PSR Annual Report 2008-09

Previous | Next

3. Case descriptions

Legal cases

This year saw the first substantive High Court decision23 relating to the PSR Scheme. A further 13 court cases relating to PSR matters were on hold (voluntarily or by consent order) pending High Court resolution of the constitutional challenges in Wong and Selim. All of these have now been resolved.

As well, one Federal Court decision was handed down this year24 and one new Federal Court appeal was lodged.

Following are reports on the status of court cases resolved during the year, many of which have been mentioned in earlier annual reports.

Dr Ashraf Thabit Selim
General practitioner
Punchbowl, New South Wales

This matter was summarised in previous PSR Annual Reports.25 In brief, Dr Selim was referred to PSR in 2001 because of his high level of rendered services and high daily servicing during 2000. A PSR Committee found that he had engaged in inappropriate practice.26 Dr Selim appealed unsuccessfully to the Federal Court on both judicial review and constitutional grounds. Only the latter issue went on to the Full Federal Court, again unsuccessfully.

On 28 March 2008, Dr Selim sought special leave to appeal to the High Court and this was granted at the hearing of the application on 1 August 2008. The appeal was considered together with a similar appeal by Dr Wong (see below). Following substantive hearing on 14 October 2008, the High Court dismissed the appeal, by a majority of six judges to one, on 2 February 2009.27

Because of the potential impact of an adverse constitutional finding on the whole Medicare scheme, the Australian Government intervened. One state (Queensland) also intervened.

The legal issue before the High Court was whether some or all of the PSR Scheme in Part VAA of the Health Insurance Act 1973 amounted to ‘civil conscription’ within the meaning of section 51(xxiiiA) of the Constitution, was outside the legislative powers of the Commonwealth and was therefore invalid.

French CJ and Gummow J discussed the Full Court’s decision and the only two previous decisions on the constitutional provision – the General Practitioners Society and BMA cases.28 They also examined the Australian legislative history relating to conscription, compulsory military services and industrial conscription – including the extension of conscription to professions under the Man Power Regulations in 1944. And they discussed the provenance of the civil conscription qualification in the 1946 proposals to give the Commonwealth power to provide medical and dental services.

Their Honours concluded that ‘civil conscription’ would involve some form of legal or practical compulsion or coercion to carry out work or

provide services for or at the direction of the Commonwealth (including statutory bodies). They did not agree that the section 82(3) requirement to have regard to records amounted to civil conscription. Neither did the test of ‘conduct unacceptable to the general body of general practitioners’, which reflected historical references to maintenance of professional standards29 (for example, a statutory test of ‘infamous conduct in any professional respect’). Those norms were not calculated to conscript medical practitioners but to ensure their activities were professional rather than unprofessional in character. Furthermore, powers under sections 106XA and 106XB of the Health Insurance Act 1973 to refer issues to other regulatory bodies did not authorise civil conscription.

Finally, they held that arrangements under sections 20(3), 20A and 19(6) for Medicare payments conditioned the enjoyment of membership of the scheme, but they did not amount to a practical compulsion to perform a professional service.

Kirby J considered that the meaning of the prohibition on ‘civil conscription’ was not controlled by historical materials but required legal analysis. History could be helpful in identifying the purpose of a provision, but a constitution necessarily changed and adapted to different times and circumstances. Nevertheless, he substantially agreed with the analysis of Hayne, Crennan and Kiefel JJ (see below) and would dismiss the appeals.

He accepted the reasoning of the Full Court that there was a practical compulsion on most general practitioners to participate in the Medicare scheme. They therefore must not, in relation to rendering or initiating services for which medical benefits were payable, do anything that would be unacceptable to the general body of general practitioners.

Kirby J noted that particular forms of regulation could, in practice, amount to a ‘form of civil conscription’ and so it was not persuasive to draw a distinction between ‘compulsion to serve’ and ‘regulation of the manner of service’.

The appellants argued that introducing the criterion of ‘inappropriate practice’ subjected health professionals to severe restrictions and regulations beyond those enforceable by their state and territory disciplinary bodies.

Kirby J examined dictionary meanings of ‘conscription’, which usually involved compulsory enrolment in the armed forces. He noted that, in Australia, medical and dental services were normally provided pursuant to a private contract between the healthcare provider and the patient. The prohibition on civil conscription was thus to preserve such consensual relationships (though it did not preclude public services with consent).

Furthermore, constitutional words should be interpreted broadly, including words protecting human rights. This was supported by the words ‘any form’. Nevertheless, implementation of constitutional powers could require very detailed provisions. Where such regulation was necessary, and reasonably proportionate to the power, the constitutional prohibition on civil conscription would not be breached.

This was further supported by the existence of equally important constitutional requirements regarding the raising and expenditure of public monies. Some intrusion into the private contract between a health service provider and

the recipient was inescapable where public monies were paid out of consolidated revenue. Machinery provisions, which were reasonably appropriate and proportionate for upholding the constitutional lawfulness and integrity of federal expenditures, would be valid.

In the present case, there was no legal or practical compulsion on a provider to perform any health service for a recipient on behalf of the Commonwealth or as its employee or agent. The Health Insurance Act 1973 carefully respected the individual and personal character of the relations between provider and recipient. While many detailed obligations were cast on the provider, they did not demonstrate a disproportionality or intrusion that amounted to ‘any form of civil conscription’.

Further, the criterion of ‘inappropriate practice’ covered excessive servicing, related to professional standards, was amenable to judicial review, and disclosed no unstated reasons of cost saving, health policy or other purposes inconsistent with the individual arrangements between provider and patient. The regulation to which the appellants objected was no more than measures proportionate to ensure the lawfulness and integrity of the provision of ‘medical and dental services’ in a manner conforming to the constitution. These did not constitute a ‘form of civil conscription’ and were valid.

Hayne, Crennan and Kiefel JJ concluded, after reviewing legislative and legal proceedings relating to health and social services benefits in the 1940s, that the central issue addressed by the constitutional qualification about civil conscription was compulsion on practitioners to become, in effect, servants of the Commonwealth. Further, the phrase ‘civil conscription’ was borrowed from the Constitution Alteration (Industrial Employment) Bill 1946 which proscribed ‘any form of industrial prescription’ – the word ‘civil’ being a genteelism to distinguish professions from industry. ‘Industrial conscription’ was often coupled with ‘compulsory military service’ in both Australian and English legislation30 between the two World Wars.

Their Honours also noted the distinction Dixon J drew in the BMA case between compulsory service and regulation of the manner of performing a service – an issue Gibbs J also identified in the General Practitioners Society case.

The appellants had submitted that sections 10, 20 and 20A of the Health Insurance Act 1973 were invalid. These covered entitlement to a Medicare benefit; who got the benefit and assignment of benefits. Their Honours accepted that it was unlikely a general practitioner could practise without giving patients access to these benefits. In that sense there was a practical compulsion to participate in the Medicare scheme. But this in itself did not indicate there was civil conscription. The provisions did not legally or practically compel a practitioner to perform any service, either for the Commonwealth or at all. There was no compulsion to treat any particular patient or group of patients.

However, the appellants drew attention to the consequences of their ‘need’ to participate in the Medicare scheme, namely to ‘conform to whatever it takes to remain in the scheme, even in matters going to the mode or manner of provision of medical services’.

Their Honours noted that the test of ‘inappropriate practice’ replaced, and was said to be broader than, an earlier test of ‘excessive services’.31 A PSR Committee would consider whether the practitioner’s conduct in a service would reasonably be acceptable to the general body of the profession or specialty. While there was room for debate about the full scope of this definition, it seemed to pick up the common thread since Allinson’s case32 of professional discipline and regulation by reference to prevailing professional opinion. Further, the test was objective and related only to services for which a Medicare or pharmaceutical benefit was payable.

There was, nevertheless, no compulsion to perform services and the practical requirement to meet a standard of conduct was not a form of civil conscription.

Heydon J took a different view. He noted the Full Court’s conclusion that there was a practical compulsion for general practitioners to participate in the Medicare scheme and therefore to avoid committing inappropriate practice. After examining various options, he concluded that inappropriate practice went beyond excessive servicing and beyond unprofessional conduct of the Allinson33 kind (for example, because of provisions relating to recordkeeping, fraud and prescribed pattern of services). Further, it encompassed want of due care and skill.

His Honour also noted that the 1999 review34 had identified a wide range of general professional issues (including behaviour and beliefs) and organisational issues covered by the scheme. He thought the scheme gave a PSR Committee a very wide power of control. There was a possibility of sanctions for particular types of services, medications or treatments which might not command majority support within the profession35 but might be thought bona fide on reasonable grounds by a particular doctor to be suitable for a particular condition in a particular patient and which, though unorthodox, might one day come to be regarded as wholly legitimate.

His Honour concluded that ‘inappropriate practice’ was seen as warranting extremely detailed examination of the contacts between the doctors and the patients in their most minute aspects. He asked himself whether a disciplinary scheme, backed by many sanctions, some severe, involving so detailed a level of management and regulation, was a form of ‘civil conscription’.

The constitutional guarantee regarding ‘any form of civil conscription’ should not be construed narrowly and practical compulsion would suffice. Medical practitioners had the strongest pressures of self-interest to earn their living and a moral obligation to support their dependents. The effect of the PSR Scheme was that, unless medical practitioners were prepared to act in the way the scheme required, they would not readily be able to earn their living in the way, and possibly the only way, in which they were qualified to earn it. There could be no more effective means of compulsion.

From contemporary materials, it appeared that in 1946 ‘industrial conscription’ included laws compelling an individual to work, to work for a particular employer or in a particular place, compelling a particular employer to accept a particular worker, and preventing a worker leaving current employment. The PSR Scheme might not meet such tests, as there is no compulsion to provide services generally or to perform particular medical services.

But could ‘civil conscription’ have a wider meaning in the medical field? In 1946 few medical and dental practitioners were employees. The doctor–patient relationship was confidential, doctors were autonomous, and they treated patients in the light of their personal perception of the problem.

In 1946, a Commonwealth legislative scheme that controlled a practitioner’s medical and professional activities would have been inconsistent with the nature of the doctor–patient relationship as then understood, and inconsistent with contemporary understandings of medical practice. These inconsistencies pointed to the conclusion that precluding ‘civil conscription’ was not directed solely to prevention of Commonwealth control over the occasion, time and place of work of medical practitioners.

His Honour concluded that ‘civil conscription’ used in relation to medical services was not limited to ideas about compelling doctors to work for the Commonwealth. While the legislation did not make medical practitioners servants of the Commonwealth, medical practitioners were engaged in the compulsory provision of services for third parties as directed by the Commonwealth. That was because the practical compulsion created on medical practitioners to operate under the Medicare scheme meant that the Commonwealth was directing them, through its legislation, to comply with PSR criteria. The expression ‘civil conscription’ extended to the very extensive intrusions effected by the PSR Scheme into the relationships between doctor and patient in circumstances where it was not in a practical sense possible for doctors to decline to provide the services.

Summary: All seven judges held that ‘civil conscription’ would include a legal or practical compulsion to work or provide services for the Commonwealth. Five judges accepted that there was a practical compulsion for general practitioners to participate in the Medicare scheme. Two judges held that requirements for records and professional standards conditioned enjoyment of the Medicare scheme but did not compel provision of services. One judge held that some forms of regulation could amount to conscription but not in this case where regulation was necessary and proportionate and there were also constitutional provisions requiring financial accountability. Three judges held that, though there was a practical compulsion to participate in Medicare, there was no compulsion to provide any service or treat any particular patients, and the practical requirement to meet a standard of conduct was not a form of civil conscription. One judge held, dissenting, that PSR intrusion into the doctor–patient relationship amounted to ‘civil conscription’, which had a wider meaning in the medical field.

Judicial review grounds of appeal having previously been dismissed, the Determining Authority is now considering the PSR Committee’s report on Dr Selim.

Dr Kenneth Wong
General practitioner
Merrylands, New South Wales

The background to this matter was summarised in the PSR Annual Report 2007–08.36 In brief, the then Health Insurance Commission referred Dr Wong on 10 May 2001 because it was concerned about his rendered services and daily servicing during the period 1 July 2000 to 30 June 2001. A Committee reported that Dr Wong had engaged in inappropriate practice.

An appeal by Dr Wong to the Federal Court on judicial review grounds was unsuccessful.

A subsequent Writ of Summons on constitutional grounds filed in the High Court by Dr Wong was remitted to the Federal Court and dismissed by the Full Court. On 28 March 2008 Dr Wong sought special leave to appeal to the High Court and this was granted at the hearing of the application on 1 August 2008. The appeal was considered along with a similar appeal by Dr Selim (see pages 32–36). Following substantive hearing on 14 October 2008, the High Court dismissed the appeal by a majority of six judges to one on 2 February 2009.37

The Determining Authority made a final determination in relation to Dr Wong’s case on 17 June 2009.

Dr Rifaat Dimian
Medical practitioner
Merrylands, New South Wales

As previously reported,38 Dr Dimian was referred to PSR in 2000 on account of high daily servicing and a high volume of rendered services in 1998–99. A PSR Committee reported that he had engaged in inappropriate practice, largely because of lack of clinical input and poor clinical records. He applied unsuccessfully to the Federal Court on both judicial review and constitutional grounds. His appeal to the Full Court on judicial review grounds was also dismissed. The constitutional grounds were to be decided after the High Court decision regarding Drs Selim and Wong.

On 3 May 2006 Dr Dimian (with Dr Wong) filed a writ of summons in the High Court on constitutional grounds. This was remitted to the Full Court, which dismissed the appeal on 27 February 2008.

The Determining Authority agreed not to proceed until the outcome of relevant applications to the High Court by Drs Selim and Wong was known (Dr Dimian was joined in the High Court appeal as the second respondent). On 2 February 2009 the High Court dismissed their applications.

The Determining Authority made a final determination on Dr Dimian’s case on 21 April 2009.

Dr Lam Quoc Phan
General practitioner
Cabramatta, New South Wales

As previously reported,39 Dr Phan was referred to PSR on 29 June 2000 on account of the number of Level B services he had rendered in 1999. A PSR Committee reported that he had engaged in inappropriate practice and it identified deficiencies in his patient histories, examinations, management plans and prescribing. He applied to the Federal Court, which dismissed his application on all judicial review grounds on 6 March 2007.40 He did not appeal that aspect and his constitutional grounds were reserved to be decided separately after other constitutional applications.

The Determining Authority undertook to make no draft determination until constitutional issues were resolved. Following the High Court decision regarding Drs Selim and Wong, the Federal Court application was dismissed by consent on 23 February 2009.

The Determining Authority made a final determination on Dr Phan’s case on 17 June 2009.

Dr John William Mathews
General practitioner
Campbelltown, New South Wales

As previously reported,41 Dr Mathews was referred on 14 December 2000 because of his volume of rendered services, daily servicing, Level B home visits and PBS prescribing. A PSR Committee reported that he had engaged in inappropriate practice in relation to MBS item 23, 24 and 19342 services. Dr Mathews applied to the Federal Court on 2 November 2004. He partially succeeded on judicial review grounds43 in so far as the Director was ordered to establish a differently constituted PSR Committee to consider the adjudicative referral. Constitutional grounds were to be decided after the High Court decision regarding Drs Selim and Wong.

Following that decision, the Federal Court application on constitutional grounds was dismissed by consent on 23 February 2009.

Dr Mathews has now been referred to a differently constituted PSR Committee.

Dr Hien Than Do and
Dr Hugo Huu Hiep Ho
General practitioners
Merrylands, New South Wales

As previously reported,44 Dr Do and Dr Ho practised in partnership. Each was referred to PSR on 13 December 2001 because some of their services during 2000 may have constituted a prescribed pattern of services. Separate PSR Committees found that both Dr Do and Dr Ho had engaged in inappropriate practice and there were no exceptional circumstances.

Drs Do and Ho both appealed to the Federal Court both on constitutional grounds and on application of the ‘exceptional circumstances’ test. Rares J held in their favour on the latter issue but this was reversed on appeal to the Full Federal Court.

The constitutional issue was reserved pending resolution of Dr Selim’s litigation.

The Determining Authority undertook to make no draft determinations until constitutional issues were resolved. Following the High Court decision regarding Drs Selim and Wong, the Federal Court applications were dismissed by consent on 23 February 2009.

The Determining Authority made final determinations on 17 June 2009.

Dr Zelco Oreb
Medical practitioner
Newtown, New South Wales

As previously reported,45 Dr Oreb was referred to PSR on 13 December 2001 because some of his services during 2000 may have constituted a prescribed pattern of services. A PSR Committee found he had engaged in inappropriate practice. He appealed to the Federal Court on both judicial review and constitutional grounds. Ultimately, and subject to separate consideration of the constitutional grounds in Selim and other cases, the Full Court returned the matter to the original Committee for reconsideration according to law in the light of its explanation of the legislation.

The Committee recommenced its consideration in January 2006, pending resolution of the constitutional issue and reported again on 9 October 2007.

The Determining Authority undertook to make no draft determination until constitutional issues were resolved. Following the High Court decision regarding Drs Selim and Wong, the Federal Court application was dismissed by consent on 23 February 2009.

The Determining Authority made a final determination on Dr Oreb’s case on 17 June 2009.

Dr Lynette Bellamy
Medical practitioner
Sydney, New South Wales

Dr Bellamy was referred to PSR on 29 May 2002 regarding services she had rendered during 2000–01. Following investigation, a PSR Committee issued a final report on 3 August 2004 and the Determining Authority made a final determination on 21 April 2005.

On 3 June 2005 Dr Bellamy applied to the Federal Court on constitutional and judicial review grounds. On 18 April 2006, by consent, the above-mentioned final report and final determination were set aside and the referral was remitted to a new, differently constituted, PSR Committee for fresh determination according to law.

As previously reported,46 Dr Bellamy failed in a Federal Court application to have a PSR Committee hearing postponed. This Committee presented its final report on 28 October 2008.

The Determining Authority undertook to make no new draft determination until constitutional issues were resolved. Following the High Court decision regarding Drs Selim and Wong, the Federal Court application was dismissed by consent on 23 February 2009.

The Determining Authority made a final determination on 19 May 2009.

Dr Gregory Ivan Cook
Psychiatrist
Granville, New South Wales

Dr Cook is the subject of a final report by a PSR Committee dated 30 May 2006. Dr Cook applied to the Federal Court on 3 July 2006 on constitutional grounds only. By agreement, the Determining Authority took no action pending the High Court decision regarding Drs Selim and Wong. Following that, Dr Cook’s application was dismissed by consent on 23 February 2009.

The Determining Authority is considering the Committee’s final report.

Dr Jane Carrick
Medical practitioner
Auburn, New South Wales

As previously reported,47 Dr Carrick was referred to PSR on 28 June 2002 because she was rendering a high number of certain endoscopy services. A PSR Committee reported that she engaged in inappropriate practice in certain MBS item 30487 endoscopy services. Her review application to the Federal Court was dismissed on all but constitutional issues reserved for separate consideration.

The Determining Authority undertook to make no draft determination until constitutional issues were resolved. Following the High Court decision regarding Drs Selim and Wong, the Federal Court application was dismissed by consent on 23 February 2009.

The Determining Authority is considering the Committee’s report.

Dr Fred Nicholas Nasser
Consultant physician
Roselands, Chatswood, St Leonards and Wyoming, New South Wales

Dr Nasser was referred to PSR on 30 July 2003 and was the subject of a final report by a PSR Committee. In July 2006 he applied to the Federal Court on constitutional grounds only.

The Determining Authority undertook to make no draft determination until constitutional issues were resolved. Following the High Court decision regarding Drs Selim and Wong, the Federal Court application was dismissed by consent on 23 February 2009.

The Determining Authority is considering the Committee’s final report.

Dr James Chee Min Thoo
General practitioner
Sanctuary Point, New South Wales

As previously reported,48 Dr Thoo was referred to PSR on 23 December 2004 because some of the services he rendered during 2003 may have constituted a prescribed pattern of services. A PSR Committee reported that he had engaged in inappropriate practice in provision of MBS item 23 and 36 services. His application to the Federal Court on judicial review grounds was dismissed.

The Determining Authority undertook to make no draft determination until constitutional issues were resolved. Following the High Court decision regarding Drs Selim and Wong, the Federal Court application was dismissed by consent on 23 February 2009.

The Determining Authority made a final determination in relation to Dr Thoo’s case on 17 June 2009.

Dr Il Song Lee
General practitioner
Eastwood, New South Wales

As previously reported,49 Dr Lee was referred to PSR on 13 December 2001 because some of the services he rendered during 2000 may have constituted a prescribed pattern of services. A PSR Committee found he had engaged in inappropriate practice and that there were no exceptional circumstances. He appealed to the Federal Court on both judicial review and constitutional grounds. Ultimately, and subject to separate consideration of the constitutional grounds, the Full Court returned the matter to the original Committee for reconsideration according to law in the light of its explanation of the legislation.

The Committee undertook to make no report until the constitutional issues were resolved. Following the High Court decision regarding Drs Selim and Wong, the constitutional aspect of the Federal Court application was dismissed by consent on 23 February 2009.

The Committee has resumed its investigation of the matter.

Dr Il Song Lee
General practitioner
Eastwood, New South Wales

As previously reported,50 Dr Lee was again referred to PSR on 3 June 2002 because some of the services he rendered during 2001 may have constituted a prescribed pattern of services. A new PSR Committee found he had engaged in inappropriate practice. He appealed to the Federal Court on both judicial review and constitutional grounds. Ultimately, and subject to separate consideration of the constitutional grounds, the Full Court returned the matter to the original Committee for reconsideration according to law in the light of its explanation of the legislation.

The Committee undertook to make no report until constitutional issues were resolved. Following the High Court decision regarding Drs Selim and Wong, the constitutional aspect of the Federal Court application was dismissed by consent on 23 February 2009.

The Committee has resumed its investigation of this matter.

Previous | Next