Phan v Kelly

Case [2007] FCA 269

FEDERAL COURT OF AUSTRALIA

Phan v Kelly [2007] FCA 269

ADMINISTRATIVE LAW – Health Insurance Act 1973 (Cth) – Professional Services Review – statutory scheme for examination of conduct to ascertain whether inappropriate practice involved – challenge to decisions of Director and Committee – whether Director erred in referral to Committee by failing to notify Applicant he had taken evidence from two medical advisors into account – whether Director erred by attaching samples of medical reports to his referral – whether Committee erred by taking reports into account – application of procedural fairness procedures in context of staged statutory procedure – whether Committee erred by adopting alternative sampling methodology in decision-making process – whether Committee should have notified the Applicant that an alternative methodology had been adopted – application of judicial immunity – whether advice given by statistician as to statistical validity of methodology is part of decision-making process – whether statistician is agent of the Committee – application dismissed.

Administrative Decisions (Judicial Review) Act 1977 (Cth), ss 5 and 6
Judiciary Act 1903 (Cth), s 39B
Health Insurance Act 1973 (Cth), ss 82, 83, 86, 88, 89B, 90, 91, 92, 93, 98, 101, 102, 103, 104, 105A, 106, 106D, 106K, 106L, 106T, 106TA, 106U
Evidence Act 1995 (Cth), s 129

Pradhan v Holmes (2001) 125 FCR 280, referred to
Kioa v West (1985) 159 CLR 550, referred to
Re Refugee Review Tribunal, Ex party Aala (2000) 204 CLR 82, referred to
Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57, referred to
Muin v Refugee Review Tribunal (2002) 76 ALJR 966, referred to
Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1, referred to
Cornall v A.B. [1995] 1 VR 372, followed
Annetts v McCann (1990) 170 CLR 596, cited
Commissioner of Police v Tanos (1958) 98 CLR 383, cited
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, followed
Mathews v Health Insurance Commission (2006) 90 ALD 49, distinguished
Herijanto v Refugee Review Tribunal (2000) 170 ALR 379, referred to
Herijanto v Refugee Review Tribunal (No 2)(2000)170 ALR 575, referred to
Mathews v Health Insurance Commission(No. 1) [2005] FCA 1061, referred to

De Smith, S.A. Judicial Review of Administrative Action (4th ed.)

LAM QUOC PHAN v BERNARD KELLY, FLORIA SIMRING AND NEIL TRAN CONSTITUTING THE PROFESSIONAL SERVICES REVIEW COMMITTEE NO 190, THE DETERMINING AUTHORITY ESTABLISHED BY SECTION 106Q OF THE HEALTH INSURANCE ACT 1973 (CTH), HEALTH INSURANCE COMMISSION AND ALAN JOHN HOLMES IN HIS CAPACITY AS DIRECTOR OF PROFESSIONAL SERVICES REVIEW
NSD 1818 OF 2004

TAMBERLIN J
6 MARCH 2007
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD1818 OF 2004

BETWEEN:

LAM QUOC PHAN
Applicant

AND:

BERNARD KELLY, FLORIA SIMRING AND NEIL TRAN  CONSTITUTING THE PROFESSIONAL SERVICES REVIEW COMMITTEE NO 190
First Respondent

THE DETERMINING AUTHORITY ESTABLISHED BY SECTION 106Q OF THE HEALTH INSURANCE ACT 1973…

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AGLC
Phan v Kelly [2007] FCA 269
Case
[2007] FCA 269
Decision Date

CaseChat Overview and Summary

In the case of Phan v Kelly, the applicant, Dr Phan, sought review of the decisions and conduct of the Director and the Professional Services Review Committee in relation to an adjudicative referral made under the Health Insurance Act 1973 (Cth). The core of the dispute was whether procedural fairness was observed during the various stages of the review process, particularly concerning the sampling methodology used by the Committee and the disclosure of certain reports to Dr Phan. The Federal Court was tasked with examining the legality and fairness of the decisions made by the Director and the Committee.

The legal issues before the court included whether the Director appropriately disclosed all relevant material to Dr Phan, whether the sample of services provided to the Committee was representative and unbiased, and whether Dr Phan was afforded procedural fairness by being informed about the advice from Professor Des Nicholls on the sampling methodology. The court had to assess if the Director's failure to disclose certain reports and the Committee's use of a potentially skewed sample rendered the entire referral process unlawful.

The court found that the Director's decision to refer the matter to the Committee was valid, as there was no requirement to disclose all material to Dr Phan prior to the referral. The court further held that the sample provided to the Committee, while not perfect, was sufficiently random and unbiased to allow the Committee to conduct a fair assessment. Additionally, the court determined that Dr Phan was not deprived of procedural fairness by not being informed about Professor Nicholls' advice, as this did not impact the fairness of the Committee's decision-making process.

The application was dismissed with costs, affirming the decisions of the Director and the Committee.

Orders

Orders of the court

The application be dismissed with costs.

Background

Background to the litigation

In Pradhan v Holmes, Finn J usefully encapsulates at [49]-[61] by reference to the above provisions the detailed staged process provided to afford procedural fairness under the statute at each of the four levels of consideration. It is against these comprehensive statutory provisions that the application and submissions as to procedural fairness in the present case ought to be considered.FACTUAL BACKGROUND Dr Phan was the subject of Investigative Referral No. 190 made by the Commission on 29 June 2000. The Investigative Referral related to all services rendered or initiated in the period 1 January 1999 to 31 December 1999 (the relevant referral period in this case). During this period, Dr Phan rendered a total of 18, 165 services, including 17, 970 level B surgery consultations. Adjudicative Referral No. 190 was made by the Director to the Committee on 29 March 2001, and the hearing took place before the Committee on 16-17 May, 2-3 August and 4 October 2001. On 4 March 2004, emails were sent by the Committee Secretary, Ms Vanessa Goodspeed, to Professor Nicholls, seeking guidance in relation to the sampling methodology adopted by the Committee. This advice was provided by Professor Nicholls on 5 March 2004. On 26 June 2004, the Committee made its draft report, with Dr Phan furnishing submissions to the Committee in relation to that report on 20 July 2004. The Committee considered these and made its final report on 28 October 2004. In its final report, the Committee found at [36] that Dr Phan had engaged in inappropriate practise in rendering 47 of the 80 services examined because he:· failed to take an adequate history and/or perform an adequate examination of his patients;· failed to implement proper management plans;· prescribed drugs as an alternative to proper investigation of the patients’ symptoms; and· prescribed drugs when they were not clinically indicated. On 7 December 2004, Dr Phan filed an Application for review of the decisions and conduct of the Director and Committee in the Federal Court. The Director’s decision and conduct in relation to Adjudicative Referral No. 190 is challenged on the basis that the Director failed to inform Dr Phan of the advice and evidence from Dr Davidson dated 4 July 2000 and Dr Dawson dated 12 October 2000. It is apparent that this material was pertinent to Dr Phan’s conduct and was unfavourable to him. In these circumstances, the Applicant submits that full disclosure should have been made in relation to these documents prior to the hearing at the time of their consideration by the Director. It is contended that the failure to do this resulted in an error of law by the Director which operated to invalidate the Adjudicative Referral. The reports are not mentioned in the Adjudicative Referral as being material which was before the Director, although paragraph 5 in the Director’s Report sets out the material considered by the Director. This includes the Commission’s Investigative Referral No. 190 of 29 June 2000; a written submission of Dr Phan dated 12 July 2000; additional information provided by Dr Phan in response to a Section 89B Notice of 1 September 2000 and a selection of records of various patients to whom Dr Phan rendered a medical benefits service (‘MBS’) item 23 service during the referral period, together with calendar charts provided by the Commissioner in relation to these records.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

TAMBERLIN J
The Director’s decision to make the referral is challenged on the second basis that the lists of medical services and patient files which were referred to the Committee were not a proper sample as they had been previously examined by the Director and found to have been deficient in relevant respects. It is contended that this conduct must have inevitably skewed the exploratory sample results and affected the deliberations of the Committee in a manner adverse to the Applicant.DECISION OF THE PROFESSIONAL SERVICES REVIEW COMMITTEE The decision of the Committee is challenged on the basis that the Panel erred in purporting to have regard to samples of services under s 106K of the Act. The Applicant submits that the Committee itself did not ensure that the sample was in fact an appropriate random sample as required under the Act. Therefore, it is contended, the sample results were invalid and the Committee did not have before it a random sample. Consequently, the Committee failed to follow the procedure required by s 106K(4) of the Act. The Committee is further said to have erred in taking into account the patient records sent to it by the Director in the adjudicative referral because those records adversely affected the sampling process and gave rise to an apprehension that the Committee was biased in considering the sample. The Applicant also contends that as a matter of procedural fairness, the Committee fell into error by not notifying Dr Phan that it had obtained and taken into account advice relating to the sampling process from a consultant, Professor Des Nicholls, a Professor of Statistics at the Australian National University. It is submitted that the Applicant was deprived of procedural fairness because he was not able to make submissions or adduce evidence in respect of the advice from Professor Nicholls as to the sampling methodology.PROFESSIONAL SERVICES REVIEW PROVISIONS The scheme of the legislative provisions is comprehensively set out in the decision of Finn J in Pradhan v Holmes (2001) 125 FCR 280 at [5]-[61]. These paragraphs provide a sufficient description of the scheme for present purposes, and it is not necessary to repeat the details of the process here. In his discussion of the scheme, his Honour noted at [6] that it involves four tiers or steps:‘The first three relate to determining whether (inter alia) a medical practitioner has engaged in “inappropriate practice” in connection with the rendering or initiating of services for which a medicare benefit was available. The fourth tier or step involves the imposition of a sanction on a practitioner who has been found to have engaged in “inappropriate practice.”’ ‘Inappropriate practice’ is defined in s 82. In the case of a general practitioner, the test is whether the conduct of the general practitioner in connection with the rendering of services would be unacceptable to the general body of general practitioners: s 82(1)(a). The first step involves the Commission’s decision to make an investigative referral to the Director in relation to the conduct of an individual as to whether that person engaged in inappropriate practice in connection with the rendering or initiating of services: s 86(1). This stage contemplates that there has previously been a complaint or inquiry by the Commission into the conduct of the practitioner. The investigation must be sufficient to enable the Commission to form a view that the practitioner may have engaged in inappropriate practice.

Ratio Decidendi

Legal Principle Established

Established by: TAMBERLIN J

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