Health Law Bulletin
Welcome to the May 2014 edition of the
Holman Webb Health Law Bulletin.
The amendments to the Privacy Act 1988
(Cth) commenced on 12 March 2014, which
are applicable to Commonwealth Government
agencies and the private health sector. Ignore
them at your peril because the penalties for
breaches have significantly increased up to
$1,700,000 for businesses and $340,000 for
It has also been a time of change for the not-forprofit sector and charities and there have been
some interesting recent medico-legal cases relevant
to the extent of the duty to warn of rare risks and the
materialisation of inherent risks.
We trust that this edition of the Health Law Bulletin is
informative with articles of relevance to you and your team.
The health, aged care/retirement living and life science
sectors form an important part of the Australian economy.
They are economic growth areas, as more Australians
retire with a significantly longer life expectancy and complex
health care needs.
Against this background, Holman Webb’s health, aged care
and life sciences team provides expert advice that keeps
pace with the latest developments. Our team has acted for
health and aged care clients over a number of years, both in
the “for profit” and the “not-for-profit” sector.
A number of our team members have held senior positions within
the health industry.
Please do not hesitate to contact me or any member of our legal
team should you have any questions about the Health Law Bulletin
content and articles or if one of your colleagues would like to be
added to our distribution list.
Alison Choy Flannigan
Health, aged care and life sciences
Holman Webb Lawyers
T: (02) 9390 8338 M: 0411 04 9459
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networked with you or a health industry association of which we are a member. If you require
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Privacy Law Update 3
2014 likely to be another year of significant change for charities 7
Employees vs Independent Contractors and the Risks of
Sham Contracting 9
Confidential disclosures during sexual assault and
domestic violence counselling - How can we protect them?
Sampson & Hartnett  FCCA 99 11
The Extent of the Duty of Medical Practitioners
to Warn Patients of Rare Risks When Providing Treatment
- Odisho v Bonazzi  VSCA II 12
Is a hospital liable for the criminal acts of its
mental health patients? 14
Update on National Board Requirements:
Revised Guidelines, Codes of Conduct and
Policies for Registered Health Practitioners 15
Professional boundaries in Health and Aged Care
– where is the line? 17
Legal Issues - Collaborations Between Hospitals
and Universities and Other Educators 20
Audit report puts spotlight on salaried specialist
rights of private practice 21
AGED CARE AND RETIREMENT LIVING
Security of Tenure, Ageing in Place and
Consumer Directed Care – Legal obligations 23
Can you register a patent for a method
of medical treatment? Apotex Pty Ltd
v Sanofi-Aventis Australia Pty Ltd
& Ors  HCA 50 25
Privacy Law Update
by Alison Choy Flannigan, Partner
Australian privacy rights are regulated by Commonwealth
State and Territory legislation and the laws protecting
confidential information under the common law.
Australian privacy laws govern the collection, use and disclosure
of “personal information”. Individuals have a right of access and
correction of their own personal information. There are also
data security, data quality and cross-border transborder data
Under Australian privacy laws:
“personal information” means information or an opinion
about an identified individual, or an individual who is
(a) whether the information or opinion is true or not, and
(b) whether the information or opinion is recorded in a material
form or not.
In Australia, health information (such as medical records) are
a subset of personal information and attract additional
protection and rules. These include:
• use and disclosure is permitted if there is a serious and
imminent threat to the health and safety of an individual or
• use and disclosure for health and medical research if certain
conditions are met;
• disclosures to individuals who are responsible for the person
for compassionate reasons;
• restrictions on access if providing direct access would
pose a serious threat to the life or health of any individual;
• the collection of family, social and medical histories; and
• use and disclosure of genetic information to lessen or prevent
a serious threat to a genetic relative.
“Health information” means:
(a) information or an opinion about:
(i) the health or a disability (at any time) of an individual; or
(ii) an individual’s expressed wishes about the future
provision of health services to him or her; or
(iii) a health service provided, or to be provided, to an individual;
that is also personal information; or
(b) other personal information collected to provide, or in
providing, a health service; or
(c) other personal information about an individual collected
in connection with the donation, or intended donation, by
the individual of his or her body parts, organs or body
(d) genetic information about an individual in a form that is,
or could be, predictive of the health of the individual or a
genetic relative of the individual.
3“Health service” means:
(a) an activity performed in relation to an individual that is
intended or claimed (expressly or otherwise) by the individual
or the person performing it:
(i) to assess, record, maintain or improve the individual’s
(ii) to diagnose the individual’s illness or disability; or
(iii) to treat the individual’s illness or disability or suspected
illness or disability; or
(b) the dispensing on prescription of a drug or medicinal
preparation by a pharmacist.
The Privacy Act 1988 (Cth) (Privacy Act), which applies to
Australian Commonwealth government agencies and private
sector organisations, has been recently amended by the Privacy
Amendment (Enhancing Privacy Protection) Act 2012 (Cth)
(Privacy Amendment Act). The Privacy Amendment Act was
passed by Parliament on 29 November 2012, received the
Royal Assent on 12 December 2012 and came into force on
12 March 2014.
• create a single set of Australian Privacy Principles applying
to both Commonwealth Government agencies and the
private sector. These principles replace the former Information
Privacy Principles and National Privacy Principles;
• introduce more comprehensive credit reporting, improved
privacy protections and more logical, consistent and simple
• strengthen the functions and powers of the Australian
Information Commissioner to resolve complaints, use external
dispute resolution services, conduct investigations and promote
compliance - penalties of up to 2000 penalty units, amounting
to $340K for individuals and AUD$1.7 million for body corporates
for serious and repeated offences; and
• create new provisions on privacy codes and the credit reporting
code, including codes that will be binding on specified agencies
Australian Privacy Principles (APP)
The amendments introduce a unified set of Australian Privacy
Principles which apply to both Commonwealth government
agencies and the Australian private sector, replacing separate
public and private sector principles.
The 13 APPs cover the following areas:
• APP 1 – open and transparent management of personal
• APP 2 – anonymity and pseudonymity;
• APP 3 – collection of solicited personal information;
• APP 4 – dealing with unsolicited personal information;
• APP 5 – notification of the collection of personal
• APP 6 – use or disclosure of personal information;
• APP 7 – direct marketing;
• APP 8 – cross-border disclosure of personal information;
• APP 9 – adoption, use or disclosure of government-related
• APP 10 – quality of personal information;
• APP 11 – security of personal information;
• APP 12 – access to personal information; and
• APP 13 – correction of personal information.
For health care providers, in addition to the significantly increased
penalties, there are significant amendments in relation to:
• notification of collection;
• direct marketing (for example consumer engagement and
• transborder dataflows.
GENERALPermitted health situations
The amendments introduce the concept of “permitted health
situation” in a new section 16B.
Collection – provision of a health service
A “permitted health situation” exists in relation to the collection
by an organisation of health information about an individual if:
(a) the information is necessary to provide a health service
to the individual; and
(i) the collection is required or authorised by or under
an Australian law (other than the Privacy Act); or
(ii) the information is collected in accordance with rules
established by competent health or medical bodies
that deal with obligations of professional confidentiality
which bind the organisation.
Collection – research etc.
A “permitted health situation” exists in relation to the collection
by an organisation of health information about an individual if:
(a) the collection is necessary for any of the following purposes:
(i) research relevant to public health or public safety;
(ii) the compilation or analysis of statistics relevant to
public health or public safety;
(iii) the management, funding or monitoring of a health
(b) that purpose cannot be served by the collection of information
about the individual that is de-identified information; and
(c) it is impracticable for the organisation to obtain the individual’s
consent to the collection; and
(d) any of the following apply:
(i) the collection is required by or under an Australian law
(other than the Privacy Act);
(ii) the information is collected in accordance with rules
established by competent health or medical bodies
that deal with obligations of professional confidentiality
which bind the organisation;
(iii) the information is collected in accordance with guidelines
approved under section 95A of the purposes of this
Use or disclosure – research, etc.
A “permitted health situation” exists in relation to the use or
disclosure by an organisation of health information about an
(a) the use or disclosure is necessary for research, or the
compilation or analysis of statistics, relevant to public health
or public safety; and
(b) it is impracticable for the organisation to obtain the individual’s
consent to the use or disclosure; and
(c) the use or disclosure is conducted in accordance with
guidelines approved under section 95A for the purposes
this paragraph; and
(d) in the case of disclosure – the organisation reasonably
believes that the recipient of the information will not
disclose the information, or personal information derived
from that information.
Use or disclosure – genetic information
A “permitted health situation” exists in relation to the use or
disclosure by an organisation of genetic information about an
individual (the first individual) if:
(a) the organisation has obtained the information in the course
of providing a health service to the first individual; and
(b) the organisation reasonably believes that the use or
disclosure is necessary to lessen or prevent a serious threat
to the life, health or safety of another individual who is a
genetic relative of the first individual; and
(c) the use or disclosure is conducted in accordance with
guidelines approved under section 95AA; and
(d) in the case of disclosure – the recipient of the information
is a genetic relative of the first individual.
GENERALDisclosure – responsible person for an individual
A “permitted health situation” exists in relation to the disclosure
by an organisation of health information about an individual if:
(a) the organisation provides a health service to the individual;
(b) the recipient of the information is a responsible person
for the individual; and
(c) the individual:
(i) is physically or legally incapable of giving consent to
the disclosure; or
(ii) physically cannot communicate consent to the disclosure;
(d) another individual (the carer) providing the health service
for the organisation is satisfied that either:
(i) the disclosure is necessary to provide appropriate care
or treatment to the individual; or
(ii) the disclosure is made for compassionate reasons; and
(e) the disclosure is not contrary to any wish:
(i) expressed by the individual before the individual became
unable to give or communicate consent; and
(ii) of which the care is aware, or of which the carer could
reasonably be expected to be aware; and
(f) the disclosure is limited to the extent reasonable and
necessary for a purpose mentioned in paragraph (d).
All Commonwealth and private sector organisations should
update their Privacy Policies and Privacy Manuals to comply
with the amended privacy legislation.
GENERAL2014 likely to be another
year of significant change
By Dr Tim Smyth, Special Counsel and Joann Yap, Graduate
2013 saw the legislative and regulatory environment for
charities significantly changed. 2014 looks like being a repeat,
but in the opposite direction. The government has confirmed
its intention to abolish the Australian Charities and Not-for-profit
Commission (ACNC) and to return to the common law definition
of charity of the purposes of Commonwealth laws.
Current framework continues for the time being
Readers should note that the ACNC remains in place and
continues to have a major regulatory and compliance oversight
of the charities and not for profit sector. Charities registered
with the ACNC continue to have important compliance and
reporting obligations under the ACNC framework. Charities
are required to be registered with the ACNC to maintain their
tax exemptions and DGR status.
While unlikely to be of material consequence for most charities,
it is also important that all charities review their constitutions,
functions and activities to ensure that they come within the
statutory definition of “charity” for the purposes of Commonwealth
law. This is because the new Charities Act 2013 (Cth) (Charities
Act) commenced on 1 January 2014. It appears unlikely that
the government will be able to amend or repeal this legislation
for some time.
Commonwealth statutory definition of ‘charity’
Under the Charities Act, a statutory definition of charity now
applies for the purposes of Commonwealth law. To meet the
definition, charities must:
• be a not for profit entity;
• have all of its purposes charitable or incidental or ancillary
to or in furtherance or in aid of charitable purposes;
• have no ‘disqualifying purposes’; and
• not be an individual, political party or government entity.
Charity under common law
The government’s intention is to return to the common law
approach to determining a charity. This approach dates back
. Common law has established four principal categories
– relief of poverty, advancement of education, advancement
of religion and ‘other purposes’ beneficial to the community.
This approach has been endorsed by Australian courts and
in ATO rulings.
What has the government announced?
On 19 March 2014, the Federal Minister for Social Services,
Kevin Andrews, introduced a Bill into Parliament to abolish the
ACNC. The Australian Charities and Not-for-profits Commission
(Repeal) (No. 1) Bill 2014 will not take effect until a later Bill is
passed by Parliament and establishes a successor Agency.
As outlined in the Minister’s speech to the Australian Institute
of Company Directors on 29 January 2014
, the Government
intends to return the ACNC’s regulatory and compliance functions
to the ATO, ASIC and other bodies (as was the case prior to
the establishment of the ACNC in December 2012).
The Minister also confirmed the intention to establish a “National
Centre for Excellence” early in the next financial year to provide
collaborative education, training and development support to
The Centre for Excellence will have a broader ambit extending
to clubs and associations with a social welfare role and entities
in the arts, environment, medical research, animal welfare and
The Minister summarised the functions of the proposed Centre as:
• provide educational and support services to registered charities;
• provide assistance with the registration process of new charities
and not-for-profit organisations;
• provide a ‘one-stop-shop’ for information on the sector;
• advocate on behalf of the sector by representing its interests
• facilitate communication and interactions between the sector
• undertake research on issues of concern to the sector; and
• foster innovation.
The Statute of Charitable Uses of 1601 (Statute of Elizabeth).
The Honourable Kevin Andrews MP, Minister for Social Services, Address to Australian
Institute of Company Directors, NFP Directors Lunch (29 January 2014):
<http://kevinandrews.dss.gov.au/speeches/45> (25 February 2014)..What are the key messages?
Substantial changes in the regulatory and compliance framework
for charities and not for profit organisations with tax exemptions
are likely to occur in 2014/15, with the exact nature of the changes
unclear ahead of the new Senate composition in July 2014.
Boards, senior management and auditors should have plans
in place to keep informed on mooted changes, maintain an
up to date reporting and compliance calendar and ensure
effective compliance and risk management is in place.
Entities required to be registered with the ACNC must still
provide reports to the ACNC. Charities using the standard 1
July to 30 June financial reporting year must have submitted
their 2013 Annual Information Statement by 31 March 2014,
and charities operating on a calendar year must submit the
statement by 30 June 2014.
Employees vs Independent
Contractors and the Risks
of Sham Contracting
By Robin Young and Alison Choy Flannigan
Who is an employee?
An employee performs work under the ‘control’ of another person
in exchange for payment for the services he or she provides.
A contract of employment may be express or implied, oral or
in writing, but preferably in writing.
The High Court of Australia in the leading case of Hollis v Vabu
Pty Limited (2001) 207 CLR 21 adopted a ‘multi-facet test’.
Indicators of an employment relationship include:
• Control by the employer, for example instruction as to how
to carry out duties, uniform and hours of work, etc. – control
indicates an employment relationship;
• The expression of the relationship by the parties in writing,
such as calling a contract an ‘Employment Contract’ or a
‘Service Agreement’ is persuasive but not determinative;
• The Terms of the contract, for example, is paid annual leave
provided? – Employment entitlements such as annual leave,
long service leave and parental leave are employment
• Was the worker in business on his/her own account? Were
tax invoices rendered? Did the worker use their own ABN?
The worker operating an independent business indicates
that the worker is an independent contractor;
• Was the worker required to work exclusively for the organisation?
Exclusivity of arrangement indicates an employment
• Who provided the resources and equipment? An employer
usually provides resources and equipment, whereas an
independent contractor provides his/her own equipment.
The indicia of employment are not exhaustive and no one factor
is necessarily conclusive.
Legal Obligations of the Employment Relationship
A relationship of employment gives rise to several obligations
for an employer, including:
• Industrial Relations Act 1996 (NSW) and Fair Work Act 2009
• workers compensation insurance to cover injury to workers;
• compliance with work, health and safety laws;
• long service leave, annual leave and parental leave;
• compliance with unfair, unlawful dismissal and adverse action
• compliance with Federal Modern and State Awards;
• payment PAYE/income tax, payroll tax, fringe benefits and
• compliance with anti-discrimination and anti-bullying laws.
The Independent Contractor Relationship
The independent contractor relationship is governed by the
contract between the organisation and the independent contractor
and not employment laws.
Independent contractors need to manage their own business
and procure their own insurance for their negligence and
income protection. They are often distinguishable from employees
by the personal risk associated with their activities.
The Independent Contractors Act 2006 (Cth) can provide relief
for unfair contracts.
Some laws apply to both the employment and
independent contract relationship
These include laws relating to:
• work, health and safety;
• adverse action claims;
• workers compensation (in some cases); and
• superannuation (in some cases).What is Sham Contracting?
Under the Fair Work Act 2009 (Cth), which applies to the
Commonwealth public sector and private sector, and employer
must not tell an employee that they are being hired as a
contractor if they are really an employee.
An employer is also prohibited from dismissing or threatening
to dismiss an employee in order to hire them as an independent
contractor doing the same or substantially the same work.
In addition to civil liabilities, penalties for a breach of these
obligations are up to $51,000 for a corporation and $10,200
for an individual for knowingly being involved in a contravention.
Organisations must be aware of the difference between an
employment relationship and an independent contractor
relationship and the risks of sham contracting.
during sexual assault and
domestic violence counselling
- How can we protect them?
Sampson & Hartnett 
By Alison Choy Flannigan, Partner and Zara Officer, Special Counsel
Healthcare providers have an interest in ensuring that victims
of sexual assault and domestic violence can seek medical and
counselling services without compromising their health,
safety and emotional wellbeing.
In Sampson & Hartnett a mother brought proceedings in the
Federal Circuit Court of Australia seeking to vary parenting
orders. As part of those proceedings the father issued a
subpoena seeking health and counselling records from the
hospital which had provided health services and counselling
to the mother. Arising out of some matters disclosed in the
counselling, a mandatory notification had been made to the
Department of Family and Community Services by a staff
member at the hospital. The hospital objected to producing
the health service and counselling records, except for the
records relating to the mandatory notification, provided that
the name of the informant was redacted from the records.
The Evidence Act 1995 (Cth) applied to the proceedings.
In New South Wales the Evidence Act 1995 provides specific
protections for confidential communications, creating a form
of privilege for such communications. These communications
include counselling, where this occurs in a professional capacity,
including counselling for domestic violence and sexual assault.
There is also a protected confidences privilege under the
Criminal Procedure Act 1986 (NSW), relating to confidential
sexual assault communications. These privileges do not exist
in the Commonwealth Evidence Act and family law proceedings
are commonly commenced in the Commonwealth jurisdiction.
In Sampson & Hartnett, the Court applied the general rule that
evidence that is not relevant in a proceeding is not admissible.
The Court upheld the hospital’s objection to production of the
mother’s medical records and counselling records, on the
basis that they were not relevant to the substantive issues in
the (parenting order) proceedings. The sections of the
records relating to a mandatory notification which were
relevant, were required to be produced, but the name of the
informant was redacted in accordance with the confidentiality
provisions in the Children and Young Persons (Care and
Protection) Act 1998 (NSW). This Act provides for the identity
of the person making the report not to be disclosed without the
consent of the person making the report, or leave of the Court.
The hospital had objected to the production of the medical
and counselling records of the mother on the basis of relevance,
and on public policy grounds in that disclosure of professional
confidential records may deter future patients of the health
service from attending or participating in counselling and other
health services, and undermining confidence in the health service.
Confidentiality of itself is not a ground for setting aside a
subpoena or for objecting to production of documents. Under
the Commonwealth Evidence Act, the key issue is that evidence
not relevant to proceeding is not admissible
. Deeper protections
exist under the NSW Acts, which create a specific “protected
General guidelines to protect disclosures
Communications made in the course of providing domestic
violence and/or sexual assault counselling may be “protected
confidences” or “privileged” in certain situations:
(a) SS.23-29A Children and Young Persons (Care and
Protection) Act 1998 (NSW);
(b) SS.126A, 126B, 126H Evidence Act 1995 (NSW);
(c) S.295-306 Criminal Procedure Act 1986 (NSW); and
(d) S.135 Evidence Act 1995 (Cth).
This means that they may be protected from disclosure if the
hospital/counsellor receives a subpoena from the Court to
produce medical records.
Evidence Act 1995 (Cth), section 56.The following are some general guidelines to assist hospitals/
counsellors to protect disclosures made in the course of providing
domestic violence and/or sexual assault counselling:
• Refrain from sending unsolicited letters disclosing that domestic
violence and/or sexual assault counselling has been provided
(other than communications which are required in order to
provide health care to the patient). If you are asked to send
such a letter, seek legal advice.
• Do not refer to mandatory reports in correspondence.
• Be aware that mandatory reports (and medical records related
to the mandatory report) may be disclosed in certain
circumstances, for example, in child custody or child welfare
• Do not refer to or disclose the bottom line, conclusions,
substance or gist of a privileged communication which you
wish to protect. Disclosure can occur even without an express
statement. If there is a clear link between the statement
regarding the privileged communication and the subsequent
action taken as a result of those communications, a waiver
will likely occur. For example, if you disclose that you have
been counselling a patient and as a result of the counselling
a mandatory report has been provided, you risk waiving
privilege (protection) of the counselling notes.
• Minimise the circulation of confidential communications
within the organisation as this will risk waiver of privilege.
The more people who have seen the records, the less
likely a court will view them as having the necessary
confidentiality to be privileged. Keeping counselling records
in a locked or secure system with limited access greatly
assists in maintaining the necessary confidentiality.
• A mere reference to the existence of a privileged communication
will not usually amount to a waiver of privilege.
• Be aware that the patients/clients themselves, by their own
disclosures, may waive privilege. The patient/client should
maintain confidentiality if at all possible.
Holman Webb recently acted in the above matter, the decision
of which is reported under a pseudonym.
The Extent of the Duty of
Medical Practitioners to
Warn Patients of Rare Risks
When Providing Treatment
- Odisho v Bonazzi 
By Colin Hall, Partner
The Supreme Court of Victoria Court of Appeal’s decision in
Grazilda Odisho v Marcia Bonazzi  VSCA 11 was handed
down on 18 February 2014. The writer acted for Dr Bonazzi
at trial and again before the Court of Appeal.
This article examines the implications of the Court of Appeals’
decision in the context of:
• A medical practitioner’s duty of care to warn a patient of a
rare risk associated with the medical treatment (sections 48,
50, 58 and 60 of the Wrongs Act 1958 (Vic)
) ; and
• The role of factual causation (sections 51 and 52 of the
Wrongs Act 1958 (Vic)
Ms Odisho (the Appellant), who at the time of treatment was
a 46 year old female sought treatment from Dr Bonazzi, a
gynecologist, for menorrhagia. It was accepted evidence that
when she presented before Dr Bonazzi she was very anxious.
Having regard to her particular circumstances the only available
medical treatment for the menorrhagia was tranexamic acid
until further investigations could be performed at the Women’s
Hospital in 3 months’ time.
The patient took the tranexamic acid tablets at the recommended
dose over a week to two week period and subsequently thereafter
developed a pulmonary embolus. The Appellant thereafter
commenced proceedings out of the County Court of Victoria
alleging that Dr Bonazzi had been negligent in her care of
rhe Appellant by failing to warn of the likelihood, however
remote, that the ingestion of tranexamic acid could cause
Following Rogers v Whitaker (1992) 175 CLR 479 it is well
accepted law in Australia that a medical practitioner has an
obligation to warn a patient regarding ‘material risks’.
Wrongs Act 1958, sections 48, 50, 58 and 60.
Wrongs Act 1958, sections 51 and 52.13
“The law should recognize that a doctor has a duty to warn a
patient of a material risk inherent in the proposed treatment;
a risk is material if, in the circumstances of a particular case,
a reasonable person in the patient’s position, if warned of the
risk, would be likely to attach significance to it or if the medical
practitioner is or should reasonably be aware that the particular
patient, if warned of the risk, would be likely to attach significance
to it.” (ibid 489-490)
Dr Bonazzi defended the proceeding at trial on two bases:
• that the subjective limb of universally accepted principal
of Rogers v Whitaker did not require her to give a warning
in this instance as the Appellant would not have attached
any significance to such a warning given her particular
• there was no available medical literature or factually based
evidence that the ingestion of tranexamic acid at the prescribed
level could cause a thrombosis. The Appellant’s own medical
background did not put her into a special class of persons
who should have been warned regardless of the absence
of any such literature in any event.
At trial Dr Bonazzi gave evidence that when the Appellant
was commenced on the treatment there was no definitive link
between tranexamic acid and thromboembolism. In fact, Dr
Bonazzi was informed by, amongst other things, the MIMS Annual
which stated at the time:
“Although clinical evidence shows no significant increase
in thrombosis, possible risk of thrombotic complications
cannot be ruled out”.
On that basis and having regard to the fact that the Appellant
ruled out any other form of treatment given her particular
circumstances tranexamic acid was the only available interim
Expert evidence called was to the following:
• Studies published four years after the commencement of
the treatment indicated that the risk of pulmonary embolism
was less than one in one thousand.
• Clinical studies also suggested there was at best a temporal
connection between tranexamic acid and pulmonary emboli.
In one study 10,000 people were given tranexamic acid
and 10,000 people were given a placebo. The placebo
group recorded a higher degree of vascular occlusions
than the group taking tranexamic acid.
Based on this evidence, the Court found that the Appellant could
not prove factual causation that the tranexamic acid treatment
led to the pulmonary emboli from which she had suffered.
In addition, the Court considered whether the provision of a
Rogers v Whitaker warning would have affected the Appellant’s
decision as to whether or not to undergo treatment with tranexamic
acid. It was found that tranexamic acid was the least invasive
treatment available for the Appellant’s heavy bleeding condition
and that in all likelihood she would still have undergone the
tranexamic treatment if she had been warned of the risk of
In considering Dr Bonazzi’s duty to warn the Appellant of the
risk, the Court of Appeal did note that despite the low statistical
possibility of thrombotic complications, “that it was at least fairly
arguable that Dr Bonazzi was under a duty to warn the Appellant”
but that even had the Appellant been warned of the remote
risks she would not have declined the treatment. Hence the
trial judge’s decision finding in favour of Dr Bonazzi that she
did not breached her duty of care by failing to warn the Appellant
was upheld by the Court of Appeal.
The Court of Appeal’s decision reinforces the need for medical
practitioners to be kept well informed and updated with available
literature as well as to pay regard to a patient’s particular
circumstances. If the medical practitioner forms the view that
the patient would place significance on a reported risk, even
a remote risk, then that information should be provided to the
patient prior the treatment being commenced.
Odisho has now applied to the High Court for special leave to
appeal the SCCA decision. The application for special leave
is being defended.Is a hospital liable for the
criminal acts of its mental
By John Van de Poll, Partner and Vahini Chetty, Solicitor
In the recent case of McKenna v Hunter & New England
Local Health District; Simon v Hunter & New England Local
Health District  NSWCA 476, the New South Wales Court
of Appeal held that a hospital and the health district was
liable to the family members of a man who was murdered by
one of its patients.
Mr Pettigrove suffered from a lengthy history of mental illness
including depression, psychosis and chronic paranoid
schizophrenia. In the early hours of 20 July 2004, Mr Pettigrove’s
friend, Mr Rose, became concerned about his mental state
and arranged for him to be taken by ambulance to Manning
Base Hospital (the Hospital) in New South Wales. The principal
cause of Mr Rose’s concern was that his friend was experiencing
what he described to be “physical jerks”.
Upon presenting to the hospital, Mr Pettigrove was assessed
and a certificate was issued for his compulsory detention.
Later that day a meeting was held between the duty psychiatrist,
Dr Coombes, Mr Pettigrove, Mr Rose and the duty nurse. Mr
Pettigrove requested during the course of the meeting that
he be permitted to return to his family in Victoria and receive
ongoing treatment. Mr Rose indicated that he wished to drive
Mr Pettigrove back to his family and it was agreed that he
would be permitted to do so the next day.
During the course of that night, Mr Pettigrove was witnessed
by nursing staff to have been pacing in his room and talking
loudly to himself.
On the morning of 21 July 2004, Dr Coombes once again
assessed Mr Pettigrove and noted that he did not have any
hallucinations or distressing thoughts. Mr Pettigrove was given
enough medication for one day (one Risperidone tablet) and
was discharged into Mr Rose’s care. Dr Coombes gave evidence
that Mr Pettigrove was to share the driving to Victoria and there
was a concern that providing him with additional medication
would have caused drowsiness.
That evening Mr Pettigrove and Mr Rose stopped near Dubbo
after nightfall. It was then that Mr Pettigrove strangled and
killed Mr Rose. In an interview with police, Mr Pettigrove stated
that he had acted on impulse, believing that Mr Rose had killed
him in a past life leading him to seek revenge.
Mr Rose’s mother and his two sisters, Ms Simon and Ms McKenna
(the Appellants) brought an action against the Hunter & New
England Local Health District for psychiatric injury resulting from
the nervous shock, claiming that the hospital had breached its
duty of care by discharging Mr Pettigrove into Mr Rose’s custody.
The majority in this case found that in light of his behavior the
night before, his history of mental illness; the fact that it was
more likely that Mr Pettigrove would become more agitated
at night; the appreciable risk that Mr Pettigrove would suffer
an acute psychotic episode of the type that had led to his
admission to the hospital; the fact that the oral medication
administered on the morning of 20 July 2004 was likely to have
been wearing off and the fact that but for Mr Rose’s offer to
drive Mr Pettigrove he would not have been discharged from the
Hospital as he was not fit to travel by public transport, the
hospital had breached its duty of care owed to Mr Rose.
The Court also found that the hospital’s decision to discharge
Mr Pettigrove was a necessary condition of the occurrence
of harm to Mr Rose as he was not given further medication as
a result of the intended road trip and was effectively undermedicated at the time that he killed Mr Rose. This liability was
found to extend to the Hunter & New England Local Health District.
The Appellants were awarded damages and an order for costs
was made in their favour.
It is noteworthy in this case that because the hospital discharged
Mr Pettigrove directly into Mr Rose’s care, a clear link could
be found between the hospital’s decision to discharge Mr
Pettigrove and the resultant harm. In contrast, in the case of
Hunter Area Health Service v Presland  NSWCA 33, it
was found that the hospital in question was not liable where
a psychiatric patient killed his brother’s fiancé six hours after
being discharged. The Court found in that case that once the
hospital’s control was lost by the refusal to detain the patient, it
was difficult to see how a duty for control extended for some
indeterminate period while the patient was at large. This case
was however distinguished from the present decision on its
Update on National Board
Guidelines, Codes of Conduct
and Policies for Registered
By Alison Choy Flannigan, Partner and Joann Yap, Graduate
The National Boards regulating registered health practitioners
in Australia have released revised guidelines, codes of conduct
and a new social media policy, which came into effect from
17 March 2014. Registered health practitioners should review
these documents to ensure their practice meets National Board
expectations from that date, including the:
• revised Guidelines for Advertising Regulated Health Services;
• revised Guidelines for Mandatory Notifications;
• revised Code of Conduct; and
• new Social Media Policy.
The National Boards will refer to the new documents in relation
to conduct occurring after 17 March 2014.
Guidelines for mandatory notifications
The Guidelines for mandatory notifications describe the mandatory
notification requirements under the National Law
. Although some
wording has been refined or added for clarification, most of
the guidelines have not changed and no new obligations have
Amendments clarify the following:
• mandatory notification is not required if a practitioners’
behaviour is being appropriately managed through treatment
and does not pose a risk to the public;
• individuals who are not subject to mandatory notification
obligations (such as patients) can make voluntary notifications;
• the person with most direct knowledge about notifiable
conduct should generally be encouraged to make a notification
• for practitioners reporting notifiable conduct, a ‘reasonable
belief’ must be formed in the course of practising the profession.
The following principles are drawn from legal cases which
have considered the meaning of reasonable belief:
• a belief is a state of mind;
• a reasonable belief is a belief based on reasonable grounds;
• a belief is based on reasonable grounds when all known
considerations relevant to the information of a belief are
taken into account including matters of opinion and those
known considerations are objectively assessed; and
• a just and fair judgement that reasonable grounds exist in
support of a belief can be made when all known considerations
are taken into account and objectively assessed; and
• the requirement to make a mandatory notification is triggered
by a practitioner practising their profession while intoxicated
by alcohol or drugs.
New exceptions have been created for practitioners in Western
Australia and Queensland in certain circumstances:
• treating practitioners in WA are not required to make mandatory
notification when their reasonable belief in misconduct or
impairment is formed in the course of providing health services
to a health practitioner or student; and
• following the commencement of the Health Ombudsman
Act 2013 (Qld), practitioners in Queensland are not required
to make a mandatory notification when their reasonable
belief is formed as a result of providing a health service to
a health practitioner, where the practitioner providing the
service reasonably believes that the notifiable conduct
relates to an impairment which will not place the public at
substantial risk of harm and is not professional misconduct.
In Queensland, mandatory notifications must be made to
the Health Ombudsman, rather than AHPRA, however the
Ombudsman must advise AHPRA about the notification
in certain circumstances.
Health Practitioner Regulation National Law (NSW), Part 8, Division 2 (and similar
legislation in other States and Territories).Code of Conduct
All National Boards publish a Code of Conduct – the National
Medical Board and Nursing and Midwifery Board publish their
own profession-specific codes.
The Code of Conduct contains a number of important standards
in relation to:
• providing good patient care, including shared decision-making;
• working with patients or clients;
• working with other healthcare practitioners;
• working within the healthcare system;
• minimising risk;
• maintaining professional performance;
• professional behaviour and ethical conduct;
• ensuring practitioner health;
• teaching, supervising and assessing; and
• undertaking research.
• clarification that the Code applies to the practitioners conduct
regardless of the setting, including for social media, e-health
and technology-based patient consultations;
• good practice also includes being aware that differences
such as gender, sexuality, age, belief systems and other
anti-discrimination grounds in relevant legislation may
influence care needs, and avoiding discrimination on the
basis of these differences;
• effective communication in all forms underpins every aspect
of good practice;
• good care includes facilitating the quality use of therapeutic
products based on the best available evidence and the patient
or client’s needs;
• encouraging patients or clients to communicate other health
advice they have received, including prescriptions or other
medications they have been prescribed and any other
therapies they are using;
• ensuring social media use and e-health is consistent with
the practitioner’s ethical and legal obligations to protect patient
• being mindful of additional informed consent requirements
when supplying or prescribing products not approved or made
• good practice involves an awareness of the cultural needs
and contexts of all patients and clients, to obtain good health
• good practice involves behaving professionally and
courteously to colleagues and other practitioners at all
times, including when using social media;
• good practice involves supporting students and practitioners
receiving supervision within a team; and
• practitioners need to be aware of and comply with any
guidelines of their National Board in relation to professional
The advertising guidelines explain the legal requirements
about advertising, which are set in the National Law
been reorganised to make them clearer and provide further
clarification and additional explanations, but do not include
any new obligations.
Social Media Policy
The new Social media policy explains how the obligations that
already exist in the National Law and Code of Conduct apply
to social media, but does not change the basic obligations to
be met by practitioners. These include the expected standards
of professional behaviour, limits on the way in which health
services are advertised, and compliance with confidentiality
and privacy requirements. The primary principle is that those
obligations apply to the behaviour of practitioners whether it
occurs online or in person.
Section 133 Health Practitioner Regulation National Law (NSW) and similar legislation
in other States and Territories.Professional boundaries in
Health and Aged Care –
where is the line?
By Dr Tim Smyth, Special Counsel
Two decisions in NSW, reinforce the requirement for all registered
health professionals to understand and respect professional
boundaries with patients. Both cases involved an allied health
In the case before the Physiotherapists Tribunal of NSW, the
Tribunal found that a lack of judgement by a physiotherapist
allowed a personal and wider family friendship to develop with
a patient to an extent that crossed the professional boundary.
In the Tribunal’s view, this lack of understanding and recognition of
professional boundaries amounted to unsatisfactory professional
conduct. The Tribunal reprimanded the physiotherapist and
imposed conditions, including a requirement for mentorship.
The second case was before the Psychologists Tribunal of NSW.
The Tribunal found that the psychologist had failed to maintain
proper professional boundaries with his client. The Tribunal
held that this conduct amounted to unsatisfactory professional
conduct and determined to reprimand the psychologist and
place conditions on his registration, including a requirement to
undertake further education and to undergo a period of supervised
practice. The psychologist was also ordered to pay 90% of the
costs of the Health Care Complaints Commission.
These cases remind health professionals of the need to:
• continually consider the nature of their relationship and
interaction with their patient or client;
• undertake an appropriate risk assessment, especially if the
patient or client is vulnerable, dependent or open to exploitation
or the nature of the relationship changes;
• carefully manage involvement of family members with patients
• be prepared to refer the patient to another practitioner if a
material risk of a boundary issue arises; and
• not allow themselves to get into a situation where the
relationship raises serious boundary issues or would be
perceived by colleagues and the community as being
unethical or improper.
HCCC v Shasank Verma  NSWPYT 2 (23
Mr Verma qualified as a physiotherapist in 1993. He first met
Patient A in 2001 and provided assessment and physiotherapy
services to her as part of his local health service employment.
As part of his separate private practice, he also provided services
to an aged care facility. Patient A moved into this facility in 2003.
In late 2001 and early 2002, at the patient’s initiative, the patient
contacted the physiotherapist’s wife and a friendship developed,
which subsequently extended to the physiotherapist’s adolescent
children and to Mr Verma. This family friendship included some
social activities, birthday gifts, visits to see the patient in the aged
care facility and assistance with shopping and transport to
appointments. Patient A was a widow and had no close relatives
Due to concerns she had about how her finances were being
managed by others, Patient A subsequently transferred significant
sums of money to Mr Verma for safekeeping. On the death of
the patient in 2008, Mr Verma received a significant financial
benefit under the patient’s will.
The Tribunal had difficulty in assessing the HCCC’s complaint
(which raised 90 allegations) and invited the HCCC to identify
the core particulars of the complaint. The Tribunal criticised the
Commission for submitting voluminous unnecessary material.
The HCCC asserted that Mr Verma, “allowed and/or encouraged
a personal relationship to develop with Patient A”. The Tribunal
was critical of many of the particulars submitted to the Tribunal
by the Commission and did not agree that they demonstrated
unsatisfactory professional conduct. The Tribunal also rejected
Commission submissions that as Mr Verma’s earlier treatment
of Patient A was while he was an employee of the local health
service, he remained bound by the NSW Ministry of Health’s
policies and Code of Conduct in his subsequent private
physiotherapy services to Patient A.
The practitioner did not dispute many of the factual matters
before the Tribunal. The Tribunal accepted that a social relationship
with a client and providing compassionate assistance is not
unusual, and of itself, would not amount to a failure to maintain
proper professional boundaries by a physiotherapist. The
Tribunal commented that had the practitioner been a treating
psychiatrist for example, the situation would be different.
HEALTHThe Tribunal found that the friendship and support provided to
Patient A by Mrs Verma and the children did not attract disapproval
of Mr Verma as a physiotherapist.
Patient A repeatedly told her carers, solicitor and GP that she
regarded Mr Verma as her next of kin. In 2007, without Mr Verma’s
knowledge, Patient A changed her will and made Mr Verma
her executor and sole beneficiary. Mr Verma did not become
aware of this until shortly after Patient A’s death.
The Tribunal acknowledged that “elderly patients living in aged
care facilities, particularly those with limited contact with family
members, will commonly develop a vulnerability to exploitation
and abuse by those responsible for their care”. The Tribunal
found that it was only in the months prior to Patient A’s death
in November 2008 that she experienced a material decline in
her cognitive ability and mental functioning, affecting her ability
to make informed decisions about her affairs. The Tribunal did
not find that Mr Verma had exploited or abused this vulnerability.
However, the Tribunal did agree that some of Mr Verma’s actions
could have resulted in exploitation of Patient A, and that his
allowing himself to be placed in such a situation was a breach
of the Physiotherapy Registration Board Code of Conduct.
The Tribunal found that he should have appreciated and avoided
The Tribunal had particular concerns in relation to the acceptance
by the Vermas of sums of money totalling over $100,000 from
Patient A. The Tribunal accepted evidence that Patient A had
asked Mrs Verma to hold the money in safekeeping for Patient A,
and that Patient A had rejected Mrs Verma’s suggestion that
the money be deposited into an account opened and controlled
by Patient A. The Tribunal noted that the Vermas held a joint
bank account and Mr Verma was aware of the deposits.
The Tribunal also had concerns over Mr Verma’s agreement
in August 2008 to accept appointment as an enduring guardian
and a transfer of power of attorney from a relative of Patient A
to him. The Tribunal noted that these appointments, and the
change in Patient A’s will, were overseen by Patient A’s solicitor.
The Tribunal found that these two concerns did show a failure
to maintain proper professional boundaries and constituted
unsatisfactory professional conduct.
A key issue for consideration by the Tribunal was whether the
contact between Mr Verma and Patient A between September
2004 and November 2008 constituted physiotherapy assessment
and/or treatment. The Tribunal noted that the nature of the
treatment was designing exercise programs for Patient A that
were implemented by a physiotherapy assistant at the aged
care facility. The Tribunal held that this did constitute provision
of physiotherapy services by Mr Verma, and hence he continued
to have a professional relationship with Patient A.
The Tribunal then considered whether the instances of
unsatisfactory professional conduct could also amount to a
more serious finding of professional misconduct. While finding
that Mr Verma’s conduct did demonstrate “a significant lack
of judgement and a significant failure on his part to appreciate
the necessary professional boundaries that need to be maintained
in a proper physiotherapeutic relationship”, the Tribunal rejected
the Commission’s submission that the conduct amounted to
professional misconduct. The conduct had not been deliberate,
exploitative or an abuse of the relationship with Patient A.
The Tribunal ordered that Mr Verma not provide physiotherapy
assessment or treatment to persons aged over 70 years until
he completed an ethics course to the satisfaction of the
Physiotherapy Council of NSW and he had been mentored
for a period of 12 months.
HEALTHHCCC v Leonard (No 1 and No 2)  NSWPST
4 (7 November 2013) and 5 (20 December 2013)
In this matter, the Commission successfully established its
complaints and the Tribunal decided to make a costs order
against the psychologist, Mr Leonard. The Commission’s
complaints were that Mr Leonard:
(a) failed to provide appropriate psychological services to
Client A by using telephone coaching and consultations
that were not appropriate in her case; and
(b) failed to establish and maintain proper professional
boundaries with Client A and failed to adequately respond
to an identified boundary issue.
The Tribunal agreed to a request by counsel for Mr Leonard
that the matter be considered in two stages – consideration
of the complaints and, should the complaints be established,
a hearing as to appropriate orders.
Mr Leonard was registered as a psychologist in 1998. He
subsequently established a private practice in Sydney and also
provided services in regional NSW. In his clinical practice he
also utilised telephone counselling.
Client A worked in a medical practice that referred patients to
Mr Leonard and they had telephone contact in this context
and occasionally saw each other in the street in Chatswood.
In 2008, Mr Leonard provided counselling to Client A’s child.
Client A was referred by her GP to Mr Leonard. Over an 8
month period in 2009, Mr Leonard had face to face sessions
with Client A. Subsequently, during a period up until March 2010,
they had telephone conversations and communicated by text
Mr Leonard and Client A met three times in December 2009
at a local café and Mr Leonard also sent Client A two photographs
of himself. Client A telephoned Mr Leonard in March 2010 to
advise him that her husband did not wish her to see him again
and she would no longer be in contact with him.
An issue before the Tribunal was whether the conduct of concern
occurred during the provision of psychological services and
a therapeutic relationship with Client A. Mr Leonard submitted
that the therapeutic relationship had concluded at the end of
the face to face sessions in August 2009. The Tribunal did not
accept this submission and did not find Mr Leonard to be a credible
witness. The Tribunal noted that Mr Leonard had made entries
in Client A’s clinical record in relation to a number of the telephone
calls and recorded them as “phone consult/session” or “long
phone coach”. The Tribunal found that Mr Leonard had continued
to provide psychological services to Client A up until March 2010.
In evidence, Mr Leonard acknowledged that Client A was
vulnerable and that his role as a psychologist and Client A’s
trust in him, placed him in a position of power and responsibility.
In the Tribunal’s expert witness’ view, Client A’s conduct clearly
demonstrated a high level of dependency and a high risk of
a transference reaction.
The Tribunal accepted the evidence of an expert psychologist
that the multiple attempts by Client A to contact Mr Leonard
and the boundary issues associated with telephone contact
and SMS messaging should have alerted Mr Leonard to the
need to more appropriately manage the situation. The Tribunal
noted with concern that many of these calls and messages
were after hours, very late at night and on weekends, and that
Mr Leonard frequently replied to them.
The Tribunal was satisfied that the continued use of telephone
counselling was not appropriate. While a romantic or other
relationship between Mr Leonard and Client A was not suggested,
Mr Leonard had failed to set clear boundaries with Client A.
By continuing to receive and respond to calls and texts from
Patient A, Mr Leonard had allowed proper professional boundaries
with a vulnerable patient to break down. Much of the telephone
contact was of a personal rather than professional nature.
The sending of two photos of himself (irrespective of the content)
to Client A was unprofessional and a boundary violation, as
was his providing counselling to Client A in a social setting at
a café. The Tribunal found that Mr. Leonard’s conduct “fostered
and facilitated the ongoing professional boundary difficulties”.
HEALTHThe Tribunal found that in failing to deal with the boundary
issues, Mr Leonard demonstrated “either ignorance of his
professional ethical obligations or reckless disregard for those
The Tribunal had no difficulty in finding that Mr Leonard’s conduct
fell significantly below what would be expected from a psychologist
with his training and experience and that it was both improper
and unethical. This constituted unsatisfactory professional
The Tribunal then considered whether this conduct was sufficiently
serious to warrant a finding of professional misconduct. The
common law definition of professional misconduct is that the
conduct “would reasonably be regarded as disgraceful or
or “such a departure from the accepted standards
as would reasonably incur the strong reprobation of professional
colleagues of good repute and competence”
Under the National Law governing registration of health
professionals, the statutory definition of professional misconduct
refers to unsatisfactory professional conduct of a sufficiently
serious nature to justify suspension or cancellation of the
The Psychology Tribunal has in other cases generally found
that a sexual relationship between a psychologist and a client
constitutes professional misconduct justifying cancellation of
While expressing concern over Mr. Leonard’s conduct and
lack of insight, the Tribunal did not believe that his conduct
could be equated with other instances where the Tribunal
had found the conduct to be the more serious, professional
The Tribunal reconvened in December 2013 to consider further
evidence and submissions as to the orders the Tribunal should
make. The Tribunal found Mr Leonard’s conduct to be “a very
serious case of unsatisfactory professional conduct, at the high
end of the range [of such conduct]”.
The Tribunal reprimanded Mr Leonard “in the strongest possible
terms”, imposed a condition requiring fortnightly supervision
for a period of 2 years to “address his failure to appreciate and
manage boundary issues” and required him to undertake an
ethics course at the St James Ethics Centre.
Legal Issues - Collaborations
Between Hospitals and
Universities and Other
By Alison Choy Flannigan, Partner
Common Arrangements between Hospitals and
Universities and other Educational Institutions
There are obvious benefits for hospitals to engage in the training
of clinical staff (provided that the training is adequately funded).
These include attracting students as future staff of the hospital,
attracting quality teaching/specialist clinical talent to the hospital,
profiling the hospital in relevant clinical specialities and attracting
research funding. For example, the Mayo Clinic in the USA has
built its reputation on its academic association
in workforce development programs for existing staff will also
improve staffing qualifications and therefore clinical care as
well as enable hospitals to attract and maintain staff with
opportunities for progression. Universities have become more
dependent upon privately funded international students as a
source of income.
The arrangements between hospitals and universities and other
educational institutions differ depending upon the type of hospital
and the nature of the relationship.
Public hospitals and health services will typically have a long
standing arrangement with specific universities, there being
in most cases an agreement between the hospital and the
university and also a number of State Health Department policies
which govern those relationships. These formal arrangements
are less likely to be in place with private hospitals and GP
Common arrangements include:
1. research collaboration, including issues such as funding and
contribution, ethics approval, common research strategy,
research governance, confidentiality, privacy, intellectual
property, commercialisation and publication rights;
2. university academic appointments for university teaching
staff at the hospital, including indemnity and insurance;
NSW Bar Association v Cummins  NSWCA 284.
Qidwai v Brown  1 NSWLR 100.
Mayo Clinic, http://www.mayoclinic.org/ (7 May 2014).3. student placement, including the qualifications, selection
and conduct of students, supervision, disciplinary issues,
compliance with hospital and university policies, patient
consent, working with children checks, confidentiality and
privacy, immunisation and insurance;
4. arrangements with Registered Training Organisations for
vocational training of staff; and
5. accommodation and equipment arrangements, whether they
be leases, licences or sessional arrangements to the enable of
use of hospitals facilities by academic and other university staff.
Before a hospital engages in the training of students and enables
those students to interact with or treat patients, the hospital
operator must ensure that adequate arrangements are in place
to manage these issues.
Registered Training Organisations (RTOs)
The Australian Government has created a number of funding
programs to support national productivity through the development
of workforce skills and manages these through Skills Connect.
Hospital operators, as employers may enter into workforce
development training arrangements with RTOs which are
registered with the Australian Skills Quality Authority (ASQA).
The Community Services & Health Industry Skills Council is a
broker for workforce development funding,
and provides valuable
funding for health service employers.
Arrangements between hospitals and RTOs typically include
issues such as the description of the workforce development
program, training participants, timetables, funding, including
compliance with relevant Commonwealth funding conditions
(which are generally not-negotiable), confidentiality and privacy,
and intellectual property.
One particular issue to consider in entering into a relationship
between a hospital operator and a university is the creation,
ownership, licence and commercialisation of intellectual property
rights because students are not usually employees of the hospital
operator or the university and the policies of the hospital and
university on intellectual property rights created by academics
and students are likely to differ.
It is important for the hospital and the university to clearly set
out in their agreements arrangements dealing with the ownership
of intellectual property rights upon their creation.
Audit report puts spotlight
on salaried specialist rights
of private practice
By Dr Tim Smyth, Special Counsel
The first of two reports, Right of private practice in Queensland
was completed in July 2013. The second, Right
of private practice: Senior medical officer conduct completed
in February 2014, examined compliance with contractual
obligations by a sample of staff specialists.
As outlined in the reports, allegations in Queensland media
in late 2012 concerning alleged ‘rorting’ of the right of private
practice arrangements, led to the Minister for Health writing
to the Auditor-General expressing concerns about the allegations
and the oversight, visibility and transparency of the conduct
of senior medical officers (SMOs). The Auditor-General initiated
a performance audit and tabled the first report in Parliament
on 11 July 2013.
The performance audit pursued three lines of inquiry to
• the intended health and financial benefits of the scheme
are being realised;
• the scheme is being administered efficiently; and
• practitioners are participating in the scheme with probity
and propriety and in full compliance with contractual obligations.
Private practice arrangements for salaried medical specialists
working in the public sector health system vary across Australia.
Common elements include payments of allowances, tiered
drawing rights from private practice revenue and the ability to
conduct an ‘outside’ private practice, all linked to granting the
public sector health service the right to bill chargeable patients
on behalf of the practitioner. In Queensland, the majority of
specialists (86%) participate under Option A and receive a private
practice allowance and assign 100% of private practice income
to the health service.
The first report found that financially, Queensland Health
paid out at least $800M more in allowances and other salary
supplementation over the past decade, than the private practice
revenue received. Option A was the biggest contributor to
this shortfall - $725.69M over the nine years to 30 June 2012.
‘Skills Connect’ http://skillsconnect.gov.au/ (7 May 2014).
‘Community Services and Health Industry Skills Council’ www.cshisc.com.au (7 May 2014).
The word limit of this article does not permit me to expand on this issue in this article,
however, refer to University of Western Australia v Gray (2009) 179 FCR 346.
Report to Parliament 1: 2013-14 available at www.qao.qld.gov.au.This finding will not be a surprise to many readers of the
Health Law Bulletin as health service managers and health
departments accept the necessity to provide salary
supplementation to recruit and retain specialists. In this regard,
the Auditor-General did note that there had been an increase
of over 1,200 senior medical officers (SMOs) since 2003-2004,
with the ratio of SMOs per 100,000 people rising from 31.7 to 56.6
over the 7 years.
The first report also found a significant lack of effective oversight
by the health department, health services and clinical unit
managers, poor administration and documentation, disparate
information systems, poor monitoring and clear compliance gaps.
The recent second report focussed on the third line of inquiry,
examining rostering, payments and billing practices for what
the Auditor-General termed SMOs in the “category of highest
risk for improper conduct”.
The report found it difficult to wholly substantiate or disprove
the allegations due to the lack of effective monitoring, accountability
and governance of the arrangements at a health service and
clinical unit level.
The report identified many areas of risk, including poor leave
records, SMOs being paid rostered overtime while on leave,
rostering practices that facilitated private practice, failure to
declare private practice income and billing of private patients
where no right of private practice had been documented.
Allegations of improper billing were substantiated for twelve
SMOs in the sample examined.
In addition to potential disciplinary action against some SMOs
for breach of contract and misconduct, the two reports also
highlight important legal compliance issues relating to:
• taxation legislation (including income tax and GST);
• the Health Insurance Act 1973 (Cth) and eligibility of services
for Medicare benefits; and
• state health service legislation.
These legal frameworks impose obligations and civil and criminal
penalties for breaches on both the medical practitioner and
their employing health service.
As noted in this and previous articles in the Health Law Bulletin,
the national health practitioner registration law also imposes
a code of conduct and duties on registered medical practitioners.
The Medical Board of Australia and conduct councils and
tribunals have found breaches of this code and duties to constitute
unsatisfactory or professional misconduct. These findings have
also been made against medical managers.
What should readers do?
As recommended by the Queensland Audit Office, health services
should closely review their current right of private practice
governance arrangements to ensure:
• transparency and clear formal documentation;
• effective accountability and monitoring;
• compliance with the regulatory framework required by each
State and Territory health department;
• billing arrangements compliance with the Health Insurance
Act 1973 (Cth); and
• compliance with taxation legislation.
HEALTHSecurity of Tenure, Ageing in
Place and Consumer Directed
Care – Legal obligations
By Alison Choy Flannigan, Partner and Joann Yap, Graduate
Approved providers of aged care services, both residential aged
care services and home care packages are required to comply
with statutory obligations under the Aged Care Act 1997 (Cth).
These obligations regulate many activities, including:
• security of tenure;
• ageing in place; and
• consumer directed care.
When approved providers implement these minimum regulatory
obligations into their daily operations, it is important to ensure
that they also comply with their duty of care to their clients
and employees as well as their contractual obligations with
clients and/or their legally authorised representatives.
Security of tenure
Approved providers of residential aged care facilities are required
under the User Rights Principles 1997 (Cth) to provide security
of tenure for a care recipient’s place in the residential care service.
The approved provider may ask the care recipient to leave the
residential care service only in limited circumstances, namely if
• the residential care service is closing;
• the residential care service no longer provides accommodation
and care suitable for the care recipient, having regard to
the care recipient’s long-term assessed needs, and the
approved provider has not agreed to provide care of the
kind that the care recipient presently needs;
• the care recipient no longer needs the care provided through
the residential care service as assessed by an aged care
assessment team (ACAT);
• the care recipient has not paid any agreed fee to the
approved provider within 42 days after the day when it is
payable, for a reason within the care recipient’s control;
• the care recipient has intentionally caused serious damage
to the residential care service or serious injury to the
approved provider (if the approved provider is an individual)
or serious injury to an employee of the approved provider,
or to another care recipient; or
• the care recipient is away from the residential care service
for a continuous period of at least 7 days for a reason other
than a reason permitted by the Act or an emergency.
The long-term needs of the care recipient must be assessed by:
• an ACAT; or
• at least 2 medical or other health practitioners who meet
the following criteria:
• one must be independent of the approved provider and
the residential care service, and must be chosen by the care
recipient or the care recipient’s appropriate representative;
• both must be competent to assess the aged care
needs of the care recipient.
The User Rights Principles set out a notification procedure to
follow with respect to requiring a care recipient to leave residential
care services. The approved provider must give at least 14 days’
notice including the following information:
• the decision;
• the reasons for the decision;
• when the care recipient is to leave; and
• the care recipient’s rights about leaving, including the right
of access to:
• the complaints resolution mechanism
• independent complaints processes; and
• one or more representatives of an advocacy service.
The approved provider must not take action to make the care
recipient leave, or imply that the care recipient must leave, before
suitable alternative accommodation is available that meets the
care recipient’s assessed long-term needs and is affordable
by the care recipient. There may also be a duty of care owed by
the approved provider to ensure that this requirement is met.
Some resident agreements may be more generous than the
minimum statutory requirements, so it is important to also consider
the relevant resident’s agreement before taking action. In some
cases, the duty of care to a care recipient may require an approved
provider to delay the transfer. To the extent of any inconsistency
between the statutory requirement and the resident agreement,
the statutory requirement prevails.
Ageing in Place
The User Rights Principles also restrict moving care recipients
within residential care services.
Under Part 2, Division 5 of the User Rights Principles a care
recipient may be moved to another bed or room in the residential
care service only if:
AGED CARE & RETIREMENT LIVING
User Rights Principles 1997 (Cth), Part 2, Division 1.• the move is at the care recipient’s request; or
• the care recipient agrees to move after being fully consulted
and without being subject to any pressure; or
• the move is necessary on genuine medical grounds as
• an ACAT; or
• at least 2 medical or other health practitioners who
meet the following criteria:
• one must be independent of the approved provider
and the residential care service, and must be chosen
by the care recipient or the care recipient’s
appropriate representative; and
• both must be competent to assess the aged care
needs of the care recipient; or
• the place occupied by the care recipient becomes an extra
service place and the care recipient elects not to pay the
extra service fee; or
• the move is necessary to carry out repairs or improvements
to the premises where the residential care service operates
and the care recipient has the right to return to the bed or
room, if it continues to exist as a bed or room for care recipients
when the repairs or improvements are finished.
Again, with moving a care recipient within an aged care service,
the approved provider must take into consideration its duty of
care to the care recipient and the relevant resident’s agreement.
Consumer directed care
From 1 August 2013 all new home care packages were required
to be delivered on a consumer directed care (CDC) basis.
From July 2015, all packages will operate on a CDC basis.
The guidelines for CDC are set out in the Home Care
Packages Program Guidelines (August 2013).
CDC is a way of delivering community services that allows
consumers and their carers to:
• control the type of care accessed, how and when it is delivered
as well as who provides that care;
• set goals in relation to remaining independent for as long
as possible, remaining healthy, or returning home after a
• determine a preferred level of involvement in managing
• receive ongoing monitoring and formal reviews by providers
to ensure the package continues to meet needs; and
• be provided with greater transparency in how the package
is funded and how those funds are being spent through
the Care Recipient Agreement.
From 1 August 2013, it became mandatory for all new Home
Care Packages in operation after that date (including all packages
allocated to providers in the 2012-13 Aged Care Approvals
Round) to be delivered on a CDC basis. The introduction of
CDC in all packages will apply from July 2015, although providers
will be able to convert existing packages to a CDC basis earlier
than this date.
The Home Care Packages Program, including the CDC
arrangements, has been evaluated by KPMG on behalf of the
then Department of Health and Ageing to refine the program
before the implementation of CDC arrangements across all
Home Care Packages in 2015.
Key findings from the evaluation include:
The KPMG report states that several CDC providers had
concerns about balancing the consumer choice elements of
the CDC with the provider’s duty of care. There may be a
conflict between the level of consumer choice to expend their
funds as they wish, and a provider’s responsibility and duty
of care to ensure consumers receive adequate support.
Some providers had refused consumer or carer requests that
CDC funds be used due to a concern that the consumer or
carer’s request would compromise the consumer’s care, for
example, reducing the amount of personal care or clinical care
a consumer could use;
Approved providers must balance the consumer’s choice with
their duty of care to the consumer. The Guidelines state that a
home care provider may decline a request from a consumer if
the proposed service may cause harm or pose a threat to the
health and/or safety of the consumer or staff. Where there is a
dispute, this should be resolved by discussion and mediation
by a mutually acceptable third party, such as the client’s health
care provider, where possible. Aged Care recipients may
make complaints to the service provider and/or the Aged
Care Complaints Scheme. Care recipients may also obtain
advice and support from advocacy service through the
National Aged Care advocacy line.
All approved providers of aged care services must review their
resident agreements, policies and procedures and daily practice
on a periodic basis to ensure continuing compliance with changing
AGED CARE & RETIREMENT LIVING
DPS Guide, Consumer Directed Care (CDC) Packages, <http://www.agedcareguide.com.
au/home-community-care-information.asp?c=53&i=30> (3 February 2014).
Australian Government Department of Health and Ageing, ‘Evaluation of the consumerdirected care initiative – Final Report’, https://www.health.gov.au/internet/main/publishing.
January 2012 (3 February 2014).
Id, at 116.Can you register a patent
for a method of medical
treatment? Apotex Pty Ltd v
Sanofi-Aventis Australia Pty
Ltd & Ors  HCA 50
By Alison Choy Flannigan, Partner and Joann Yap, Graduate
The majority of the High Court in Apotex Pty Ltd v Sanofi Aventis
Australia Pty Ltd
has held that some methods of medical
treatment of the human body are patentable inventions if certain
conditions are met, within the meaning of section 18(1) of the
Patents Act 1990 (Cth).
Sanofi-Aventis Deutschland GmbH was the registered owner
of Australian Patent No 670491 entitled “Pharmaceutical for
the treatment of skin disorders”. The patent had a single claim:
“A method of preventing or treating a skin disorder,
wherein the skin disorder is psoriasis, which comprises
administering to a recipient an effective amount of a
pharmaceutical composition containing as an active ingredient
a compound of the formula I or II”.
The formulae is then set out. A compound of the formula I is
Australian Patent No 529341 claimed a chemical formula of
Leflunomide, a process for its preporation, a composition
containing the compound as an active ingredient and a
method claim. That patent expired in 2004.
Apotex Pty Ltd (Apotex) intended to supply leflunomide in
Australia under the its generic trade name ‘Apo-Leflunomide’
for the treatment of rheumatoid arthritis and psoriatic arthritis
and obtained registration on the Australian Register of Therapeutic
Goods. Psoriasis is a skin condition. Leflunomide is not used
in Australia to treat psoriasis alone. Dermatologists do not
prescribe Leflunomide for that purpose. However, Leflunomide
is used by rheumatologists to treat rheumatoid arthritis and
psoriatic arthritis. Almost every person with psoriatic arthritis
has or will develop psoriasis. The evidence established that when
this compound is prescribed to treat a patient with psoriatic
arthritis, it is usually expected to also prevent or treat the patient’s
psoriasis, if the person has a concurrent case of psoriasis.
Sanofi-Aventis argued the supply of the product to treat psoriatic
arthritis would infringe its patent. Apotex cross-claimed and
sought to have the patent revoked on the basis of invalidity
because the patent related to a method of medical treatment,
or in the alterative that the claim in the patent did not disclose
a patentable invention because it was a second or subsequent
medical use of a previously known product.
The issue was whether a method of medical treatment is a
‘manner of manufacture within the meaning of section 6 of the
Statute of Monopolies’.
Sanofi-Aventis relied on section 117 of the Patents Act 1990
(Cth) which states:
117 Infringement by supply of products
(1) If the use of a product by a person would infringe a
patent, the supply of that product by one person to
another is an infringement of the patent by the supplier
unless the supplier is the patentee or licensee of the
(2) A reference in subsection (1) to the use of a product
by a person is a reference to:
(a) If the product is capable of only one reasonable use,
having regard to its nature or design – that use; or
(b) If the product is not staple commercial product –
any use of the product, if the supplier had reason to
believe that the person would put it to that use; or
(c) In any case – the use of the product in accordance
with any instructions for the use of the product, or
any inducement to use the product, given to the
person by the supplier or contained in an advertisement
published by or with the authority of the supplier.
Relevantly, the product information sheet for Apo-Lefluonomide
“Apo-Leflunomide is indicated for the treatment of:
• Active Rheumatoid Arthritis.
• Active Psoriatic Arthritis. Apo-Leflunomide is not indicated
for the treatment of psoriasis that is not associated with
manifestation of arthritic disease.”
 HCA 50 Issue
By the time the case came to the High Court, two particular
• Could a method of medical treatment be a “manner of
manufacture” and thus patentable?
• If a patent covers a method of treating a disease using a
product, does another person infringe that patent by supplying
that product with instructions that it be used to treat a different
The majority of the High Court concluded that a method of
medical treatment can be a “manner of manufacture” and
“methods of medical treatment of human beings, can be the
subject of patents”.
Crennan and Kiefel JJ in a joint judgment found that:
“Assuming that all other requirements for patentability are
met, a method (or process) for medical treatment of the human
body which is capable of satisfying the NRDC Case test,
namely that it is a contribution to a useful art having economic
utility, can be a manner of manufacture and hence a patentable
invention within the meaning of s18(1)(a) of the 1990 Act.
There is, however, a distinction which can be acknowledged
between a method of medical treatment which involves a
hitherto unknown therapeutic use of a pharmaceutical (having
prior therapeutic uses) and the activities or procedures of
doctors (and other medical staff) when physically treating
patients. Although it is unnecessary to decide the point,
or to seek to characterise such activities or procedures
exhaustively, speaking generally they are, in the language of
the NRDC Case, “essentially non-economic” and, in the
language of the EPC and the Patents Act 1977 (UK), they are
not “susceptible” or “capable” of industrial application. To the
extent that such activities or procedures involve a “method
or process”, they are unlikely to be able to satisfy the
NRDC Case test for the patentability of processes because
they are not capable of being practically applied in commerce
or industry, a necessary prerequisite of a “manner of
The court held, in relation to section 117(2)(c), that as
Apotex’s instructions specifically said its product was not
indicated for non-arthritic psoriaris, this was an “emphatic
instruction to recipients of Apo-Leflunomide from Apotex to
restrict use of the product to uses other than use in accordance
with the patented method”.
The section of the Act was not
engaged as the product information document did not instruct
recipients to use the unpatented pharmaceutical substance
in accordance with the patented method.
Further, the claim for indirect infringement failed as the court
in relation to s 117(2)(b) concluded that it was not shown, nor
could it be inferred, that Apotex had reason to believe that its
product would be used contrary to the indications in the product
Each case will depend upon its particular facts, in particular
the wording of the patent claim, and the infringing product and
its use, however, the case is of interest:
• to health and medical researchers in terms of potential future
patents in innovative methods of medical treatment; and
• to the life science industry in terms of the protection of their
Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd  HCA 50,  per French CJ. and .
Id, at  per Crennan and Kiefel JJ
Id, at  per Crennan and Kiefel JJ
Id, at  per Crennan and Kiefel JJ
Id, at  per Crennan and Kiefel JJ Goodbye FMA and CAC -
By Dr Tim Smyth, Special Counsel
The countdown to the commencement of the new Public
Governance, Performance and Accountability Act 2013 (Cth)
(PGPA Act) has begun. Commencement of the substantive
provisions of this Act is planned for 1 July 2014. The PGPA Act
will replace two Acts, well thumbed and bookmarked by both
Commonwealth officials and their lawyers – the Financial
Management and Accountability Act 1997 (Cth) and the
Commonwealth Authorities and Companies Act 1997 (Cth)
It is now time to get to know the PGPA Act.
The PGPA Act is a core part of a broader
public sector management reform agenda
which commenced in late 2010, with the
announcement of the Commonwealth
Financial Accountability Review (CFAR).
The Department of Finance and
Deregulation released 13 issues papers
to Commonwealth agencies to facilitate
discussion on financial management and
performance. A Discussion Paper
was released in March 2012,
and more detailed proposals
were outlined in a Position Paper
in November 2012.
The PGPA Bill to consolidate the Commonwealth financial
framework legislation into one Act was introduced into Parliament
in May 2013. The Joint Committee of Public Accounts and Audit
(JCPAA) conducted an inquiry into the PGPA Bill and tabled
their report on 4 June 2012. The PGPA Act was passed by
the Parliament on 28 June 2013 and received the Royal
Assent on 29 June 2013.
The PGPA Act represents a change from a compliance approach
to financial management, to a principles-based framework.
The Act is based on four key principles:
• Government should operate as a coherent whole;
• a uniform set of duties should apply to all resources handled
by Commonwealth entities;
• performance of the public sector is more than financial; and
• engaging with risk is a necessary step in improving
A set of PGPA Rules and better practice guidelines are being
prepared by the Department of Fniance to support the
implementation of the PGPA Act. There will also be a review
of other legislation to determine what consequential amendments
Further background information is available on the Public
Management Reform Agenda website of the Department of
Finance – at www.pmra.finance.gov.au
The Act uses a number of key concepts:
• Commonwealth entities;
• Accountable authorities;
• Officials; and
• Public resources.
Commonwealth entities will be two types:
• Corporate Commonwealth entities established as
corporations under their enabling Commonwealth
• Non-corporate Commonwealth entities (Commonwealth
government department and entities prescribed by the
Some parts of the PGPA Act apply to only one type of
Accountable authorities are the persons or bodies responsible
for governing the entity (eg secretary of the department or
board of a corporate Commonwealth entity). Accountable
authorities have a duty to govern the entity in a way that promotes
the proper use and management of public resources (including
effective systems relating to risk and control and keeping their
Minister and the Finance Minister informed of activities of the
entity and significant issues).
Officials are generally the staff of the entity. Staff of current
CAC Act authorities will be officials under the PGPA.
Public resources include relevant money, relevant property
and appropriations. Relevant money will include money in a bank
account and any other money held or controlled by an entity.
Commonwealth entities should review their governance policies
and procedures for compliance with the new legislation.