Zador, I. v Minister for Community Services & Health

[1991] FCA 411

Re: IMRE ZADOR
And: MINISTER FOR COMMUNITY SERVICES AND HEALTH
No. G619 of 1990
FED No. 411
Social Security - Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Gummow J.(1)

CATCHWORDS

Social Security - whether service provided by applicant was a "professional attendance" - Health Insurance Act 1973, Schedule 1, Items 134-142 - whether the ground existed for the making by the Minister of a determination under s. 3C.

Administrative Law - whether Minister's decision was at the direction or behest of another person - estoppel - discontinuance of proceedings - discretionary grounds for relief - bad faith.

Health Insurance Act 1973

Administrative Decisions (Judicial Review) Act 1977

Health Insurance (Variation of Fees and Medical Services) (No. 51) Regulations, SR 230 of 1989

O'Reilly v The Commissioners of the State Bank of Victoria (1983) 153 CLR 1

Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193

Haoucher v Minister for Immigration and Ethnic Affairs (1990) 169 CLR 648 Attorney-General for the State of New South Wales v Quinn (1990) 170 CLR 1

Lamb v Moss and Brown (1983) 76 FLR 296

The King v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust.) Ltd (1949) 78 CLR 389

HEARING

SYDNEY

#DATE 19:7:1991

Counsel and solicitors Mr L.G. Foster instructed
for the applicant: by Messrs Esplins.

Counsel and solicitors Miss M.J. Beazley QC and
for the respondent: Mr L.S. Katz instructed

by the Australian Government Solicitor.

ORDER

The application be dismissed.

The applicant pay the costs of the respondent.

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

JUDGE1

This application for an order of review under the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act") was filed 30 October 1990. It arises out of a dispute between the Health Insurance Commission ("the Commission") and the applicant regarding the conduct by him of a psychiatric outpatient centre in Sydney for the period between 1 February 1984 and the closure of the centre on 4 July 1989. The centre, The William Osler Hall Psychiatric Day Care Clinic, was established in 1974 and named after the eminent physician, Sir William Osler.

1. The applicant, Dr Zador, was born in Hungary in 1917 and after taking a medical degree there in 1942 he completed his post-graduate studies in England and in Switzerland in 1948-1949. In 1956, he left Hungary and in 1962 began to practise in Sydney.

2. In order to understand the decision in respect of which the present application is made, it is necessary to have some regard to other litigation. On 12 September 1989, the Commission issued to Dr Zador a notice pursuant to s. 129AC of the Health Insurance Act 1973 ("the Act") claiming "an amount of $408,991.70 as being a debt due to the Commonwealth". Section 129AC deals with the recovery by the Commonwealth of amounts paid by way of benefit or payment under the Act, but paid because of false statements. The notice in question specified that Dr Zador had made false or misleading statements as follows:
   

"Incorrect use of several Commonwealth Medical Benefit item numbers within the 134-142 range in the raising of accounts in relation to professional services provided by yourself in your speciality as Psychiatrist."

Section 9 of the Act provides that Medicare benefits under Part II shall be calculated by reference to the fees for medical services set out in the "Table", a word defined in sub-s. 3 (1) as meaning, inter alia, "the general medical services table". The general medical services table is set out in Schedule 1 to the Act but is varied from time to time by regulations, as indicated in s. 4 of the Act. It was common ground that the Items 134-142 referred to in the notice under s. 129AC of the Act are to be found in an unaltered form in the Schedule as it stood with the commencement on 1 September 1989 of the Health Insurance (Variation of Fees and Medical Services) (No. 51) Regulations, SR 230 of 1989. The Schedule includes a statement of Rules for interpretation of the Table.

1. On 22 June 1990, the Commonwealth commenced in the High Court of Australia an action against Dr Zador ("the recovery action") seeking recovery of the sum of $408,991,70 and, on 15 August 1990, Mason C.J. made, by consent, an order remitting the recovery action to this Court. Directions then were given in this Court for the preparation of the matter for hearing and a body of affidavit evidence has been filed. However, the bringing of the recovery action to trial has been delayed by intervening circumstances.

2. In particulars given by the Commonwealth in the recovery action, it is said that the allegedly false or misleading statements as a result of which the alleged over-payments in question were made, "were made without any determination by the Minister that the medical services provided by (Dr Zador) be treated as within the Table at a fee specified in such determination pursuant to Section 3C of the Act". On 11 April 1990, Dr Zador, by his solicitors, had requested that the respondent ("the Minister") exercise his discretion under para. 3C (1) (a) of the Act to determine that the health services, provided by him between 1 February 1984 and 4 July 1989 and in respect of which he received payment as services under Items 134-142, be treated in such a way as effectively to validate retrospectively the claims made by Dr Zador under those Items during that period. It is common ground that, if successful, the application made by Dr Zador would enable him to answer the claim for recovery of moneys made against him by the Commonwealth in the recovery action.

3. However, by letter dated 8 August 1990, the Minister responded to Dr Zador's application by stating that the institution of proceedings by the Commission in the High Court on 22 June 1990 "makes all matters relevant to the issue before the Court sub judice". Therefore, it was said, it would be inappropriate while those issues were before the Court for the Minister to be involved in the matter. Dr Zador then commenced, on 31 August 1990, a proceeding in this Court seeking an order of review under the ADJR Act of the failure of the Minister to deal with his application dated 11 April 1990. The Minister took further advice and the upshot was that on 9 October 1990 the Australian Government Solicitor wrote to the solicitors for Dr Zador stating that further consideration had been given to the matter and
   

"As a result, the Minister now intends to exercise his powers under section 3C of the Health Insurance Act 1973 ('the Act') in respect of the applicant's submission of 11 April 1990. The Minister's decision not to make a decision under section 3C of the Act is, in effect, revoked."

The matter was taken a little further by a letter dated 11 October 1990 from the Australian Government Solicitor to Dr Zador's solicitors stating, in part:

"I am instructed that the Department of Community Services and Health undertakes that the Minister will make a decision in respect of the applicant's application under Section 3C of the Health Insurance Act 1973 prior to 25 October 1990.

I am further instructed that the Department will meet the applicant's reasonable costs of this action in the event he agrees to a discontinuance of these proceedings."

On 11 October 1990, the proceeding in question, No. G504 of 1990, was discontinued.

1. However, on 18 October 1990, the Minister made a decision upon the application which was adverse to Dr Zador. The decision was communicated to Dr Zador's solicitors in a letter from the Minister in the following terms:
   

"I refer to my previous letter of 6 August 1990 in which I indicated that as the proceedings regarding your client Dr Zador were before the Court, any action by me in considering your request to make a determ-ination under section 3C of the Health Insurance Act 1973 ('the Act') would be sub judice. I therefore considered it would be inappropriate for me to be involved in the matter at that time.

I have since received further advice, following which I have considered your request for a determination under section 3C of the Act on behalf of Dr Zador.

A Ministerial determination may be made under section 3C of the Act only in circumstances where there is no item specified in the general medical services table or the pathology services table that covers the particular health services in question. The health services rendered by Dr Zador, which are the subject of your request, are already specified by items in the general medical services table. Items 134 - 142 inclusive or items 887 - 889, all relate to attendances by consultant psychiatrists at consulting rooms, hospitals or nursing homes for individual patients or for group psychotherapy situations. The health services rendered by your client are covered by one of the above items. I understand that the issue as to which of these items actually apply to the health services rendered by your client is a matter presently before the Federal Court of Australia. As the health services rendered by your client are already specified by items in the general medical services table, it is not possible for me in these circumstances to make a determination under section 3C of the Act as you have requested."

As I have indicated, the present application was filed on 30 October 1990, and the decision in respect of which an order of review is sought is that set out in the letter dated 18 October 1990.

1. So far as is relevant, s. 3C provides as follows:
   

"3C. (1) The Minister may, by writing, determine that -

(a) a specified health service, or a health service included in a specified class of health services, being a health service not specified in an item in the table, shall, or shall in specified circum-stances, be treated, for the purposes of specified provisions of this Act, the regulations, the National Health Act 1953 or the regulations under that Act, as if -

(i) the health service were whichever of the following is specified in the determination, namely:

(A) both a professional service and a medical service;

(B) a medical service; and

(ii) there were an item in the general medical services table . . . that -

(A) related to the health service; and

(B) specified in respect of the health service a fee in relation to a State, being the fee and the State specified in the determination in relation to the health service; and

(b) a specified provision of the regulations, a specified instrument made under or given pursuant to this Act or a specified provision of a specified instrument made under or given pursuant to this Act, being a provision or instrument, as the case may be, in which all or any of the following are specified, namely, a professional service, medical service or item, shall, or shall in specified circumstances, have effect as if -

(i) the health service; or

(ii) the item that, by virtue of sub-paragraph

(a) (ii), relates to the health service, as the case requires, were also specified in the provision or instrument, as the case may be. . . .

(2) A determination made under sub-section (1) may be expressed to have taken effect from a day earlier than the day on which the determination was made (not being a day earlier than 1 February 1984). . . ."

It will be noted that the period in respect of which the recovery proceeding was commenced was 1 February 1984 to 4 July 1989. The term "health service" as it appears in s. 3C is defined in sub-s. (8) as meaning, inter alia, "medical treatment".

1. In the present proceeding, a statement by the Minister pursuant to s. 13 of the ADJR Act was issued, bearing date 13 December 1990. Under the heading "Reasons for Decision", the following appears:
   

"4.1 Paragraph 3C(1)(a) of the Act refers to 'a specified health service, . . ., being a health services (sic) not specified in an item'. I considered that in order to exercise my discretion under section 3C of the Act, I must be satisfied that the specified health service is not a health service specified in an item in the table. 4.2 The services rendered by Dr Zador are already a specified health service, or a health service included in a specified class of health services, being a health service specified in an item in the Medical Services Table under either the time tiered items relating to professional attendances at consulting rooms, hospital or nursing home by a consultant psychiatrist (items 134-142 inclusive) or under items 887-889 which relates to group psychotherapy of not less than one hour's duration.

4.3 I therefore concluded that section 3C of the Act did not give me the power to create a new item in the table where appropriate items already exist in the Medical Services Table to cover the services referred to in Dr Zador's submission of 11 April 1990."

The submission dated 11 April 1990 (Exhibit B) is a document of 16 pages, not allowing for the nine attachments. It describes Dr Zador as, "(i)n effect", having "fulfilled the role not only of clinical psychiatrist, but also of social worker and rehabilitation staff". It describes the following routine as that generally experienced by patients visiting William Osler Hall (pp 6-7):

"The patient would give their name at reception. If necessary, the patient would wait in a pleasantly appointed waiting room until Dr Zador called the patient into his study. There would typically then be a consultation with the patient in private in Dr Zador's study. With new patients, Dr Zador would discuss the patient's problem with the patient at length and would design a program with the patient for their future treatment. In some cases, the treatment involved psycho-therapy (meaning involving continued discussions with Dr Zador from time to time) and in other cases the treatment involved psycho-therapy combined with some type of tranquillizers or anti-depressants, which also involved the patient returning to William Osler Hall from time to time. In serious cases involving patients with suicidal tendencies or some other deep-seated depression or some other personality problems, treatment combined with injections was suggested. Some patients required continued treatment with injections in order to keep them out of mental hospitals. Some patients treated by Dr Zador had been in and out of mental hospitals a number of times. Where Dr Zador provided treatment in combination with some type of medication, the patient would spend varying degrees of time in one of the rest rooms, and Dr Zador would circulate amongst the patients from time to time, ensuring that they were comfortable and resting and the patients would relay to Dr Zador their feelings and thoughts while undergoing these rest periods. The period of time that elapsed from the time when the patient would enter the William Osler Hall and leave could vary from between one hour up to four hours depending on the precise form of treatment being received and whether or not the patient was a new patient.

In addition to the time spent by Dr Zador treating patients, Dr Zador encouraged his patients to write down their thoughts as part of the rehabilitative process, which required many hours of additional time by Dr Zador to consider patients' letters, and discuss them with patients, as part of their treatment. . . .

Dr Zador was physically present in the clinic at all times that it opened, and it is submitted that his presence was a significant factor in assisting anxious or disturbed patients, even during the times when Dr Zador was not physically administering treatment to those particular patients. Many patients would not have accepted sedation if Dr Zador were not present. He had their trust because he was present physically, mentally and emotionally."

There were some ten beds in all, in three "rest rooms". Each room had more than one bed. In the submission, the point also was made that patients could receive appropriate treatment at the day clinic, and continue carrying on a normal role in the community in terms of both family and working relationships, so avoiding the stigma of internment in a psychiatric hospital which removed them from the mainstream of normal life.

1. Following certain discussions with officers of the Commission, the Clinic was closed in July 1989. In Exhibit B, Dr Zador submitted that the Commission should not now seek to recover from him amounts paid to him under the Act from the period between 1984 and 1989.

2. The letter conveying the decision of 18 October 1990 followed a written recommendation by an officer of the Minister's Department, dated 18 October 1990, that the Minister:
   

"(i) note advice from Counsel that there is no reason arising out of the fact that there are presently proceedings before the Court which would prevent you from making a determination as to whether or not you should exercise your powers under Section 3C of the Health Insurance Act 1973 (HIA);

(ii) determine that you are not able to exercise your powers under Section 3C as requested by the solicitors for Dr Zador, because of the constraints of the legistation (sic); and

(iii) inform Dr Zador's solicitors of your decision."

1. Beside this recommendation, the Minister, on 18 October 1990, that is to say on the same day, wrote the following:
   

"Note (i) I agree to (ii) ie determine that I am unable to exercise my powers under s 3C."

1. In the present proceeding, the application for an order of review of the decision of 18 October 1990 is put on various grounds in s. 5 of the ADJR Act. Counsel for the applicant sought to make good the following three principal submissions:
   

(i) No proper consideration has been given to the matter, having particular regard to the endorsement by the Minister on 18 October 1990 of the recommendation bearing the same date.

(ii) The Minister was in error in concluding that the services rendered by the applicant were already covered by items 134 - 142 inclusive or items 887 - 889.

(iii) The discontinuance of the first proceedings in this Court under the ADJR Act raised an estoppel which prevented the Minister from now asserting that he now lacked the necessary power under s. 3C of the Act to make the determination sought by the applicant.

1. Counsel for the Minister sought to meet those three points and submitted that, in any event, there were discretionary grounds which would lead to the dismissal of the application.

2. I turn to the applicant's three principal submissions, beginning with submission (i). This is not a case where it is said that the Minister might act through an officer of his Department of State, as a matter of "administrative necessity" and without the Minister directing his mind to the matter in hand: O'Reilly v The Commissioners of the State Bank of Victoria (1983) 153 CLR 1 at 11-12, 19-20, 30-31. Rather, it is said that the Minister improperly exercised the power conferred by sub-s. 3 (1) of the Act at the behest of the officer of his Department who proffered the submission dated 18 October 1990. On that footing, para. 5 (1) (e) and para. 5 (2) (e) of the ADJR Act would apply, although it may appear odd to characterise the decision of a Minister in this way. More simply, upon the applicant's argument, the decision in question would not be authorised by the Act, thereby enlivening para. 5 (1) (d) of the ADJR Act.

3. But there is on the evidence simply no basis for drawing any such conclusion. The notation by the Minister, which I have set out, indicates that he did apply his mind to the matter. The fact that he did so on the same day as the recommendation was tendered is indicative of crisp and prompt decision-making, surely something not to be impugned in the way the applicant would have it.

4. By the third ground, the applicant sought to raise an estoppel. This was not an estoppel which would merely control the manner of exercise of an undoubted statutory discretion, as in Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193. It would operate to overcome the objection that the course proposed by the applicant would be beyond the scope of the power conferred upon the Minister by s. 3C of the Act. Counsel for the applicant, in address, accepted that there were formidable obstacles to the success at first instance of such a submission. The statements upon the subject by McHugh J. in Haoucher v Minister of State for Immigration and Ethnic Affairs (1990) 169 CLR 648 at 678-679 and by Mason C.J. in Attorney-General for the State of New South Wales v Quinn (1990) 170 CLR 1 at 17-18, apply a fortiori to the present case. In my view, the applicant's third submission should be rejected.

1. There remains the second submission, and the Minister's discretionary defence.

2. I turn to the second submission. Items 887-889 deal with group psychotherapy given under continuous direct supervision of a consultant physician in the practice of his specialty of psychiatry. No point arises concerning these provisions. Items 134-142 deal with attendances of up to more than 75 minutes' duration, and differ in terms only as regards the length of the attendance. Item 142 may serve as an example. It states:
   

"142 Professional attendance by a consultant physician in the practice of his specialty of psychiatry where the patient is referred to him by a medical practitioner - an attendance of more than 75 minutes duration where that attendance is at consulting rooms, hospital or nursing home."

1. Unquestionably, the Clinic in question answered the description "consulting rooms". There was no debate on that point. But counsel for the Minister submitted that a significant proportion of the time claimed by Dr Zador for attendances had not answered the description of "professional attendance" by him upon patients referred to him by a medical practitioner. Hence, the contention that Dr Zador had made false or misleading statements and incorrectly used the Items in question in raising accounts for Medical Benefits. Hence also the High Court proceedings to recover the alleged over-payments.

2. Dr Zador submits, and the Minister denies (and this is the nub of the present proceeding) that the activities, the subject of the alleged over-payments were the provision by him of health services which, however, were not specified in any item in the Table. Accordingly, Dr Zador submits that he had properly laid the ground for a determination in his favour by the Minister under s. 3C.

3. As I have indicated, the term "health service" is defined in sub-s. 3C (8) as meaning, inter alia, "medical treatment". The term "attendance" in items such as 134-142, is defined in interpretive rule 6 as meaning "a physical attendance on not more than one person on the one occasion, other than an attendance on one person in the course of a group session".

4. I have set out the crucial passages from Exhibit B. The activities of Dr Zador at the Clinic included (i) face to face consultations with patients, (ii) group psychotherapy sessions and (iii) other activities. There is in the present case no difficulty as to (i) and (ii), but (iii) includes Dr Zador's activities after the patient had been given medication and placed in one of the "rest rooms". Dr Zador would "circulate amongst the patients from time to time, ensuring that they were comfortable and resting". Whilst undergoing these "rest periods", the patients would "relay to Dr Zador their feelings and thoughts".

5. The Minister submitted that Dr Zador's circulation among the patients from time to time in this way was a physical attendance upon them within the sense of items 134-142. I agree, and it is difficult to see how the contrary could be accepted. Therefore, in relation to these activities, one could not say, as Dr Zador must maintain as a starting point for his case, that they were health services not specified in an item in the Table.

6. Counsel for Dr Zador also contended that some of the attendances claimed by his client amounted to him "patrolling the rooms". But insofar as Dr Zador's activities fell outside the description of a physical attendance upon a particular patient and were not part of group psychotherapy, they were, in my opinion, no more than activities incidental in a general way to the operation by Dr Zador of the Clinic. They were not the provision of medical treatment and thus did not amount to a "health service" within the definition in sub-s. 3C (8).

7. Accordingly, there was no scope for any determination under s. 3C in favour of Dr Zador.

8. There remains the question of whether, in any event, relief should have been denied on discretionary grounds. Section 16 of the ADJR Act confers a discretion upon the Court not only as to the form of relief, if relief is to be granted, but as to whether or not to grant relief: Lamb v Moss and Brown (1983) 76 FLR 296 at 312. Thus, relief might be withheld if there had been bad faith on the part of the applicant, either in the transaction out of which there arises the decision sought to be reviewed, or towards the Court itself; cf. The King v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust.) Ltd (1949) 78 CLR 389 at 400; Wade, "Administrative Law", 6th Ed., p 709-712, Craig, "Administrative Law", 2nd Ed., p 393. In the circumstances of the present case, where the application fails in any event, it is not necessary to consider whether the conduct of Dr Zador is to be stigmatised as displaying bad faith in the sense I have described.

9. The application should be dismissed with costs.