Re Jack Freeman v WM Mccubbery; MA Mckenzie; RM Mclennan and GJ Royal (Who Are Sued As the Members of the Second Medical Services Committee of Inquiry of Victoria) v [1985] FCA 59 (5 March 1985)

FEDERAL COURT OF AUSTRALIA

Re: JACK FREEMAN
And: W.M. McCUBBERY; M.A. McKENZIE; R.M. McLENNAN and G.J. ROYAL (who are sued
as the Members of the Second Medical Services Committee of Inquiry for the
State of Victoria)
V. No. G162 of 1984
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.

CATCHWORDS

Administrative law - judicial review - Health Insurance Act 1973 - whether insufficient particularity amounts to error of law - whether rules of natural justice apply.

Health Insurance Act 1973

Administrative Decisions (Judicial Review) Act 1977 ss.5 and 6

HEARING

MELBOURNE
5:3:1985

ORDER

THE COURT ORDERS THAT the application be dismissed with costs.

DECISION

The applicant is a legally qualified medical practitioner carrying on a general practice from two locations in the State of Victoria. In the course of his practice he provided a variety of diagnostic services not normally provided in a general practice.

2. The respondents are four of the members of a Medical Services Committee of Inquiry for the State of Victoria constituted under Division 3 of Part V of the Health Insurance Act 1973 ("the Act"). That Part of the Act is headed "Committees" and Division 3 is headed "Medical Services Committees of Inquiry". Division 3 of Part V comprises sections 79 to 106AA inclusive. The functions of committees of inquiry are contained in s.82 and those functions include the following:

"82. A Committee shall inquire into, and

submit to the Minister its report and
recommendations on -

(a) ...

(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 ... and arises out of or relates
to -

(i) ...

(ii) the rendering of a
professional service on or
after 15 April 1977 ... in
the State for which the
Committee is established."

3. By instrument dated 1 May 1984 (hereinafter called "the instrument of referral") a delegate of the Minister, pursuant to paragraph 82(b) of the Act, referred to the Second Medical Services Committee of Inquiry for the State of Victoria -

"... for inquiry into, and submission of
a report and recommendations to the
Minister of State for Health on a matter
relevant to the operation or
administration of the said Act, which
arises out of the rendering of
professional services in the State of
Victoria after 15 April 1977, namely,
whether in rendering professional
services to patients particulars of which
are set out in annexures marked 'A and
B', being services for which
medical/medicare benefits have become
payable..."

the applicant rendered excessive services within the meaning of paragraph 79(1B) of the Act.

4. The applicant is seeking orders of review under the Administrative Decisions (Judicial Review) Act 1977 ("the Judicial Review Act") of two decisions of and of proposed conduct by the respondents who constituted a quorum of the Committee of Inquiry with respect to the referral pursuant to the instrument of referral. The two decisions are identified as being:

1. The decision under s.94 of the Act that it appeared

to the respondents that the applicant may have
rendered excessive services. This decision is
hereinafter referred to as "the section 94
decision"; and

2. The decision under s.96 of the Act to summon the

applicant to attend and produce to the respondents
documents referred to in a notice dated 4 July 1984.
This decision is hereinafter referred to as "the
section 96 decision".

5. The proposed conduct is identified as the conduct whereby the respondents propose to hold a hearing into the matter referred to in the instrument of referral.

6. In Division 3 of Part V of the Act, a reference to excessive services is a reference to professional services being services in respect of which a medical or medicare benefit has become or may become payable and which was not reasonably necessary for the adequate medical care of the patient concerned; see paragraph 79(1B)(a) of the Act. Under s.80, the Minister is required to establish at least one Medical Services Committee of Inquiry in each State. In Division 3 the word "Committee" is used to describe a Medical Services Committee of Inquiry and that terminology will be used in these reasons. Each Committee consists of five medical practitioners and thus each Committee constitutes a committee of experts. The functions of a Committee are set out in s.82 and the relevant functions for present purposes have been referred to earlier. Sections 83, 84, 85, 86, 87, 88, 89 and 90 make provisions for procedural matters. A quorum for a meeting is three. Section 91 provides that subject to the Act and regulations, a Committee may regulate its own proceedings and meetings shall be held in private. Section 92 provides that, subject to s.94, a Committee may, for the purpose of its inquiry into a matter the subject of a reference, inform itself in such manner as it thinks fit. Under s.93, with the approval of the Minister, the Chairman of a Committee may, on behalf of the Committee, engage experts as consultants to the Committee. The relevant parts of s.94 are set out:

"94. Where, after consideration of a
matter referred to a Committee by the
Minister and of any documents that
accompany the reference supplied by the
Minister, it appears to the Committee
that -

(a) ...

...

(c) a practitioner may have rendered
excessive services; ...

...

the Committee shall -

(j) unless paragraph (k) applies -
conduct a single hearing into the
matter; or

(k) if it is satisfied that it is
appropriate to do so - conduct two
or more hearings into the matter,
each hearing being a hearing into
the matter in so far as the matter
relates to one or more of the
circumstances referred to in
paragraphs (a) to (h) inclusive."

7. Section 95 prescribes detailed procedures to be followed where a Committee proposes to conduct a hearing or hearings under s.94. The relevant parts of s.95 are set out:

"95. (1) A Committee shall -

(a) ...

(b) if it proposes to hold a hearing
into a matter in so far as the
matter relates to a circumstance
referred to in paragraph 94(c), ...
- cause to be given to the person
first referred to in that paragraph,

notice in writing of the time and place
of the proposed hearing at least ten days
before the date of the proposed hearing.

(2) A notice under sub-section (1)
shall give particulars of the matter to
which the hearing relates.

(3) A notice under sub-section (1)
may be served on a person either
personally or by post."

Section 96 is set out in full -

"96. (1) For the purposes of a hearing,
a member may, by writing under his hand,
summon a person who is, in relation to
that hearing, a relevant person, to
attend the hearing and to produce such
documents (if any) as are referred to in
the summons and to appear at the hearing
to give evidence for the purpose only of
identifying any such documents.

. . . . . . . . . . . . . .

(3) A summons under this section
may be served on the relevant person
concerned personally or by post."

By reason of sub-section 79(1) the phrase "relevant person" appearing in Division 3 of Part V, for the purposes of the present application, includes the applicant.

8. Under s.96A a relevant person summoned under s.96 to attend a hearing must attend in person and may be represented by another person. A relevant person who, without reasonable excuse, fails to attend as required is guilty of an offence under sub-section 101(2). Under s.79B, where a relevant person attends at a hearing in accordance with s.96A, he or his representative shall be given the opportunity to give evidence, to call witnesses, to examine other witnesses and to address the Committee. Under s.97, the hearing shall be held in private and shall be presided over by the Chairman, or in his absence the Deputy Chairman, of the Committee. The rules of evidence do not apply in relation to the hearing and the procedure for conducting the hearing is, subject to the Act and regulations, within the discretion of the person presiding. Documents produced by the relevant person may be inspected and copied by members of the Committee. Under s.98, evidence at a hearing shall be taken on oath or affirmation. A relevant person who, without reasonable excuse, refuses or fails to produce documents which he is required to produce by the summons under s.96, is guilty of an offence under sub-section 102(1A). Any document so produced by a relevant person is not admissible against him in criminal proceedings except to the limited extent specified in sub-section 102 (2A). Section 103 confers a protection on members, on persons appearing on behalf of another person, and on persons appearing as witnesses.

The relevant parts of s.104 are set out:

"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) ...

...

the report shall identify the excessive
services."

9. Under s.105, where the report under s.104 expresses the opinion that a practitioner has rendered excessive services and a medicare benefit is payable or has been paid in respect of those services, the Committee may, in the report, make a recommendation that where the medicare benefit is payable but has not been paid to the practitioner, the medicare benefit or a specified part thereof ceased to be payable, or, where the medicare benefit has been paid, that the amount of the benefit so paid or a specified part thereof be payable by the practitioner to the Commonwealth. Under s.106, where a Committee makes either of the recommendations just referred to, the Minister may make a determination in accordance with that recommendation. Where that determination is so made, that determination shall have effect. Section 106AA contains provisions relating to determinations made by the Minister.

10. Part VA of the Act contains provisions enabling the person to whom a determination under s.106 relates to refer the determination to a Medical Services Review Tribunal for review with a further appeal, on a question of law, to the Federal Court. Counsel agree, in my opinion quite correctly, that the provisions of that Part enabling a matter to be reviewed by a prescribed court have no application to any determination that may be made by the Minister with respect to the matters the subject of this application.

11. In Division 3 of Part V a reference to excessive services includes professional services, being services in respect of which a medicare benefit has become or may become payable and which was not reasonably necessary for the adequate medical care of the patient concerned; see paragraph 79(1B)(a). In the Act, the phrase "professional service" is defined to include a medical service to which an item in the table of medical services set out in Schedule 1 of the Act relates, being a service that is rendered by a medical practitioner; see s.3 of the Act. The applicant is a medical practitioner within the meaning of the Act.

12. There is no substantial dispute as to the facts of this application. The instrument of referral which initiated the action of the respondents was dated 1 May 1984 and the relevant parts of that instrument have been set out earlier in these reasons. Annexure "A" thereto comprised a summary of the medical benefits paid or payable to the applicant with respect to items of medical services identified by item number and being diagnostic services provided to patients of the applicant. There were eight different items of service specifying 6,452 separate services between the period 15 April 1977 and 21 September 1979. The amount of the medical payments paid or payable totalled $112,811.77. Annexure "B" comprised a list of 1,623 patients to whom the services had been rendered showing the name and date of birth of the patient, the item number of the service rendered and the date it was rendered. The items of service rendered included a number of diagnostic services including ultrasonic, respiratory function tests, electrocardiography, blood count and radiographic examination. Neither annexure identified the nature of the symptoms from which any of the patients complained, nor the nature of the disease or injury from which any of the patients was suffering.

13. Pursuant to s.13 of the Judicial Review Act, the respondents have given a statement of their reasons for the section 94 decision. That statement is dated June 1984. It discloses that the four respondents held a meeting of the Committee on 1 May 1984. The meeting was presided over by the Deputy Chairman. The minutes of that meeting included the following:

"2. REFERENCE TO THE COMMITTEE

Reference MS 18026 - Dr J Freeman.

The Committee having regard to what they
believed to be the average cross section
of patients in a general practice
considered that the number of tests
apparently performed on the premises, and
particularly those performed in the
common grouping of exercise ECG's,
respiratory function tests, chest X-rays
plus pathology tests for so many patients
during the period referred, was markedly
high.

Accordingly after lengthy consideration
of the matter referred, it appeared to
the Committee that Dr J Freeman may have
rendered excessive services within the
meaning of Section 79(1B)(a) of the Act.

For these reasons the Committee was
unanimous in its decision that a notice
under Section 95 be forwarded to Dr
Freeman informing him of a hearing to be
held on 5 June 1984 at 5.00pm. Further,
that a summons under Section 96(1) of the
Act be served with the notice, requiring
Dr Freeman to attend and produce clinical
notes and case records on the first 30
patients under reference, at the
aforesaid hearing, the first 30 patients
being selected at this stage for the
convenience of Dr Freeman."

14. The statement states that the decision did not involve any findings of fact. In stating their reasons for decision the respondents say that the decision was made at the meeting of the Committee held on 1 May 1984. They considered the instrument of referral and the two annexures thereto. They say they spent about one and a half hours examining the annexures and discussing whether to make a decision to hold an inquiry. The discussions related to a comparison between the services for patients outlined in the annexures and the services which the Committee considered were likely to be provided by a general practice in Melbourne in the period from 1977 to 1979. The statement sets out their reasons for decision as follows:

"9. The decision to hold an inquiry was
made because the following features were
observed in (the annexures) ... namely
that:

(a) ECG Stress Testing (Item 914)
appeared to have been performed more
frequently than the Committee
considered to be reasonable.

(b) Respiratory Function Tests (Item 921)
appeared to have been performed more
frequently than the Committee
considered to be reasonable.

(c) ECG Stress Testing (Item 914),
Respiratory Function Testing (Item
921) Pathology Tests (Items 1007,
1307 and 1308) and Chest X-ray (Item
2625) all appeared to have been
performed together on one patient on
the one occasion more frequently than
the Committee considered to be
reasonable.

The Committee considered that the
features as outlined in sub-paragraphs
9(a)(b) and (c) above from examination of
the said (annexures) ... were indicative
that the patients who were the recipients
of the services referred to by these
items may have been rendered excessive
services within the meaning of the Act,
because such services would not have been
reasonably necessary for the adequate
medical care of the patients concerned."

Thereafter the respondents caused to be set in motion the procedures prescribed by the Act.

15. Under cover of a letter to the applicant dated 3 May 1984 and received by the applicant shortly thereafter, the Committee gave notice that it intended to hold a hearing and that pursuant to s.96 of the Act, the applicant was required to produce records and give evidence. Various explanatory notes and the relevant statutory provisions were also forwarded under cover of that letter.

16. The application herein was issued on 4 June 1984. The application was amended pursuant to an order of the Court made on 22 June 1984. There may have been a number of defects in some of the documents which had been served on the applicant, for example, the section 95 notice made reference to "an inquiry" instead of "a hearing". Pursuant to the directions which had been given, by a further letter dated 29 June 1984, a further set of documents was served on the applicant. The date of hearing was altered to 16 October 1984 and notice was given that the first thirty patients only named in Annexure "B" would be considered at the first sitting of the hearing on that day. The further documents served included an explanatory key to Annexures "A" and "B", the instrument of referral and annexures thereto, a list of the first thirty patients listed in Annexure "B" and an amended notice under s.95. The amended notice made reference to "a hearing". It recited the instrument of referral but did not set out the operative words thereto, but described it as "the rendering of professional services by you on or after 15 April 1977". A notice under s.96 to attend the hearing and produce documents and dated 4 July 1984 was also served.

17. Finally, a final notice of proposed hearing dated 2 November 1984 was served on the applicant. Omitting formal parts, that notice is set out in full:

" NOTICE OF PROPOSED HEARING PURSUANT
TO SECTION 95 OF THE HEALTH INSURANCE
ACT 1973

TO: Dr J. Freeman
44c Haines Street
NORTH MELBOURNE

The previous Notice under section 95 in
relation to this reference dated 2
October 1984 is hereby rescinded.

WHEREAS the Minister for Health of the
Commonwealth of Australia has referred to
a Medical Services Committee of Inquiry
for the State of Victoria (hereinafter
referred to as 'the Committee')
established under the Health Insurance
Act 1973 ('the Act') a matter within the
Committee's functions under the Act
namely-

whether in rendering professional
services to patients particulars of
which are set out in annexures
marked 'A' and 'B' being services
for which medical/medicare benefits
have become payable, Dr Jack Freeman
rendered 'excessive service' within
the meaning of s. 79(1B)(a) of the
Act (hereinafter referred to as 'the
matter').

AND WHEREAS at a meeting of the Committee
held on 1 May 1984, after consideration
of the matter and of the documents which
accompanied the reference, being those
documents specified in the Schedule to
this notice, copies of which were
forwarded to you by way of service with
the notice dated 29 June 1984, it
appeared to the Committee that you may
have rendered excessive services within
the meaning of the Act.

YOU ARE HEREBY NOTIFIED that in
accordance with section 94 of the Act the
Committee proposes to hold a hearing into
the matter to commence on Tuesday the
fourth day of December 1984 at 5.00 pm in
the Conference Room, Second Floor,
Commonwealth Centre, corner of Spring and
LaTrobe Streets, Melbourne. The
Committee does not expect to complete the
hearing into this matter on the said date
('the first sitting') thus you will be
advised in due course of any further
dates necessary for the continuation of
the hearing. For your convenience, the
Committee intends to restrict its
enquiries at the first sitting to only
those services identified by Annexure B
attached to the Notice under Section 95
forwarded to you by way of service on 29
June 1984, as being rendered upon the
first 30 patients in that Annexure.

THE SCHEDULE

1. Instruments of Referral dated 1 May
1984

2. Annexure A - Summary of Reference

3. Annexure B - Particulars of Services
under reference."

18. Before proceeding further it should be noted that although the provisions of the Act are complex, that does not excuse the serving of such a large number of different and possibly conflicting documents upon the applicant. The welter of documents must lead to confusion and has made it difficult for the applicant and the Court to understand and appreciate what the Committee was attempting to do. From a consideration of all the documents, however, it can be seen that on 1 May 1984 the Committee made the section 94 decision based upon a consideration of Annexure "A" and Annexure "B" to the instrument of referral, namely that the applicant may have rendered excessive services. In coming to this decision the members of the Committee relied upon their own knowledge and experience as medical practitioners. That decision having been made, section 94 of the Act thereupon imposed a duty on the Committee to conduct a hearing or hearings into the matter. In the present case, it appears that the respondents propose to conduct the hearing over a number of sittings.

19. Under s.96 of the Act, the Committee had a discretion to summon the applicants to attend the hearing, to produce documents and to give evidence for the purpose only of identifying any of those documents. The respondents have exercised that discretion and the applicant is challenging the section 96 decision.

20. Submissions made in support of the application covered a wide range. Counsel relied upon a number of grounds contained in sections 5 and 6 of the Judicial Review Act, namely those contained in paragraphs 5(1)(a), (b), (d), (e), (f), (h) and (j), and paragraphs 6(1)(a), (b), (c), (d), (e), (f), (h) and (j). The additional grounds imported by paragraphs 5(1)(e) and 6(1)(e) are those set out in paragraphs 5(2)(c) and 6(2)(c) of the Judicial Review Act respectively. For the purposes of paragraphs 5(1)(h) and 6(1)(h), reference should be made to sub-sections 5(3) and 6(3) respectively. In summary form the grounds relied upon by the applicant are set out, namely that with respect to the decisions and to the proposed conduct:

(a) there occurred or will occur a breach of the rules
of natural justice;

(b) procedures required by law to be observed were not
observed and will not be observed;

(c) there were and will be an improper exercise of the
power conferred by the Act, in that the decisions
were made and the proposed hearing will be
conducted for a purpose other than that for which
the decision could be made and the hearing may be
conducted;

(d) they involved and will involve an error of law;

(e) there is no evidence or other material to justify
them;

(f) they were and will be contrary to law.

21. The major objection taken by the applicant was that the section 94 decision involved an error of law, namely that in order to determine whether a practitioner may have rendered excessive services, the Committee should consider the patient with respect to which the alleged excessive service was rendered. That consideration should involve considering the symptoms complained of by the patient, or at the very least the disease or injury from which the patient was suffering. It was contended that the section 94 decision could not have been made as it were "in globo" by reference to the large number of patients and the large number of services rendered in the absence of an identification of symptoms, disease or injury. The error of law alleged by the applicant, it was contended, was highlighted by the facts of the present case where the services rendered go back to 1977, where many of the patients have since died and the records relating to them have been destroyed and many of the copies of the records which had been supplied to the Minister at the time have been destroyed also. This aspect was in addition to the complaint made in relation to the severe burden placed upon the applicant in having to comply with the summons to attend the hearing, to produce documents and to give evidence identifying documents for such a large number of patients and over such a long period of time.

22. In support of his major contention, counsel for the applicant referred to the defined meaning to be given to the phrase "excessive services" by paragraph 79(1B)(a) of the Act and emphasized that the phrase referred to professional services which were not reasonably necessary for the adequate medical care of the patient concerned. He emphasized the use of the word "patient" in the singular. There is force in the contention.

23. A reference to s.23 of the Acts Interpretation Act 1901 does not assist the applicant's contention, since if the word "patient" includes the plural, the definition should be construed distributively with respect to each patient.

24. In a matter referred to a Committee under s.82 of the Act, each matter had to be with respect to an identifiable patient, although that would not prevent a number of matters with respect to a number of different patients being included in the one reference, as was done in this case. In those circumstances, however, in determining whether under s.94 it appeared to the Committee that the practitioner may have rendered excessive services, the Committee was required to consider the services provided separately to each patient, the symptoms complained of by that patient, or the disease or injury from which that patient was suffering and whether the professional services rendered to that patient appeared to be excessive.

25. The major contention on behalf of the applicant is rejected. The Act contains detailed provisions with respect to the determination of whether practitioners have rendered excessive services. The Minister initiates action by referring a matter or matters to a Committee consisting of medical practitioners. That Committee considers the matter so referred, including the documents, if any, accompanying the references. No further action is to be taken by the Committee unless "it appears to the Committee that (the) practitioner may have rendered excessive services". The members of the Committee are entitled to rely upon their own knowledge and experience. On a proper reading of the provisions of the Act, including the meaning to be given to the phrase "excessive services", the Committee is not limited to a consideration of the services rendered to a particular patient with respect to defined symptoms, disease or injury. There is nothing in the Act to prevent the members of the Committee having regard to a large number of patients without reference to the symptoms, disease or injury of any of them. It is possible that the Committee could come to a conclusion that a pattern of services rendered to a large number of patients may be evidence of the rendering of excessive services and calls for explanation. Under s.94, the Committee is not considering whether a practitioner has in fact rendered excessive services. The minutes of the Committee of its meeting on 1 May 1984, and the reasons supplied by it for the section 94 decision, make clear the basis for that decision. On the proper construction of the Act, that was a decision open to the Committee. The section 94 decision was in the nature of a decision that the Committee had jurisdiction to proceed to the next step, namely the investigation of the matter, and that next step was a duty imposed upon the Committee by s.94, namely to conduct a hearing.

26. It was contended further that the rules of natural justice required the Committee to give notice to the applicant of the particulars of the charges of rendering excessive services made against him and that those particulars should be given before the commencement of the hearing by the Committee. It was contended further that the Committee had not complied with the procedural provisions of the Act.

27. It will be apparent from the reasons already given, that in my opinion the respondents have complied with the statutory requirements following the section 94 decision. There was no necessity for notice to be given to the applicant that the Committee was proposing to consider the reference from the Minister. After the section 94 decision had been made, the statutory procedures were followed, albeit in a somewhat confusing manner. The Judicial Review Act does not impose a duty to comply with the requirements of natural justice when that obligation does not otherwise apply. In the present case, the statutory provisions contain detailed procedures requiring notice of the hearing to be given to the practitioner who may be affected by the report and recommendation and the right of that practitioner to be heard. The Committee is an investigating body. It can compel the practitioner to attend and to produce documents. It has no power to compel the practitioner to give evidence. The practitioner is permitted to cross-examine other witnesses. The practitioner may himself give evidence. He may be able to explain the need for the services rendered. He has been given notice of all the matters alleged against him. He must be given an opportunity to be heard. He is free to make any explanation which he considers relevant, including an explanation of the nature of his practices and the equipment he provides as an aid to diagnosis. After the completion of the hearing, the Committee makes its report and recommendation to the Minister who is then required to apply the provisions of the Act which apply to him.

28. In my opinion, in the present case there is no room for the implication of natural justice. The procedures prescribed by the Act must be followed and, in this respect, they make provision for the general rules of natural justice to be applied. In my opinion those procedures have been followed. The fact that the production of all the documents specified in the summons may place an onerous burden on the applicant does not of itself make the s.96 decision invalid. If documents are not produced, offences may be committed or there may be reasonable grounds for the non-production of those documents, particularly having regard to the lapse of time since the services were rendered and the possible deaths of the patients. That, however, is not a matter relevant to this decision. Likewise, if the position is as claimed by the applicant, that at the relevant times his practices were different from those conducted by the average general practitioner at Melbourne, the Committee may have to consider those matters, but it is not a matter going to the power of the Committee to inquire into the matters referred to it. It is a matter of substance to be determined at the hearing by the Committee.

29. The challenge to the section 94 decision fails. The Committee, therefore, is under a duty to conduct the hearing; see s.94. Insofar as the section 96 decision is challenged on the basis that the section 94 decision was invalid, the challenge fails. The applicant has failed to establish any other grounds to invalidate the section 96 decision.

30. In my opinion the applicant has failed to make out his case. The application should be dismissed with costs.