FEDERAL COURT OF AUSTRALIA Crowley v Holmes [2002] FCA 1585 PAUL DAVID CROWLEY v ALAN JOHN HOLMES (in his capacity as the Director of Professional Services Review) and GEOFFREY HIRST and STEPHEN PHILLIPS and DAVID ROSENTHAL and HEALTH INSURANCE COMMISSION V 259 OF 2002 NORTH J 18 DECEMBER 2002 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 259 OF 2002 BETWEEN: PAUL DAVID CROWLEY APPLICANT AND: ALAN JOHN HOLMES (in his capacity as the Director of Professional Services Review) FIRST RESPONDENT GEOFFREY HIRST SECOND RESPONDENT STEPHEN PHILLIPS THIRD RESPONDENT DAVID ROSENTHAL FOURTH RESPONDENT HEALTH INSURANCE COMMISSION FIFTH RESPONDENT JUDGE: NORTH J DATE OF ORDER: 18 DECEMBER 2002 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The application is dismissed. 2. The applicant is to pay the respondents' costs of the application. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 259 OF 2002 BETWEEN: PAUL DAVID CROWLEY APPLICANT AND: ALAN JOHN HOLMES (in his capacity as the Director of Professional Services Review) FIRST RESPONDENT GEOFFREY HIRST SECOND RESPONDENT STEPHEN PHILLIPS THIRD RESPONDENT DAVID ROSENTHAL FOURTH RESPONDENT HEALTH INSURANCE COMMISSION FIFTH RESPONDENT JUDGE: NORTH J DATE: 18 DECEMBER 2002 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 Doctor Crowley, the applicant, is a general practitioner who conducts a practice in Lowood in Queensland. In this application to the Court he seeks to prevent a Professional Services Review Committee (the Committee) constituted under the Health Insurance Act 1973 (Cth) (the Act) from proceeding to consider whether he has engaged in inappropriate practice. The Committee was established by the Acting Director of Professional Services Review, acting on behalf of the first respondent (the Director), and was constituted by Doctors Hirst, Phillips and Rosenthal, the second, third and fourth respondents respectively. 2 It is first useful to explain the factual circumstances and the legislative setting of the proceeding. Whilst it will be necessary to refer to certain legislative provisions in detail, a convenient starting point is to sketch by way of broad overview the legislative scheme applicable so far as it is relevant to this proceeding. 3 Part VAA of the Act establishes a professional services review scheme whereby the conduct of doctors and other providers of like services can be examined to ascertain whether any inappropriate practices have been undertaken. The scheme provides for the Health Insurance Commission (the Commission), the fifth respondent, to refer matters to the Director of Professional Services Review (s 86). Such a referral is called an investigative referral. The Director must then conduct an investigation into the referred services (s 89). The Director may set up a Professional Services Review Committee (s 93) under Division 4 of the Act and make an adjudicative referral to the Committee. In such a case the Committee must consider whether the rendering of the referred services constituted engaging in inappropriate practice. The Committee must give a final report to, inter alia, the Determining Authority (s 106L(4)), which is established by s 106Q. If the Committee reports that there has been inappropriate practice, the Determining Authority must determine the consequences from a number of possible outcomes listed in s 106U, including, reprimand, counselling, repayment of Medicare benefits, or disqualification for up to three years. Inappropriate Practice 4 For the purpose of this proceeding the provision which defines the concept of inappropriate practice is s 106KA, which relevantly provides: "(1) Subject to subsections (2) and (2A), if, during a particular period (the relevant period), the circumstances in which some or all of the referred services were rendered or initiated constituted a prescribed pattern of services, the conduct of the person under review in connection with rendering or initiating services during that period in those circumstances is taken for the purposes of this Part, to have constituted engaging in inappropriate practice. (2) If the person under review satisfies the Committee that, on a particular day or particular days during the relevant period, exceptional circumstances existed that affected the rendering or initiating of services by the person, the person's conduct in connection with rendering or initiating services on that day or those days is not taken by subsection (1) to have constituted engaging in inappropriate practice. … (3) The regulations may prescribe, in relation to: (a) a particular profession; or (b) an identified group or groups of practitioners in a particular profession; circumstances in which services of a particular kind or description that are rendered or initiated constitute, or do not constitute, a prescribed pattern of services for the purposes of subsection (1). (4) The circumstances that may be prescribed under subsection (3) as circumstances in which services that are rendered or initiated constitute a prescribed pattern of services include, but are not limited to, the rendering or initiation of more than a specified number of services, or more than a specified number of services of a particular kind, on each of more than a specified number of days during a period of a specified duration. (5) The circumstances that constitute exceptional circumstances for the purposes of subsection (2) include, but are not limited to, circumstances that are declared by the regulations to be exceptional circumstances." 5 Part 3 of the Health Insurance (Professional Services Review) Regulations 1999 (Cth) (the Regulations) relevantly provides: "9 Practitioners affected by these Regulations For subsection 106KA(3) of the Act, the following groups of practitioners in the profession of medicine are groups to which these Regulations apply: (a) general practitioners; (b) other medical practitioners rendering professional attendances. 10 Circumstances constituting a prescribed pattern The circumstance in which services that are professional attendances constitute a prescribed pattern of services is that 80 or more such services are rendered on each of 20 or more days in a 12 month period. 11 Exceptional circumstances For subsection 106KA(5) of the Act, the following circumstances are declared as constituting exceptional circumstances: (a) an unusual occurrence causing an unusual level of need for professional attendances; (b) an absence of other medical services, for patients of the person under review during the relevant period, having regard to: (i) the location of the practice of the person under review; and (ii) characteristics of the patients of the person under review." the investigative referral 6 Section 86(1), (2), and (4) of the Act provide: "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; … (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. … (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." 7 The investigative referral in the present case was made on 13 December 2001. It is in the following terms: " Investigative Referral by the Health Insurance Commission Instrument of Investigative Referral Pursuant to subsection 86(1) of the Health Insurance Act 1973 ("the Act"), I, Janet Wendy Mould, General Manager, Professional Review Division, of the Health Insurance Commission (HIC), and a delegate of the HIC for the purposes of subsection 86(1) of the Act, hereby refer to the Director of Professional Services Review the conduct of Dr Paul David Crowley relating to · whether he has engaged in inappropriate practice in connection with the rendering of services constituting a prescribed pattern of services within the meaning of subsection 106KA(1) of the Act and Part 3 of the Health Insurance (Professional Services Review) Regulations 1999 (the Regulations). A. REFERRED SERVICES Pursuant to subsection 87(1) of the Act, this Investigative Referral relates to all services rendered by Dr Paul Daivd [sic] Crowley which were rendered: i. within a specific location or locations, namely: Shop 2 Walters Street LOWOOD QLD 4311; and ii. within a specified period, namely on and from 1 January 2000 to and including 31 October 2000 (the referral period). The referred services were all rendered within the two year period immediately preceding the date of this Investigative Referral in accordance with subsection 86(2) of the Act. Further, the referred services were all rendered on or after 1 January 2000, being the first date on which section 106KA of the Act and Part 3 of the Regulations were both in force. Pursuant to subsection 86(4) of the Act, Reports 3 and 7 of this Investigative Referral contain particulars of all services rendered or initiated during the referral period. B. REASONS FOR INVESTIGATIVE REFERRAL Part VAA of the Act provides a scheme (the Professional Services Review Scheme) under which a practitioner's conduct can be examined to ascertain whether they have engaged in inappropriate practice as defined in section 82 of the Act. Section 106KA of the Act (which section commenced on 1 August 1999) also provides that, if, during a particular period, the circumstances in which some or all of the referred services were rendered or initiated constituted a prescribed pattern of services, the conduct of the person under review in connection with rendering or initiating services during that period in those circumstances is taken to have constituted engaging in inappropriate practice. Dr Crowley is a general practitioner (as defined in the Act) and, for present purposes, Part 3 of the Regulations (which part commenced on 1 January 2000) applies. Part 3 provides that, in relation to general practitioners, the circumstances in which services that are professional attendances constitute a prescribed pattern of services is that 80 or more such services are rendered on each of 20 or more days in a 12 month period, where 'professional attendance' means a service of a kind mentioned in group A1, A2, A5, A6, A7, A13, A14 or A15 of Part 2 of the general medical services table (as defined in the Act). C. REFERRED CONDUCT AND PARTICULARS OF SERVICES In accordance with subsection 86(4)(b) of the Act, the HIC considers Dr Crowley may have engaged in inappropriate practice because there is evidence that some of Dr Crowley's professional attendances constitute a prescribed pattern of services as defined in section 106KA of the Act and Part 3 of the Regulations. Specifically, the HIC's records for professional attendances rendered by Dr Crowley during the referral period show that Dr Crowley: · rendered 80 or more professional attendances per day on 129 occasions on and from 1 January 2000 to and including 31 October 2000. Further material in relation to the referred conduct and particulars of services is attached as part of this Investigative Referral. Dated this Thirteenth day of December 2001. [signature] Dr J W Mould General Manager Professional Review Division Delegate of the HIC for the purposes of subsection 86(1) of the Health Insurance Act 1973" [emphasis in original] 8 Attached to the investigative referral were two further sections designated "D" and "E". Section D was as follows: "D. CHRONOLOGICAL RECORD OF THIS INVESTIGATIVE REFERRAL 5 January 1993 & Dr Crowley was counselled by a HIC Medical Adviser in relation to his volume of rendered services. 2 February 1995 17 December 1996 The HIC referred Dr Crowley's conduct to the Director of Professional Services Review. 3 November 1997 A Final Determination was made that Dr Crowley be counselled by the Director of Professional Services Review and be disqualified for a period of 6 months in relation to Group A1 of Part 2 from the General Medical Services Table from 5 December 1997 to 4 June 1998 inclusive. 28 July 2000 The HIC generated a report which identified that Dr Crowley may have engaged in inappropriate practice in connection with the rendering of services constituting a prescribed pattern of services within the meaning of subsection 106KA(1) of the Act and Part 3 of the Regulations. 20 December 2000 The HIC forwarded a letter to Dr Crowley outlining the HIC's concerns that the professional attendances rendered by him may constitute a prescribed pattern of services as defined in section 106KA of the Act and Part 3 of the Regulations. Dr Crowley was advised that he may be referred to the Director of Professional Services Review for consideration of whether he has engaged in inappropriate practice. 29 May 2001 The HIC referred the conduct of Dr Crowley to the Director of Professional Services Review. 7 December 2001 The Director of Professional Services Review decided to take no further action in respect of Investigative Referral No.249 due to its similar wording to the referral in Pradhan v Holmes & Ors. 12 December 2001 As the HIC's concern still remain the HIC decided to refer again the conduct of Dr Crowley. 12 December 2001 Correspondence from the HIC to Dr Crowley advising that the HIC has decided to refer again his conduct to the Director of Professional Services Review." [emphasis added] 9 Section E contains 278 pages. The index to section E reveals its contents as follows: "E Material in relation to particulars of services 5-283 1. Mode of payment. 2. Dr Crowley's rendered services. 3. Report 1: Number of verified professional attendances rendered by Dr Crowley and the Medicare benefits paid for each of the days referred. 4. Report 2: Number of professional attendances rendered by all practitioners rendering professional attendances in the same locality as Dr Crowley during the referral period. 5. Report 3: Item description of Medicare services rendered by Dr Crowley during the referral period. 6. Report 4: Number of services per day rendered by Dr Crowley during the referral period by calendar month. 7. Report 5: Distribution by age and sex of patients in Dr Crowley's practice during the referral period. 8. Report 6: Verified professional attendances rendered by Dr Crowley for each of the days referred. 9. Report 7: Particulars of all Medicare services initiated by Dr Crowley during the referral period." [emphasis in original] 10 Section E commences as follows: "E. MATERIAL IN RELATION TO PARTICULARS OF SERVICES The following tables and reports contain further information in relation to professional attendances and services rendered by Dr Crowley during the referral period." 11 Item numbered 2 in section E is in the following form: "2. Dr Crowley's Rendered Services The following table summarises Dr Crowley's practice statistics by quarters from 1 January 1997 to 31 March 2001. (**The total number of patients seen in one year is not equal to the sum of each quarter. This is because individual patients attendances will vary throughout the year). Table 2 PERIOD **TOTAL TOTAL SERVICES SRV/PAT BENEFIT BEN/PAT BEN/SRV PATIENTS Q1 1997 2,377 4,621 1.94 $103,955.20 $43.73 $22.50 Q2 1997 2,632 5,356 2.03 $117,440.45 $44.62 $21.93 Q3 1997 3,050 6,280 2.06 $138,413.80 $45.38 $22.04 Q4 1997 2,995 6,165 2.06 $130,372.05 $43.53 $21.15 TOTAL 1997 5,721 22,422 3.92 $490,181,50 $85.68 $21.86 Q1 1998 3,037 6,377 2.10 $123,519.15 $40.67 $19.37 Q2 1998 3,381 7,014 2.07 $137,287.25 $40.61 $19.57 Q3 1998 3,453 7,223 2.09 $158,577.60 $45.92 $21.95 Q4 1998 3,145 6,477 2.06 $145,646.60 $46.31 $22.49 TOTAL 1998 6,505 27,091 4.16 $565,030.60 $86.86 $20.86 Q1 1999 2,882 5,772 2.00 $132,142.95 $45.85 $22.89 Q2 1999 2,590 5,218 2.01 $121,306.10 $46.84 $23.25 Q3 1999 2,995 6,364 2.12 $144,262.85 $48.17 $22.67 Q4 1999 3,067 6,397 2.09 $146,509.85 $47.77 $22.90 TOTAL 1999 5,973 23,751 3.98 $544,221.75 $91.11 $22.91 Q1 2000 3,023 6,166 2.04 $141,968.25 $46.96 $23.02 Q2 2000 3,027 6,118 2.02 $141,269.25 $46.67 $23.09 Q3 2000 3,361 6,688 1.99 $156,318.90 $46.51 $23.37 Q4 2000 2,905 5,593 1.93 $132,126.10 $45.48 $23.62 TOTAL 2000 6,217 24,565 3.95 $571,682.50 $91.95 $23.27 Q1 2001 3,348 6,379 1.91 $153,592.75 $45.88 $24.08" 12 Following the making of an investigative referral, the Commission must send a copy to the person under review (s 88(1)). Section 88(2) and (3) then provide: "(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." Dr Crowley provided such a submission on 24 December 2001. 13 Section 89 obliges the Director, upon receiving an investigative referral, to conduct an investigation into the referred services. the adjudicative referral 14 Section 93(1) and (6) provide: "93 Decisions to set up Committees (1) The Director may, by writing, set up a Committee in accordance with Division 4, and make an adjudicative referral to the Committee, to consider whether conduct by the person under review in connection with rendering or initiating services specified in the adjudicative referral in accordance with subsection (7) constituted engaging in inappropriate practice. … (6) If the Director makes an adjudicative referral, the Director must: (a) prepare a written report to the Committee, in respect of the services to which the referral relates, giving the reasons why the Director thinks that conduct by the person under review in connection with rendering or initiating the services may have constituted engaging in inappropriate practice; and (b) attach the report to the adjudicative referral." 15 On 14 February 2002, the Committee was established by an instrument made under s 93(1) to "consider whether conduct by Dr Paul David Crowley of Shop 2, Walters Street, Lowood Qld 4311, the person under review in connection with rendering services specified in Adjudicative Referral No. 296, constituted engaging in inappropriate practice." 16 On the same date an adjudicative referral was made in the following terms: "ADJUDICATIVE REFERRAL No. 296 UNDER SECTION 93(1) CONCERNING Dr Paul David Crowley of Shop 2 Walters Street Lowood Qld 4311 BACKGROUND 1. On 13 December 2001, pursuant to subsection 86(1) of the Health Insurance Act 1973 ('the Act'), a delegate of the Health Insurance Commission ('the Commission') made Investigative Referral No.296 ('the investigative referral') the Director of Professional Services Review ('the Director'). 2. The investigative referral concerned the conduct of Dr Paul David Crowley ('Dr Crowley'), a general practitioner of the above address, relating to whether he had engaged in inappropriate practice in connection with the rendering of services constituting a prescribed pattern of services within the meaning of subsection 106KA(1) of the Act and Part 3 of the Health Insurance (Professional Services Review) Regulations 1999 ('the Regulations'). The investigative referral related to all services ('the referred services') rendered by Dr Crowley which were rendered: · within specified locations, namely: Shop 2 Walters Street Lowood Qld 4311 · within a specified period, namely on and from 1 January 2000 to and including 31 October 2000 ('the referral period'). 3. Pursuant to subsection 89(1), I conducted an investigation into the referred services. I did not dismiss the referral under section 91 of the Act as I was not satisfied that there were insufficient grounds on which a Committee established under section 93 of the Act could reasonably find that Dr Crowley had engaged in inappropriate practice in connection with rendering the referred services. 4. Pursuant to subsection 93(1) and in accordance with Division 4, on 14 February 2002 I set up a Committee ('PSRC No.296') to consider whether the conduct of Dr Crowley in connection with rendering the services specified in paragraph 5 below constituted engaging in inappropriate practice. ADJUDICATIVE REFERRAL 5. Pursuant to subsection 93(1), I hereby make this adjudicative referral to PSRC No.296 to consider whether the conduct of Dr Crowley in connection with rendering the following services ('the specified services') constituted engaging in inappropriate practice because the circumstances in which some or all of the specified services were rendered constituted a prescribed pattern of services as defined in section 106KA of the Act and Part 3 of the Regulations: · all professional attendances (as defined in Regulation 7) rendered by Dr Crowley within the referral period within specified locations, namely: Shop 2 Walters Street Lowood Qld 4311 6. The following material is attached, as part of this referral, for the information of PSRC No.296: Attachment A: My report pursuant to subsection 93(6); and Attachment B: Relevant extracts from Investigative Referral No.296" 17 Attached to the adjudicative referral were two attachments designated A and B. Attachment A was the report of the Director made pursuant to s 93(6). 18 The first four paragraphs of the report were as follows: "Background 1. Dr Paul David Crowley is a general practitioner who practised at Shop 2, Walters Street, Lowood Qld 4311 during the referral period. During the referral period Dr Crowley apparently rendered 80 or more professional attendances per day on 129 occasions. 2. Investigative Referral No.296 was made as the Commission was concerned Dr Crowley may have engaged in inappropriate practice because there was evidence that the circumstances in which some of Dr Crowley's professional attendances were rendered constituted a prescribed pattern of services as defined in section 106KA of the Act and Part 3 of the Regulations. 3. Given the nature of this referral, as a referral under section 106KA of the Act, the investigation was limited to consideration of material in the investigative referral and the submission from Dr Crowley (see paragraph 11 below). Material considered 4. The material on which the decision to refer this matter to a PSR Committee is based comprises: · The Health Insurance Commission's Investigative Referral No.296 dated 13 December 2001. · The results of the above-mentioned investigation. · The submission from Dr Crowley dated 24 December 2001." [footnotes omitted] 19 Paragraphs 5 and 6 of the report set out s 106KA of the Act and Part 3 of the Regulations respectively. Attachment A then continued as follows: "7. The specified services were all rendered within the two year period immediately preceding the date of the investigative referral, in accordance with subsection 86(2) of the Act. Further, the specified services were all rendered on or after 1 January 2000, being the first date on which section 106KA of the Act and Part 3 of the Regulations were both in force. 8. Regarding regulation 9(a), the investigative referral states at page 3 that Dr Crowley was a general practitioner at the time the referred services were rendered. 9. Regarding regulation 10, the material at pages 14-273 of the investigative referral indicates Dr Crowley rendered 80 or more professional attendances (principally Medicare Benefits Schedule item 23 services) a day on each of 129 occasions during the referral period. 10. On 17 December 2001 the Director wrote to Dr Crowley drawing his attention to subsection 88(3) of the Act which provides that, within 14 days from receipt of the referral, he may make written submissions to the Director as to reasons the Director should dismiss the referral without setting up a Committee. The Director also provided him with a copy of the Regulations. The Director did receive a submission from Dr Crowley dated 24 December 2001. 11. In this submission he said he worked in a rural community with rapid population growth due to its proximity to Ipswich and Brisbane. He saw patients from the surrounding areas as well as Lowood itself. There was a severe shortage of doctors in the area. His practice could accommodate four fulltime doctors; however he had had only intermittent assistance during the referral period. This included one doctor who worked only three days, one who worked only four hours a week, one who worked from the end of January to the end of April and then became ill and one who worked in September and October. More recently he had been able to get a husband wife team to work with him. Twenty five of the referred days were in the winter months when the practice was very busy. He said he normally worked 15 hours a day and 16.5 hours on the days he visited nursing homes. His practice was partially computerised and had been since October 1999. He used the RACGP records system. He noted the other doctors apparently working in the Lowood area and indicated that they comprised a doctor who was over 80 years old and worked very reduced hours and his own locums and assistants. I did not consider the evidence so strong that a committee would be bound to find that there were exceptional circumstances on each of the 129 days in question. Reasons for making adjudicative referral 12. Following the investigation and having considered the submission from Dr Crowley, I concluded that the circumstances in which Dr Crowley rendered some or all of the specified services during the referral period may have constituted a prescribed pattern of services, as defined in section 106KA of the Act and Part 3 of the Regulations because · The investigative referral presented credible evidence that Dr Crowley rendered 80 or more professional attendances per day on each 129 days during the referral period; and · Dr Crowley made a submission which did not persuade me that a committee could not conclude that Dr Crowley had engaged in inappropriate practice. 13. Accordingly, I decided to make an adjudicative referral to a Committee in accordance with section 93 for the Committee to consider whether the conduct of Dr Crowley in connection with rendering the specified services constituted engaging in inappropriate practice because the circumstances in which some or all of the specified services were rendered constituted a prescribed pattern of services as defined in section 106KA of the Act and Part 3 of the Regulations." 20 Attachment B to the adjudicative referral comprised extracts from the investigative referral. The extracts included sections A to D and also included parts 1 and 2 of section E, all of which have been extracted in pars 7 to 11 of these reasons. 21 On 21 February 2002, the Director sent letters to each of the members of the Committee advising them of their appointment. He enclosed a copy of the instrument establishing the Committee, and, importantly, continued: "The conduct to be reviewed relates to those services identified in the attached copy of the Adjudicative Referral No.296 and associated documentation, copies of which have also been forwarded to Dr Crowley today." The proposed hearing by the committee 22 On 25 March 2002, the Secretary of the Committee wrote to Dr Crowley (the hearing letter) as follows: "Dear Dr Crowley, Re: Proceedings of Professional Services Review Committee No.296 I wish to advise you that Professional Services Review Committee No.296 (the Committee) has considered the matter that is the subject of adjudicative referral no.296 dated 14 February 2002 from the Acting Director of Professional Services Review and must hold a hearing into this matter. Accordingly, I draw your attention to the following: Notice of Hearing I enclose a Notice of Hearing, pursuant to section 102 of the Health Insurance Act 1973 (the Act), containing the details of the hearing. In summary, the Notice of Hearingrequires you, pursuant to section 104(1) of the Act, to appear at the hearing on Friday 31 May 2002 and give evidence. If necessary, the hearing will be continued on a later date and you will be advised accordingly. Prescribed pattern of services It is the intention of the Committee to examine your conduct in connection with your rendering of services that may have constituted a prescribed pattern of services within the meaning of section 106KA of the Act and Part 3 of the Regulations (as explained in the adjudicative referral). In accordance with section 106KA of the Act, the Committee will hear and consider your evidence regarding the circumstances in which you rendered the referred services. Submission to the Director and other written material If, during the course of the Director's investigations, you made any submissions to the Director, which you would like to be passed on to the Committee, please provide written authorisation for this to be done. Other written material The Committee also invites you to provide, prior to the hearing, any further written material on any exceptional circumstances that you believe may be relevant to the matter before it. It would be appreciated if such material was provided to me at least 7 days before the hearing. This will allow the Committee members time to consider the material prior to the hearing. Outline of Hearing In order to assist you in preparing for the hearing, the Committee has asked that I give you the following outline of the way the hearing will be conducted: 1. The Chair, Dr Hirst, will introduce the Committee members and further explain the process. 2. Documents before the Committee will be tendered into evidence as exhibits. You have the right to tender any documents of your own and to examine any of the exhibits. 3. The Committee will hear and consider your evidence regarding the circumstances in which you rendered the specified services. Throughout the proceedings, you may ask questions or address the Committee on any relevant matter and if necessary, you can request a short adjournment at any stage during the hearing. Draft report Following the close of the hearing and in accordance with section 106KD of the Act, the Committee will forward to you a copy of the draft report together with a notice inviting you to make to the Committee, within 21 days after the day on which the copy of the draft report is given to you, written submissions addressing any matters contained in the draft report. Witnesses You may arrange for evidence (other than character evidence) to be given to the Committee by persons other than yourself. If you would like to do so, please advise me of the name of each witness and give me a short description of the nature of his or her proposed testimony no later than 7 days prior to the hearing in order that the Committee can take this into account when planning proceedings. I will then contact you to arrange a suitable time for your witness(es) to give evidence. Accompanying persons With regard to accompanying persons, section 103 of the Act states: (2) 'A lawyer accompanying the person under review is entitled, on behalf of the person under review, subject to any reasonable limitations or restrictions that the Committee may impose: (a) to give advice to the person under review; and (b) to address the committee on questions of law arising during the hearing; and (c) subject to subsection (4), after the conclusion of the taking of evidence, to make a final address to the Committee on questions of law, the conduct of the hearing and the merits of the matters to which the hearing relates. (3) The Committee may allow an adviser (other than a lawyer) of the person under review subject to any reasonable limitations or restrictions that the Committee may impose: (a) to give advice to the person under review: and (b) subject to subsection (4), after the conclusion of the taking of evidence, to make, on behalf of the person under review, a final address to the Committee on the merits of the matters to which the hearing relates. (4) If the person under review is accompanied both by a lawyer and by an adviser who is not a lawyer, a final address to the Committee may be made either by the lawyer or by the other adviser, but not by both of them. (5) Any fees or expenses in respect of the services of a lawyer or other adviser accompanying the person under review or in respect of witnessed [sic] called by that person are payable by that person.' I should also mention that the Committee will have its own legal adviser present at the hearing. Please advise me whether you will be accompanied at the hearing and, if so, by whom and in what capacity (legal, medical, other adviser or friend). Progress of proceedings In the event that sufficient progress is made on Friday 31 May 2002 to enable the matter to be finalised, the Chair asks that you turn your mind to any oral submissions you would wish to make or, if you would prefer, written submissions can be made after the close of the hearing. Should another sitting be required, the Chair will advise you of the details at the close of the proceedings on 31 May 2002. Further information Further information on the Professional Services Review process can be found on the following website address: www.psr.gov.au or alternatively, please contact me on: 02 6281 9145. Yours sincerely [signature] Lynne Benson Evans Secretary Professional Services Review Committee No. 296 Date: 25 MAR 2002 encl: Notice of Hearing pursuant to section 102 of the Act." [emphasis in original] 23 The notice of hearing enclosed with the letter was as follows: " Notice of Hearing Pursuant to Section 102 TO: Dr Paul Crowley Lowood Medical Centre Walters Street LOWOOD QLD 4311 In response to adjudicative referral no.296 made by the Acting Director of Professional Services Review on 14 February 2002 Professional Services Review Committee No. 296 (the Committee) must hold a hearing into the matter. Under section 102 of the Health Insurance Act 1973 (the Act), the Committee gives you notice of the hearing as follows: Hearing date: Friday 31 May 2002 and, if necessary, the hearing will be adjourned to a later date. Commencement time: 10am Venue: Administrative Appeals Tribunal Hearing Room 3, Level 4 Commonwealth Law Courts Cnr Tank St and North Quay BRISBANE QLD 4000 In accordance with section 104 of the Act you are required to: · appear at each day of the hearing; and · give evidence to the Committee as required. The particulars of the matter to which the hearing relates are: Whether your conduct, in connection with the rendering of services that were professional attendances during the period 1 January 2000 to, and including, 31 October 2000 on each of the days identified in Report 1 of Attachment B (copy attached) of the adjudicative referral, within the location Shop 2, Walters Street, Lowood, Qld, 4311 constituted engaging in inappropriate practice because the circumstances in which some or all of these services were rendered constituted a prescribed pattern of services. [signature] Dr Geoff Hirst Chair For and on behalf of Professional Services Review Committee No. 296 Date: 25 MAR 2002" [footnotes omitted] [emphasis in original] 24 There were two attachments to the notice of hearing. The first was an extract of ss 104 and 105 of the Act setting out the legal requirement to attend the hearing, and the consequences of failure to do so. The second attachment was referred to in the notice of hearing as attachment B to the investigative referral. In fact, it was part of attachment E to the investigative referral, namely Item 3 in that attachment, being: " REPORT 1 3. Number of verified professional attendances rendered by Dr Crowley and the Medicare benefits paid for each of the days referred." 25 There followed a table showing, for each of the 129 days between 4 January and 31 October 2000 on which there were services referred for the consideration of the Committee, the date of the service, the number of services rendered, and the Medicare benefits paid. On each of those days the number of services exceeded 80, and on some days the number of services were as high as 113. the current proceedings 26 On 6 May 2002, this proceeding was commenced, and on 22 May 2002, at the first directions hearing, the second, third and fourth respondents undertook not to proceed with the hearing until after judgment in this proceeding. 27 Although the applicant's written submissions developed a number of arguments, in the result, at the hearing of the application, the applicant pressed only three arguments. They were summarised in the written supplement to further submissions of applicant as follows: "3. The Applicant contends that – (a) the Investigative Referral is invalid because it failed to comply with Section 86(2) of the Act in that it does not relate only to services rendered during the referral period, (b) the Adjudicative Referral is invalid in that it fails to comply with Section 93 of the Act, in that, because of the presence of irrelevant and extremely prejudicial material, it does not refer a question to the Committee to consider the question in a fair and impartial manner on the basis of logically probative and relevant evidence, that being an implied requirement of Section 93, and (c) if the Adjudicative Referral, despite the Submissions, is valid, nonetheless the content of the referral is such as to create a reasonable apprehension of bias." 28 Each of these arguments will be dealt with, although it is convenient to deal with the argument referred to in (c) before the argument in (b). is the investigative referral invalid 29 Section 86(2) requires that an investigative referral "may only relate to services rendered during the two year period immediately proceeding the referral". Dr Bleechmore, who appeared with Mr Hayden as counsel for the applicant, contended that the investigative referral did not comply with this provision because it included Dr Crowley's practice statistics from 1 January 1997 to 31 March 2001, in item 2 section E which is set out in par 11 of these reasons (the practice statistics). Such inclusion rendered the investigative referral invalid. It follows that there was no legal basis for the investigation, the making of the adjudicative referral, or the establishment of the Committee. 30 This argument cannot be sustained in the light of the clear words of the investigative referral. Section A is headed "Referred Services". It states that the investigative referral relates to all services rendered by Dr Crowley "on and from 1 January 2000 to and including 31 October 2000 (the referral period)". It then states that the particulars of the services are contained in reports 3 and 7 of the investigative referral. Report 3 is described as "item description of Medicare services rendered by Dr Crowley during the referral period", and report 7 is described as "particulars of all Medicare services initiated by Dr Crowley during the referral period". Then, in section C, which is headed "Referred Conduct and Particulars of Services" the investigative referral states that the Commission considers Dr Crowley may have engaged in inappropriate practice because the Commission records show that he: "rendered 80 or more professional attendances per day on 129 occasions on and from 1 January 2000 to and including 31 October 2000." [emphasis in original] 31 Whilst the practice statistics in section E encompass the period from 1 January 1997 to 30 March 2001, there is no doubt that the conduct which has been referred by the instrument is the conduct which occurred from 1 January 2000 to 31 October 2000. 32 Consequently, this argument is not made out. did the adjudicative referral create A reasonable apprehension of bias 33 Counsel for the applicant submitted that the Committee was bound to observe the requirements of natural justice. It was consequently required to act fairly. Each of the members of the Committee received a copy of the adjudicative referral. Attached to it was a copy of the investigative referral. The investigative referral, in section D, set out in par 8 of these reasons, contained material that Dr Crowley was counselled by the Commission in 1993 and 1995, that his conduct was referred to the Director in 1996 and that a determination was made in 1997 that he be counselled by the Director and disqualified for six months (the prior conduct material). The investigative referral also contained the practice statistics. The prior conduct material and the practice statistics (the contentious material), it was submitted, were both irrelevant and prejudicial. The receipt of it by the members of the Committee created an apprehension of bias. As a result the Court should restrain the Committee from further acting on the adjudicative referral. 34 It was common ground that the Committee was bound to observe the requirements of natural justice, and to act fairly. Ms Hampel SC, who appeared with Mr Maloney as counsel for the respondents, conceded that the prior conduct material was irrelevant to the consideration of the Committee. 35 What then was the position in relation to the practice statistics? The issues before the Committee are clearly defined in the adjudicative referral, namely, did Dr Crowley provide 80 or more professional attendances on 20 or more days in the period from 1 January 2000 to 31 October 2000, and, if so, were there exceptional circumstances that affected the rendering of such services on a particular day or days. Counsel for the respondents explained the possible relevance of the practice statistics: "One can't look at the services in isolation in order to understand them, to give them context and to give them meaning. They've got to be seen against the background of the way the doctor conducts the practice and therefore they do provide relevant background, just as information in the referral about where the doctor trained and qualified, the experience and practice up until the date, information about the demographics in the area, breakdown of sex and age of patients are all potentially but sensibly potentially relevant materials to consider in shaping the investigation and in making a decision as to whether to make an adjudicative referral or to deal with it under section 91 or section 92, enter into an agreement or dismiss." 36 These justifications supply reasons for including the practice statistics in the investigative referral. The applicant conceded that the practice statistics were properly included in the investigative referral. Dr Bleechmore, however, argued that the Director had a filtering function when it came to preparation of the adjudicative referral. He should not have included the entire contents of the investigative referral in the adjudicative referral. The only basis on which the practice statistics could be relevant for inclusion in the adjudicative referral would be if they related to the issue of exceptional circumstances. 37 Having regard to the manner in which the practice statistics came to be included in the adjudicative referral, that is to say, by attachment of the investigative referral to the adjudicative referral, it seems likely that the reason for inclusion was simply to provide a record of the background steps taken prior to the making of the adjudicative referral. In other words, the practice statistics appeared by way of attachment to the adjudicative referral as a matter of history only. However, one cannot confidently say that the practice statistics bear on any issue to be considered by the Committee. Thus, for present purposes, I intend to treat the practice statistics as if they are not relevant to any issue to be considered by the Committee. 38 Assuming for present purposes that the contentious material is prejudicial to the applicant, as well as irrelevant to the determination of the adjudicative referral, in my view, its mere inclusion in the referral does not alone give reason for a reasonable apprehension of bias. In this area of discourse, bias involves a fixed state of mind which no argument or evidence is able to change. A reasonable person must apprehend from a tribunal's conduct or the circumstances in which it considers material that is said to be irrelevant and prejudicial, that it has such a state of mind caused by the material: Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293-4. Irrelevant and prejudicial material might be of such a nature as to cause a reasonable person to apprehend that its mere presence will pollute the minds of the tribunal against the applicant. 39 It is premature to conclude that the Committee has been affected by the material in a way which is unalterable, or that a reasonable person viewing the situation would so conclude. A reasonable person observing the situation of the Committee would need to wait and see how the Committee deals with the material. The following factors bear on the approach the Committee will take to the contentious material. 40 First, counsel for the members of the Committee stated to the Court that the members will not take into account the prior conduct material. Naturally, this statement is made on the instructions of the members of the Committee. There is no reason to doubt that the Committee members will act in the way in which they have indicated. This is an important contextual factor to be considered in assessing the reasonableness of the reaction of an observer of the circumstances: Johnson v Johnson (2000) 201 CLR 488 at 494; [2000] HCA 48. 41 Then, s 103(2)(b) (set out in the hearing letter) permits Dr Crowley to have a lawyer present before the Committee, and to have the lawyer address the Committee on questions of law. Thus, Dr Crowley has the chance to engage a lawyer to make submissions to the Committee on the proper approach which the Committee should take to the contentious material. There is no reason to expect that the Committee will not listen to, and properly determine, such submissions. Further, the hearing letter indicates that the Committee will have its own legal adviser present at the hearing. This also contributes to the likelihood that the Committee will adopt an approach to the material as is required by the law. 42 Further, even after the hearing, Dr Crowley has an opportunity to make further submissions in response to a draft report of the Committee. Section 106KD(1) requires the Committee to prepare a draft report after the hearing. Section 106KD(3) provides: "(3) The Committee must give to the person under review a copy of the draft report together with a notice inviting the person to make to the Committee, within 21 days after the day on which the copy of the draft report is given to the person, written submissions suggesting changes to the draft report." 43 Then, s 106L(1) relevantly provides: "(1) After the period of 21 days referred to in subsection 106KD(3), the Committee must, after taking into account any submissions made to the Committee by the person under review within that period, prepare a final report …" 44 Dr Bleechmore argued that it was unfair to force Dr Crowley to have to highlight the contentious material in order to persuade the Committee that the material is not relevant. However, unless the material is so damaging that its mere reception for the purpose of argument will persuade a reasonable person that the Committee cannot bring an unbiased mind to the issues, there is no legal basis on which to invalidate the process. There may, perhaps, be cases where the contentious material is so poisonous that no reasonable decision-maker could proceed without being seen by a reasonable person to be influenced by a fixed view on the matter under consideration arising from the reception of the material. But that is not this case. 45 It is also significant that the issues to be considered by the Committee are clear cut, and are apparently well understood by the Committee to be limited. Thus, the notice of hearing states that "the particulars of the matter to which the hearing relates" are the professional attendances between 1 January 2000 and 31 October 2000, and that the allegation is that the provision of those services constituted a prescribed pattern of services. 46 Holmes v Mercado (2000) 111 FCR 160; [2000] FCA 1848 concerned an application by a doctor to prevent a committee proceeding to determine an adjudicative referral that included reference to the fact that the doctor had been counselled prior to the referral being made. However, unlike the present case, the proceedings were initiated after the committee's view in respect of the prior counselling material had been made clear to the doctor. The Full Court (Wilcox, Merkel and Weinberg JJ) found that the material was not irrelevant to the task of the committee, however, in obiter the Full Court said at pars 62 to 63 that there was no reasonable ground to apprehend bias in the circumstances: "62 Even if we are wrong in holding that the material concerning prior counselling of Dr Mercado was not irrelevant to the task of the committee, we respectfully disagree with the view that the committee members' knowledge of that material leads to a reasonable apprehension of bias. The committee gave assurances to Dr Mercado, on a number of occasions, that it would restrict its findings to referred services: see the letter of 16 December ([16] above), the statement made by the chairman at the 21 January hearing ([20] above) and the letter of 16 February. The last reference is particularly important. It was the most recent statement of the committee's position before institution of the proceeding in this court. It will be recalled that Mr Irvine, on behalf of the committee, acknowledged 'that the counselling reports are not evidence before it'. He specifically stated that the committee "does not intend to make use of the report in conducting the inquiry" (see [25] above). Later in the letter, Mr Irvine wrote: 'Because the reports are irrelevant the committee is ignoring them … The committee is not influenced by matters which are irrelevant and unproved'. 63 The argument put on behalf of Dr Mercado requires the Court to disregard or discount these assurances. The argument has to be, and is, that a fair-minded and informed observer would reasonably have such doubts about the willingness or ability of a lay (as distinct from a legally-trained) tribunal to honour these assurances as to continue to harbour apprehension of bias. We see no basis for that view. The committee comprises three members of the Professional Services Review Panel. Members of the Panel are appointed by the Minister after consultation with the Australian Medical Association (AMA): see s 84(3) of the Act. The committee's chairman is a Deputy Director of Professional Services Review appointed in consultation with the AMA: see s 95(1)(a) and (2). The three members were required to be, and no doubt were, medical practitioners during the review period. We see no reason to doubt that such people are as capable as lawyers of understanding the concept of putting out of their minds an irrelevant matter, when reaching conclusions on a matter of grave importance to a practitioner, and of doing so." 47 The same applies with greater force to this case in which the Committee has not yet had the opportunity to demonstrate the way in which it will approach the contentious material. 48 It follows that this argument is also rejected. 49 I have approached this argument on the basis that the practice statistics are prejudicial and irrelevant. Because, even on that assumption, at this stage, their inclusion in the adjudicative referral does not give rise to a reasonable apprehension of bias by the Committee. However, this assumption is not intended to preclude the Committee from drawing its own conclusions about the relevance of the practice statistics. The relevance of the practice statistics is a question for the Committee to determine. The practice statistics may turn out to be relevant to the exceptional circumstances argument. That will depend on the evidence and argument relied upon by Dr Crowley at the hearing. is the administrative referral invalid 50 Dr Bleechmore argued that the administrative referral is invalid because it includes the contentious material. In the end, the basis for the alleged invalidity of the adjudicative referral was said to be its failure to comply with s 93 of the Act. That section, it was contended, implicitly prohibited the inclusion of irrelevant and prejudicial material. The reason for such implication is the further requirement that the Committee conduct a fair hearing. The inclusion of the contentious material means, it was argued, that a fair hearing could not be achieved. As the argument was based on this rationale, it is not surprising that there was a good deal of overlap between this argument and the reasonable apprehension of bias argument dealt with in the previous section of these reasons. 51 For the purpose of argument, it can be accepted that there is an implied requirement as contended for. However, for the same reasons as expressed in the previous section of these reasons, the mere inclusion of the contentious material will not necessarily result in an unfair hearing. Consequently, the applicant has not established a breach of any such requirement. 52 In any event, if it were necessary to determine the question, I would hold that the inclusion of such material was not intended to invalidate the adjudicative referral: Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355. The inclusion of the right to legal representation and the necessity for the Committee to circulate a draft report to the subject of the review for comment, as well as the right to challenge any decision for apprehended bias, establish that the adjudicative referral was not intended to be invalidated by the inclusion of material such as the contentious material. conclusion 53 The above reasoning means that the application must be dismissed. It is unnecessary to consider the extensive written submissions filed after the hearing on the question of the consequences of finding the adjudicative referral to be invalid, or the power of the Court to modify the adjudicative referral so as to remove any prejudicial or irrelevant material. The applicant must pay the respondents' costs of the application. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North. Associate: Dated: 18 December 2002 Counsel for the Applicant: Dr J Bleechmore with Mr I Hayden Solicitor for the Applicant: Mulcahy's Barristers & Solicitors Counsel for the Respondents: Ms F Hampel SC with Mr S Moloney Solicitor for the Respondents: Minter Ellison Lawyers Date of Hearing: 2 December 2002 Date of last Submission: 13 December 2002 Date of Judgment: 18 December 2002