the undertaking. His Honour summarised his view about this aspect of the case by saying: "The applicant simply cannot be held responsible for someone else's decision that tests be conducted".
In our opinion the answer given by the primary Judge to the second question was erroneous. It is unnecessary for us to discuss the matter at any length. As counsel agree, if the first question is answered favourably to the Minister the second question does not really matter. If the Medical Services Committee of Inquiry, approaching the matter in the way Tiong requires, concludes that the respondent rendered unnecessary services, it would be open to it to make appropriate findings and recommendations under ss.104 and 105 upon that question, whether or not his conduct also breached his undertaking. Moreover, the reasoning supporting a negative answer to question 2 - both that of the primary Judge and that incorporated in counsel's submissions to us - depends upon the same proposition, that ss.16A-16C constitutes an exclusive code for the control of pathology services, as underlies his Honour's answer to question 1. We have already given our reasons for rejecting that proposition.
We think that the second question should have been answered in the affirmative. Even though a service has been requested by a medical practitioner, it is open to the Medical Services Committee of Inquiry to consider whether its performance by the respondent constituted a breach of his undertaking.
Section 82The third question is ancillary to the first two questions. It asks whether the Minister can, under s.82(b) of the Act, refer to a Medical Services Committee of Inquiry the question whether certain specified pathology services were not reasonably necessary for the adequate medical care of the patient concerned. Section 82 provides:
"A Committee shall inquire into, and submit to the Minister its report and recommendations on -
(a) a question referred to the Committee by the Minister under section 16C; and
(b) any other matter referred to the Committee by the Minister, being a matter that is relevant to the operation or administration of this Act or the National Health Act 1953 (other than Part VII of that Act) and arises out of or relates to -
(i) an undertaking accepted by the Minister under section 16C; or
(ii) the rendering of a professional service on or after 15 April 1977, or the initiation of a pathology service on or after the date of commencement of this section, in the State for which the Committee is established."
Einfeld J answered the third question negatively; as he said, "(f)or the same reasons as my answers to the other two questions". He added:
"It would be different if this were a case of pathology services being initiated by the applicant or (its equivalent) being rendered by him following his own determination that they should be performed; but that is not alleged against this applicant." (Original emphasis).
It follows from our answers to the first two questions that we are of the opinion that this question ought also to have been answered "yes".
OrdersAs we have stated, Einfeld J made a number of declarations. It is unnecessary to set them out. These declarations reflected his Honour's answers to the three questions. In view of our conclusions none of the declarations can stand.
During the course of addresses there was some discussion with the Court as to the desirability, if we thought that his Honour had erred, of making substitute declarations. Counsel for the appellant suggested that there was little utility in this course. The Court's reasons would speak for themselves; the proceeding ought simply be dismissed. Counsel for the respondent, on the other hand, submitted that if, contrary to their argument, the declarations made by Einfeld J should be set aside, the Court should substitute a new declaration, by way of guidance to the Medical Services Committee of Inquiry. They suggested a declaration in the following form:
"Declare that, on the true construction of the Health Insurance Act, 1973-86, a pathologist who did not himself determine that a service rendered by him was necessary could only render an excessive service if on the face of the request or by virtue of other specific matters brought to his attention in relation to the patient, it ought to have been apparent to him that the service was not reasonably necessary for the adequate medical care of the patient."
Counsel suggested that this declaration summarises the effect of Tiong. We do not think that it does. It is too narrowly framed. Although the situation postulated in the draft is one circumstance in which a pathologist may be found to have been at fault, it is only one example of personal fault. There are other possibilities. Whether any of them are relevant to the present case is a matter to be determined by the Medical Services Committee of Inquiry.
It appears to us that there is no utility in making a declaration. The circumstances under which a pathologist may be found to have rendered an excessive service, despite a request from another practitioner, will be clear to the Committee from the terms of Tiong and these reasons. The appropriate substantive order is that the appeal be allowed, the declarations and orders made by Einfeld J be set aside and, in lieu thereof, it be ordered that the Application be dismissed.
Against the possibility that the appeal would succeed, counsel for the respondent put two submissions in relation to costs. First, they invited the Court to mark its disapproval of the appellant's delay in prosecuting the appeal by denying him the costs of the appeal. Secondly, if costs were to be awarded, they sought an order under the Federal Proceedings (Costs) Act 1981.
As we have already indicated, we are critical of the appellant's delay in prosecuting the appeal. But we do not see why the respondent should thereby benefit. The respondent could have taken steps to have the appeal papers filed and the matter listed for hearing. For his own reasons, he chose not to do so. There is no suggestion that he was misled, or otherwise prejudiced, by the appellant's inactivity. The Court should make the ordinary order for costs.
Section 6(1) of the Federal Proceedings (Costs) Act sets out the circumstances under which a costs certificate may be granted. Those circumstances include a successful appeal on a question of law from a judgment of a single Judge of this Court to the Full Court. That is, of course, the present case. Although the granting of a certificate under s.6 is a discretionary matter, it is appropriate in this case to grant a certificate. We shall do so.
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