Oreb v Willcock

Case [2004] FCA 1520

FEDERAL COURT OF AUSTRALIA

Oreb v Willcock [2004] FCA 1520

ADMINISTRATIVE LAW - Professional Services Review Scheme - whether a medical practitioner has engaged in “inappropriate practice” in connection with the rendering or initiation of services for which Medicare benefits are payable – investigative referral – adjudicative referral – referral period - “prescribed pattern of services” – breach of the 80/20 rule – exceptional circumstances – s 92 Agreement

Administrative Decisions (Judicial Review) Act 1977 (Cth) – s 11(3)
Health Insurance Act 1973 (Cth) - Part VAA – ss 80, 81, 82, 92, 93, 93A, 94, 106KA, 106T, 106U
Judiciary Act 1903 (Cth) s 39B(1A)
Health Insurance (Professional Services Review) Regulations 1999 (Cth) – Regs 10, 11

Abernethy v Deitz (1996) 39 NSWLR 701 referred to
Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531 referred to
Braganza v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 170 referred to
Bruce v Cole (1998) 45 NSWLR 163 referred to
Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 referred to
Crowley v Holmes [2004] FCA 521 considered and applied
Daniel v Kelly (2003) 200 ALR 379 distinguished
Elias v Commissioner of Taxation (2002) 123 FCR 499 referred to
Freeman v Health Insurance Commission [2004] FCA 453 applied
Health Insurance Commissionv Grey (2002) 120 FCR 470 referred to
Institute of Patent Agents v Lockwood [1894] AC 347 cited
Jones v Dunkel (1959) 101 CLR 298 referred to
Kelly v Daniel [2004] FCAFC 14 distinguished
Khan v Minister for Immigration and Ethnic Affairs (1987) 14 ALD 291 referred to
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1985) 162 CLR 24 referred to
Minister for Aboriginal Affairs v State of Western Australia (1996) 67 FCR 40 referred to
Minister for Immigration and Multicultural Affairs v Anthonypillai (2001) 106 FCR 426 referred to
Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 cited
MLC Investments Ltd v Commissioner of Taxation (2004) 205 ALR 207 referred to
Peko-Wallsend Ltd v Minister for Aboriginal Affairs (1985) 5 FCR 532 referred to
Pradhan v Holmes (2001) 125 FCR 280 referred to
Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 cited
Pearce & Geddes, Statutory Interpretation in Australia (5th ed) at [3.38]
J D Heydon, Cross on Evidence (7th Aust ed) at [1215]

ZELCO OREB v SIMON WILLCOCK, ELIZABETH MAGASSY and ROD McMAHON AND THE DETERMINING AUTHORITY AND HEALTH INSURANCE COMMISSION AND ALAN JOHN HOLMES

N 1316 of 2002

JACOBSON J
SYDNEY
30 NOVEMBER 2004


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1316 of 2002

BETWEEN:

ZELCO FRANCIS OREB
APPLICANT

AND:

SIMON WILLCOCK, ELIZABETH MAGASSY
and  ROD McMAHON
FIRST RESPONDENTS

THE DETERMINING AUTHORITY
established by s 106Q of the Health Insurance Act 1973 (Cth)
SECOND RESPONDENT

HEALTH INSURANCE COMMISSION
THIRD RESPONDENT

ALAN JOHN HOLMES in his capacity
as Director of Professional Services Review
FOURTH RESPONDENT

JUDGE:

JACOBSON J

DATE OF…

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AGLC
Oreb v Willcock [2004] FCA 1520
Case
[2004] FCA 1520
Decision Date

CaseChat Overview and Summary

The case of Oreb v Willcock involved Dr Oreb, a medical practitioner, challenging the decision of the Health Insurance Commission (the Commission) to refer his case for peer review under the Health Insurance Act 1973 (the Act). The Commission had concerns about Dr Oreb's high total and daily volumes of medical services, which they believed could indicate inappropriate practice. The Commission had initially counselled Dr Oreb about these concerns, but subsequently decided to refer his case to the Director of Professional Services Review, potentially leading to a peer review. Dr Oreb sought to have this referral set aside, arguing that it was unlawful and procedurally unfair. The case was heard in the Federal Court of Australia, where the court had to determine whether the Commission's decision to refer Dr Oreb's case was lawful and whether it was procedurally fair.

The primary legal issues the court had to decide were whether the Commission's decision to refer Dr Oreb's case for peer review was lawful and procedurally fair. Dr Oreb argued that the Commission failed to consider relevant factors when making the referral, specifically that different officers of the Commission had counselled him about his breach of the 80/20 rule and that no action would be taken to refer his case to the Director. Additionally, Dr Oreb contended that the adjudicative referral was invalid because the Director of Professional Services Review did not consider entering into a s 92 agreement with Dr Oreb, which requires the person under review to acknowledge their conduct as inappropriate practice.

The court, in its reasoning, considered the findings of the Full Court in the case of Daniel, which had similar issues regarding the Commission's referral process. The court noted that the Full Court had set aside the referral in Daniel because the Commission failed to take into account a relevant consideration. Applying these principles to the current case, the court found that the Commission had indeed failed to consider relevant factors in making the referral. The court also found that the Director did not consider entering into a s 92 agreement with Dr Oreb, which was a procedural error. Therefore, the court held that the referral was unlawful and procedurally unfair.

The court set aside the findings of the Committee that Dr Oreb had engaged in inappropriate practice and that exceptional circumstances did not exist. It ordered that the matter be referred back to the Director of Professional Services Review to consider whether it is appropriate to establish a differently constituted committee to determine, in accordance with law, whether Dr Oreb engaged in inappropriate practice during the referral period. The court also scheduled a brief argument on costs to be heard in the week of 6 December 2004.

Orders

Orders of the court

1. The findings of Committee 198, that Dr Oreb had engaged in inappropriate practice and that exceptional circumstances did not exist, be set aside.

2. The matter be referred back to the Director of Professional Services Review to consider whether it is appropriate to establish a differently constituted committee to determine, in accordance with law, whether Dr Oreb engaged in inappropriate practice during the referral period.

3. Brief argument on costs be heard in the week of 6 December 2004.

Background

Background to the litigation

The Full Court in Daniel referred at [38] to the Explanatory Memorandum to the Health Insurance Amendment (Professional Services Review) Bill 1999, introduced on 2 June 1999, which states that the effect of the powers conferred on the Director by the insertion of s 89(1) may mean that a subsequent referral to a Committee becomes unnecessary.The Factual Background On 7 September 2000, Dr Lynda Bates of the Professional Review Branch of the Commission wrote to Dr Oreb confirming an appointment for her to discuss with Dr Oreb his provision of medical services. The particular services which Dr Bates wished to discuss included high total volumes and high daily volumes. The letter attached two brochures explaining the principal features of the scheme. The first brochure was from the Professional Services Review Branch of the Commission. This branch is separate from the Office of the Director of Professional Services Review established by s 83 of the Act. The brochure from the Commission included a description of inappropriate practice as defined by the Act and referred in particular to conduct in connection with the rendering of services which would be unacceptable to the general body of members of the profession. Importantly, the brochure also drew attention to the 80/20 rule, which was set out. The second brochure was on the letterhead of the “Professional Services Review”. This document was a brochure which was produced by the office of the Director. That is to inferred from the fact that the contact address which is given is the address in the ACT which appears on the correspondence from the Director to which I will refer later. Also, the brochure refers to the Director’s annual report to the Minister about the scheme. The Director’s brochure describes the concept of inappropriate practice, the participants in the scheme, and the stages of the process comprised in the scheme. After referring to the Director’s power to dismiss a referral, the following statement is set out:“Negotiating an agreement: The practitioner may approach the Director to negotiate a conclusion of the matter. The Determining Authority must approve any agreement for it to become effective.” On 12 September 2000, Dr Bates attended Dr Oreb’s practice at Newtown and counselled him about the high number of his daily services. She told him of the possibility of the special circumstances exception contained in s 106KA(2) of the Act, but she said that if the Commission’s concerns continued after counselling, the Commission may have to refer Dr Oreb for peer review under the scheme. Dr Bates also informed Dr Oreb at the meeting of the terms of the 80/20 rule which had become effective from January 2000. Dr Bates produced a written report of her interview. It referred to the matters which I have described in the preceding paragraph. The written report concluded as follows:-“To summarise, whilst Dr Oreb suggested a number of reasons for the high total services and daily volumes the Commission still has serious concerns.It was explained that the Chairperson of the NSW Case Management Committee would write to inform him of its decision with regards further action.”

Evidence

Evidence Before The Court

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Decision

Reasons for decision

JACOBSON J
Annexure AJH-3 was the substantially identical letter dated 18 December 2001 which I referred to at [107] above.The Decision in Daniel Dr Oreb’s contention that the investigative referral and/or the adjudicative referral ought to be set aside depended in large measure on the decision of the Full Court in Daniel. The Full Court set out in some detail the reasoning of Ryan J at first instance. Ryan J analysed the powers and duties of the Commission in considering and making an investigative referral. His Honour also analysed the powers and duties arising upon an investigation by the Director of Professional Services Review and the decision to make an adjudicative referral. Ryan J at [26] and [34] found that the investigative referral had to be set aside by reason of the failure by the Commission to take into account a relevant consideration. The consideration which the Commission had failed to consider was that different officers of the Commission had counselled Dr Daniel about his breach of the 80/20 rule. The Full Court at [81] upheld his Honour’s finding. I will set out the passage in full later but it is important to note that the Full Court’s consideration of this issue makes it plain, in my view, that the decision in Daniel turned upon the fact that different arms of the Commission took different views of Dr Daniel’s conduct. The initial view, expressed to Dr Daniel in counselling sessions, was that no action would be taken to refer his case to the Director, and this view was not taken into account by the Acting Director, Dr Kelly (“Dr Kelly”). Having made that finding, Ryan J said that in case he was wrong about the investigative referral he would consider the validity of the adjudicative referral. Two questions were raised in relation to the adjudicative referral. The first was whether Dr Kelly had made an error of law going to jurisdiction, or had denied Dr Daniel procedural fairness, in relation to Dr Kelly’s discretion to enter into a s 92 agreement. This question turned upon Dr Kelly’s evidence on the s 92 issue which Ryan J set out at [27] as follows:-“Before making [the] Adjudicative Referral … … I considered whether this might be an appropriate case to enter into an agreement with Dr Daniel under s 92.I did not consider this was an appropriate case to enter into an agreement under s 92.At no stage did I receive any indication Dr Daniel wished to enter into an agreement under s 92. No submissions were made by Dr Daniel in that respect. It is a precondition of a s 92 agreement that the person under review acknowledge his or her conduct constitutes inappropriate practice. I received no indication that Dr Daniel was prepared to make such an admission.” Ryan J said at [28] that this evidence made it clear that Dr Kelly regarded it as a prerequisite for the exercise of his discretion that the person under investigation be prepared to concede guilt of inappropriate practice or otherwise invite him to resort to s 92.

Ratio Decidendi

Legal Principle Established

Established by: JACOBSON J

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