Case: Phan v Kelly [2007] FCA 269
Outcome: approved
Appendix 2 to the Adjudicative Referral was a list of the first 40 randomly selected MBS item 30487 services (and the full medical records for the patients identified in that list) from the list of randomly selected MBS item 30487 services provided to the Director by the Commission. Dr Carrick's outline opening statement indicated that her case concerning the Adjudicative Referral was that the discretion of the Director to refer the matter to a Committee hearing miscarried because he included in his referral 'the already examined patient medical files of [Dr Carrick] for the Committee for it to examine again' (emphasis in original). This appears to be a re-run of an argument unsuccessfully advanced before Tamberlin J in Phan v Kelly [2007] FCA 269. 48 Section 93 of the Act governs the form and content of an adjudicative referral. Subject to s 93, the content and form of an adjudicative referral must comply with relevant guidelines made by the Minister under s 93(4). The Health Insurance (Professional Services Review Content and Form of Adjudicative Referrals) Guidelines 1999 ('the Guidelines') were made by the Minister under s 93(4). 49 Section 93(6) provides: '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.' 66 As I understand Dr Carrick's submissions concerning the sampling methodology adopted by the Committee, she does not contend that the Committee breached any express requirement of the Determination. Rather she argues that it is necessarily implicit in the Determination that the Committee was required: 'to find for itself and inspect a fresh pool of randomly selected medical services to examine, instead of examining a set of 30 from the 40 provided to them by the Director.' Again, as I understand it, this is a re-run of an argument unsuccessfully advanced before Tamberlin J in Phan [2007] FCA 269. 67 The evidence demonstrates that on 2 July 2002 the Director requested the Commission to select a random sample of 98 patient services from the total population of MBS item 30487 services rendered by Dr Carrick for the period 1 July 2000 - 30 June 2001. It is accepted that the Commission used a computer program to create a report which listed the names of 98 patients who had received a MBS item 30487 service from Dr Carrick randomly selected from the total population as required. The report discloses that it was produced on 29 July 2002 by the Analysis &amp; Evaluation Section of the Program Review Division of the Commission. 68 It is not disputed that the preliminary sample size of 98 patient services met the requirements of s 7 of the Determination. Nor is it disputed that before providing the list of randomly selected patient services to the Director, the Commission used the same computer program to randomly assign a new random number to each of the services in the preliminary random sample. It then re-sorted the services in the order corresponding to the new random numbers assigned to each service. The list of randomly selected services provided by the Commission to the Director was the list re-sorted in that order. 69 The exploratory sample which the Committee examined consisted of the first 30 services on the list of randomly selected services provided by the Commission to the Director. I accept the evidence of Professor Desmond Nicholls, which was not challenged, that these first 30 services were a sample selected randomly from the preliminary random sample as required by s 8 of the Determination. 70 The Director, by a written notice given under s 89B(2) of the Act, required Dr Carrick to produce to him original patient records for the first 40 patients listed on the random sample of 98 patient services provided to the Director by the Commission. The Director engaged Dr Heap to review the 40 medical records provided by Dr Carrick. Dr Heap reported that he did not believe that it was justified for Dr Carrick to charge any of the 40 patients for an MBS item 30487 service. The Director also obtained data which showed that Australia wide 7,800 claims were made for MBS item 30487 services during the referral period and that Dr Carrick provided 4,073 of these services. The next highest provider claimed 876 MBS item 30487 services. 79 The second error claimed to affect the methodology adopted by the Committee was that the preliminary random sample was not a random sample in the hands of the Committee because it had already been the subject of consideration by the Director. This argument was rejected by Tamberlin J in Phan [2007] FCA 269 at [52] . His Honour there observed: 'In my view, the sample used in the present case was in accordance with the requirements of the Act. The evidence is that the Commission drew a preliminary random sample and that the Director required the production of records which he examined. He concluded, for the reasons given by him in his Report, that it would be appropriate for him to refer the matter to a Committee. In examining the material and completing his Report, the Director did not decide that there was inappropriate conduct. That determination was left for the Committee to make following a hearing and having regard to the evidence adduced at that hearing. It is not correct to suggest that the Director had found that the samples had in fact given rise to inappropriate conduct. The fact that the Director examined and considered the records and forwarded them to the Committee does not affect their randomness when they were considered afresh by the Committee. The sample items retained their character as random samples and were not skewed or biased so that the Committee's decision should be considered invalid.' (emphasis in original) 80 Again, I should follow the approach adopted by his Honour unless I am satisfied that his Honour was in error. I am not so satisfied. Indeed, in my respectful view, his Honour was correct. 81 The report of Dr Stevenson, parts of which I received by way of submission (O 10 r 1(2)(j) of the Federal Court Rules ), assumed a requirement for the conclusions arrived at by the Committee to be 'truly independent of those of the Director' . Dr Carrick argued that were this not the case, the conclusions would otherwise be ' unfair '. It is, of course, the case that a Professional Services Review Committee is obliged to make its own finding in respect of the conduct of the person under review; that is, a finding as to whether the conduct constituted engaging in inappropriate practice. However, as I understand the report of Dr Stevenson, he takes the view that, at least where a Committee places reliance on s 106K of the Act, the findings of the Committee must be arrived at by reference to samples of services not previously considered by the Director. Additionally Dr Stevenson places reliance on the notion of 'data snooping' in suggesting that the preliminary random sample did not satisfy the requirements of s 7 of the Determination. Data snooping can occur when a given set of data is used more than once for the purpose of inference. 82 The question of whether the findings of the Committee were required to be arrived at by reference to samples of services not previously considered by the Director is to be answered by reference to the Act. References to sound audit practice and notions of fairness are of only limited assistance in this regard. Section 93(6) of the Act provides that where the Director makes an adjudicative referral the Director must prepare and attach to the adjudicative referral: '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' . This statutory requirement suggests against any legislative intention that the conclusions arrived at by the Committee are to be arrived at by reference to evidence independent of that considered by the Director. 83 It is also significant in this regard that the Director is not authorised to make a finding that a person has engaged in inappropriate practice. Rather the role of the Director under Part VAA of the Act is as outlined in [12] above. A function of the Director under the scheme established by Part VAA is to ensure that only matters where the Committee could reasonably find that the person under review has engaged in inappropriate practice are referred to a Professional Services Review Committee.