FEDERAL COURT OF AUSTRALIA Oreb v Professional Services Review Committee No 298 [2004] FCA 1408 PRACTICE AND PROCEDURE – s78B Judiciary Act 1903 (Cth) – severance of matters– public interest legislation Constitution, s 51(xxiiiA) Judiciary Act 1903 (Cth), s 78B British Medical Association in Australia v Commonwealth of Australia (Pharmaceutical Benefits case (No 2)) (1949) 79 CLR 201 referred to Daniel v Health Insurance Commission (2003) 200 ALR 379 cited General Practitioners Society in Australia v Commonwealth of Australia (1980) 145 CLR 532 referred to Health Insurance Commission v Grey (2002) 120 FCR 470 referred to Kelly v Daniel [2004] FCAFC 14 cited Narain v Parnell (1986) 9 FCR 479 cited Tankey v Adams (2000) 104 FCR 152 cited ZELCO FRANCIS OREB vSIMON WILLCOCK, ELIZABETH MAGASSY and ROD MCMAHON constituting PROFESSIONAL SERVICES REVIEW COMMITTEE NO 298 ANDDETERMINING AUTHORITY established by s106Q Health Insurance Act 1973 (Cth) AND HEALTH INSURANCE COMMISSION AND ALAN JOHN HOLMES in his capacity as Director of Professional Services Review N1316 of 2002 JACOBSON J SYDNEY 28 OCTOBER 2004 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1316 OF 2002 BETWEEN: ZELCO FRANCIS OREB Applicant AND: SIMON WILLCOCK, ELIZABETH MAGASSY and ROD MCMAHON constituting PROFESSIONAL SERVICES REVIEW COMMITTEE NO 298 First Respondent DETERMINING AUTHORITY established by s106Q 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 JUDGE: JACOBSON J DATE OF ORDER: 27 OCTOBER 2004 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The Applicant is given leave to file Notice of Motion, returnable instanter; 1. The Applicant is given leave to file a further amended application to raise the Constitutional questions set out in grounds 1A, 1B and 1C; 1. The application to vacate the hearing, listed to commence today, is refused; 1. The Applicant is given leave to issue section 78B Notices to the State, Territory and Federal Attorneys General by close of business, Thursday 28 October 2004, in the form of the draft submitted to the Court on 27 October 2004; 1. The argument on the Constitutional question is stood over to 6 December 2004; 1. Pursuant to Order 29 rule 2 of the Federal Court Rules, all the issues raised by the application other than the Constitutional questions are to be heard separately from and before the Constitutional questions are determined; 1. The Applicant is to pay the costs of the motion filed in court on 27 October 2004; and 1. The Applicant is to pay the costs thrown away by the amendment to the application. THE COURT NOTES THAT: The applicant proposes to petition the High Court, pursuant to section 40 of the Judiciary Act 1903 (Cth) for removal of the Constitutional questions to the High Court. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1316 OF 2002 BETWEEN: ZELCO FRANCIS OREB Applicant AND: SIMON WILLCOCK, ELIZABETH MAGASSY and ROD MCMAHON constituting PROFESSIONAL SERVICES REVIEW COMMITTEE NO 298 First Respondent DETERMINING AUTHORITY established by s106Q 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 JUDGE: JACOBSON J DATE: 28 OCTOBER 2004 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 25 August 2004 I listed this proceeding for hearing on 27 October 2004. The applicant is a medical practitioner who seeks orders under sections 5 and 6 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and section 39B(1)(a) of the Judiciary Act 1903 (Cth) ("the Judiciary Act") setting aside certain decisions made under the provisions of Part VAA of the Health Insurance Act 1973 (Cth) ("the Act"). 2 Part VAA of the Act established a peer review based Professional Services Review Scheme. The legislation was introduced in 1994 and amended in 1997, 1999 and 2002. The amendments made in 2002 are not relevant to the present proceeding. A description of the legislation as it stood in 1999 is set out in the decision of a Full Court in Kelly v Daniel [2004] FCAFC 14 at [22] to [40]. 3 The applicant seeks orders setting aside an investigative referral, an adjudicative referral and a committee report made respectively by the Health Insurance Commission, the Director of Professional Services Review and the Professional Services Review Committee No. 298. 4 When the matter was called on for hearing, I granted leave to the applicant's counsel to file in court a notice of motion seeking leave to amend the application to raise a Constitutional challenge to the validity of Part VAA of the Act. The motion also sought an order that the hearing be vacated and that notices be issued under section 78B of the Judiciary Act and Order 51 of the Federal Court Rules to the State, Territory, and Commonwealth Attorneys-General. 5 The notice of motion indicated that the applicant proposes to petition the High Court of Australia for removal of the Constitutional questions, pursuant to section 40 of the Judiciary Act. 6 The present proceeding is one of ten matters in my docket in which medical practitioners seek review of decisions made at the various stages of the peer review scheme in Part VAA of the Act. Two of the other matters are listed for hearing this week. The remaining matters are listed for hearing during the week commencing 6 December 2004. 7 Counsel for the applicant is briefed in each of the other matters. He informs me that notices of motion in similar terms to the motion filed in Dr Oreb's matter will be filed in the other proceedings. 8 The Constitutional challenge which the applicant wishes to make to Part VAA is founded upon section 51(xxiiiA) of the Constitution which provides: "51. The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: … (xxiiiA)the provision of maternity allowances, widows' pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription), benefits to students and family allowances;" 9 Written submissions outlining the Constitutional question were delivered to my Chambers on 26 October 2004. An affidavit explaining the delay was filed in court on 27 October 2004. The reason for the delay is that counsel who was previously briefed was appointed to the Federal Magistrates Court in July 2004. New counsel was briefed in September 2004. 10 The effect of what is put, therefore, is that the Constitutional question is raised as a result of the application to the case of fresh legal minds who perceived a new point; see State of Queensland v JL Holdings Pty Limited (1996) 189 CLR 146 at 170. It was not until 20 October 2004 that counsel advised that the Constitutional point should be taken. The point seems to have been raised at the first possible opportunity thereafter. 11 The argument which the applicant wishes to put is that the provisions of Part VAA constitute "civil conscription". Reference has been made to the decisions of the High Court in British Medical Association in Australia v Commonwealth of Australia (Pharmaceutical Benefits case (No 2)) (1949) 79 CLR 201 ("the BMA case") and General Practitioners Society in Australia v Commonwealth of Australia (1980) 145 CLR 532 ("the GPS Case"). Those cases dealt with pharmaceutical and medical benefits schemes which were in different terms from the current legislation. 12 A brief outline of the applicant's contentions is set out in the written submissions on the Constitutional question. The effect of the submissions is that medical practitioners are economically and practically forced to work within the Medicare system and bound by the concept of "inappropriate practice" which is defined in section 82 of the Act and which is the foundation of the Professional Services Review Scheme. The applicant submits that this affects almost every aspect of a doctor's practice. 13 It is said that the power of disqualification from provision of specified services as contained in section 106U of the Act has the effect of compelling medical practitioners to work within the existing Medicare system or seek employment otherwise than as a medical practitioner. 14 The applicant seeks leave to further amend the application to add the following three grounds: "1A Part VAA of the Health Insurance Act 1973 (Cth) ("the Act") is invalid in that it is beyond the power of the Commonwealth under the Commonwealth Constitution. 1B Alternatively, Part VAA of the Act in so far as it relates to the Applicant is invalid in that it authorises or provides for a form or forms of civil conscription contrary to section 51(xxiiiA) of the Constitution. 1C Further and in the alternative, sections 82, 86 and 106U of the Act are invalid in that they are beyond the power of the Commonwealth under the Constitution and/or they authorise or provide for a form or forms of civil conscription contrary to section 51 (xxiiiA) of the Constitution." 15 Ms Hampel, Senior Counsel for the respondents, did not oppose leave to amend. However, she opposed the making of an order vacating the hearing date. She did not submit that the applicant had failed to satisfy the test stated by Burchett J in Narain v Parnell (1986) 9 FCR 479 at 489 as follows: "Section 78B only operates when the circumstances it postulates are made to appear to the court; it does not operate simply because a party asserts those circumstances." 16 However, Ms Hampel did not of course concede that Part VAA involves civil conscription contrary to the Constitution, it is plain that she proposes to argue that it does not. Rather, Ms Hampel submitted that the administrative law questions and the questions of construction of Part VAA raised by the existing application are severable from the Constitutional matter. 17 Accordingly, she asked me to exercise the power contained in section 78B(2)(c) of the Judiciary Act to hear evidence and argument concerning the severable matters. She submitted that the appropriate course was to adjourn argument on the Constitutional questions to an appropriate date. 18 No authorities were cited either by the applicants or the respondents on the question of what constituted a "severable" matter. However, it seemed to me that the questions raised by the existing application are severable within the terms of section 78B(2)(c) of the Judiciary Act. 19 The principal non-Constitutional questions which are raised by the application are as follows: § Whether in making an investigative referral under section 86 of the Act the Commission failed to take into account certain aspects of the applicant's conduct, including the fact that he had been counselled by an adviser to the Professional Review Branch of the Health Insurance Commission and the Director of Professional Services Review about the high volume of his services; § Whether the Director of Professional Services Review made errors of law in exercising his discretion under section 93 of the Act to make an adjudicative referral and establish a committee to consider whether the services rendered by the applicant constituted "engaging in inappropriate practice"; § Whether the Director wrongly construed the Act as not requiring him to accord the applicant the opportunity to enter into an agreement under section 92 of the Act; § Whether the Director failed to accord the applicant procedural fairness by failing to offer him the opportunity to enter into an agreement under section 92 of the Act; § Whether the committee misdirected itself on a question of law, namely, the proper construction of "exceptional circumstances" in sections 106KA(2) and (5) of the Act and Regulation 11 of the Health Insurance (Professional Services Review) Regulations 1999 (Cth). 20 It is true that if the Constitutional challenge succeeds, the hearing of argument on the non-Constitutional issues will have been futile. However, the administrative law questions raise discrete issues, the determination of which is not bound up with the outcome of the Constitutional questions. The possibility that argument on the administrative law questions and the questions of construction of the Act will be futile merely goes to the issue of discretion. 21 I came to the view that I ought to exercise the discretion conferred by section 78B(2)(c) of the Judiciary Act. In doing so I took into account the observations made by the Full Court in Health Insurance Commission v Grey (2002) 120 FCR 470 at [173] ("Grey"), namely, that the object of the legislation is to protect both patients and the Commonwealth against abuse. There is, accordingly, a strong public interest in the Court hearing and determining the severable questions without further delay. 22 This proceeding has already been the subject of some delay. The application was filed on 10 December 2002. The proceeding was listed for hearing before another judge on 1 September 2003. The hearing was vacated on 21 August 2003 to await determination of an appeal from Ryan J in Daniel v Health Insurance Commission (2003) 200 ALR 379. I took the view that it was not desirable that there be any further delay in the proceedings. 23 Accordingly, the orders that I made yesterday were as follows: i. The applicant is given leave to file a notice of motion returnable instanter. ii. The applicant is given leave to file a further amended application to raise the Constitutional questions set out in grounds 1A, 1B and 1C. iii. The application to vacate the hearing, listed to commence today, is refused. iv. The applicant is given leave to issue section 78B notices to the State, Territory and Federal Attorneys-General in the form of a draft submitted, by close of business Thursday, 28 October 2004. v. Argument on Constitutional questions is stood over to 6 December 2004. 24 I noted that the applicant proposes to petition the High Court for removal of the Constitutional questions under section 40 of the Judiciary Act. However, it seemed to me to be appropriate that I hear argument on the questions raised by the amendments contained in grounds 1A, 1B and 1C. To do so would be consistent with the course adopted in Grey and in Tankey v Adams (2000) 104 FCR 152. 25 I therefore, as stated above, stand over until 6 December 2004 the argument raised by the Constitutional questions. 26 The costs orders I will make are that the applicant pay the costs of the motion filed in court on 27 October 2004 and that the applicant pay the costs thrown away by the amendment to the application. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate: Dated: 3 November 2004 Counsel for the Applicant: Mr M Robinson and Mr C Jackson Solicitor for the Applicant: Tress Cox Lawyers Counsel for the Respondent: Ms F Hampel SC and Ms R Henderson Solicitor for the Respondent: Minter Ellison Lawyers Date of Hearing: 27 October 2004 Date of Judgment: 28 October 2004