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Federal Court of Australia |
Last Updated: 7 March 2007
FEDERAL COURT OF AUSTRALIA
Phan v Kelly [2007] FCA 269
ADMINISTRATIVE LAW – Health
Insurance Act 1973 (Cth) – Professional Services Review –
statutory scheme for examination of conduct to ascertain whether inappropriate
practice involved – challenge to decisions of Director and Committee
– whether Director erred in referral to Committee
by failing to notify
Applicant he had taken evidence from two medical advisors into account –
whether Director erred by attaching
samples of medical reports to his referral
– whether Committee erred by taking reports into account –
application of
procedural fairness procedures in context of staged statutory
procedure – whether Committee erred by adopting alternative sampling
methodology in decision-making process – whether Committee should have
notified the Applicant that an alternative methodology
had been adopted –
application of judicial immunity – whether advice given by statistician as
to statistical validity
of methodology is part of decision-making process
– whether statistician is agent of the Committee – application
dismissed.
Administrative Decisions (Judicial Review) Act
1977 (Cth), ss 5 and 6
Judiciary Act 1903 (Cth), s
39B
Health Insurance Act 1973 (Cth), ss 82, 83, 86, 88, 89B, 90, 91,
92, 93, 98, 101, 102, 103, 104, 105A, 106, 106D, 106K, 106L, 106T, 106TA,
106U
Evidence Act 1995 (Cth), s 129
Pradhan v
Holmes [2001] FCA 1560; (2001) 125 FCR 280, referred to
Kioa v West [1985] HCA 81; (1985) 159 CLR
550, referred to
Re Refugee Review Tribunal, Ex party Aala [2000] HCA 57; (2000) 204
CLR 82, referred to
Re Minister for Immigration and Multicultural Affairs;
Ex parte Miah [2001] HCA 22; (2001) 206 CLR 57, referred to
Muin v Refugee Review
Tribunal [2002] HCA 30; (2002) 76 ALJR 966, referred to
Re Minister for Immigration
and Multicultural Affairs; Ex parte Lam [2003] HCA 6; (2003) 214 CLR 1, referred
to
Cornall v A.B. [1995] 1 VR 372, followed
Annetts v
McCann [1990] HCA 57; (1990) 170 CLR 596, cited
Commissioner of Police v Tanos [1958] HCA 6;
(1958) 98 CLR 383, cited
Ainsworth v Criminal Justice Commission [1992] HCA 10;
(1992) 175 CLR 564, followed
Mathews v Health Insurance Commission
(2006) 90 ALD 49, distinguished
Herijanto v Refugee Review Tribunal [2000] HCA 49;
(2000) 170 ALR 379, referred to
Herijanto v Refugee Review Tribunal
(No 2)(2000)170 ALR 575, referred to
Mathews v Health Insurance
Commission (No. 1) [2005] FCA 1061, referred to
De
Smith, S.A. Judicial Review of Administrative Action (4th
ed.)
LAM
QUOC PHAN v BERNARD KELLY, FLORIA SIMRING AND NEIL TRAN CONSTITUTING THE
PROFESSIONAL SERVICES REVIEW COMMITTEE NO 190, THE DETERMINING
AUTHORITY
ESTABLISHED BY SECTION 106Q OF THE HEALTH INSURANCE ACT 1973 (CTH), HEALTH
INSURANCE COMMISSION AND ALAN JOHN HOLMES IN HIS CAPACITY AS DIRECTOR OF
PROFESSIONAL SERVICES REVIEW
NSD 1818 OF 2004
TAMBERLIN
J
6 MARCH 2007
SYDNEY
|
AND:
|
BERNARD KELLY, FLORIA SIMRING AND NEIL TRAN
CONSTITUTING THE PROFESSIONAL SERVICES REVIEW COMMITTEE NO 190
First Respondent THE DETERMINING AUTHORITY ESTABLISHED BY SECTION 106Q OF THE HEALTH INSURANCE ACT 1973 (CTH) Second Respondent HEALTH INSURANCE COMMISSION Third Respondent ALAN JOHN HOLMES IN HIS CAPACITY AS DIRECTOR OF PROFESSIONAL SERVICES REVIEW Fourth Respondent |
THE COURT ORDERS THAT:
The application be dismissed with
costs.
Note: Settlement and entry of orders is dealt with in Order 36
of the Federal Court Rules.
|
BETWEEN:
|
LAM QUOC PHAN
Applicant |
|
AND:
|
BERNARD KELLY, FLORIA SIMRING AND NEIL TRAN CONSTITUTING THE
PROFESSIONAL SERVICES REVIEW COMMITTEE NO 190
First Respondent THE DETERMINING AUTHORITY ESTABLISHED BY SECTION 106Q OF THE HEALTH INSURANCE ACT 1973 (CTH) Second Respondent THE HEALTH INSURANCE COMMISSION Third Respondent ALAN JOHN HOLMES IN HIS CAPACITY AS DIRECTOR OF PROFESSIONAL SERVICES REVIEW Fourth Respondent |
|
JUDGE:
|
TAMBERLIN J
|
|
DATE:
|
6 MARCH 2007
|
|
PLACE:
|
SYDNEY
|
REASONS FOR JUDGMENT
TAMBERLIN J:
1 This is an application for review under ss 5 and 6 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("ADJR Act") and s 39B(A) of the Judiciary Act 1903 (Cth) for a review of decisions and conduct under the Health Insurance Act 1973 (Cth) ("the Act").
2 The challenged decisions are set out in the third further amended application for review as follows:
‘(i) The decision, conduct or action of the Third Respondent on or about 29 June 2000 to make an investigative referral under s 86 of the Health Insurance Act 1973 (Cth) to the Fourth Respondent in respect of conduct of the Applicant (hereinafter referred to as "the Investigative Referral").
(ii) The decision, conduct or action of the Fourth Respondent on or about 21 March 2001 to set up a Committee comprising the First Respondents and to make an adjudicative referral to them under s 93 of the Act in respect of the conduct of the Applicant (hereinafter referred to as "the Adjudicative Referral").
(iii) The decision, conduct or action of the First Respondents in preparing and giving to the Second Respondent a Final Report dated 28 October regarding the conduct of the Applicant, which was communicated to the Applicant by letter dated 4 November 2004 and received on 5 November 2004 (hereinafter called "the Committee’s Report").’
3 Only the second and third decisions as outlined in the third further amended application are at issue in this proceeding. The second challenged decision or course of conduct concerns Dr Holmes, the Director of Professional Services Review ("the Director"). The next decision challenged is that of the Professional Services Review Committee ("the Committee") in preparing and forwarding to the Determining Authority the final report regarding the conduct of Dr Phan.
DECISION OF THE DIRECTOR OF PROFESSIONAL SERVICES REVIEW
4 In relation to the decision of the Director, it is first said that he failed to provide procedural fairness and thereby committed jurisdictional error because he did not inform Dr Phan that he had taken into account evidence from two medical advisors. The first is the advice of Dr Christine Davidson dated 4 July 2000 and the second is that of Dr John Dawson dated 12 October 2000. As a consequence, it is contended that Dr Phan was unable to make submissions contrary to the adverse comments set out in those reports by Dr Davidson and Dr Dawson. It is submitted that the Applicant was not aware of these statements, and that he ought to have been informed of them so that he could make relevant submissions to contest them or seek to adduce additional material to the Director.
5 The Director’s decision to make the referral is challenged on the second basis that the lists of medical services and patient files which were referred to the Committee were not a proper sample as they had been previously examined by the Director and found to have been deficient in relevant respects. It is contended that this conduct must have inevitably skewed the exploratory sample results and affected the deliberations of the Committee in a manner adverse to the Applicant.
DECISION OF THE PROFESSIONAL SERVICES REVIEW COMMITTEE
6 The decision of the Committee is challenged on the basis that the Panel erred in purporting to have regard to samples of services under s 106K of the Act. The Applicant submits that the Committee itself did not ensure that the sample was in fact an appropriate random sample as required under the Act. Therefore, it is contended, the sample results were invalid and the Committee did not have before it a random sample. Consequently, the Committee failed to follow the procedure required by s 106K(4) of the Act.
7 The Committee is further said to have erred in taking into account the patient records sent to it by the Director in the adjudicative referral because those records adversely affected the sampling process and gave rise to an apprehension that the Committee was biased in considering the sample. The Applicant also contends that as a matter of procedural fairness, the Committee fell into error by not notifying Dr Phan that it had obtained and taken into account advice relating to the sampling process from a consultant, Professor Des Nicholls, a Professor of Statistics at the Australian National University. It is submitted that the Applicant was deprived of procedural fairness because he was not able to make submissions or adduce evidence in respect of the advice from Professor Nicholls as to the sampling methodology.
PROFESSIONAL SERVICES REVIEW PROVISIONS
8 The scheme of the legislative provisions is comprehensively set out in the decision of Finn J in Pradhan v Holmes [2001] FCA 1560; (2001) 125 FCR 280 at [5]- [61]. These paragraphs provide a sufficient description of the scheme for present purposes, and it is not necessary to repeat the details of the process here. In his discussion of the scheme, his Honour noted at [6] that it involves four tiers or steps:
‘The first three relate to determining whether (inter alia) a medical practitioner has engaged in "inappropriate practice" in connection with the rendering or initiating of services for which a medicare benefit was available. The fourth tier or step involves the imposition of a sanction on a practitioner who has been found to have engaged in "inappropriate practice."’
9 ‘Inappropriate practice’ is defined in s 82. In the case of a general practitioner, the test is whether the conduct of the general practitioner in connection with the rendering of services would be unacceptable to the general body of general practitioners: s 82(1)(a).
10 The first step involves the Commission’s decision to make an investigative referral to the Director in relation to the conduct of an individual as to whether that person engaged in inappropriate practice in connection with the rendering or initiating of services: s 86(1). This stage contemplates that there has previously been a complaint or inquiry by the Commission into the conduct of the practitioner. The investigation must be sufficient to enable the Commission to form a view that the practitioner may have engaged in inappropriate practice.
11 The second step concerns the investigative referral to the Director, who is a medical practitioner appointed by the Minister with the consent of the Australian Medical Association: s 83. Section 86 provides that an investigative referral must contain particulars of all services rendered or initiated during the two years immediately preceding the referral. When an investigative referral is made by the Commission to the Director, the Commission must send a copy of the referral to the practitioner concerned inviting written submissions to the Director within 14 days stating why the Director should dismiss the referral without establishing a Committee: s 88. The Director has power to require the provision of information or the production of documents from the person under review or any other person the Director believes may have relevant documents: s 89B. In addition, in order to obtain assistance in making his or her decision on the investigative referral, the Director may consult with Panel members or any consultant or professional bodies that the Director considers appropriate: s 90(1). The Director may dismiss the investigative referral if he or she is satisfied there are insufficient grounds for a finding of inappropriate practice: s 91. Alternatively, the Director may dismiss the referral by entering into an agreement with the individual under review that includes an acknowledgement by the individual of past inappropriate practice and specified action to be undertaken in relation to this: s 92.
12 The third stage of the process involves a decision by the Director to establish a Committee and the making of an adjudicative referral to that Committee under s 93. The three Committee members appointed by the Director consist of a Deputy Director and two practitioners of the same speciality or the area of practice as the practitioner being investigated. The Committee sits in private as provided for in s 98. Where a Committee is established, the Director must prepare a written report to the Committee in respect of services to which the referral relates. This report must outline the reasons why the Director considers that there is inappropriate conduct: s 93(6). The Committee must hold a hearing if, after considering the matters that are the subject of the adjudicative referral, it appears to the Committee that the person may have engaged in inappropriate practice in connection with rendering or initiating the referred services: s 101(2). The practitioner concerned must be given notice and particulars of the matter to which the hearing relates 14 days before the date of the proposed hearing: s 102. This notice must require the person under review to appear at the hearing and give evidence to the Committee: 104(1).
13 Section 103 spells out the rights of persons under review in relation to hearings before the Committee. An individual under review is entitled to attend the hearing, to be accompanied by a lawyer or another advisor, and to call witnesses to give evidence. The individual can also produce written statements as to her or her character, question individuals giving evidence at the hearing, and address the Committee on questions of law arising during the hearing. Finally, following the conclusion of the taking of evidence, the individual concerned has the right to make a final address to the Committee in relation to questions of law, the conduct of the hearing and the merits of the matter to which the hearing relates.
14 Section 105A empowers the Committee to require that the person under review or any other individual produce further relevant documents if the Committee believes such documents to be in possession of the person given notice. The procedure for conducting the hearing is within the discretion of the presiding Committee member: 106(1). Further, the Committee is not bound by the rules of evidence but may inform itself in any matter in any way it sees appropriate: s 106(2).
15 Section 106K concerns the Committee’s power to have regard to only a sample of services included in a particular class of referred services under an investigation. The section is in the following terms:
‘106K Committee may have regard to samples of services
(1) The Committee may, in respect of conduct in connection with rendering or initiating the services included in a particular class of the referred services, have regard only to a sample of the services included in the class.
(2) If the Committee finds that conduct in connection with rendering or initiating all, or a proportion, of the services included in the sample constituted engaging in inappropriate practice, then, the conduct of the person under review, in connection with rendering or initiating all, or that proportion, as the case may be, of the services included in the class from which the sample is chosen, is taken, for the purposes of this Part, to have constituted engaging in inappropriate practice.
(3) The Minister may make written determinations specifying the content and form of sampling methodologies that may be used by Committees for the purposes of subsection (1).
(4) The Committee may use a sampling methodology that is not specified in such a determination if, and only if, the Committee has been advised by a statistician accredited by the Statistical Society of Australia Inc that the sampling methodology is statistically valid.
(5) A determination by the Minister under subsection (3) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.’
16 In assessing Dr Phan’s case, the Committee acted on the basis of s 106K(4) and used a sampling methodology that was not specified in a Ministerial determination after seeking advice from Professor Nicholls, who is a duly accredited statistician for the purposes of this section.
17 The Committee is required to provide a draft report setting out its preliminary findings pursuant to s 106D. This draft report may, with the consent of the practitioner, include recommendations for the disqualification of the practitioner and the nature and duration of that disqualification.
18 A copy of the draft report must be given to the practitioner concerned accompanied by a notice inviting written submissions to the Committee within 21 days suggesting changes put forward by the practitioner. After taking into account any such submissions, the Committee must prepare a final report setting out its findings, including its recommendations. The copy of the final report must be given to the Director and the practitioner under review. The Committee must not give a copy of the final report to the Determining Authority until 28 days after the day on which a copy is given to the practitioner. This establishes a timeframe in which an application can be made by the practitioner for judicial review or relief: 106L.
19 The final step in the decision-making process relates to the determination of the Determining Authority. In the present case, the Court is not concerned with the decision made at that level. The decisions and conduct challenged relate only to the second and third steps as described above. However, it is important to note that ss 106T – 106U prescribes the nature of the contents of the draft and final determinations, and covers considerations such as the reimbursement of Medicare benefits. Section 106T makes provision for the draft determination to be sent the practitioner and allows the individual to make written submissions within 14 days suggesting any changes to the draft determination. Within one month from the end of the 14-day submission period, the Determining Authority must take into account the submissions and make a final determination in accordance with s 106U: s 106TA.
20 In Pradhan v Holmes, Finn J usefully encapsulates at [49]-[61] by reference to the above provisions the detailed staged process provided to afford procedural fairness under the statute at each of the four levels of consideration. It is against these comprehensive statutory provisions that the application and submissions as to procedural fairness in the present case ought to be considered.
FACTUAL BACKGROUND
21 Dr Phan was the subject of Investigative Referral No. 190 made by the Commission on 29 June 2000. The Investigative Referral related to all services rendered or initiated in the period 1 January 1999 to 31 December 1999 (the relevant referral period in this case). During this period, Dr Phan rendered a total of 18, 165 services, including 17, 970 level B surgery consultations.
22 Adjudicative Referral No. 190 was made by the Director to the Committee on 29 March 2001, and the hearing took place before the Committee on 16-17 May, 2-3 August and 4 October 2001.
23 On 4 March 2004, emails were sent by the Committee Secretary, Ms Vanessa Goodspeed, to Professor Nicholls, seeking guidance in relation to the sampling methodology adopted by the Committee. This advice was provided by Professor Nicholls on 5 March 2004.
24 On 26 June 2004, the Committee made its draft report, with Dr Phan furnishing submissions to the Committee in relation to that report on 20 July 2004. The Committee considered these and made its final report on 28 October 2004.
25 In its final report, the Committee found at [36] that Dr Phan had engaged in inappropriate practise in rendering 47 of the 80 services examined because he:
• failed to take an adequate history and/or perform an adequate examination of his patients;
• failed to implement proper management plans;
• prescribed drugs as an alternative to proper investigation of the patients’ symptoms; and
• prescribed drugs when they were not clinically indicated.
26 On 7 December 2004, Dr Phan filed an Application for review of the decisions and conduct of the Director and Committee in the Federal Court.
27 The Director’s decision and conduct in relation to Adjudicative Referral No. 190 is challenged on the basis that the Director failed to inform Dr Phan of the advice and evidence from Dr Davidson dated 4 July 2000 and Dr Dawson dated 12 October 2000. It is apparent that this material was pertinent to Dr Phan’s conduct and was unfavourable to him. In these circumstances, the Applicant submits that full disclosure should have been made in relation to these documents prior to the hearing at the time of their consideration by the Director. It is contended that the failure to do this resulted in an error of law by the Director which operated to invalidate the Adjudicative Referral.
28 The reports are not mentioned in the Adjudicative Referral as being material which was before the Director, although paragraph 5 in the Director’s Report sets out the material considered by the Director. This includes the Commission’s Investigative Referral No. 190 of 29 June 2000; a written submission of Dr Phan dated 12 July 2000; additional information provided by Dr Phan in response to a Section 89B Notice of 1 September 2000 and a selection of records of various patients to whom Dr Phan rendered a medical benefits service (‘MBS’) item 23 service during the referral period, together with calendar charts provided by the Commissioner in relation to these records.
29 The documents of Dr Davidson and Dr Dawson were prepared for the Director after the date of the Commission’s Investigative Referral on 29 June 2000. They constituted part of the material before the Director.
30 The memorandum by Dr Davidson prepared in July is a summary of the data set out in the Investigative Referral and highlights concerns in relation to the number of services rendered and pharmaceutical benefits prescriptions authorized by Dr Phan at his surgery. Dr Davidson sets out an examination of the records of Dr Phan and describes the nature and extent of his practice in considerable detail. The report is concluded with a recommendation that the referral be further investigated.
31 In addition to factual references, the report contains the following comments:
‘The pathology, diagnostic imaging and specialist referral flow on costs are extremely low indicating patients are seldom investigated or referred for specialist management...
The PBS information ... is indicative of a prescription style practice where patients are encouraged to seek a prescription for a variety of minor symptoms ... it is likely Dr Phan is seeing a patient base consisting almost entirely of poorly educated migrants with no access to other sources of health information. It is possible he also has a reputation as a doctor who will give a prescription and thus attract patients who prefer this form of management...
[T]he excessive prescribing of silver sulfadiazine and cream and several other items does not appear to have a logical explanation.’
32 The report of Dr Dawson dated 12 October 2000 provides a similar analysis and assessment of clinical records, and includes the following comments:
‘All the records were computer-generated...the record in general gave the impression of a minimalist consultation and examination. All these appropriate records if put to a committee might well be found to be inappropriate... Most of the records had repetitious entries unrelated to the presenting symptoms and it was difficult to determine how much of the record was factual and how much was computer generated. The impression engendered was one of a practitioner legally protecting himself... None of the records recorded a diagnosis...
The records gave the impression of a practitioner seeing a large number of patients, recording a minimal history and examination yet having a computer-generated set of words for medico-legal protection.’
33 Dr Dawson recommended a referral to a Committee as he suspected that deep questioning would reveal the inadequacies of the practice.
34 The Adjudicative Referral by Dr Holmes to the Committee sets out the background of the matter and refers to the material sent to the Committee with the report. I am informed by counsel for the Respondents - and this was not contradicted by the Applicant - that the reports of Dr Davidson and Dr Dawson did not go before the Committee. They are not referred to as material attached to the Director’s Report in the Adjudicative Referral.
35 In the present case, I am satisfied that the material from Dr Davidson and Dr Dawson contained some comments adverse to the interests of Dr Phan. I also note that he did not have these documents disclosed to him or any opportunity to contest them. However, for reasons given below, I do not consider that there was any consequential breach of procedural fairness when regard is had to the determination process as a whole and the specific statutory scheme established for providing an opportunity to the practitioner to make appropriate and relevant submissions.
APPLICATION OF PROCEDURAL FAIRNESS PRINCIPLES
36 It is common ground that failure to give procedural fairness can result in jurisdictional error in some cases. The Applicant refers to the principles set out in Kioa v West [1985] HCA 81; (1985) 159 CLR 550 at 584-5 where it is 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 critical question in most cases is not whether the principles of natural justice apply. It is: what does the duty to act fairly require in the circumstances of the particular case? ...
In this respect the expression "procedural fairness" more aptly conveys the notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case. The statutory power must be exercised fairly, i.e., in accordance with procedures that are fair to the individual considered in the light of the statutory requirements, the interests of the individual and the interests and purposes, whether public or private, which the statute seeks to advance or protect or permits to be taken into account as legitimate considerations.’
37 In written submissions, the Applicant refers to the following principles:
‘a. A person should have matters adverse to that person or that person’s application put to that person for comment or evidence before an adverse decision is made (Kioa v West) [1985] HCA 81; (1985) 159 CLR 550).
b. A decision-maker should not make a decision having had regard to undisclosed material being adverse information that was credible, relevant and significant to the decision to be made without first putting that material to the relevant person (Kioa, ibid, at 629.3 per Brennan J; Re Refugee Review Tribunal, Ex party Aala [2000] HCA 57; (2000) 204 CLR 82; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22; (2001) 206 CLR 57; and Muin v Refugee Review Tribunal [2002] HCA 30; (2002) 76 ALJR 966).
c. A decision-maker should bring to a person’s attention the critical issue or factor on which the decision is likely to turn so that the person may have an opportunity to deal with it (eg: Re Minister for Immigration and Multicultural Affairs; Ex parte Lam [2003] HCA 6; (2003) 214 CLR 1 at [81]).
d. A decision-maker should not mislead a party as to the importance of a factor to the decision-maker (either actively or impliedly) (Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22; (2001) 206 CLR 57; Muin v Refugee Review Tribunal [2002] HCA 30; (2002) 76 ALJR 966).’
38 The Director’s Report, a copy of which was given to the Applicant, sets out the factual background and records that the Commission was concerned about the very substantial number of rendered services and high level of PBS prescriptions issued by Dr Phan. The report records relevant percentile figures and makes certain observations as to the records and material provided. It concludes that this material raised the possibility that Dr Phan’s records were not accurate and also specifies anomalies in relation to rates of prescription. The report expresses concern that the Applicant may have failed to provide sufficient clinical input and doubts are also raised as to the appropriateness and sufficiency of clinical investigations giving rise to the prescriptions.
39 In examining a staged statutory procedure concerning the rights or interests of a practitioner, in addition to considering the availability of procedural fairness at each stage it is necessary to take into account the statutory scheme as a whole in so far as its establishes a framework directed to achieving procedural fairness.
40 The importance of looking at the decision-making process in its entirety was referred to in the decision of Cornall v A.B. [1995] 1 VR 372 which concerned the application of a scheme of review in relation to an alleged breach of professional standards by a solicitor. In that case, the statutory scheme provided for a staged process of investigation and referral before the making of a final determination. The Full Court of the Victorian Supreme Court observed, at 396, that it is not a requirement in every case that an investigative body must afford a person under investigation an opportunity to be heard before the body can recommend a further step which could result in a determination of a judicial or quasi-judicial nature. At 397, the Court noted that consideration of the relevant principle may properly begin with a statement of S.A. de Smith in his Judicial Review of Administrative Action (4th ed.) p. 199, which reads:
"Where an act or proposal is only the first step in a sequence of measures which may culminate in a decision detrimental to a person’s interests, the courts will generally decline to accede to that person’s submission that he is entitled to be heard in opposition to this final act, particularly if he is entitled to be heard at a later stage."
41 Their Honours decided that the common law principles of natural justice could be modified or displaced where a legislative intent could be discerned from a statutory scheme. In the case of Cornall, the requirements of natural justice were considered to have been satisfied by the statutory scheme leading to the ultimate determination, having regard to the entire process from the complaint to the final determination. The requirements of procedural fairness were therefore considered to have been exclusively prescribed by the detailed statutory scheme, and there was no room for the implication of procedural fairness in addition to those provided by the Legal Profession Practice Act 1958 (Vic). Their Honours also referred to the decision of Annetts v McCann [1990] HCA 57; (1990) 170 CLR 596, where Mason CJ, Deane and McHugh JJ said at 598:
"It can be taken as settled, that, when a statute confers power upon a public official to destroy, defeat or prejudice a person’s rights, interests or legitimate expectations, the rules of natural justice regulate the exercise of that power unless they are excluded by plain words of necessary intendment."
42 The question is whether the statutory provisions are effective to exclude any supplementary duty of fairness under the common law. In order to exclude the rules of natural justice, the legislative intent must be clearly evident and cannot be discerned from indirect references, uncertain inferences or equivocal considerations: Commissioner of Police v Tanos [1958] HCA 6; (1958) 98 CLR 383 at 396.
43 In assessing the procedural fairness requirements in the present case, a relevant consideration is whether the respective decisions of the Director and the Committee may be said to part of the one decision-making process. In the matter of Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564, the High Court considered whether the operation of the Criminal Justice Commission of QLD and Parliamentary Criminal Justice Committee could be said to be part of a unitary decision-making process. This, in their Honours’ view, was an essential requirement in excluding the duty. At 578, Mason CJ, Dawson and Toohey JJ noted:
‘It is not in doubt that, where a decision-making process involves different steps or stages before a final decision is made, the requirements of natural justice are satisfied if "the decision-making process, viewed in its entirety, entails procedural fairness" (South Australia v. O’Shea [1987] HCA 39; (1987) 163 CLR 378 at 389).’
44 Accordingly, it is permissible to have regard to the scheme as a whole. Looking at the process in the present case in its entirety, the contested decisions of the Director and Committee were clearly part of, and directed to, the ultimate determination by the Determining Authority. They may be characterised as part of a single, sequentially-stepped decision-making process leading to a final outcome. This consideration leads to the conclusion that the legislative scheme is sufficiently exhaustive to indicate a legislative intent to exclude the application of additional measures to achieve procedural fairness.
45 As counsel for the Respondents points out, and as appears from the material attached to the Adjudicative Referral, the reports prepared by Dr Davidson and Dr Dawson were not before the Committee, which proceeded to hear the matter on the material before it. Accordingly, it cannot be said that the Committee’s decision was "infected" or "poisoned" in any way by the two reports.
46 In this case, I am satisfied that the statutory scheme, considered as a whole, exclusively provided for procedural fairness principles to the extent that the legislature intended those principles to apply. I am satisfied that in its entirety, the process in fact afforded procedural fairness to the Applicant in respect of the Director’s decision. Accordingly, I do not consider that there is any substance in the procedural fairness argument based on the Director’s examination of the reports of Dr Davidson and Dr Dawson.
VALIDITY OF SAMPLING METHODOLOGY
47 The Applicant also challenges the decision of the Director on the basis that he sent the Committee copies of the 39 medical records together with his Director’s Report which stated that it was open to the Committee to make a finding of inappropriate practice in relation to Dr Phan. It is submitted that this sample of records was not "random" because it contained items that had been previously examined by the Director and found to be examples of inappropriate practice. Therefore, the Applicant contends, the samples were not in accordance with the statutory procedure and were biased or skewed in such a way that any decision in relation to them must be invalid.
48 It is common ground that the Commission drew a preliminary random sample and then asked Dr Phan to produce the patient records relating to the item 23 services in that sample. I accept the view of Professor Nicholls that from a statistical point of view, it is irrelevant that the Committee looked at the same random samples and services as the Director. It was the Committee, rather than the Director, which had the authority to decide whether the sample disclosed inappropriate practice.
49 To support his position, Dr Phan has referred to the decision of Edmonds J in Mathews v Health Insurance Commission (2006) 90 ALD 49. In that case, his Honour decided that the Committee had erred in its sampling by failing to examine samples randomly drawn from a preliminary random sample as required by Health Insurance (Professional Services Review - Sampling Methodology) Determination 2000 (No. 1) ("the Determination"). The breach considered by his Honour was clear. The case was decided on the basis that the Committee had examined the first 30 services on lists of the first 40 services taken from lists of random samples furnished by the Commission. They were not therefore ‘randomly drawn from the preliminary random sample’ as required by s 8(a) of the Determination.
50 In the present case, the Committee - as it was entitled to do under s 106K(4) - used a sampling methodology which was not the subject of a Ministerial determination under s 106K(3). Instead, it used the sampling methodology which had been advised to be statistically valid by Professor Nicholls pursuant to s 106K(4) of the Act. The case of Mathews is clearly distinguishable from the present case, both on its facts and having regard to the controlling principles.
51 It was submitted by the Applicant in Mathews that the Committee’s examination of 30 services in each MBS item of service under review from a list of 40 services provided to the Committee by the Director – which included services that had already been examined by the Director and found to be deficient and adverse to Dr Mathews – had the effect that the sample could no longer be considered to have been ‘randomly drawn from the preliminary random sample.’ His Honour did not find it necessary to determine this question and specifically left it open. However, he did indicate that there might be some suggestion that this allegation of error in the sampling process should be upheld.
52 It is important to note that, as discussed above, the Mathews case is distinguishable and that Edmonds J specifically refrained from deciding that particular question. The observation of his Honour is not binding on me. In my view, the sample used in the present case was in accordance with the requirements of the Act. The evidence is that the Commission drew a preliminary random sample and that the Director required the production of records which he examined. He concluded, for the reasons given by him in his Report, that it would be appropriate for him to refer the matter to a Committee. In examining the material and completing his Report, the Director did not decide that there was inappropriate conduct. That determination was left for the Committee to make following a hearing and having regard to the evidence adduced at that hearing. It is not correct to suggest that the Director had found that the samples had in fact given rise to inappropriate conduct. The fact that the Director examined and considered the records and forwarded them to the Committee does not affect their randomness when they were considered afresh by the Committee. The sample items retained their character as random samples and were not skewed or biased so that the Committee’s decision should be considered invalid.
53 The next ground of invalidity raised relates to Professor Nicholls’ memorandum addressed to Ms Goodspeed dated 5 March 2004. It is submitted that Professor Nicholls’ memo demonstrates that the decision of the Committee was based on errors of law.
54 On 4 March 2004, Ms Goodspeed, who had been given the task of preparing a draft report for the Committee, sent an email to Professor Nicholls. She sought his advice as to whether it was unsafe to proceed with the proposed sampling methodology. In his reply of 5 March 2004, Professor Nicholls responded:
‘Re: Request of 4 March 2004
From the information supplied I note:
• From the 17,970 item 23 services a random sample of 84 services have been examined (with 4 services being disregarded due to no records). The Committee found that of the remaining 80 services, 69 or 86% (rounded down) were considered inappropriate.
• Applying appropriate statistical techniques it can be shown that we can be 95% confident that the true percentage of inappropriate practice lies between 86% + 8%, that is the lower 95% confident limit is 78%. This value (78%) is to be chosen as the level of inappropriate practice (rather than 86%).
In conclusion, it is statistically valid to accept the conclusion based on the sample of 80 item 23 services that the level of inappropriate practice will be determined as 78%.
I confirm that I am a statistician accredited by the Statistical Society of Australia Inc. as required under subsection 106K(4) of the Act.’
55 I accept the explanation in relation to the sampling methodology as outlined by Professor Nicholls in his report dated 28 November 2005:
‘3. The methodology on which the Determination is based is designed so the sampling procedure will result in the size of samples being determined so that if a particular sample is drawn then one can be 95% confident that the estimate of the percentage of inappropriate practice determined from the sample will be within +10% of the actual or true percentage of inappropriate practice. Once the estimated percentage of inappropriate practice has been determined by the Committee, this percentage is then reduced by 10% (the half width of the 95% confidence interval) to give the final percentage on which sanctions are to be based. This is to the benefit of the doctor.
4. An alternative approach, for a fixed sample size of 30 or more services, is to determine an estimate of the percentage of inappropriate practice. For this estimate, and the associated fixed sample size, it is then possible to determine the 95% confidence interval associated with the estimated level of inappropriate practice for the fixed sample size, and choose the lower bound of this confidence interval as the basis for which sanctions are to be based.
5. In the first approach the half width of the 95% confidence interval is fixed at 10%, and the size of the sample selected to guarantee that the difference between the estimated and true percentage of inappropriate practice is within this value, ie + 10%. The estimated percentage of inappropriate practice is then reduced by 10% for the imposition of sanctions.
6. In the second approach the sample size is fixed and the percentage of inappropriate practice determined from this sample. Based on the estimated percentage of inappropriate practice, a 95% confidence interval is then determined for this fixed sample. The lower limit of this confidence interval will then be taken as the basis of sanctions to be imposed.’
In his discussion of the present case, Professor Nicholls stated:
‘24. [W]hat the Committee has done, in paragraph 30 of their final report, is to make their findings on a ‘reduced final random sample of size 80 MBS item 23 services.’ The Committee then pointed out that the half width of the confidence interval increased from 10% to 12%. That is, rather than calculate a final random sample as defined by the Determination and which will give a half width confidence interval of 10%, the Committee fixed the random sample at 80 and calculated the half width of the confidence interval (as 12%). As discussed above, provided the reduced sample is 30 or more, this is a statistically valid approach and leads to a statistically acceptable estimate of 46% to be used for the imposition of sanctions...
50. The Committee examined a random sample of size 80, and in its final deliberations, as reported in its final report, found 58% of these services to be inappropriate. This figure was then reduced by 12% , the lower limit of the 95% confidence interval, to give a figure of 46% which is to be used for the imposition of sanctions. The approach adopted by the Committee is statistically valid in accordance with subsection 106K(4) of the Health Insurance Act 1973. In accordance with this subsection, the Committee adopted an approach approved by an accredited statistician as required by subsection 106K(4) of the Act.’
56 Dr Maxwell Stevenson, a statistician whose evidence was adduced by the Applicant, agreed that the alternative sampling plan supplied to the Committee by Professor Nicholls was a ‘substantially valid’ plan. However, he says that he did not thereby mean to indicate that he considered that the outcome was statistically valid. In his affidavit dated 6 March 2006, Dr Stevenson says that he checked the calculations and agreed that the conclusions presented in the final report of the Committee were statistically valid. However, he did not agree with the statement in the final report that the conclusions were arrived at by the sampling plan and as detailed in the Determination. He refers to the fact that one course of sampling action had been taken and a second course was then adopted in the analysis of the results in order to salvage the incorrect implementation of the first.
57 The principal difficulty with this challenge to the sampling process is that s 106K(4) of the Act specifically contemplates that the Committee can make use of an alternative sampling methodology to that prescribed in s 106K(3) if it has been advised by a statistician accredited by the Statistical Society of Australia Inc that the alternative sampling method is statically valid. Professor Nicholls’ response to Ms Goodspeed’s email dated 5 March 2004 clearly certifies that it was statistically valid for the Committee to accept the conclusion, based on a sample using 80 item 23 services, that the level of inappropriate practice would be determined at 78%.
58 The decision of the Committee was further contested by the Applicant on the basis that Dr Phan was unable to make any submission regarding the advice given by Professor Nicholls as Dr Phan was not notified that any such advice had been given. In my opinion, the Committee was not required by s 106K(4) to disclose the advice from Professor Nicholls. Under s 106K(4), it is open to the Committee to use any particular sampling methodology provided that the sampling methodology is the subject of the requisite advice prepared by a statistician qualified according to the section. The Committee is entitled to obtain the required advice at any stage of the decision-making process up to the time of the decision. There is no restraint on the changing of method, provided that the Committee makes use of a methodology that satisfies the requirements of s 106K(4).
59 In the present case, Professor Nicholls’ advice constituted a condition precedent to the Committee’s usage of a statistical tool or method of sampling. Once such an advice was obtained, the Committee was entitled to proceed on the basis of that certified or advised methodology. This is not a provision in respect of which there existed a duty to alert Dr Phan. The only issue which arises is whether, as a matter of fact, advice which complied with s 106K(4) was obtained by the Committee.
60 Furthermore, for reasons given above, the statutory hearing framework provides adequate opportunity for the practitioner to meet the substantive case brought against him. In this case, it is common ground that the conclusions in the final report of the Committee are statistically valid. In relation to the Committee’s choice of methodology, it is important to note that like Professor Nicholls, Dr Stevenson is also a member of the Statistical Society of Australia and his confirmation on this point can be accepted. I am not persuaded that there is any constraint on the Committee proceeding on the basis of a sampling procedure which has been changed, provided that it uses a properly advised procedure and that the conditions of s 106K(4) are met. In particular, I do not accept the submission that if a previous method is considered inappropriate or invalid, it is impossible for an alternative method to be used by the Committee.
APPLICATION OF ‘JUDICIAL IMMUNITY’
61 In the course of the hearing and the reading of evidence, there were objections to certain material prepared by Professor Nicholls concerning material said to have been before the Committee. The principal objection taken by the Applicant was that to allow such evidence would be contrary to the principle of ‘judicial immunity,’ as discussed in the judgments of Gaudron J in Herijanto v Refugee Review Tribunal [2000] HCA 49; (2000) 170 ALR 379 and Herijanto v Refugee Review Tribunal (No 2)(2000)170 ALR 575. Those decisions were concerned with the operation of s 435(1) of the Migration Act 1958 (Cth), which confers on members of the Refugee Review Tribunal ("RRT") the same protection and immunity as a member of the Administrative Appeals Tribunal. In the present case, s 106F(1) of the Act gives to Committee members in the performance of their duties the same protection and immunity as that given to a Justice of the High Court.
62 The case of Herijanto concerned a plaintiff who had administered interrogatories to an individual member of the RRT in relation to the conduct and role of that member in the processing of the plaintiff’s application. By way of illustration of the nature of several of the interrogatories, the member was asked to give details as to the time and date when a specific view was reached and over what period of time the plaintiff’s application was considered before the member came to a conclusion. One question concerned the physical location of the member during the consideration of the plaintiff’s application.
63 Her Honour held that the entire general protection and immunity of a Justice of the High Court is conferred on a member of the RRT by s 435(1), and that this immunity extends to the disclosure of any aspect of the decision-making process. In her Honour’s view, the purpose of such a provision was to provide freedom of thought and independence of judgment. Her Honour found no difficulty with the proposition that, in appropriate cases, a judge may be required to disclose ‘the record’ on which the judge has acted. However, in her Honour’s view, the production of additional material beyond the record could breach immunity: Herijanto v Refugee Review Tribunal [2000] HCA 49; (2000) 170 ALR 379 at 383.
64 In respect of several of the interrogatories at issue in Herijanto, her Honour found that answers would not disclose the decision-making process and therefore these were permitted. However, where Gaudron J considered that the nature of the interrogatories sought compulsory disclosure of aspects of the decision-making process, her Honour held that they constituted a contravention of s 435(1). The offending interrogatories were consequently set aside by her Honour.
65 In the later Herijanto decision, her Honour held that the protection conferred by s 435(1) extended not merely to disclosure by the individual member concerned, but the revelation, by whatever means, of any aspect of their decision-making process. It was also noted by her Honour that whether or not the privilege extended to the revelation, by whatever means, of the decision-making processes of individual members, it would not be right to order discovery to enable the plaintiffs to do indirectly what they could not do directly. Accordingly, her Honour refused the discovery application: Herijanto v Refugee Review Tribunal (No 2)(2000)170 ALR 575.
66 In Mathews v Health Insurance Commission (No. 1) [2005] FCA 1061, Edmonds J refused an application for discovery of the file of the Committee. In that case, the Applicant submitted that the file should be disclosed on the basis that an affidavit of the Manager of the Committee Unit indicated that the Manager had reviewed the Committee file and certain statements in the affidavit were made in consequence of that review. Referring to the principles articulated by Gaudron J in the Herijanto cases, his Honour rejected the application for discovery of the Committee file.
67 In the present case, the Committee has not opposed the disclosure of the material provided in Professor Nicholl’s report in respect of which the Applicant makes the objection based on judicial immunity. In my view, there are two considerations which lead me to reject the submissions of the Applicant as to the application of judicial immunity in this case.
68 The first is that the advice of Professor Nicholls and the circumstances surrounding the provision of his report have not been shown to be a part of or an aspect of the decision-making process of the Committee or any individual member. The certification by Professor Nicholls and matters relating to it were directed to the provision of advice as to whether a statistical method was valid and could be used by the Committee. In other words, the advice of Professor Nicholls provided a basis, factum or tool of analysis in respect of which the Committee was free to act if it so chose. The Committee was able to accept a methodology approved by him as being in accordance with the required procedures, but his certification of the relevant methodology could not be said to be part of the Committee’s ‘decision-making process’ in the sense articulated by Gaudron J in the Herijanto decisions.
69 The second consideration is that Professor Nicholls cannot be considered to be a member or agent of the Committee. I do not agree with Applicant’s contention that the principle of judicial immunity operates to prevent Professor Nicholls from providing copies of his report to the Court because he is effectively the Committee’s agent. Professor Nicholls is an independent expert consultant of the Committee, and accordingly the evidence which is objected to is not within the immunity conferred by s 106F.
70 In addition, I do not consider that s 129 of the Evidence Act 1995 (Cth) takes the matter further or is of any assistance to the Applicant. I do not need to decide whether the immunity can be waived in a manner similar to the way in which, for example, legal professional privilege can be waived, having regard to the public interest element that is concerned with the grant of judicial immunity. I note that Division 3 of Part 3.10 of the Evidence Act in which s 129 appears is entitled "Evidence Excluded in the Public Interest." Clearly, the evidence given by Professor Nicholls in this case is an expression of his own independent advice.
71 As a consequence of my ruling in the course of the hearing on the judicial immunity objection, counsel for the Applicant indicated that he might seek discovery of other documents in the Committee file on the basis that there had been a "waiver" of the privilege by the Commission, and that the Applicant was therefore entitled to see the whole of the file and not just simply the letter of advice from Professor Nicholls. However, this course was not pressed by the Applicant.
72 For these reasons, I am of the opinion that the challenges made to the decisions of the Director and the Professional Services Review Committee must fail.
73 Accordingly, the application is dismissed with costs.
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I certify that the preceding seventy-three (73) numbered paragraphs are a
true copy of the Reasons for Judgment herein of the Honourable
Justice
Tamberlin.
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Solicitor for the Applicant:
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/269.html