Specialist loses battle over $2m Medicare repayment order

By Geir O'Rourke

9 Jun 2023

A sleep and respiratory physician who was found guilty of inappropriately billing Medicare almost $2 million over a single year for home sleep studies has suffered a major legal setback in his long-running battle with the Professional Services Review.

It comes after the Sydney-based specialist lost his second lawsuit against the PSR over the allegations, in a dispute which has now drawn out almost a decade.

The RACP-qualified physician first came to the watchdog’s attention in early 2016, having claimed $1,959,719 for MBS item 12250 in the previous financial year.

Covering overnight sleep apnoea investigations in adult patients, the item had an out-of-hospital rebate of $285.05 at the time, with the physician claiming it for 6,875 patients over the 12 months – more than any other doctor in Australia.

At the time, the item’s descriptor did allow for some delegation of the actual administration of the study to sleep technicians. However, it did explicitly state the claiming specialist should pre-emptively establish “quality assurance procedures for data acquisition” as well as personally analyse and report on the results.

In addition, the sleep medicine practitioner was required to confirm the necessity of the investigation before it took place, the item descriptor stated.

Specialist ‘had never set up a home sleep study’

But the specialist did none of these things and in fact “was not at all familiar with significant aspects of the data he was reviewing”, according to the PSR committee which examined his case.

Based on a random sample of 28 claims submitted to Medicare, he also routinely provided the wrong dates on services claimed, and recommended treatment that “may not have been warranted” or “would have significant intrusions” on a patient for the rest their life without appropriate consultation, the committee found.

Beyond that, in a 2017 hearing before the committee, he admitted he had “never been involved in setting up a home sleep study” and “said he did not know where the body position sensor is on the recording device”, it noted.

“[The doctor] did not have an adequate appreciation and understanding of the technical elements of the equipment and the nature of the data and the parameters and measures to enable him to report adequately or sufficiently on any of the services,” the committee’s report said.

“This adversely affected the content and quality of his reports and meant that another practitioner seeking to provide follow-up services for the patient would have been unable to properly appreciate the basis on which [the doctor’s] reports were written and their limitations.”

Other criticisms revolved around conflicts of interest with the corporate sleep medicine chain where the specialist worked at the time, with the PSR committee stating he failed to inform patients about the availability of other treatment providers.

These findings were ultimately upheld by the Federal Court of Australia in 2020, which heard an unsuccessful challenge from the doctor on various legal grounds including that the committee hearing had been unfair, and that it had misunderstood the item requirements.

But despite having his earlier case thrown out with costs, the doctor took the PSR back to court a year later, accusing it of “legal unreasonableness” and inappropriate practice.

Final lawsuit

The latest lawsuit centred on the final stage of the PSR process, involving a panel at the watchdog called the Determining Authority.

This authority had reviewed the committee’s findings and ordered the doctor to repay the full $1.96 million as well as ban him from claiming MBS item 12250 for a year, the court heard.

Arguing both these decisions should be overturned, the doctor pointed out the item had been revised since 2014-15 such that his billing would no longer be considered inappropriate.

Even absent these changes to the item descriptor, the doctor said he had modified his practices, having learned from the PSR process, and was now heavily involved in supervising the corporate’s sleep technicians and data scorers.

More than that, he said he was approaching his planned retirement age of 75 and was not in any realistic position to make the nearly $2 million repayment, which would likely force him to declare bankruptcy.

Judge’s verdict

But in findings handed down earlier this year, Federal Court Justice Scott Goodman rejected all those arguments, saying each had already been appropriately considered by the PSR’s determining authority.

He noted that while the repayment order was significant, this had been properly considered by the authority in view of the seriousness of its findings.

“The Authority explicitly accepted that the repayment amount of $1,959,718.75 was ‘substantial’ and would have a significant impact’ upon the [doctor’s] finances,” he said in his decision (link here).

“The Authority also acknowledged that a possible consequence was the bankruptcy of the applicant. It noted that it was open to the applicant to discuss potential repayment options with the Department of Health.”

Justice Goodman also rejected the doctor’s argument that he should not be placed on the hook for the entire MBS repayment because a portion of the money had ended up in the hands of the corporate where he worked. This notwithstanding, the doctor retained full legal responsibility for claims billed in his name, the judge said.

He also found there was no evidence to support the doctor’s contention that the PSR’s decision had been punitive, saying its decisions “each had a logical and intelligible basis”.

“The authority was concerned as to the gravity and extent of the applicant’s inappropriate conduct as found by the committee,” the judge concluded.

“It was also concerned that the applicant had not accepted or appreciated the gravity of the committee’s findings. It concluded that there was a risk that the applicant would engage in inappropriate conduct in the future.”

“It also gave consideration to the applicant’s submissions including his submissions as to the effect that the disqualification direction and the repayment direction would have upon him. The directions that it made were open to it and the applicant has not established that either direction was attended by legal unreasonableness.”

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