Biotech & Health News – June 2008

Court upholds constitutional validity of the PSR scheme

In brief: Senior Associate Sarah Bryden and Law Graduate Leesa Vanmali examine the recent decision in Selim v Lele¹, where the Full Federal Court of Australia dismissed a constitutional challenge to the validity of the Professional Services Review Scheme.

• Background
• Facts
• Basis of the challenge
• The Federal Court's decision
• The Full Court's decision
• Conclusion

How does it affect you? This decision reiterates the need for general practitioners to comply with their obligations under the Professional Services Review Scheme by 'shutting the door' on the argument that this scheme lacks constitutional validity.

Background

The Professional Services Review Scheme (the PSR Scheme), created to protect the integrity of the Medicare Benefits Scheme (the MBS) and the Pharmaceutical Benefits Scheme (the PBS), is established and administered under the Health Insurance Act 1973 (Cth) (the Act).

Under the Act, a PSR Committee (the Committee) is authorised to investigate suspected 'inappropriate practice' by practitioners who have performed services attracting a Medicare benefit. If a finding of 'inappropriate practice' is made, a practitioner may face sanctions, including disqualification from participation in the MBS for up to three years. Inappropriate practice is defined as conduct that would be unacceptable to the general body of medical practitioners.

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Facts

There were two matters before the Full Federal Court that culminated in the decision under discussion.² Although these matters concerned different practitioners, both cases involved a constitutional challenge to the PSR Scheme.

In the two cases, the Committee had made a finding that the general practitioners (the GPs) had engaged in 'inappropriate practice' under the Act, by providing a high volume of services, without providing the 'appropriate quality of clinical input into those services'. The GPs sought to avoid the imposition of any sanctions by mounting a challenge to the constitutional validity of the PSR scheme.

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Basis of the challenge

The GPs argued that certain parts of the Act offended the prohibition on civil conscription contained in section 51(xxiiA) of the Constitution. The relevant parts of the Act the GPs were challenging were those that establish:

• who is entitled to receive Medicare benefits, the circumstances under which they are entitled to a benefit and the amount of the benefit;
• the 'bulk-billing scheme (together, the Medicare Scheme Provisions); and
• the PSR Scheme under which, in order to be entitled to render services for which the Medicare benefit is payable, a general practitioner must not engage in 'inappropriate practice' (the PSR Scheme Provisions).

Section 51(xxiiA) of the Constitution provides:

The Parliament shall, subject to this Constitution, have power to make laws... with respect to the provision of... pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorise any form of civil conscription) (emphasis added).

In this context, the term 'civil conscription' means a form of compulsion to serve the Commonwealth by way of providing professional medical or dental services.

The Full Federal Court accepted that if it is not open for patients to claim the Medicare benefit for services a doctor provides, that doctor will have very few patients and limited opportunities, if any, to practise as a general practitioner in private practice. As a result, the Act imposed a practical compulsion on general practitioners to participate in the Medicare Scheme and, to conduct their practice in a certain manner. That is, doctors must not, when rendering services for which a Medicare benefit is payable, act 'inappropriately' or in a way that would be unacceptable to the general body of practitioners.

The GPs argued that this practical compulsion or regulation of inappropriate practice constituted civil conscription as it amounted to regulation of the medical services provided.

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The Federal Court's decision

The primary judge in Selim held that the challenge to the validity of the PSR Scheme failed as neither the Medicare Scheme nor the PSR Scheme imposed any compulsion to provide medical services.

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The Full Court's decision

The court upheld the decision of the primary judge. The court held that, although a law that imposes a practical compulsion may be deemed to authorise civil conscription, neither the Medicare Scheme Provisions nor the PSR Scheme Provisions compel a doctor to perform any professional service to any person. The court's reasons were that:

• the Medicare Scheme Provisions merely provide a scheme whereby an eligible person becomes entitled to a Medicare benefit after the relevant medical service has been provided and the relevant fee paid; and
• the PSR Scheme Provisions do not compel a doctor to perform any professional service but, once a doctor has chosen to render a service, it regulates the way in which that service should be provided (ie not inappropriately).

In summary, the court held that:

[t]o the extent that there is a practical compulsion for general practitioners to participate in the Medicare Scheme, what is compelled is not service of the Commonwealth. Rather, it is that they conduct their practices with the care and skill that would be acceptable to the general body of practitioners.3

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Conclusion

This decision illustrates that the PSR Scheme does no more than require practitioners who wish to utilise the MBS or the PBS to refrain from engaging in inappropriate practice. The PSR Scheme therefore has the effect of obliging medical practitioners to meet a minimum standard when rendering services to their patients. This limited form of regulation does not, however, involve a compulsion to provide services to the Commonwealth so as to amount to civil conscription. 

Footnotes

1. Selim v Lele [2008] FCAFC 13.
2. Selim v Lele and Ors (2006) 150 FCR 83; Dimian & Anor v Commonwealth of Australia [2006] HCATrans 565 (11 October 2006).
3. Selim v Lele [2008] FCAFC 13 at [50].

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For further information, please contact:

Dr Trevor Davies Partner, Allens Arthur Robinson Patent & Trade Marks Attorneys, Sydney Ph: +61 2 9230 4007 Trevor.Davies@aar.com.au		Andrew Wiseman Partner, Sydney Ph: +61 2 9230 4701 Andrew.Wiseman@aar.com.au
Richard Hamer Partner, Melbourne Ph: +61 3 9613 8705 Richard.Hamer@aar.com.au		Sarah Matheson Partner, Melbourne Ph: +61 3 9613 8579 Sarah.Matheson@aar.com.au
Adam Thatcher Partner, Brisbane Ph: +61 7 3334 3157 Adam.Thatcher@aar.com.au

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