Re Geoffrey W Edelsten v Health Insurance Commission; John Nearhos; Nicholas J Radford; John Horgan; Arthur Waterhouse; Stella Kwong and William Rose Re Neil Blewett (Minister of Comm Serv and Health); Edward Geoffrey Dash (Delegate of the [1990] FCA 449 (16 November 1990)

FEDERAL COURT OF AUSTRALIA

Re: GEOFFREY W. EDELSTEN
And: HEALTH INSURANCE COMMISSION; JOHN NEARHOS; NICHOLAS J. RADFORD; JOHN
HORGAN; ARTHUR WATERHOUSE; STELLA KWONG and WILLIAM ROSE
Re: NEIL BLEWETT (Minister of State for Comm Serv and Health); EDWARD GEOFFREY
DASH (Delegate of the Minister); NICHOLAS J. RADFORD; JOHN HORGAN; ARTHUR
WATERHOUSE; STELLA KWONG and WILLIAM ROSE
And: GEOFFREY W. EDELSTEN
Nos. V G59 and 60 of 1990
FED No. 649
Administrative Law
96 ALR 673
27 FCR 56

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Northrop(1), Davies(2) and Lockhart(1) JJ.

CATCHWORDS

Administrative Law - Whether decisions to refer to the Minister and to a Medical Services Committee of Inquiry the question whether excessive services have been rendered by a medical practitioner are decisions under an enactment and therefore reviewable - Meaning of "decision" in s. 3 of Administrative Decisions (Judicial Review) Act 1977 - Whether any rights affected by decisions - Whether irrelevant considerations taken into account - Whether there is an obligation to afford procedural fairness during preliminary investigative process.

Administrative Decisions (Judicial Review) Act 1977: s. 3

Health Insurance Act 1973: ss. 3, 4 Part V Div. 3

Health Insurance Commission Act 1973: ss. 8E and 8H

Health Insurance Commission Regulations: regs. 3(2)(b) and 3(2)(c).

HEARING

MELBOURNE
16:11:1990
No. VG59 of 1990

Counsel for appellant: Dr C. Howard

Solicitor for appellant: Michael Webb and Bruce Arthur

Counsel for respondents: Mr M. Black QC with Mr N.J.D. Green

Solicitor for respondents: Minter Ellison
No. VG60 of 1990

Counsel for appellants: Mr M. Black QC with Mr N.J.D. Green

Solicitor for appellants: Minter Ellison

Counsel for respondents: Dr C. Howard

Solicitor for respondents: Michael Webb and Bruce Arthur

ORDER

In matter VG59 of 1990 the appeal be dismissed and the cross-appeal be allowed.

In matter VG60 of 1990 the appeal be allowed and orders numbered 1 and 2 made on 5 February 1990 at first instance be set aside.

Dr. Edelsten pay the costs of the other parties of the two appeals and the cross-appeal.

The matters be restored to the list of the learned primary Judge for determination of the costs of the hearing at first instance.

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

DECISION

This case is concerned with provisions of the Health Insurance Act 1973 (Cth), the Health Insurance Commission Act 1973 (Cth) and the Health Insurance Commission Regulations (Cth) which provide for the investigation of cases where it is possible that medical practitioners have rendered "excessive services". The expression "excessive services" is defined in the Health Insurance Act by ss. 79(1B) as professional services in respect of which Medicare benefit has become or may become payable and which were not reasonably necessary for the adequate medical care of a patient.

2. The facts are not in dispute. Dr G.W. Edelsten has been practising medicine for about twenty years. In December 1988 he began to carry on general practice in a suburb of Melbourne. In January 1989 he received a request by the Health Insurance Commission ("the Commission") to meet a medical adviser employed by the Commission "to discuss your practice statistics and matters in general". The discussion took place on 25 January 1989 between Dr Edelsten and a Dr Ralph Lewis, a medical practitioner who is also an officer of the Commission. The discussion was about "matters in general", but included Dr Edelsten's use of ultrasound, echocardiography, pathology costs, the "appearance" of some medical claims and the possibility of some Workcare claims being incorrectly claimed through Medicare. The unusual patterns of practice were discussed by Dr Lewis and Dr Edelsten who explained that he had been devoting many hours every day to the practice of his profession, that he had been trained, as few general practitioners were, in the techniques of ultrasound and echocardiographical investigation, and had been employing those techniques and undertaking the more serious wound repairs in order to provide, at the clinic where he practiced, a more comprehensive range of professional services than was common in general practice.

3. During March and April 1989 Dr Edelsten was requested in writing by Dr Lewis and a Dr Poddar, also a medical practitioner and an officer of the Commission, to provide "clinical details" of a substantial number of claims for Medicare benefits in respect of professional services rendered by Dr Edelsten. Dr Edelsten complied with some of the requests, and, in the result, some of the claims which had been questioned were explained by Dr Edelsten to the satisfaction of the Commission. Dr Edelsten complained in writing to Dr Poddar of the burden imposed on him and his clerical staff of finding time to comply with the requests.

4. During the months of March and April 1989 Dr Poddar and Dr Nearhos, who was a more senior officer of the Commission based in Canberra, consulted with each other about aspects of the patterns of Dr Edelsten's practice. Dr Edelsten suggested to Dr Poddar by letter dated 29 April 1989 that they should meet with a view to reducing by discussion the number of Medicare claims in respect of which Dr Edelsten was being questioned to furnish "clinical details". Dr Nearhos replied by letter dated 26 April 1989 in these terms:

"Your correspondence dated 20 April to Dr A.
Poddar has been forwarded to Central Office for
attention.
It is noted that a number of your claims for
Medicare benefits have been pended for more
detailed assessment by Medical Advisers in
Victoria. This was done because of concerns by
the Advisers that these claims may have been for
health screening services, which are proscribed
under Section 19(5) of the Health Insurance Act.
You have given your assurance in your letter that
the services claimed were reasonably necessary for
the adequate medical care of the patients
concerned. As you are aware, in cases where there
is doubt as to the medical necessity of services
which are claimed for Medicare benefits,
consideration must be given for referral of such
services to a Medical Services Committee of
Inquiry. The claims in question, together with
other services which have been claimed for
Medicare benefits by you, will be presented to the
appropriate delegate of the Minister with a view
to preparation of a reference to MSCI in relation
to these services.
In view of these circumstances, it would appear
that nothing could be achieved by a meeting with
you at this stage."

5. The parties agreed that this letter is evidence of a decision by Dr Nearhos, as the delegate of the Commission (see s. 8H of the Health Insurance Commission Act) that the investigation undertaken by the Commission in relation to Dr Edelsten disclosed that there was sufficient evidence to warrant a referral of the case investigated to a Committee established under Division 3 of Part V of the Health Insurance Act; and the further decision to refer the case and the information obtained in the course of the investigation with appropriate comments and recommendations to the Minister for Community Services and Health (see reg. 3(2)(b) of the Health Insurance Commission Regulations). The parties treated these decisions as being one decision, which is sensible, so we shall treat them in the same way. There is a question as to whether this "decision" of Dr Nearhos was made on 26 April or 8 May 1989. Nothing turns on the precise date of the decision, but where necessary we shall refer to it as having been made on 26 April 1989.

6. More than 3,000 professional services said to be rendered by Dr Edelsten to more than 300 patients are the subjects of the decision of Dr Nearhos.

7. Dr E.G. Dash, as delegate of the Minister, decided on 9 June 1989 to refer to the Medical Services Committee of Inquiry for the State of Victoria ("the Committee") the question whether each of 4,011 professional services rendered by Dr Edelsten to 544 patients was an "excessive service" within the meaning of s. 79(1B) of the Health Insurance Act. The decision included professional services in respect of which claims for Medicare benefits were made after the time at which claims considered by Dr Nearhos had been made.

8. The claims for Medicare benefits made by Dr Edelsten in respect of professional services rendered in the course of his practice, like the claims in respect of other medical practitioners' professional services, were received by the Commission in its administration of the Medicare Benefits Scheme. From those claims information about Dr Edelsten's practice was obtained by abstracting the information from the Commission's computer records; and comparison was made by officers of the Commission between patterns of that practice and normal patterns of practice by medical practitioners in general medical practice. It appeared by those comparisons that in several respects Dr Edelsten's practice was unlike that practice. The number of professional services in respect of which claims for Medicare benefits had been made was greater for Dr Edelsten than any other practitioner in general practice in Victoria. Particular kinds of professional services were the subjects of abnormally numerous claims, which include investigation by "ultrasound", echocardiography and the surgical repair of deep wounds.

9. The decisions of Dr Nearhos of 26 April 1989 and of Dr Dash of 9 June 1989 are the subject of these proceedings. As the learned primary Judge (Jenkinson J.) said in his reasons for judgment, both decisions were made in administration of the legislative scheme for monetary payments by way of medical benefits to Australian residents and certain other persons. The benefits are called Medicare benefits in the Health Insurance Act in which the scheme is principally enacted. The benefits are payable in respect of medical and like expenses each of which has been incurred in respect of a "professional service"; a phrase defined by s. 3 of the Health Insurance Act as meaning, amongst other things, a medical service which is rendered by or on behalf of a medical practitioner and which falls within the description contained in one of more than 8,000 categories, each called an item and assigned a number in a table of medical services in Schedule 1 to that Act or in a substituted table prescribed by regulation in exercise of a power conferred by s. 4 of the Act and having effect by force of that section as if the substituted table were set out in Schedule 1. The benefit payable is a percentage, fixed in the Act, of the fee specified in respect of that item in the table for the State in which the service was rendered.

10. Dr Edelsten commenced proceedings in this Court's original jurisdiction for a review under the provisions of the Administrative Decisions (Judicial Review) Act 1977 ("the Judicial Review Act") of those decisions. By consent the two matters were heard together by the learned primary Judge, as were the appeals before us.

11. In one proceeding (now VG 59 of 1990) his Honour held that the decision of Dr Nearhos was a reviewable decision to which the Judicial Review Act applied and that in connection with and in arriving at the decision Dr Nearhos was not obliged to comply with the rules of natural justice. His Honour dismissed Dr Edelsten's application for review.

12. In the other proceeding (now VG 60 of 1990) his Honour held that Dr Dash's decision was a reviewable decision to which the Judicial Review Act applied and that there was a duty to afford a medical practitioner procedural fairness in relation to the making of a decision as to whether a medical practitioner may have rendered excessive services and whether that question should be referred to a Medical Services Committee of Inquiry under s. 82 of the Health Insurance Act. His Honour held that there is a requirement that a medical practitioner in respect of whose rendering of a professional service the Minister or his delegate is considering whether to make a reference under s. 82 of the Health Insurance Act on the ground that it may have been an excessive service, be given the opportunity to be informed of the substance of the case for a reference and the opportunity to state his case against a reference. Dr Dash was held to be under an obligation derived from the principles of natural justice to inform Dr Edelsten of the allegations and to afford him an opportunity to put before Dr Dash his reply. In his Honour's opinion the failure to take that course established the ground that a breach of the rules of natural justice had occurred in connection with the making of the decision. His Honour therefore set aside the decision of Dr Dash.

13. Dr Edelsten appealed to a Full Court of this Court (appeal VG 59 of 1990) against the dismissal of the proceeding for review of Dr Nearhos's decision. The Commission and the other respondents cross-appealed against the primary Judge's finding that the decision of Dr Nearhos was a reviewable decision to which the Judicial Review Act applied. The Minister and the other appellants (appeal VG 60 of 1990) appealed from the primary Judge's judgment setting aside Dr Dash's decision.

14. To understand the issues in these appeals it is necessary to set out and explain the relevant statutory provisions. First, the Health Insurance Commission Act 1973. The Commission is established (s. 4) and constituted a body corporate with power to hold and dispose of real and personal property and to sue or be sued in its corporate name (s. 9). The Act draws a distinction between the functions and powers of the Commission. The functions of the Commission (an expression defined by s. 3 as meaning a function conferred on the Commission by or under the Act) are to conduct a medical benefits fund or a hospital benefits fund or both in respect of a State or of the Northern Territory in accordance with rules determined by the Commission (s. 8A(1)). Part IIB provides for what are described as "additional functions" of the Commission, the elucidation of which emerges from s. 8E as being such functions in relation to health insurance as are prescribed by the regulations.

15. The Commission is empowered to do all things necessary or convenient to be done for or in connection with the performance of its functions (s. 8G). The expression "power" is defined by s.3, in relation to the Commission, as meaning a power conferred on the Commission by the Act.

16. The distinction between the functions and powers of an administrative body is between functions or purposes or activities of an administrative body on the one hand and the powers conferred upon it to perform or execute those functions, purposes or activities on the other. This is the primary sense in which the words are understood. The types of statutory contexts in which the expressions "functions" and "powers" of such bodies appear differ considerably. Sometimes the two expressions are treated interchangeably or with blurred dividing lines; whilst some statutory definitions of "functions" provide that "'functions' includes powers and duties". See the definition of "functions" in Strouds Judicial Dictionary, 5th ed; and Kathleen Investments (Australia) Limited v Australian Atomic Energy Commission [1977] HCA 55; (1977) 139 CLR 117 at 130; Leon Fink Holdings Pty. Limited v Australian Film Commission (1979) 141 CLR 672 at 677-8; Committee of Direction of Fruit Marketing v Australian Postal Commission [1979] FCA 31; (1979) 37 FLR 457. In the Health Commission Act the two expressions are used in their primary sense mentioned above.

17. The Commission is empowered to delegate to one of its members or a member of its staff any of its powers under the Act other than the power of delegation (s. 8H(1)); and a power so delegated, when exercised by the delegate, shall for the purposes of the Act be deemed to have been exercised by the Commission (s. 8H(2)).

18. Turning to the Health Insurance Act 1973, Part V contains six divisions each dealing with a particular committee established thereunder. It is the Medical Services Committee of Inquiry established under Division 3 of Part V with which this case is concerned. The Minister is required to establish for each State a Medical Services Committee of Inquiry (s. 80(1)) to consist of five medical practitioners, all of whom are appointed by the Minister but four of whom must be appointed after consultation by the Minister with the Australian Medical Association (s. 80(3)).

19. Section 82 is the critical section for present purposes and it provides:

"82. A Committee shall inquire into, and submit
to the Minister its report and recommendations on,
any matter referred to the Committee by the
Minister, being a matter that -
(a) is relevant to the operation or
administration of this Act or the National Health
Act 1953 (other than Part VII of that Act); and
(b) arises out of or relates to the rendering
of a professional service (other than a pathology
service), on or after 15 April 1977, in the State
for which the Committee is established."

20. It is common ground between the parties that there is no express power in the Minister under the Health Insurance Act or any other relevant Act to refer matters to the Committee. The power appears to be assumed by s. 82. It was not contested by the parties that the power is necessarily implied by the section and in our view the implication is correct.

21. The "Chairperson" of the Committee is required to convene such meetings of the Committee as are necessary for the efficient conduct of its affairs (s. 90(1)). Subject to the Act and the regulations the Committee may regulate its proceedings at its meetings as it thinks fit and its meetings shall be heard in private (s. 91). The Committee is empowered to inform itself in such manner as it thinks fit for the purposes of its inquiry into a matter the subject of the reference (s. 92). Section 94 so far as relevant provides as follows:

"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 -
(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 2 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)"

22. The expression "excessive services" is defined by s. 79(1B) as:

"a reference to professional services (other than
pathology 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."

"Professional services" is an expression defined by the definition section (s. 3) as meaning four species of service including:

"(a) a medical service to which an item relates,
being a service that is rendered by or on behalf
of a medical practitioner."

23. A Committee shall, if it proposes to hold a hearing into a matter which relates to a circumstance referred to in certain of the paragraphs of s. 94 including paragraph (c) with which this case is concerned, give notice in writing of the time and place of the proposed hearing at least ten days before the date of the proposed hearing to the medical practitioner (s. 95(1)). The notice shall give particulars of the matter to which the hearing relates (s. 95(2)).

24. For the purposes of the hearing, a member of the Committee is empowered to summon the medical practitioner 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 (the emphasis is ours) (s. 96).

25. The medical practitioner who has been summoned under s. 96 is required to attend the hearing in person and he may be represented by another person at the hearing (s. 96A(1).

26. The medical practitioner whose conduct is the subject of the inquiry or his representative shall be given the opportunity to give evidence and to call witnesses and to examine other witnesses appearing at the hearing and to address the Committee (s. 96B(1)). The hearing must be held in private (s. 97(1)).

27. The rules of evidence do not apply in relation to a hearing and the procedure for conducting the hearing is, subject to the Act and regulations, within the discretion of the presiding member (s. 97(3)). Evidence at a hearing shall be taken on oath or affirmation and any member of the Committee is empowered to administer the oath or affirmation (s. 98). A member of the Committee may by writing under his hand summon a person to appear at a hearing to give evidence and to produce such documents, if any, as are referred to in the summons (s. 99(1)).

28. Failure, without reasonable excuse, to appear as required by the summons and to report from day to day unless excused constitutes an offence (s. 101(1)). The medical practitioner whose conduct is the subject of the inquiry is required to attend the hearing as required by the summons and failure to do so, in the absence of reasonable excuse, or to attend and report from day to day unless excused, also constitutes an offence (s. 101(2)).

29. Refusal by witnesses to be sworn or to answer questions or to produce documents is an offence (s. 102(1)). Refusal or failure of the medical practitioner to produce a document that is required to be produced by a s. 96 summons is also an offence (s. 102(1A)).

30. A statement or disclosure made by a witness at a hearing is not admissible in evidence against him in civil or criminal proceedings in a court except in a prosecution for giving false testimony at the hearing (s. 102(2)). A document produced at the hearing by the medical practitioner is not admissible in evidence against him in criminal proceedings except in prosecutions under or arising out of the Health Insurance Act itself or the National Health Act or regulations (s. 102(2A)).

31. After the Committee has completed its hearing in relation to a matter it is obliged to report to the Minister its opinion on the matter. In a case where the Committee expresses an opinion in its report that the practitioner specified in the report has rendered excessive services, the report shall identify the excessive services (s. 104). Where the Committee has in its s. 104 report expressed the opinion that a practitioner has rendered excessive services and has identified those services, and a medical benefit is payable or has been paid in respect of any of those services the Committee is empowered in its report to make one or more of a number of recommendations including a recommendation that the practitioner be reprimanded or counselled, and where the Medicare benefit is payable but has not been paid to the practitioner, that the benefit or a specified part of the benefit cease to be payable; and where the Medicare benefit has been paid to the practitioner or has been paid or is payable to another person, that the amount of the Medicare benefit or a specified part of it be payable by the practitioner to the Commonwealth (s. 105(2)).

32. Where the Committee has made a recommendation in accordance with sub-s. 105(2) the Minister may make a determination, in writing, in accordance with that recommendation (s. 106(1)). Where such a determination is made by the Minister in relation to a person he shall serve on the person to whom the determination relates a notification in writing setting out the determination (s. 106(2)). Where the Minister has made such a determination the practitioner concerned has a right to request a review of the determination under Division 3 of Part VA of the Health Insurance Act or to apply for a judicial review of the determination under Division 4 of that Part within a specified period. If no such request is made the determination of the Minister takes effect at the expiration of that period. If a request for a review is duly lodged and the determination is affirmed or varied on the review and no appeal is brought against the decision on the review within the time allowed for appeal, the determination takes effect, or takes effect as varied, at the expiration of that period (s. 106(3)(b)). Where the determination is set aside on review it does not take effect (s. 106(3)(c)). Section 106 contains other references relevant to a review and appeals, but nothing turns on them for present purposes.

33. After the Minister has made a determination under s. 106 he is required to cause to prepare a statement setting out the particulars of the determination and certain other matters and he may cause the statement to be published in the Gazette and shall cause a copy of the statement to be laid before each house of the Parliament within fifteen sitting days of that House after the preparation of the statement (s. 106AA). Actions or proceedings, civil or criminal, do not lie against a person publishing in good faith a copy of a fair abstract from or a fair abstract of a publication made in accordance with s. 106AA. The publication is deemed to be made in good faith if the person by whom it is made is not actuated by ill will to the person affected by the publication or by any other improper motive. Section 106AA does not limit or prevent the operation of any rule of absolute privilege relating to the publication by either House of Parliament of any document laid before it and nothing in the section authorises the publication of the name of the patient or particulars that would enable a patient to be identified.

34. The Health Insurance Commission Regulations prescribe, for the purposes of s. 8E(1) of the Health Insurance Commission Act, by regulation 3(2)(b), certain functions including the functions

"to investigate cases where there are
reasonable grounds to suspect that a
practitioner ... may have rendered
excessive services and, where an
investigation discloses that there
is sufficient evidence to warrant a
referral of the case investigated to
a Committee established under
Division 3 or 3A of Part V of the
Health Insurance Act, as the case may
be, to refer the case and the information
obtained in the course of the
investigation, with appropriate
comments and recommendations, to the
Minister or the delegate of the
Minister." (reg. 3(2)(b))

35. Regulation 3(2)(c) prescribes as a function for the purposes of s. 8E(1) of the Act the function of investigating cases where there are reasonable grounds to suspect, amongst other things, that an act done by a person in relation to a claim for payment or the receipt of Medicare benefits may constitute an offence under the Health Insurance Act or the Crimes Act 1914 and, where an investigation discloses that there is sufficient evidence to warrant a prosecution, to refer the case investigated and the information obtained in the course of the investigation to the Australian Federal Police or the Director of Public Prosecutions.

36. Those are the principal provisions of the various statutes and regulations with which this case is concerned.

37. The primary question is whether the decisions of Drs Dash and Nearhos are decisions under an enactment within the meaning of that expression in s. 3 of the Judicial Review Act and therefore reviewable thereunder. The point was not raised before Jenkinson J., no doubt because the matters were heard and decided by his Honour before the High Court gave judgment in Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 64 ALJR 462. After the institution of this appeal and before it was heard Bond's Case was decided by the High Court and leave was given to the Minister and other parties with the same interest to raise the question whether either or both of the decisions under attack were reviewable decisions under the Judicial Review Act.

38. The question of what is a reviewable decision under the Judicial Review Act has been considered in many cases by this Court both at first instance and on appeal and most recently by the High Court in Bond which is an authoritative exposition of the essential nature of such a decision. Brennan and Deane JJ. agreed with the Chief Justice's reasons for judgment (at 482 and 483 respectively).

39. Mason C.J. considered the meaning of the word "decision" as it is used in the Judicial Review Act. It is not necessary to set out the whole of the relevant passages from his Honour's judgment but they appear at pp 468 and 469. In essence his Honour held that the word "decision" as it is used in the Judicial Review Act:

"will generally, but not always, entail a decision
which is final or operative and determinative, at
least in a practical sense, of the issue of fact
falling for consideration. A conclusion reached
as a step along the way in a course of reasoning
leading to an ultimate decision would not
ordinarily amount to a reviewable decision, unless
the statute provided for the making of a finding
or ruling on that point so that the decision,
though an intermediate decision, might accurately
be described as a decision under an enactment.
Another essential quality of a reviewable decision
is that it be a substantive determination" (469).

40. It is plain from what followed this passage that his Honour used the expression "substantive determination" to distinguish a "procedural determination", an example of which was given by his Honour, namely, the refusal by a decision-maker of an application for an adjournment in the course of an administrative hearing which his Honour said would not constitute a reviewable decision because it was "a procedural matter not resolving a substantive issue and lacking the quality of finality". His Honour went on to say, however, that it is the "conduct" of the hearing in refusing an adjournment that is the subject of review and that to treat the refusal of the adjournment in this way is more consistent with "conduct" than with the notion of "decision under an enactment". His Honour there obviously had in mind s. 6 of the Judicial Review Act which provides for the review of "conduct (engaged in) for the purpose of making a decision to which this Act applies".

41. Toohey and Gaudron JJ. in a joint judgment put the test of what constitutes a reviewable decision under the Judicial Review Act in different terms. They said at 487 first column that the acts reviewable as decisions under s. 5 of the Judicial Review Act "are not confined to acts involving the exercise of or refusal to exercise a substantive power". But they said immediately thereafter:

"It does not follow that, because s. 5 is not
confined to acts involving the exercise of or a
refusal to exercise a substantive power, the acts
which constitute a decision reviewable under s. 5
of the ADJR Act are at large. They are confined
by the requirement in s. 3(1) that they be made
'under an enactment'. ... If an enactment requires
that a particular finding be made as a condition
precedent to the exercise of or refusal to
exercise a substantive power, a finding to that
effect is readily characterised as a decision
'under an enactment'. However, it is otherwise
with respect to findings which are not themselves
required by an enactment but merely bear upon some
issue for determination or some issue relevant to
the exercise of a discretion. Findings of that
nature are not themselves 'discretions under an
enactment'; they are merely findings on the way to
a decision under an enactment."

42. Whether the tests laid down by Toohey and Gaudron JJ. to determine whether a decision is reviewable under the Judicial Reviewable Act differ in emphasis or to a degree in substance from the tests prescribed by Mason C.J. is not a question which we need consider as the judgment of Mason C.J. must be taken as the authoritative statement of principle which binds this Court as it was concurred in by two other Justices of the High Court, thus constituting a majority of the Court. Bond is authority for the principle that generally, for a decision to be reviewable under the Judicial Review Act it must have a quality of finality, not being merely a step taken on the way to the possible making of an ultimate decision; and it must have the essential quality of being a substantive as distinct from a procedural determination.

43. The rationale underlying Bond is that Parliament could not have intended the Judicial Review Act to be a vehicle for judicial review of every decision of a decision-maker under a Commonwealth enactment. Some decisions will have real impact upon a person's rights, privileges or obligations; some will have no such impact, whilst others are mere stepping stones which may lead ultimately to the making of a decision which does affect the person's position.

44. The decision which is the subject of the appeal in VG 59 of 1990 was the decision made by Dr Nearhos as delegate of the Commission to refer to the Minister's delegate the question whether Dr Edelsten may have rendered excessive medical services.

45. The decision which is the subject of the appeal VG 60 of 1989 is the decision made on 9 June 1989 by Dr Dash to refer to the Committee for an inquiry into and submission of a report and recommendations to the Minister of State for Community Services and Health matters relevant to the operation or administration of the said Act (the Health Insurance Act), which arise out of the rendering of professional services in the State of Victoria after 15 April 1977, namely, whether each professional service rendered to a patient by Geoffrey Walter Edelsten, Medical Practitioner, particulars of which are set out in Annexure marked "B", patients numbered 1 to 554, being a service to which Medicare benefits have been paid, was an excessive service within the meaning of section 79(1)(B) of the said Act.

46. Turning first to Dr Nearhos's decision. It is agreed by the parties that in making that decision Dr Nearhos acted as delegate of the Commission (see s. 8H(1) of the Health Insurance Commission Act). The decision was therefore deemed to be the decision of the Commission (s. 8H(2)). It was made pursuant to regulation 3(2)(b) of the Health Insurance Commission Regulations, the terms of which are set out earlier. Dr Nearhos may or may not have decided to refer the matter to the Committee. No provision of any of the relevant statutes or regulations was pointed to by counsel as imposing any duty on the Minister or his delegate to do anything about the reference to him or his delegate by Dr Nearhos pursuant to regulation 3(2)(b) nor can we find any. At most, the reference by Dr Nearhos to the Minister's delegate obliged Dr Dash to consider it and make a decision as to what he should do about it. The Minister has power (implied from s. 82) to refer to the Committee "any matter ... that is relevant to the operation or administration of" the Health Insurance Act or the National Health Act (other than Part VII of that Act) and that "arises out of or relates to the rendering of a professional service (other than a pathology service), on or after 15 April 1977, in the State for which the Committee is established" (s. 82). The reference made by Dr Nearhos to Dr Dash on 26 April 1989 plainly may be the subject of the Minister's reference to the Committee pursuant to s. 82.

47. No rights of Dr Edelsten are affected by Dr Nearhos's decision, nor does any "legitimate expectation" arise from it. During the course of the investigations being made by Dr Nearhos, Dr Edelsten spent much time and energy in supplying information to Dr Nearhos and other officers of the Commission. This action by Dr Edelsten can be understood, but that action does not "constitute rights of Dr Edelsten" in any relevant sense. Nor does that action form the basis for any "legitimate expectation". Dr Edelsten was not required by law to take that action or to give any information or explanation. The legal "rights" of Dr Edelsten were not affected by what the officers did. Dr Edelsten could have refused to co-operate and in so doing would not have committed any offence. For similar reasons, neither did the subsequent decision of Dr Dash to refer, as delegate of the Minister, the matter to the Committee pursuant to s. 82 affect any rights of Dr Edelsten or give rise to any legitimate expectation. Indeed, even when the Minister or his delegate refers a matter to the Committee pursuant to s. 82, the Committee, though bound by s. 94 to consider the matter, may decide no more than that Dr Edelsten may have rendered excessive services (s. 94(c)). But the Committee is not empowered to decide at that preliminary stage whether Dr Edelsten has or has not rendered excessive services, simply whether he may have rendered excessive services. It is only when the Committee reaches an affirmative view on that question that it is required to conduct a hearing into the matter (s. 94(j) and (k)). The machinery of the Health Insurance Act then comes into operation, requiring the Committee to give notice of the hearing to Dr Edelsten and particulars of the matter to which the hearing relates (s. 95); empowering it to issue summonses to Dr Edelsten and others for the production of documents and the giving of evidence at the hearing; and giving Dr Edelsten the right to legal representation at the hearing which must be conducted in private. Sections 94 to 105 of the Health Insurance Act contain provisions commonly found with respect to administrative inquiries, conferring powers on the inquisitor and rights and duties on the person whose conduct is the subject of the inquiry.

48. There is no doubt that the rules of natural justice apply to the hearing before the Committee. Dr Edelsten must be given full opportunity to answer all of the particular matters set out in the notice of hearing under s. 95(2) if a hearing in fact takes place. Whether there will be such a hearing will depend on whether the Committee reaches a preliminary conclusion that Dr Edelsten may have rendered excessive services.

49. The making of an adverse report and recommendations by the Committee to the Minister does not itself in law affect Dr Edelsten's rights, though it is the genesis of a series of steps which ultimately may seriously affect his rights. The Minister must first consider the report and recommendations and may make a determination in writing in accordance with the recommendations: see s. 106(1), the terms of which are set out earlier. Dr Edelsten then has a right to request a review of the determination or to apply for judicial review under s. 106(3). It is only when the processes of review by a Medical Services Review Tribunal under Division 3 or judicial review under Division 4 of Part VA of the Act are completed that the Minister's determination takes effect. The Minister is then required, by s. 106AA to publish the requisite particulars of the determination and certain other matters and to cause a copy of the relevant statement to be laid before each House of the Parliament.

50. An adverse report of the Committee pursuant to s. 104 and adverse recommendation under s. 105 may clearly lead to serious injury to Dr Edelsten, his livelihood and reputation. But the decisions of Dr Nearhos and Dr Dash are at very early stages of the administrative process for determining if Dr Edelsten has rendered excessive services, and they are no more than steps in an administrative process that may lead to an ultimate or operative determination affecting his position. In themselves the decisions of Dr Nearhos and Dr Dash are steps remote from any such consequences. Those decisions lack any quality of finality and they are not substantive determinations.

51. The finding of the primary Judge that the decisions of Dr Nearhos and Dr Dash are reviewable decisions under the Judicial Review Act cannot be reconciled in our opinion with the judgment of the High Court in Bond which, as we mentioned earlier, was given after his Honour's judgment was delivered in this case.

52. Section 3(3) of the Judicial Review Act was relied on by counsel for Dr Edelsten in support of his argument that the decisions of Dr Nearhos and Dr Dash were reviewable decisions. Section 3(3) provides:

"Where provision is made by an enactment for the
making of a report or recommendation before a
decision is made in the exercise of a power under
that enactment or under another law, the making of
such a report or recommendation shall itself be
deemed, for the purposes of this Act, to be the
making of a decision."

53. In our opinion s. 3(3) applies where there is a provision in an enactment that a particular report or recommendation be made as a condition precedent to the making of a decision under that enactment or under another law. The sub-section was considered by Mason C.J. in Bond at 468, second column but as an indication that the word "decision" as used in the Judicial Review Act has a relatively limited field of operation. The Chief Justice's remarks did not touch the present question. We agree with the view expressed by Ellicott J. in Ross v Costigan (1982) 59 FLR 184 at 198 that s. 3(3):

"contemplates a case where there is provision in
an enactment for a specific report or
recommendation as a condition precedent to the
making of a decision under that enactment or some
other."

54. Regulation 3(2)(b) is an enactment, but it makes no provision of the kind envisaged by s. 3(3). Nor is any referral itself under regulation 3(2)(b) a condition precedent to the exercise of any power conferred upon the Minister or his delegate under any enactment whether under s. 82 of the Health Insurance Act or otherwise. Any report and recommendation made by the Committee under ss. 104 and 105 is an illustration of a report which constitutes a decision by reason of s. 3(3) of the Judicial Review Act. Such a report is a condition precedent to the exercise of the power conferred on the Minister by s. 106 of the Health Insurance Act.

55. Our finding that the decisions under challenge are not reviewable decisions under the Judicial Review Act must result in dismissing Dr Edelsten's appeal and allowing the cross appeal in matter VG 59 of 1990 and allowing the appeal in matter VG 60 of 1990.

56. We shall deal briefly with the submissions of counsel for Dr Edelsten concerning alleged abuse of power by Dr Nearhos and Dr Dash. It was argued on behalf of Dr Edelsten that Dr Nearhos, in referring the cases considered by him under regulation 3(2)(b) to the Minister's delegate, had regard to impermissible considerations, namely, relying on the profile of Dr Edelsten's practice compared with practices of other general practitioners and considering the number of patients on which those services were performed. It was submitted that Dr Nearhos should have had regard to services rendered to a particular patient on a specific occasion in considering whether excessive services were rendered.

57. The submission is untenable. In our opinion Dr Nearhos, when exercising his powers under regulation 3(2)(b) on behalf of the Commission; Dr Dash, as delegate of the Minister, when referring the matters concerning Dr Edelsten to the Committee under s. 82; and the Committee, when exercising its powers under s. 94 of the Health Insurance Act, are not limited to a consideration of the services rendered to a particular patient with respect to specifically defined symptoms, disease or injury. If there is a pattern of services rendered by Dr Edelsten to a large number of patients which is unusual in relation to the pattern of services which it is considered are likely to be provided by the average general practitioner during the same or substantially the same period in a similar location, that is a legitimate matter to consider in deciding whether there may be evidence of the rendering of excessive services. This very question was considered by Northrop J. in Freeman v McCubbery (1985) 5 FCR 367 and on appeal to a Full Court of this Court (Smithers, Lockhart and Jenkinson JJ.) 10 October 1985, unreported, which dismissed the appeal. Freeman v McCubbery is clear authority against the argument of counsel for the appellant.

58. It was argued on behalf of Dr Edelsten that there was an obligation imposed on Dr Nearhos to afford procedural fairness to him in the investigative process preliminary to any decision being made by him under regulation 3(2)(b). We adopt the reasons given by Jenkinson J. in his judgment for rejecting that argument. It was also argued that a similar obligation was imposed on Dr Dash before he made the decision to refer the matter to the Committee pursuant to s. 82. For the reasons given earlier, the reference by Dr Dash under s. 82 has no effect whatsoever on Dr Edelsten's rights, privileges or liabilities unless and until the Committee makes a decision under s. 94C of the Health Insurance Act that Dr Edelsten may have rendered excessive services. Nor is there any discernible legitimate expectation of Dr Edelsten which may have been affected: Kioa v West [1985] HCA 81; (1985) 159 CLR 550 at 582-4.

59. Nor does the decision of the Committee under s. 94(c) attract the requirements of procedural fairness: Freeman v McCubbery above per Northrop J. at 376 (this point was not considered by the Full Court on appeal from Northrop J.'s decision). If and when the Committee decides that Dr Edelsten may have rendered excessive services then the machinery of the act for which ss. 94 to 105 make provision comes into play and provides a statutory code governing the requirements of natural justice during and in relation to the inquiry. We see no warrant for importing into any anterior stage of the matter, including the deliberations and decisions, if any, of the Minister's delegate or the Committee at the s. 94C stage, a requirement that procedural fairness be afforded to Dr Edelsten.

60. We would dismiss Dr Edelsten's appeal and allow the cross appeal in matter VG 59 of 1990. We would allow the appeal in matter VG 60 of 1990 and set aside the orders numbered 1 and 2 made on 5 February 1990 by the primary Judge. Dr Edelsten must pay the costs of the other parties of the two appeals and the cross appeal. The question of costs of the hearing below was not determined by his Honour, so the matters may be restored to his Honour's list for consideration of that question.

The Federal Court has jurisdiction under s.5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") to make orders of review with respect to decisions as defined in the ADJR Act, to make orders of review with respect to conduct engaged in or proposed to be engaged in for the purpose of making a decision to which the ADJR Act applies. The Court also has jurisdiction under s.39B of the Judiciary Act 1903 (Cth) with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officers of the Commonwealth.

2. In Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 64 ALJR 462 Mason C.J. with whom Brennan and Deane JJ. agreed in this respect, distinguished, for the purposes of the ADJR Act, between a decision to which the ADJR Act applied, which at pp 468-9, his Honour said should have the quality of resolving a substantive issue and the quality of finality, from conduct, which at p 471, his Honour described as action taken for the purpose of making a decision, and from an unreviewable decision which is no more than a step in a deliberative or reasoning process. In the present appeal, we are not concerned with that last-mentioned category, which was significant in Bond's case.

3. In Board of Education v Rice (1911) AC 179, Lord Loreburn L.C. said at p 182:-

"Comparatively recent statutes have extended, if they have not
originated, the practice of imposing upon departments or officers
of State the duty of deciding or determining questions of various
kinds. In the present instance, as in many others, what comes for
determination is sometimes a matter to be settled by discretion,
involving no law. It will, I suppose, usually be of an
administrative kind; but sometimes it will involve matter of law
as well as matter of fact, or even depend upon matter of law
alone. In such cases the Board of Education will have to ascertain
the law and also to ascertain the facts. I need not add that in
doing either they must act in good faith and fairly listen to both
sides, for that is a duty lying upon everyone who decides
anything." (the emphasis is mine.)

Likewise, in Kioa v West (1985) CLR 550 at p 584, Mason J. said:-

"The law has now developed to a point where it may be accepted
that there is a common law duty to act fairly, in the sense of
according procedural fairness, in the making of administrative
decisions which affect rights, interests and legitimate expectations
subject only to the clear manifestation of a contrary statutory
intention". (the emphasis is mine)

His Honour went on to refer to Lord Loreburn's comment of this as being a "duty lying upon every one who decides anything".

4. In above, Lord Loreburn spoke of "deciding or determining questions" Mason J. referred to "administrative decisions which affect rights, interests and legitimate expectations" in this context. More recently, in Bond's case, at pp 468-472, Mason C.J. made it clear what he had in mind as to the distinction between a reviewable decision and reviewable conduct. His Honour's earlier remarks in Kioa v West should be read in this light. Procedural fairness thus is a precondition of decision making, not of conduct which does not decide anything, even on a provisional basis.

5. Dr Nearhos made no decision. His action brought to the attention of the Medical Director of the Department of Health a perceived need to initiate proceedings under s. 82 of the Health Insurance Act 1973 (Cth) ("the Act"). The letter from Dr Nearhos, which was dated 8 May 1989, listed "six areas of concern" and went on to say:-

"The medical necessity of these services which have been claimed
for Medicare benefits needs to be determined by a Medical
Services Committee of Inquiry."

This letter did not decide anything and it had no effect, practical or otherwise, upon Dr Edelsten's position. Dr Nearhos' action and any view that might be inferred therefrom were irrelevant to any decision that might subsequently be taken in relation to Dr Edelsten. See Collins v Minister for Immigration and Ethnic Affairs [1981] FCA 147; (1981) 36 ALR 598.

6. Dr Nearhos' action was not a decision for the purposes of the ADJR Act nor was it conduct engaged in for the purpose of making a decision applied. Accordingly, Dr Nearhoss' action was not reviewable under the ADJR Act. No relief was sought under s.39B of the Judiciary Act. Even had it been, no ground for an order of review was established.

7. Pursuant to s.82 of the Act, Dr E.G. Dash, a delegate of the Minister for Community Services and Health, referred to a Medical Services Committee of Inquiry the question whether each professional service rendered to patients by Dr Edelsten, particulars of which were annexed, was an excessive service within the meaning of s.79(1)(B) of the Act.

8. This reference had a practical effect so far as Dr Edelsten was concerned for it activated the duties which the Act imposed on the Committee of Inquiry, namely the duty to inquire and report in accordance with the Act.

9. However, Dr Dash's reference was not a decision. It was conduct engaged in for the purpose of making a decision under s.106 of the Act. The lodgment of a request under s.82 was the first procedural step required by the Act prior to the making of a decision under s.106. The conduct was reviewable under s.6 of the ADJR Act; but the grounds relied upon were not established.

10. Dr Dash's action did not breach principles of procedural fairness. Dr Dash's reference merely initiated an inquiry: it did not decide or formally recommend anything. It would be inconsistent with the Act to imply any requirement as to notice to Dr Edelsten or as to giving to Dr Edelsten of a right to be heard at that stage of the proceedings. The Act lays down a complicated procedure protective of the position of medical practitioners. It requires an investigation by an Independent and expert body, a Medical Services Committee of Inquiry, the first step being a consideration under s.94 as to whether a practitioner may have rendered excessive services and, if so the calling of a hearing into the matter. After the Committee has reported, there may be determination by the Minister under s.106 and, if so, provision is made for subsequent review of the determination by a Medical Services Tribunal or by a prescribed court. These provisions are lengthy and detailed and it is inconsistent with them that the Minister or his delegate should, at the initiating stage, be required to give particulars to the medical practitioner concerned or make extended inquiries of the medical practitioner concerned or of the patients of the medical practitioner. Moreover, specific provisions suggest the contrary. Dr Dash satisfied the requirements of procedural fairness at that stage by referring the matter to a Medical Services Committee of Inquiry for its report, the procedure specified by the Act.

11. Counsel for Dr Edelsten further submitted that Dr Dash and Dr Nearhos considered the wrong issue, namely whether Dr Edelsten's services matched the general pattern of services of a general practitioner, and not the correct question, namely whether a particular service had been excessive having regard to the needs of the patient and to Dr Edelsten's expertise. I do not accept the submission. It was not the concern of either Dr Nearhos or Dr Dash to inquire into each service. Their concern was whether or not an inquiry should be initiated. In this assessment, as in an inquiry itself, computer patterns may provide a guide, as Northrop J. held in Freeman v McCubbery (1985) 5 FCR 367, affirmed on appeal by Smithers, Lockhart and Jenkinson JJ. (unreported, delivered 10 October 1985).

12. Counsel for Dr Edelsten further alleged that the large number of services particularised was unreasonable and oppressive. Certainly, the number of the services is a matter which the Medical Services Committee of Inquiry will have to take into account in its proceedings. The Committee is governed by principles of procedural fairness and is required to ensure that the cases are fairly investigated and that the medical practitioner has an opportunity to know what is raised and to give an answer in relation to each matter. The Committee, therefore, may have to consider whether to select a number of services for specific examination in the first instance. A view formed with respect to those cases may assist the Committee to set down an appropriate procedure for the remainder of the services to be inquired into. It is premature to speculate. The Committee's proceedings have not commenced and are not under challenge. It cannot be postulated that the reference under s.82 precluded a fair hearing because of the number of the services to the Committee.

13. I agree that Dr Edelsten's appeal should be dismissed and the cross-appeal allowed. The appeal by the Minister et al should be allowed. I agree with the orders proposed by Northrop and Lockhart JJ.