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Selim v Lele [2006] FCA 126 (23 February 2006)

Last Updated: 28 February 2006

FEDERAL COURT OF AUSTRALIA

Selim v Lele
[2006] FCA 126

CONSTITUTIONAL LAW – powers of Commonwealth Parliament – power to make laws with respect to the provision of medical and dental services (but not so as to authorise any form of civil conscription) – power to make laws with respect to matters incidental to the provision of medical and dental services – meaning of ‘civil conscription’, ‘inappropriate practice’ – Constitution s 51 (xxiiiA), (xxxix) – Health Insurance Act 1973 (Cth) Part VAA ss 82, 86 and 106U – constitutional validity – law imposing standards on provision of medical services incidental to Commonwealth power to provide medical services – law imposing standards upon provision of medical services not civil conscription

WORDS AND PHRASES – ‘civil conscription’, ‘inappropriate practice’

The Constitution of the Commonwealth of Australia s 51(xxiiiA), (xxxix)
Health Insurance Act 1973 (Cth) ss 80, 81, 82, 86, 87, 88, 93, 106H, 106U, Part VAA

Yung v Adams (1997) 80 FCR 453 referred to
Attorney-General for Victoria v The Commonwealth [1935] HCA 31; (1935) 52 CLR 533 cited
Attorney-General for Victoria v The Commonwealth [1945] HCA 30; (1945) 71 CLR 237 cited
Federal Council of the British Medical Association in Australia v Commonwealth [1949] HCA 44; (1949) 79 CLR 201 distinguished
Holland v Jones [1917] HCA 26; (1917) 23 CLR 149 cited
The General Practitioners Society in Australia v The Commonwealth of Australia [1980] HCA 30; (1980) 145 CLR 532 applied

D Mendelson, "Devaluation of a Constitutional Guarantee: The History of Section 51(xxiiiA) of the Commonwealth Constitution" (1999) 23 MULR 308

ASHRAF THABIT SELIM v VINAYAK (VINOO) LELE, PATRICK TAN AND DAVID RIVETT AND THE DETERMINING AUTHORITY AND HEALTH INSURANCE COMMISSION AND ALAN JOHN HOLMES
N1723 OF 2003

STONE J
23 FEBRUARY 2006
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1723 OF 2003

BETWEEN:	ASHRAF THABIT SELIM APPLICANT
AND:	VINAYAK (VINOO) LELE, PATRICK TAN AND DAVID RIVETT constituting the Professional Services Review Committee No 309 FIRST RESPONDENT
	THE DETERMINING AUTHORITY established by Section 106Q of the Health Insurance Act 1973 (Cth) SECOND RESPONDENT
	HEALTH INSURANCE COMMISSION THIRD RESPONDENT
	ALAN JOHN HOLMES in his capacity as Director, Professional Services Review FOURTH RESPONDENT
JUDGE:	STONE J
DATE OF ORDER:	23 FEBRUARY 2006
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The application be dismissed.
2. The applicant pay the respondents’ costs.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N1723 OF 2003

BETWEEN:	ASHRAF THABIT SELIM FIRST APPLICANT
AND:	VINAYAK (VINOO) LELE, PATRICK TAN AND DAVID RIVETT constituting the Professional Services Review Committee No 309 FIRST RESPONDENT
	THE DETERMINING AUTHORITY established by Section 106Q of the Health Insurance Act 1973 (Cth) SECOND RESPONDENT
	HEALTH INSURANCE COMMISSION THIRD RESPONDENT
	ALAN JOHN HOLMES in his capacity as Director, Professional Services Review FOURTH RESPONDENT

JUDGE:	STONE J
DATE:	23 FEBRUARY 2006
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 The applicant, Dr Ashraf Selim, is a general medical practitioner whose conduct of his practice came to the attention of the Health Insurance Commission. Following a review of his practice profile the Commission referred Dr Selim’s conduct to the fourth respondent, the Director of Professional Services Review. As a consequence of this referral Dr Selim’s practice was investigated by the first respondent, the Professional Services Review Committee 309, which found that Dr Selim’s conduct, in particular his high volume of services and lack of clinical input, in connection with the rendering of some of his services during the referral period constituted inappropriate practice under s 82 of the Health Insurance Act 1973 (Cth) (‘HIA’).

2 Dr Selim sought review of the decisions made by the first and fourth respondents under ss 5 and 6 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 39B of the Judiciary Act 1903 (Cth). In his amended application for review, the applicant also sought a declaration, on constitutional grounds, that Part VAA of the HIA is invalid. In the alternative he sought declarations that Part VAA is invalid in so far as it relates to the applicant or, in the further alternative, that ss 82, 86 and 106U are invalid. On 29 October 2004 Jacobsen J made an order severing the constitutional questions and providing for the hearing of the claims for judicial review, which his Honour dismissed on 7 February 2005. These reasons concern only the constitutional questions.

3 The applicant challenges the constitutional validity of the Professional Services Review Scheme (‘PSR Scheme’) contained in Part VAA of the HIA on the grounds that it is beyond the legislative power of the Commonwealth and because it infringes the prohibition against civil conscription in s 51 (xxiiiA) of the Commonwealth Constitution. In the alternative the applicant contends that ss 82, 86 and 106U are invalid for the same reasons.

4 Section 51 (xxiiiA) of the Constitution provides:

‘51 The Parliament shall, subject to this Constitution, have power to make laws for the peace, order and good government of the Commonwealth with respect to:
....

(xxiiiA) the provision of maternity allowances, widows’ pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription), benefits to students and family allowances;’

The Medicare Scheme

5 The PSR Scheme is designed to prevent abuse of the Medicare and Pharmaceutical Benefits Scheme (‘Medicare Scheme’). The fundamental elements of the Medicare Scheme were summarised in the written submissions of the respondent to which the applicant made no objection. I gratefully adopt that summary, which (not including footnotes) is as follows:

‘The Medicare scheme is established under the Health Insurance Act 1973. The Act was one of the pieces of legislation enacted as a result of the historic joint sitting of the houses of the Federal Parliament in 1974. Its long title is ‘An Act providing for Payments by way of Medical Benefits and Payments for Hospital Services and for other purposes.’
Part II of the Act deals with Medicare Benefits. Section 10 provides for the payment of benefits for ‘medical expenses ... incurred in respect of a professional service’ rendered to an eligible person. A ‘professional service’ is, relevantly, a service to which an item in the general medical services table prescribed by the regulations relates, rendered by a medical practitioner, that is generally accepted in the medical profession as being necessary for the appropriate treatment of the patient to whom it is rendered.
The provisions of the Act relating to payments by way of medical benefits were enacted pursuant to s 51(xxiiiA) of the Constitution.
Under the Act, Medicare benefits are calculated by reference to the fees (‘Schedule fees’) for medical services set out in the tables prescribed in the Regulations. At the relevant time the amount of the benefit for each service was 85% of the Schedule fee.
To assist medical practitioners and the public, the tables (including the rules for their interpretation) in the Regulations are published annually by the Department of Health and Ageing in a publication entitled, ‘Medicare Benefits Schedule Book’, which is provided to all practitioners.
Medicare benefits are payable by the Health Insurance Commission (‘Commission’) on behalf of the Commonwealth to the patient. However, a patient may enter into an agreement with the practitioner under which the patient assigns to the practitioner the right to payment of the Medicare benefit. If such an agreement is entered into, the practitioner must accept the assignment in full payment of the medical expenses incurred in respect of the service. Assignments provide the means by which the practitioner ‘bulk-bills’ the Commission in respect of services which attracted Medicare benefits.’

6 In oral submissions, Mr Robertson SC who appeared for the respondents referred at length to the provision the scheme makes for a patient to assign his or her right to a benefit under the Medicare Scheme to the doctor who provides the medical service. He stressed that the practitioner’s decision to accept an assignment of the benefit is entirely voluntary; there is no compulsion for any doctor to ‘bulk-bill’.

The PSR Scheme

7 The PSR Scheme was introduced in 1994 and was amended in 1997, 1999 and 2002. It is the 1999 version that is relevant to this proceeding; that is the HIA as amended by the Health Insurance Amendment (Professional Services Review) Act 1999 (Cth) and the Health Legislation Amendment Act (No 3) 1999 (Cth), (together the Amending Acts). The scheme establishes a process for examining the conduct of a practitioner, in connection with the supply of services which attract a payment under Medicare, in order to determine if the practitioner has engaged in ‘inappropriate practice’.

Key concept and definitions

8 Section 80(1) of the HIA establishes ‘inappropriate practice’ as the key concept of the PSR. Referring to Part VAA it provides:

‘This Part creates a scheme under which a person’s conduct can be examined to ascertain whether inappropriate practice (see section 82) is involved. It also provides for action that can be taken in response to inappropriate practice.’

‘Inappropriate practice’ is defined in s 82 as follows:

‘(1) A practitioner engages in inappropriate practice if the practitioner's conduct in connection with rendering or initiating services is such that a Committee could reasonably conclude that:

(a) if the practitioner rendered or initiated the referred services as a general practitioner - the conduct would be unacceptable to the general body of general practitioners; or
(b) ...

(2) A person (including a practitioner) engages in inappropriate practice if the person:

(a) knowingly, recklessly or negligently causes, or knowingly, recklessly or negligently permits, a practitioner employed by the person to engage in conduct that constitutes inappropriate practice by the practitioner within the meaning or subsection (1); or
(b) ...

(3) A Committee must, in determining whether a practitioner’s conduct in connection with the rendering or initiating services was inappropriate practice, have regard to (as well as to other relevant matters) whether or not the practitioner kept adequate and contemporaneous records of the rendering or initiation of the services.’

Definitions

9 Other relevant definitions are found in s 81 and apply in the absence of a contrary intention:

‘adjudicative referral means a referral made by the Director to a Committee under section 93.

Director means the Director of Professional Services Review appointed under section 83.

investigative referral means:

(a) a referral made by the Commission to the Director under subsection 86(1); or
(b) a referral made by a Committee to the Director under subsection 106H(2).

practitioner means:

(a) a medical practitioner; or
(b) ...

referral means an investigative referral or an adjudicative referral, as the context requires.

referral period means the period applicable under subsection 86(2) or (3), as the case may be.

referred services means:

(a) in relation to an investigative referral - the services particulars of which are contained in the referral in accordance with paragraph 86(4)(a); or
(b) in relation to:
(i) an adjudicative referral; or
(ii) the consideration by the Determining Authority of a report of a Committee on an adjudicative referral;
the services to which the referral relates.

service means:

(a) a service for which, at the time it was rendered or initiated, medicare benefit was payable; or
(b) a service rendered by way of prescribing or dispensing of a pharmaceutical benefit by a medical practitioner or a dental practitioner.’

Investigative referrals

10 Under s 86 the Health Insurance Commission (‘Commission’) may refer the conduct of a practitioner to the Director to investigate whether the practitioner had been engaging in inappropriate conduct in relation to the rendering or initiation of services:

‘86 Commission may refer matters to the Director

(1) The Commission may, in writing, refer to the Director the conduct of a person relating to one or both of the following:

(a) whether the person has engaged in inappropriate practice in connection with rendering of services;
(b) whether the person has engaged in inappropriate practice in connection with initiation of services.

(2) An investigative referral in relation to the rendering of services may only relate to services rendered during the 2 year period immediately preceding the referral, whether or not any or all of the services were initiated before the start of that period.
(3) An investigative referral in relation to the initiation of services may only relate to services initiated during the 2 year period immediately preceding the referral.
(4) An investigative referral must:

(a) contain particulars of all services rendered or initiated during the referral period by:
(i) the person under review; or
(ii) a practitioner employed by the person under review; or
(iii) a practitioner employed by a body corporate of which the person under review is an officer; and
(b) set out the reasons why the Commission considers the person under review may have engaged in inappropriate practice.

(4A) After the Commission has made an investigative referral, the Director may request the Commission to give him or her further information relating to any services particulars of which are contained in the referral whether or not the services to which the request relates are dealt with in reasons given by the Commission under paragraph (4)(b)...’

11 Additional requirements for the content and form of investigative referrals are found in ss 87 and 88 which provide:

"87 Content and form of investigative referrals

(1) An investigative referral must specify whether it relates to one or both of the following:

(a) specified services;
(b) services rendered or initiated by a practitioner that are one or more of the following:
(i) services of a specified class;
(ii) services provided to a specified class of persons;
(iii) services provided within a specified location;
(iv) services provided within a specified period. ...

88 Procedure for notifying investigative referrals

(1) The Commission must send a copy of the investigative referral to the person under review within 48 hours of sending the investigative referral to the Director.
(2) The copy must be accompanied by a notice inviting the person under review to make written submissions to the Director, within 14 days, stating why the Director should dismiss the referral without setting up a Committee.
(3) Within the 14 day period commencing on the day on which the person under review is sent the copy and notice, he or she may make such written submissions to the Director."

12 Once an investigative referral has been made the Director must conduct an investigation into the referred services, which may encompass services not dealt with in the reasons given by the Commission under paragraph 86(4)(b), in any manner he or she thinks appropriate.

Adjudicative referrals

13 Following his investigation the Director may establish a Committee and make an adjudicative referral to it to consider whether the practitioner has engaged in inappropriate practice. The Director may make written guidelines about the content and form of adjudicative referrals. The Committee may only make findings about the services that are the subject of the adjudicative referral; s 106H(1).

Inappropriate practice

14 With effect from 1 July 1994 the concept of inappropriate practice was introduced into the HIA by the Health Legislation (Professional Services Review) Amendment Act 1994 (Cth); the ‘Review Act’. Before that the concept of ‘excessive services’ or over-servicing, was the criterion by which practitioners’ conduct was judged. Section 79(1B) of the HIA, the predecessor to s 82, provided that a reference to excessive services,

‘is 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 adequate medical or dental care of the patient concerned.’

15 The applicant claims that, unlike ‘excessive services’, inappropriate practice (in relation to general practitioners) can be anything that three other general practitioners constituted as a Committee by the Director pursuant to s 93 of the HIA, consider it to be. In support of this submission the applicant referred to the Explanatory Memorandum to the Health Legislation (Professional Services Review) Amendment Bill 1993 (which became the Review Act) which says:

‘New Proposed Section 82 – Definitions of inappropriate practice
Section 82 defines a new concept, to be known as "inappropriate practice". It encompasses the existing concepts of excessive rendering and excessive initiating but also introduces the concept of excessive prescribing. In addition, it will allow a Committee to examine, where relevant, aspects of a practitioner’s practice broader than purely the excessive servicing of patients. A Committee will have the capacity to consider the conduct of the person under review in his or her practice and determine whether that conduct is acceptable to the general body of his or her profession or specialty.’

16 In his second reading speech the Minister referred to the concept of inappropriate practice saying,

‘a significant change in the bill is the replacement of the concept of excessive servicing with one of inappropriate practice. Whereas excessive servicing is currently defined as the rendering or initiation of services not reasonably necessary for the adequate care of the patient, the concept of inappropriate practice goes further. It covers a practitioner engaging in conduct in connection with the rendering or initiation of services that is unacceptable to his or her professional colleagues generally.’

17 The applicant also referred to the Report of the Review Committee of the Professional Services Review Scheme, Commonwealth, 1999 at pp 15-16 where categories of conduct identified as involving inappropriate practice include:

• concerns about clinical competence and performance;
• aberrant professional behaviour or beliefs;
• lack of meaningful continuing medical education;
• physical or mental impairment;
• substance abuse;
• organisational issues affecting safety (such as equipment and staffing deficiencies);
• high number of services per patient;
• unusual incidence of specific types of services;
• inappropriate prescribing;
• inappropriate ordering of diagnostic imaging and pathology;
• inappropriate use of Medicare item numbers when making claims; and
• high numbers of services per day with low rates of consultation services per patient.

18 Under s 106U of the HIA, the sanctions attached to a finding of inappropriate practice range from reprimand or counselling to substantial monetary penalties and disqualification from participating in the Medicare Scheme for up to three years.

Submissions as to personal hardship

19 Before dealing in any detail with the parties’ submissions on the constitutional point, I should make some preliminary observations about the evidence proffered by the applicant and the applicant’s submissions concerning the possible consequences of the adverse decisions that have already been made with respect to his conduct and his consequent exposure to sanctions.

20 The applicant sought to put certain evidence before the Court including affidavits of Dr Selim and various other extrinsic materials such as explanatory memoranda to relevant legislation. The respondents did not object to the applicant relying on the extrinsic material although they made the point, correctly in my view, that such material is not evidence. They did object to evidence concerning Dr Selim’s personal circumstances on the grounds that this evidence is not relevant to the debate as to the constitutional validity of the PSR Scheme. They submit that whether Part VAA is valid does not depend on its impact on the applicant as an individual; it cannot be the case that Part VAA is invalid with respect to the applicant and valid for everyone else. For this reason the factual propositions relevant to the constitutional challenge must be put at a general and not an individual level. It is for this reason, it is submitted, that the leading cases on s 51(xxiiiA) have not had an individual’s personal circumstances as their factual base but have proceeded by way of a demurrer to a fully pleaded statement of claim or on a case stated. I agree with these submissions.

21 There is no challenge to Dr Selim’s standing to bring the present proceeding. The respondents have accepted that should the applicant be disqualified from participating in the Medicare Scheme, then for the period of the disqualification the applicant’s patients would not receive benefits in respect of the applicant’s professional services. The respondents accept that, depending on the length of any disqualification the applicant ‘may lose a number of his patients’. The pervasiveness of the Medicare Scheme and its role in covering an individual’s medical expenses or, at least, in subsidising those expenses, is sufficiently well known generally as to allow me to take judicial notice of this and of its impact on medical practitioners who are unable to participate in the scheme; Holland v Jones [1917] HCA 26; (1917) 23 CLR 149 ; Evidence Act 1995 (Cth) s 144. It is not difficult to conclude that the consequences for a medical practitioner who is excluded from the scheme would be sufficiently serious. The disadvantages of operating outside the Medicare Scheme are such as, in my view, to impose practical, if not legal compulsion, to participate in the Scheme.

22 The written submissions made on behalf of the applicant went into considerable detail about the repercussions for the applicant should he be disqualified from the Medicare Benefits Scheme for up to three years. These included the virtual devastation of his practice and loss of his livelihood. As I have explained above these submissions are not relevant to the issue I have to decide. The applicant sought judicial review of the decisions of the Director and the Committee. Jacobson J dismissed that application. I understand that, pending the outcome of the present constitutional challenge to the legislation, no penalties have been imposed on the applicant. Whether or not hardship submissions will be relevant to the assessment of any penalty is not for me to say. The issue of whether the PSR exceeds the powers of the Commonwealth however, cannot depend on issues of hardship particular to an individual practitioner.

Civil conscription – the applicant’s submissions

23 It is not in contention that medical practitioners are not obliged to participate in the Medicare Scheme. Nevertheless, the applicant contends that the realities underlying the medical benefits scheme are such that ‘realistically, economically and practically’ it requires medical practitioners to become approved medical providers in order for them to practise as general practitioners. The applicant submits that the HIA requires general practitioners to provide medical services in a manner designated as ‘appropriate’ but which is ‘unstated and undefined’. According to the applicant, this dictates the ‘kinds of and manner in which medical services are actually provided’ and attaches significant sanctions to a failure to conform including disqualification from participation in the scheme for up to three years, public reprimand and/or the imposition of substantial repayments of Medicare benefits paid to them or assigned to them by their patients. By so doing, the applicant submits, the HIA ‘impermissibly’ constitutes civil conscription.

24 Elaborating on this submission the applicant contends that the financial consequences of not participating in the Medicare Scheme create a formidable and real compulsion for general practitioners to do whatever is necessary to enable them to participate. What is required, it is submitted, goes to the actual medical services to be delivered as well as to the mode or manner of their delivery. The applicant submitted:

‘The Commonwealth is now therefore present in between, as it were, the general practitioner and his or her patient and the kind of medical service delivered by the practitioner, or whether such service is delivered at all, is untaken by the practitioner having to have strict regard to ... the Commonwealth’s requirements. The Commonwealth is now empowered to intervene in the actual professional delivery of medical services.’

25 In making these submissions the applicant relies on the decision of the High Court in The General Practitioners Society in Australia v Commonwealth of Australia [1980] HCA 30; (1980) 145 CLR 532 (‘General Practitioners case’). In the alternative the applicant submits that:

(a) GPS is distinguishable and does not apply to the present case; and/or
(b) the construction of ‘civil conscription’ in GPS is incorrect and should not be accepted by this Court. Rather, it is submitted, the broader view of what constitutes ‘civil conscription’ taken by Latham CJ, Rich, Williams and Webb JJ in Federal Council of the British Medical Association in Australia v Commonwealth [1949] HCA 44; (1949) 79 CLR 201 (‘BMA case’) should be accepted.

26 At the outset I should dispose of the submission in (b). It is not open to this Court to say that a decision of the High Court of Australia is incorrect. If, contrary to my view, the General Practitioners case and the BMA case are not reconcilable then the General Practitioners case, being the later decision, must prevail. In the present proceeding, unless it is relevantly distinguishable from the circumstances under consideration here, the General Practitioners case must be applied.

Background to s 51(xxiiiA)

27 Section 51(xxiiiA) was inserted into the Constitution by amendment pursuant to s 128 of the Constitution. The proposed amendment had been approved by the necessary majorities of electors and was assented to on 19 December 1946. In explaining the background to this amendment in BMA at 285, Williams J referred to the different views as to the proper scope of s 81 of the Constitution (Commonwealth power of appropriation) expressed in Attorney-General for Victoria v Commonwealth [1945] HCA 30; (1945) 71 CLR 237 (‘Pharmaceutical Benefits Case’) and to the likelihood, if the point arose for decision, that a majority of the Court would hold that the Commonwealth could only expend its money on those forms of social services expressly authorised by the Constitution, namely invalid and old age pensions authorised by s 51(xxiii). The extension of Commonwealth power to the provision of the benefits enumerated in s 51(xxiiiA) had been put beyond doubt by the amendment and concerns that the extension of power might lead to the nationalisation of medical and dental professions were met by the prohibition of civil conscription; see also D Mendelson, "Devaluation of a Constitutional Guarantee: The History of Section 51(xxiiiA) of the Commonwealth Constitution" (1999) 23 MULR 308.

High Court consideration of s 51(xxiiiA)

The BMA case

28 In the BMA case, the High Court held that the prohibition against civil conscription in s 51(xxiiiA) applied only to medical and dental services and not to the other elements of the section. At issue was the validity of s 7A of the Pharmaceutical Benefits Act 1947 (Cth) which required medical practitioners to use a prescribed form and adhere to a prescribed list of pharmaceuticals in writing a prescription if their patients were to be entitled to free pharmaceutical benefits. It was an offence, carrying a penalty of [sterling]50, for a medical practitioner to write a prescription other than in the statutory form unless asked to do so by the person for whom or at whose request the prescription was written. The majority of the High Court (Latham CJ, Rich, Williams and Webb JJ, Dixon and McTiernan JJ dissenting) held that the section imposed a form of civil conscription contrary to the prohibition in s 51(xxiiiA).

29 Latham CJ emphasised, at 243, that the power given to the Commonwealth under s 51(xxiiiA) is not a power to make laws with respect to pharmaceutical benefits and medical services but for the provision of such benefits and service. The Chief Justice accepted that in providing such benefits and services, the Commonwealth was entitled to rely upon the existing ‘position in the community’, that is, a system whereby private doctors prescribe medicine. His Honour found that the incidental power derived from s 51(xxxix) of the Constitution entitled the Commonwealth, when providing benefits out of public moneys, to take precautions so as to prevent injury to the public and the useless or dishonest expenditure of public moneys.

30 The Chief Justice also said (at 249) that the term ‘civil conscription’ is wider than ‘industrial conscription’ and is applicable to "any compulsion of law requiring that men should engage in a particular occupation, perform particular work, or perform work in a particular way." The Chief Justice emphasised that the words ‘any form of’ in s 51(xxiiiA) evinced an intention on the part of the Parliament to ensure that any service to which the limitation applied should be ‘completely voluntary’. Considering s 7A, his Honour accepted that a doctor might escape the penalty by not writing a prescription but noted that if a doctor could not carry on practice without writing many prescriptions included in the prescribed list, the doctor is not given any live option. Given that the doctor had no power or right to procure or control a request that he not use the Commonwealth forms then he either had to use them or go out of practice. The Chief Justice viewed this as a very real form of compulsion commenting (at 253):

‘There could in my opinion be no more effective means of compulsion than is to be found in a legal provision that unless a person acts in a particular way he shall not be allowed to earn his living in that way, and possibly in the only way, in which he is qualified to earn a living.’

Webb J expressed a similar view at 292-3.

31 Williams J was also not prepared to confine the operation of the constitutional prohibition to direct legal compulsion; at 287. In his Honour’s view, however, the fact that s 7A carried a penalty for non-compliance implied legal compulsion and by compelling medical practitioners, in the absence of a relevant request to the contrary, to write prescriptions on forms supplied by the Commonwealth, the section compelled the provision of a medical service to the Commonwealth. Williams J summarised his view at 289:

‘The scheme of the Act is to make the provision of a pharmaceutical benefit conditional upon a medical practitioner prescribing particular treatment, so that in prescribing that treatment the medical practitioner is rendering a medical service to the Commonwealth. He is in effect certifying to the Commonwealth that the patient requires a pharmaceutical benefit within the meaning of the Act. ... He is compelled to render that service in the course of rendering a contractual service to his patient. But it is a service which forms no part of the implied contract for services created by a patient seeking the advice and treatment of a medical practitioner and the medical practitioner examining the patient with a view to giving him advice and treatment. It is a compulsory service to the Commonwealth for the purposes of the Act which is super-imposed upon the contract of the parties. It is a compulsory service whether the obligation is absolute or absolute unless performance is excused by the person in respect of whom or at whose request the prescription is written.’

32 The aspects of the legislation that had led Webb J to conclude that the legislation involved a compulsory medical service were clearly identified by his Honour at 294:

‘To reiterate: if s 7A had not been enacted a patient requesting a doctor to write a prescription on the Commonwealth form, which involves consulting and consideration of the Commonwealth Pharmaceutical Formulary or its addendum or both, would request a service which only a doctor can render, and which therefore is properly described as a medical service. But when this service is made compulsory by a fine, or loss of practice to avoid the fine ...then, having regard not only to the extent of the professional work involved but to the almost unlimited number of persons entitled to insist on the service at any time, it becomes, I think, not merely a compulsory service but a form of civil conscription within any meaning that can be given to that expression which, if not quite clear, was certainly intended to be comprehensive. It is civil conscription of doctors as doctors.’

His Honour’s comments on these aspects of the legislation are particularly instructive in the present proceeding.

The General Practitioners case

33 The only other case in which the High Court has considered the meaning of ‘civil conscription’ in any detail is the General Practitioners case. Certain provisions of the HIA (ss 16A, 16B and 16C) and regulations made under the Act imposed conditions to be met before Commonwealth medical benefits were payable in respect of pathology services (other than prescribed pathology services) and also imposed obligations on some, at least, of the persons providing those services. It was necessary for those services to be provided by or on behalf of an ‘approved pathology practitioner’. The conditions and obligations were designed to prevent the supply of unnecessary or excessive pathology services.

34 The legislative provisions operated in conjunction with an undertaking to be provided by approved pathology practitioners and a code of conduct. They had no application to a medical practitioner who was prepared to render pathology services for which no medical benefit would be payable and there was no legal compulsion on any medical practitioner to become an approved pathology practitioner. The arguments put to the Court that the legislation imposed a form of civil conscription were summarised by Gibbs J at 549:

‘First, it was said that the laws positively require a practitioner to perform services of a medical kind. Secondly, it was said, the laws, by prohibiting practitioners from carrying on practice in what was formerly the normal way, compel them to carry on practice in a different way. ... it was argued for the plaintiffs that few practitioners would be able to attract patients, or to make a living from their profession, if medical benefits were not payable in respect of their services, and that therefore, if ss 16A, 16B and 16C are valid, a practitioner who intends to render pathology services (whether as a specialist or as a general practitioner) is compelled by practical considerations to apply to become an approved pathology practitioner.’

35 His Honour accepted that the facts in the case stated for the consideration of the High Court established that the provisions in question left some medical practitioners with no real choice if they wished to preserve their practices. It would be necessary for them to become approved pathology practitioners, and for that purpose they would have to submit to the obligations imposed by the statute, the undertaking and the regulations. Referring to the BMA case, Gibbs J clearly stated, at 550:

‘The question whether a law imposes civil conscription cannot be answered in the negative simply because the law does not create any legal liability to perform any medical or dental service; the effect of the law in the economic and other circumstances must be considered, and practical compulsion is enough.’

36 To answer the question it was necessary to examine the provisions of the Act, regulations and undertaking more closely. His Honour noted first, at 554, that mere compulsion for a medical practitioner to seek to become an approved pathology practitioner could not in itself ‘amount to the imposition of any form of civil conscription’. Accordingly, his Honour focussed in particular upon those provisions which had the effect of compelling medical practitioners to observe certain positive requirements. Those provisions involved the requirement to make (or confirm) requests in writing, to give details of the relevant service in the handwriting of the person making the request and to record other particulars as required by the regulation. The approved pathology practitioner was also required to retain certain records for 18 months, to ensure that his employees acted in accordance with the legislation and to furnish information as required by the Minister from time to time. In relation to these provisions his Honour said, at 559-60:

‘The provisions in question in these proceedings do compel medical practitioners to perform certain duties in the course of carrying out their medical practices, but they do not go beyond regulating the manner in which some of the incidents of those practices are carried out, and they do not compel any medical practitioner to perform any medical services. Most of the duties imposed relate only to things done incidentally in the course of practice, rather than to a medical service itself.’

37 Gibbs J disagreed with observations by some members of the majority in the BMA case (Latham CJ at 249, Williams J at 290 and Webb J at 294) to the effect that ‘a law which compels people to perform services in a particular manner is a law which imposes civil conscription’. At 557, Gibbs J explained his disagreement thus:

‘That expression, [‘any form of civil conscription’] used in its natural meaning, and applied, as the context of par. (xxiiiA) requires, to medical and dental services, refers to any sort of compulsion to engage in practice as a doctor or a dentist or to perform particular medical or dental services. However, in its natural meaning it does not refer to compulsion to do, in a particular way, some act in the course of carrying on practice or performing a service, when there is no compulsion to carry on the practice or perform the service. ... it could not properly be said that it would be a form of civil conscription to require a person who had voluntarily engaged in civilian employment to perform the duties of that employment in accordance with the instructions given to him by his employers. ... There is nothing in the Constitution that would indicate that the expression "any form of civil conscription" where it appears s 51(xxiiiA) should be given an enlarged meaning which its words do not naturally bear. The words "any form of" do not, in my opinion, extend the meaning of "conscription", and that word connotes compulsion to serve rather than regulation of the manner in which a service is performed. Of course no express power is conferred on the Parliament to make laws to regulate the manner of performance of medical or dental services, but it appears clearly necessary to the effective exercise of the power conferred by s 51(xxiiiA) that the Parliament should be able to make laws as to the way in which medical and dental services provided by the Commonwealth under the authority of that paragraph are performed, and laws annexing conditions to the entitlement to any of the benefits provided under that authority even if those conditions may have the result that a medical or dental service must be rendered in a particular way if the benefit is to be obtained. I find it impossible to discern in the words in parenthesis in par. (xxiiiA) any intention to prevent the Parliament from making laws of that kind, provided that no compulsion to serve is imposed.

38 Gibbs J added that he agreed with the opinion expressed in by Dixon J in the BMA case, that there is a wide distinction between regulating the manner in which an incident of medical practice is carried on (if and when it is done) and the compulsion to serve medically or to render medical services, the latter, but not the former, being within the prohibition.

39 Despite the disagreement outlined in the passage quoted above, Gibbs J did not regard the BMA case as wrongly decided as it could be supported on narrower grounds. His Honour identified the fatal elements in the legislation considered in the BMA case as being:

1. that s 7A required a doctor to write any prescriptions for any medicine included in the prescribed list on the form supplied by the Commonwealth irrespective of whether the medicines were to be obtained free. This requirement had no necessary relationship with any pharmaceutical benefit or medical services provided by the Commonwealth; and
2. in the light of its history and context, s 7A could be seen to intend to compel medical practitioners to join the Commonwealth scheme for the provision of free pharmaceutical benefits and to provide ‘against their will’ a medical service for the Commonwealth.

40 Gibbs J felt that these elements sufficiently distinguished the position under s 7A from that under consideration in the General Practitioners case; see [36] above. The only medical service that the provisions in question compelled was, possibly, that required by s 16A(1) of the HIA, namely that a request by medical practitioner to an approved pathology practitioner to render an approved pathology service should be made or confirmed in writing. Although Gibbs J thought that such a request might be regarded as a medical service he held that the section did not compel any medical practitioner to make such a request. Rather it required that the request, if made, be in writing.

41 Subject to the points made below in [42]-[43], and to some additional observations that are not relevant here, the other members of the High Court agreed with Gibbs J that the provisions under consideration did not impose compulsion amounting to ‘civil conscription’.

42 Although it is clear that Gibbs J was of the opinion that practical compulsion, as distinct from legal compulsion, is sufficient to satisfy the concept of ‘civil conscription’, given the High Court’s interpretation of the legislation under consideration in the General Practitioners case it was not necessary to decide this point. Indeed, Barwick CJ, Mason J and Wilson J all left this question open. Barwick CJ additionally commented that he did not read the decision of the majority in the BMA case as deciding the issue adding, at 537-8:

‘But that is not to say that, in my opinion, civil conscription could not in any case result from the coercive force of circumstance: but, in my opinion, to make out such a case would need an extremely strong set of circumstances which, in real terms, left the individual with no choice but to submit to what the statute required, though it did not command it.’

43 The other four members of the High Court accepted that practical compulsion was sufficient to breach the constitutional prohibition on civil conscription and clearly regarded the majority of the High Court in the BMA case as having decided the issue; per Gibbs J (with whom Stephen J agreed) at 550 and 556; per Murphy J at 565, per Aickin J at 565.

44 In summary, the General Practitioners case decided there was no compulsion (legal or otherwise) to provide medical services amounting to any form of civil conscription because:

1. the practical compulsion on practitioners to become approved pathology practitioners was not a compulsion to provide medical services even though the practitioners had no real choice if they wished to preserve their practices; see Gibbs J at 554;
2. the provisions which did compel medical practitioners to observe certain positive requirements compelled acts that were reasonably incidental to the provision of medical services and were required only after a voluntary decision to provide the medical services had been taken;
3. regulation of the manner in which an incident of medical practice is carried on is incidental to the power of the Commonwealth to provide medical services and, so long as no compulsion to serve is imposed, is outside the prohibition.

Interpretation of Part VAA

45 I have gone into considerable detail in analysing the General Practitioners case because, in my view, the principles for which it stands apply to the present circumstances and inexorably lead to the conclusion that Part VAA of the HIA does not provide for any form of civil conscription. The General Practitioners case clearly shows, however, that careful examination of the specific requirements of challenged legislation is crucial to the determination of whether the constitutional prohibition has been breached.

46 The salient features of the Medicare Scheme and the PSR Scheme are outlined in [5] – [13] above. As can be seen, there is no legal compulsion for a medical practitioner to participate in the Medicare Scheme any more than there was for medical practitioners to become approved pathology providers under the legislation considered in the General Practitioners case. I accept that here, as there in the General Practitioners case, there is a form of compulsion in that it may be severely detrimental, if not fatal, to the viability of a medical practice if the practitioner were excluded from the Medicare Scheme. The General Practitioners case clearly establishes, however, that such compulsion is neither a legal nor a practical compulsion to provide a medical service and is not affected by the constitutional prohibition; see [36] above. It is not clear exactly what the High Court meant by ‘practical compulsion’ but the acceptance (‘with equanimity’ as Mr Robertson observed) in the General Practitioners case of the fact that a pathologist who did not participate in the statutory scheme under consideration might not have a viable practice shows that such compulsion as is here involved, does not fall within the constitutional prohibition; see the General Practitioners Case at 549-50 per Gibbs J. It may be that ‘practical compulsion’ is a term that follows from an examination of the substance of a statute rather than mere form and is really a conclusion about that which offends the constitutional prohibition. In any event I do not need to decide that here.

47 For the applicant to succeed he would have to show that important aspects of rendering medical services are compulsory under the Medicare Scheme, enforced by the PSR Scheme. In making this point Mr Robertson referred to the provision for assignment of benefits under the Medicare Scheme to the medical practitioner who provides the service; see [5]-[6] above. In support of his submission that a medical practitioner was entirely free to accept payment by way of assignment of the benefit he referred to the comments to this effect in Health Insurance Commission v Peverill [1994] HCA 8; (1994) 179 CLR 226 at 235 per Mason CJ, Deane and Gaudron JJ. As Mr Robertson explained, a doctor can charge whatever fee he likes for his services; it is only where he voluntarily accepts assignment as full payment that his fee is limited to the amount that the Commonwealth is prepared to pay. The fact that the practitioner may be financially advantaged in deciding to accept an assignment does not make the provision compulsory.

48 As explained at [7] – [18] above, the PSR Scheme provides for a practitioner’s conduct to be examined to determine if he or she has engaged in ‘inappropriate practice’. The consequences attached to a finding of inappropriate practice show that, as the name suggests, the purpose of the provisions is to prevent inappropriate practice rather than to compel the provision of medical services. Such a simple analysis is, of course, not sufficient to resolve the issues raised by the applicant but it does make clear that the thrust of the provisions is to regulate the conduct of medical practitioners, including the way in which they provide medical services.

49 The applicant accepts that regulating the incidents of medical practice does not offend the constitutional prohibition but contends that the PSR Scheme does more than regulate the incidents of medical practice. It does not merely regulate the number of services provided or the administrative incidents of medical practice but, it is submitted, the Scheme trespasses into the actual medical services provided not just the manner in which they are provided; it affects the practitioner’s clinical decision whether or not to provide a particular service. This feature alone, the applicant contends, distinguishes the present-day system from that considered by the High Court in the General Practitioners case.

50 In my view this submission does not take sufficient account of Gibbs J’s express statement in the General Practitioner’s case (see [37] above) that Parliament has the power to make laws as to the manner in which medical services are performed where such laws are ‘clearly necessary’ to the effective exercise of the Commonwealth’s power to provide medical and dental services. It is incidental to the exercise of the power to provide medical services to be able to make such regulatory laws and to be able to annex conditions to the entitlement to any of the benefits provided, even if this means that medical or dental services have to be rendered in a particular way if the benefit is to be obtained. The making of such laws is not civil conscription provided that ‘no compulsion to serve is imposed’. Therefore the issue here is whether regulation with reference to the criterion of ‘inappropriate practice’ is ‘clearly necessary’ to the effective exercise of the power conferred by s 51(xxiiiA).

51 The High Court has cautioned that when considering the ambit of the incidental power, whether arising by implication or expressly under s 51(xxxix) of the Constitution, it is important not to allow the incidental power to dominate the main power or, as Rich J said, not to put the cart before the horse; Attorney-General for Victoria v The Commonwealth [1935] HCA 31; (1935) 52 CLR 533 at 563. The point was well illustrated by Dixon J in the Pharmaceutical Benefits case. The legislation under consideration there rested on the power of the Commonwealth to appropriate money under s 81 of the Constitution. Dixon J concluded that even if one accepted that s 81 authorised the expenditure of money on any purpose that the Parliament might think fit without restriction, the scheme established under the legislation would still be invalid. His Honour, at 270, put the point thus:

‘[T]he fact is that under the Pharmaceutical Benefits Act appropriation of money is the consequence of the plan; the plan is not consequential upon or incidental to the appropriation of money.’

52 Since the Pharmaceutical Benefits case, s 51(xxiiiA) has, of course, authorised the provision of services that were not possible under the previous constitutional arrangements. However, as the General Practitioners case shows, the incidental power is still relevant in an assessment of the constitutional standing of the PSR.

53 The applicant accepts that matters ‘merely incidental to the core of clinical practice of medicine’ do not fall within the constitutional prohibition because they might constitute a necessary part of the Commonwealth’s administration of its benefits scheme. In the applicant’s written submissions such incidental matters are said to include requirements about completing forms or with respect to accounts and receipts or financial and administrative matters. The applicant does not accept that it is incidental to the Commonwealth’s provision of medical services either that it has the power to impose a standard which the services provided have to meet or the power to discipline medical practitioners whose services fail to meet that standard.

54 The applicant is correct that the regulation implicit in the concept of inappropriate practice is capable of going to the heart of medical services rather than merely to ancillary aspects. Whether that is different from merely regulating the incidents of medical services I do not need to decide, although I suspect that it is not. Ultimately however, I do not accept that a constitutional provision that empowers the Commonwealth to provide medical services, including through the existing network of medical practitioners, at the same time prohibits it from imposing standards on the medical services provided. Such standards are integral to the responsible provision of medical services and, as Latham CJ recognised in the BMA case, the Commonwealth’s incidental power entitles it to provide for such matters as well as to take the necessary precautions to ensure that public money is properly used; see [29] above. A disciplinary system that is directed to support such precautions (as opposed to a free-standing disciplinary system) would also fall within the incidental power of the Commonwealth even if it could otherwise be viewed as exceeding the power of the Commonwealth because it can be characterised as, for example, a law with respect to the regulation of medical practice. As the High Court observed in Alexandra Private Geriatric Hospital Proprietary Limitetd v Commonwealth [1987] HCA 6; (1987) 162 CLR 271 at 279:

‘A single law can possess more than one character and it suffices for constitutional validity if any one or more of those characters fairly falls within a head of Commonwealth legislative power.’

55 The applicant contends that the concept of inappropriate practice could be anything that a Committee considers it to be; that it could extend to any conduct of the practitioner. This submission cannot be sustained. Section 80(1) shows that ‘inappropriate practice’ is a subset of a person’s conduct; it refers to examining a person’s conduct to ascertain if there has been ‘inappropriate practice’. Inappropriate practice is defined in s 82 (see [8] above). The definition restricts the concept to conduct ‘in connection with rendering or initiating [medical] services’ and provides that it must be such that the Committee could ‘reasonably conclude’ that the conduct would be unacceptable to the general body of general practitioners. The context indicates that the grounds on which the conduct is to be judged must relate to the services that are rendered or initiated. Moreover, the Explanatory Memorandum quoted above at [15] indicates that the relevant conduct is conduct in the course of the practice of medicine. Were a Committee to attempt to label as ‘inappropriate practice’ conduct of a medical practitioner that is unrelated to the provision of medical services the appropriate challenge would be, not to the constitutional validity of the PSR, but to the accuracy of the committee’s interpretation of the concept.

56 This point was made in Yung v Adams (1997) 80 FCR 453 at 459 where Davies J observed that, notwithstanding the width of the definition of ‘inappropriate conduct’, it should be read subject to the legislative power under which the Act was passed:

‘The Federal Parliament has no general power to regulate the activities of medical practitioners. Therefore, under Pt VAA, the power to discipline in relation to "inappropriate practice" must be understood as a power to discipline in relation to conduct which is related to the payments which are made by the Commonwealth under the Act by way of medical benefits and the like. Accordingly, the reference to "inappropriate practice" in s 82 refers to conduct in relation to which Commonwealth benefits were paid or payable and in respect of which the medical practitioner failed in some way to meet the standards of the general body of the members of the profession in which the services were rendered. The Commonwealth's interest is to see that the services which are provided by a medical practitioner and for which a Commonwealth benefit is or may be claimed are services in respect of which the medical practitioner provides due care and skill, that a claim if made is brought under the correct item and that overservicing does not occur.’

57 The applicant contends that the comments of Gibbs J quoted at [37] above are not to be taken as stating a ‘blanket proposition’ that any regulation of the manner in which practice is conducted is within power. This is clearly correct. However, his Honour’s statement that:

‘If the incident of practice which is regulated is not medical or dental, but financial or administrative, it is clearly outside the prohibition’,

cannot be used, as the applicant attempts to do, as authority for the proposition that any attempt to regulate an incident of practice which is medical or dental will fall within the prohibition.

58 The applicant puts forward the General Practitioners case as authority for the blanket proposition that it is constitutionally impermissible to regulate any performance by medical practitioner of his medical duties and functions; that such regulation was equated with compulsion and therefore with conscription. This however is not what is held in the General Practitioners case. What was crucial for Gibbs J in the General Practitioners case was that no medical service was compelled. This is quite clear from his Honour's comments at 559-60:

‘The provisions in question in these proceedings do compel medical practitioners to perform certain duties in the course of carrying out their medical practices, but they do not go beyond regulating the manner in which some of the incidents of those practices are carried out, and they do not compel any medical practitioner to perform any medical services. Most of the duties imposed relate only to things done incidentally in the course of practice, rather than to a medical service itself. The only possible exception is s 16A (1), which requires that a request by a medical practitioner to an approved pathology practitioner to render a pathology service shall be made or confirmed in writing as prescribed. A request of that kind may be regarded as a medical service. However, s 16A(1) does not compel any medical practitioner to make such a request. What it requires is that the request, if made, be made or confirmed by written instrument which satisfies reg. 5. There is nothing in that regulation which affects in the slightest the performance by a medical practitioner of his medical duties and functions. The statutory requirements may impose on him more administrative work. In particular he is required to specify, in his own handwriting, the services to which the instrument relates, and cannot simply mark a form on which is printed a list of possible services. The reason why a condition of this kind is attached to the entitlement to medical benefits is no doubt that the use of the printed form might reasonably be regarded as likely to contribute to laxity and to facilitate fraud. However that may be, to require a practitioner to write out particulars of the service which he has decided to request another practitioner to perform is not to compel the practitioner making the request to perform a medical service. Even more clearly, the requirements of s 16A(2) with regard to accounts and receipts, and those of s 16A(3) with regard to the retention and production of any written request or confirmation, do not compel any medical practitioner to perform any medical service. ...
For these reasons none of the provisions in question imposes any form of civil conscription contrary to s 51(xxiiiA) of the Constitution.

59 I have quoted his Honour’s comments at length to make quite clear his Honour’s position. His Honour found that the provisions in question did not breach the constitutional prohibition because, put simply, that which was compelled was not a medical service in itself; although it may have been incidental to a medical service; and where a medical service was regulated, as by requiring a request to be made in writing, the medical service itself was not compelled. These comments do not support the proposition that any regulation of the way in which a medical service is provided is unconstitutional.

60 In my view the General Practitioners case is directly applicable to the present situation. For the reasons I have given I do not find that the Medicare Scheme or the PSR Scheme impose any compulsion to provide medical services. The decision to provide medical services is a voluntary decision. The regulation of the manner in which such services are provided is properly incidental to the Commonwealth’s power under s 51(xxiiiA) to provide medical services and does not offend the constitutional prohibition against civil conscription. In my view a proper application of the term ‘inappropriate practice’ would sufficiently confine the concept to matters which are within the incidental power of the Commonwealth.

61 For the above reasons the applicant’s challenge to the constitutional validity of PSR Scheme must fail. The appeal must be dismissed with costs.

I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate:

Dated: 23 February 2006

Counsel for the Applicant:	Mr M A Robinson with Mr C Jackson

Solicitor for the Applicant:	Tress Cox

Counsel for the Respondents:	Mr A Robertson SC with Ms R Henderson

Solicitor for the Respondents:	Minter Ellison

Date of Hearing:	14 June 2005

Date of Judgment:	23 February 2006

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URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/126.html

1.	The application be dismissed.
2.	The applicant pay the respondents’ costs.

1.	that s 7A required a doctor to write any prescriptions for any medicine included in the prescribed list on the form supplied by the Commonwealth irrespective of whether the medicines were to be obtained free. This requirement had no necessary relationship with any pharmaceutical benefit or medical services provided by the Commonwealth; and
2.	in the light of its history and context, s 7A could be seen to intend to compel medical practitioners to join the Commonwealth scheme for the provision of free pharmaceutical benefits and to provide ‘against their will’ a medical service for the Commonwealth.