JUDGMENT NO. a8.) 24 oncesseetose: CATCHWORDS ADMINISTRATIVE LAW - judicial review - appeal from a decision of the Administrative Appeals Tribunal atfirming a determination of the Medicare Participation Review Committee - whether the Tribunal erred 1n law. MEDICINE - discipline of medical practitioners - whether a practitioner asked for a benefit from a service provider providing diagnostic imaging services - whether the request was made seriously or as a joke - what speciticity is required in the identification of the service provider or providers to whom the request 1s made. Health Insurance Act 1973 (Cth), s.23DZG MICHAEL REDDY v. MEDICARE PARTICIPATION AND REVIEW COMMITTEE and THE MINISTER FOR HEALTH Davies J. 30 September 1994 Sydney 30 SEP 1994 AUSTRALIA PRINCIPAL REGIGTAY EF. URT OF AUST. 1A W SO W, S DISTRICT REGISTRY ) No NG 81 of 1994 ) ) GENERAL DIVISION On appeal] from the General Administrative Division of the Administrative Appeals Tribunal} BETWEEN: MICHAEL REDDY Applicant AND- MEDICARE _ PARTICIPATION AND REVIEW COMMITTEE First Respondent THE MINISTER FOR H TH Second Respondent Davies J. 30 September 1994 Sydney MINUTES OF ORDER THE COURT ORDERS THAT: NOTE. The decision of the Administrative Appeals Tribunal be varied so that the balance of Dr Reddy's disqualification shall be served during the period commencing on 28 October 1994 The application be otherwise dismissed. The applicant pay the respondents' costs of the proceeding. Settlement and entry of orders ts dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No NG 81 of 1994 ) GENERAL DIVISION ) On appeal from the General Administrative Division of the Administrative Appeals Tribunal BETWEEN: MIC REDDY Applicant AND: MEDICARE _PARTICIPATION AND REVIEW COMMITTEE First Respondent THE MINISTER FOR HEALTH Second Respondent Coram: Davies J. Date: 30 September 1994 Place: Sydney REASONS FOR JUDGMENT This 1s an appeal from a decision of the Administrative Appeals Tribunal ("the Tribunal"), constituted by Deputy President B J McMahon, Dr M E C Thorpe, member, and Mr I Way, member, which affirmed a determination of the Medicare Participation Review Committee ("the Committee") that the apphcant, Dr Michael Reddy, be disqualified from medical practice tor a period of 26 weeks under s.124FF(2) of the Health Insurance Act 1973 (Cth), ("the Act"). -2- Dr Reddy was a general medical practitioner who carned on practice on his own account at Mowbray, Tasmama. Dr Reddy rendered general professional services and initiated requests tor the provision of specialist services such as pathology and diagnostic imaging. The Tribunal aftirmed the Commuttee's finding that Dr Reddy had engaged in a "prohibited diagnostic imaging practice" as defined by s.23DZG(c) of the Act. Section 23DZG(c) provides, inter alia:- "For the purposes of this Act, 4 person is taken to be engaged in a prohibited diagnostic imaging practice if (c) the person 18 a practitioner, or the employer of a practiuoner, who, without reasonable excuse, asks, feceives or Obtains, or agrees to receive or obtain, any property, benefit or advantage of any kind for himself of herself, or any other person, from a service provider or a person acting on behalf of the service provider, * Dr Reddy was a relevant "practitioner" for the purposes of the section: s.3 and s.23DZF ot the Act. A "service provider" ts defined by s.23DZF: "service provider' means a person who (a) renders diagnostic imaging services, OF (b) carries on the business of rendering diagnostic imaging services, or (c) 1S a proprietor of premises at which diagnostic imaging services are rendered, or (d) employs a person who qa) tenders diagnostic imaging Services, of (1) carries on the business of rendering diagnostic imaging services " -3- "Diagnostic imaging services" are defined by reference to a table set out in the regulations to the Act (s.4AA) and include "any necessary interpretation, analysis or reporting" of such services: s.3(5B). In the course of his practice, Dr Reddy referred many of his patients for diagnostic imaging services to a practice conducted by Drs P W Burden and Dr J Kay or, in the latter period, by their company, P W Burden Pty Ltd ("Burden"). P W Burden Pty Ltd was a trustee tor trusts in which Dr Burden, Dr Kay and members of their tamilies were beneficiaries. Another company in which Dr Burden and Dr Kay had an interest, Launceston Radiodiagnostic Pty Limited ("Launceston"), which was also a trust company, owned diagnostic equipment and provided the equipment and staff at a tee to the radiological practice. The proprietor ot the radiological practice, Burden, and also Drs Burden and Kay, were each a "service provider" as defined by 5.23DZF. The matter arose trom a complaint made to the Health Insurance Commission by Mr Steven Krett. Mr Kreft was a director of Launceston but he received his remuneration trom Burden and was employed in managing the practice as a whole, in supervising the radiographers, in maintaining contact with medical practitioners and generally in administering the affairs of both Launceston and Burden. In a statement given to the Health Insurance Commission on 15 August 1991, Mr Krett said, inter alia:- -4- "During the last 12 months there have been at least two occasions of contact with Doctor Reddy during which, Doctor Reddy had made either of the following remarks He said He said 'I give you a lot of work Where's my share?' And another occasion, 'You guys must be making a lot of money Where's my ten per cent?" On these occasions, | took his remarks as being made tn jest About 700 pm, Sunday, 26 May 1991 after closing our premises at 270 Invermay Road, Mowbray, I attended at the surgery of Doctor Reddy at 282 Invermay Road, Mowbray. On arrival there I noticed that Doctor Reddy's son was seated at the recepuon desk Dr Reddy was standing at the reception desk 1 presented Doctor Reddy with an imaging guidelines booklet for the requesting of imaging services and then the following conversation took place [Reddy] "This is to get more business for you guys (Kreft] No It's so the guidelines are clear for requesting radiology [Reddy| Yeah Yeah Remember this thing I've mentioned a couple of tames about my ten per cent? I'm quite serious about that. [Kreft] Oh come on Michael We won't get involved in anything like that. [Reddy] We'll just sent 11 across the road to the opposition [Kreft} Are they paying [Reddy] Yes [Kreft} I find that hard to believe How are they paying? [Reddy] In cash Dr Reddy then appeared to me to be uncomfortable and did not discuss this issue further. I distinctly felt that Dr Reddy was asking me to pay him money to ensure that my organisation continued to get requests for diagnostic imaging from him" Subsequently, Dr Reddy responded to this complaint by a letter which stated, inter alia:- (a) (b) On the evening of May 26th, 1991, MR STEVEN KREFT (Radiographer and part owner) of the Radiology service mentioned, turned up at my practice, while I was waiting for my last patient to come He demanded to know why | was not making use of their Ultrasound scanner and the Mammography equipment which they had recently installed! -5- He further mentioned that they kept a profile on various doctors' Radiology request pattern and my profile I believe showed quite low in number of requests as compared to others (c) He further mentioned that his Practice had given me x-ray viewing boxes and he expected services in return! (d) He further mentioned that he believed I was receiving commission from his opposition Practice and that was why I was using their services more often The above remarks of MR KREFT made me quite furious as [ do not do such things and I believe that no Radiographer or Radiologist have any right to come and demand thal | request services to keep them in business * In the hearing before the Committee, Dr Reddy tendered a further statement which read, inter alia:- "There are other occasions however when | met with Mr Kreft In the course of my work days I would come ito contact with him occasionally at the reception area of my surgery where he would be dropping off or collecting x-rays Esther Kreft or Edwards or their receptionist would call at my premises to drop off or collect x-rays [I recall over the years preceding the discussion with Mr Kreft on 26 May 1991 that there were possibly 2 or 3 occasions when I said to him in front of my patents and in front of the recepuionists who worked at my office, words to the following effect on occasions when Kreft had called erther to drop off a huge load of x-rays or to collect them MR "Hey Steve, that's a lot of x-rays you have there Where's my commission?' ] never said 'where's my 10%?' I never said these words with the intention of obtaining a commission in respect of the work that I had referred On the 2 or possibly 3 occasions that I said these words or words to this effect to Mr Kreft over a period of some years | said it jokingly and it was my belief that Mr Kreft took my word to be a joke Mr Kreft always laughed and went on his way On the evening of 26 May 1991 | was at my surgery when at about 630 pm Mr Kreft came into the reception area | was at the reception desk dictating I was alone on that occasion I was dictating notes and Jetters for my receptionist to type on Monday morning on my handheld voice activated dictaphone I was waiting for a patient to arrive The patient had telephoned me earlier to inquire as to whether I would stll see him if he arrived after 700 pm and I indicated that I would be at my office for a short time after 700 pm if he wished to call The conversation occurred in words to the following effect Kreft MR Kreft Kreft Kreft MR Kreft MR Both Dr Reddy and Mr Kreft were cross-examined before the Committee and also before the Tribunal. complaint was made by Mr Kreft to the Health Insurance Commussion until late July 1991, approximately 2 months atter the events ot 26 May 1991. months period there had been a substantial drop in the number of patients whom Dr -6- 'Hey what's happening with your requests? You are not utilizing our ultrasound and mammogram machines these days We are not getting enough requests from you * Kreft's voice and manner appeared to me as anxtous "You are getting enough mate | cannot cook up requests if they are not required' 'But you're sending patients to the opposition for the same tests, | know I am sure you are getting commission from them' 'But you are getting Commission aren't you?' I was quite angry now I said "Yes, [am so what Is that what you want to hear?' 'How much are you getting' 'Are you going to match 1" My anger was increasing at (his stage 'But how much?" I said angrily 'Steve, enough of your nonsense You had better quit now I am not here to hsten to your garbage * Reddy referred to the Burden practice. The Tribunal preterred the version of events put torward by Mr Kreft. In assessing their credibility, a relevant fact was that no During this two -7- A factor which influenced the Tribunal was that the figures relating to referrals from Dr Reddy to the Burden practice did not disclose a falling off in the number of referrals until after 26 May, when the number of referrals fell significantly. The Tribunal also considered there to be a difference between the statement which Dr Reddy had put to the Health Insurance Commission and the statement which he presented to the Committee. The Tnbunal rejected Dr Reddy's explanation that the decline in referrals resulted from a decline in the quality of the service provided by the Burden practice. Certain examples were given to the Tribunal. The Tribunal thought that this evidence was obscure and unconvincing. The Tribunal stated that it was not prepared to accept that there had been any decline in the quality of the service provided by the Burden practice. The Tnbunal further took account of the tact that, by May 1991, Dr Reddy's financial position was deteriorating and indeed had become precarious. His estate was subsequently sequestrated in bankruptcy. The Tribunal gave no weight to the conversations insofar as they related to other radiological practices. Two radiologists in two competing practices gave evidence that they had not given Dr Reddy any monetary benefit related to his referrals. This evidence was not challenged. Although it was common ground 1n both versions of the conversation that Dr Reddy said that he received money from the other practices, it was not alleged that this was in fact true. -8- The Tribunal considered, however, that it went against Dr Reddy's case that he had made such a statement. The Tribunal said:- "It is difficult to imagine a mature and financially experienced medical practitioner tellmg a radiographer that he received commissions from the opposition in cash because he thought that that was what the radiographer wanted to hear". The Tribunal thought that the version of events given by Mr Kreft had been consistent from the beginning and that it was consistent with Mr Kreft's complaint that he did not know how to take the extraordinary statements made by Dr Reddy on that night until referrals began to fall significantly in the subsequent months. The Tribunal compared the demeanour of the two witnesses and thought that Mr Kreft appeared to give frank answers to questions asked of him but that, while Dr Reddy was articulate and careful, he appeared to lack candour and frankness. The Tribunal said:- "He responded carefully to questions, some of which had to be repeated a number of tumes, before he was satisfied with the text of his answer His concern can be understood, having regard to the consequences of the complaint Nevertheless we have the same feeling that was expressed by the Committee that the applicant was not totally forthcoming in his recollections " The Tribunal was satisfied with Mr Kreft's version of events and was satisfied that, on this version, Dr Reddy had attempted to suborn a service provider and thereby to subvert the purposes of the Act. Such a decision 1s primarily a decision of fact. An appeal under s.44 of the Administrative Appeals Tribunal Act 1975 (Cth) is hmited to questions of law. A -9- question of law arises in relation to such a decision of fact if there was no evidence or other material to justify the making of the decision, which is not alleged, or if the decision was so unreasonable that no reasonable decision-maker could have made tt, or, as the same point is sometimes put, that the decision was perverse, arbitrary or capricious: Australian Broadcasting Tribunal v. Bond (1990) 170 CLR 321 at 355-60; Australian Scale Co Ltd v. Commissioner of Taxes (Qld) (1935) 53 CLR 534 at 555; Commussioner of Taxation v. McCabe (1990) 26 FCR 431 at 438-442. In my opinion, the decision of the Tribunal was open on the evidence before it. The points on which the Tribunal relied in preferrmg Mr Kreft's version of events over that put forward by Dr Reddy had merit. Mr P Taylor SC, with whom Mr M Murphy of counsel appeared for Dr Reddy, raised two particular points. He submitted that the evidence did not show that Dr Reddy's request for "ten per cent" was made to a "service provider". Mr Taylor submitted that Mr Kreft had attended the surgery to collect exposed x-ray film, that the entity responsible for the storage of the film was Launceston which was not a service provider and that Dr Reddy may theretore have spoken to Mr Kreft im his capacity as agent for that company. Mr Taylor submitted alternatively that the conversation did not make it clear whether Dr Reddy was making a request of the radiologists or of the persons who benefited from the practice, such as the persons interested in Launceston or the members of the families who might benefit through the trust over the radiological practice, or even of Mr Kreft himself. Mr Taylor submitted that a request will not infringe s.23DZG unless it indicates the service -10- provider or the person acting on behalf of the service provider to whom the request is made. The Tribunal rejected this challenge to the decision and, in my opinion, was correct in doing so. The request made by Dr Reddy was a request for "my 10 per cent". This would have been understood as a request for a percentage of the sums which the Burden practice charged or received for its diagnostic imaging services, the bulk of the fees being received directly or indirectly from the Commonwealth's Medicare Scheme. The request was theretore made to Mr Kreft in his capacity as manager of the Burden practice and would have been so understood. Section 23DZG(c) looks to the substance of the event and not to a technical form of words. The Tribunal's finding of fact that the request was made of Mr Kreft as "the agent at all relevant times of P W Burden Pty Ltd, a service provider" was open to it on the evidence. Mr Taylor relied upon the point that, in the course of its reasoning, the Tribunal referred to the businesses of Burden and of Launceston as a "practice as a whole ... an integrated undertaking." I do not conclude from this that the Tribunal erred in law. Probably, the Tmbunal had in mind the pomt that the definition of "service provider" could, in a particular case, encompass more than one person and that it would not, in the ordinary case, be essential of a s.23DZG(c) request that there be named specitically the person or persons to whom it was directed. Moreover, if the request was made of the agent of an organisation that was centred around and included a practice which rendered diagnostic imaging services, it -11- would not seem to matter that the asking was made of the organisation as a whole provided that it was, inter alia, directed to the person or persons who fell within the definition of "service provider" and provided it constituted a request made without reasonable excuse for a benefit or advantage from that person or those persons. As I read the reasons for decision, the Tribunal approached its task correctly and kept in mind the words used by s.23DZG(c). Mr Taylor submitted that the word "asks" in s.23DZG(c) imports a requirement that the words used convey positively a proscribed request. He submitted that what was said on the might ot 26 May, 1991 was said and understood as a joke. Mr Taylor relied upon the reference by the Tribunal to "a tentative joke" in the following passage:- "On balance, we are satisfied on the evidence that the applicant, without reasonable excuse, asked to receive a benefit for himself from a service provider, that the asking was serious ¢cven though disguised_as_a tentative joke, and that the intention behind the statements made by Dr Reddy in the Kreft version, which we prefer to his, was to suborn the service provider and to subvert the purposes of the Act" (emphasis added) Mr Taylor submitted that this passage constituted a positive finding by the Tribunal that Mr Reddy made his statement in a manner which indicated a joke. He supported this submission by reterence to the fact that 1t was not for a further two months that Mr Kreft reported the matter to the Health Insurance Commission. It seems to me, however, that the Tribunal's reference to "a tentative joke" did not precisely describe what the Tribunal had in mind. There was nothing in Mr Krett's description of the conversation of 26 May 1991 which could be regarded as a -12- joke. Nor was there in Dr Reddy's description of the events any suggestion of a joke or a laughing matter. Both witnesses described a serious conversation. Some confusion arose from the development in cross-examination of Mr Kreft's evidence that he considered it ridiculous that Dr Reddy should think that the Burden practice would pay him, in breach of s.23DZG(a) of the Act, a percentage of the diagnostic imaging fees or that the competing practices would do so, as Dr Reddy was suggesting. Because Mr Kreft considered both propositions preposterous, he was bemused by the conversation and kept an open mind on it until he saw that there had been a significant fall in reterrals to the Burden practice He was then satisfied that Dr Reddy had been entirely serious. In his cross-examination of Mr Kreft, the then counsel for Dr Reddy, Mr J B Simpkins, progressed this evidence towards the proposition that what Dr Reddy said on the night of 26 May 1991 was said as, and was understood to be, a joke. As, however, the words used by Dr Reddy were not expressed as a joke and, in hus evidence, he did not attempt to support the conversation as a joke, it was clearly open to the Tribunal to find, as it did, that Dr Reddy, without reasonable excuse, asked to receive a benefit for himself from the service provider and that the asking was serious. Mr Kreft conceded in cross-examination, which occurred on 9 December 1993, that he did not then recollect using the words "I am quite serious about this", as set out in his statement. However, the Tribunal had earlier reterred to the fact that Mr -13- Kreft's statement had been given at a time relatively soon after 26 May 1991, when recollection should have been fresh. The statement was part of the material before the Tribunal and the Tnbunal was entitled to take it into account. The appeal must therefore fail. An order was made on 8 March 1994 staying the disqualification from that date until the hearmng and determination of this appeal. Some period of the disqualification has already been served. It would be inappropriate for the balance to of the disqualification be served immediately. Time should be given so as to allow Dr Reddy to obtain a replacement physician to service his patients. An order should theretore be made that the decision of the Administrative Appeals Tribunal should be varied so that the balance of the disqualification is served during the period commencing 28 days from this date, that 1s to say commencing on and from 28 October 1994, The applicant, Dr Michael Reddy, should pay the respondents' costs of the proceeding. I certify that this and the 12 pregeding pages Associate: Date: 30 September 1994 -14- Counsel tor the applicant. Mr Peter Taylor SC with Mr Michael Murphy Solicitor for the applicant: Callachor & Gillroy Counsel for the 1st & 2nd respondents: Mr G.T. Johnson Solicitor for the 1st & 2nd respondents: Australian Government Solicitor Date of hearing: 22 July 1994 Date of judgment: 30 September 1994