In Bupa HI Pty Ltd v Chang [2019] FCAFC 180, the Federal Court considered the proper interpretation and application of the Medicare Benefits Schedule (MBS).

Background

On 17 October 2019, the Federal Court dismissed an appeal brought by Bupa HI Pty Ltd (Bupa) against Dr Andrew Chang (Dr Chang), ophthalmologist and his related company Andrew Chang Services Pty Ltd (ACS) – the owner and operator of Sydney Retina Clinic and Day Surgery (Clinic) where Dr Chang practices.

The appeal arises from the dismissal by the primary judge in Bupa HI Pty Ltd v Andrew Chang Services Pty Ltd [2018] FCA 2033 of Bupa’s originating application by which it made claims against Dr Chang and ACS for misleading or deceptive conduct, and mistaken payment in relation to Medicare claims submitted by ACS.

Relevant facts

At trial, Bupa alleged the administration by Dr Chang of alprazolam (Xanax), in the absence of an anaesthetist (the Oral Sedation Procedure), was not an anaesthetic service which could attract MBS item 42739. The reason being, the ‘anaesthetic service’ merely involved the patient being given a 0.25mg tablet of Xanax (active ingredient alprazolam) orally 15-30 minutes before the procedure for intravitreal injections.

Relevantly, whilst both MBS items 42738 and 42739 describe the procedure for intravitreal injections in identical terms, item 42739 attracted a 60-70% higher second tier default benefit in comparison to item 42738. The dispute concerned 4,101 claims made by ACS between 13 September 2012 and 10 August 2015 under MBS item 42739 (the Conduct).

Bupa alleged the Conduct was in contravention of section 18 of the Australian Consumer Law (misleading and deceptive conduct).

Further, as a result of the Conduct, Bupa deregistered Dr Chang from the Bupa Medical Gap Scheme (Gap Scheme) effective 15 August 2016 in accordance with the terms of the BUPA Medical Gap Scheme Terms and Conditions dated March 2016 (Contract).

Pursuant to the Contract, Bupa may deregister a practitioner from the Gap Scheme where, “in Bupa’s reasonable opinion, the practitioner’s conduct may adversely impact the goodwill, reputation or business of Bupa at any time”.1

Bupa formed the view that it was inappropriate and unsustainable to bill MBS item 42739 for a patient receiving only a low-dose oral sedative or anxiolytic and that Dr Chang’s conduct might adversely impact the goodwill, reputation or business of Bupa.

The primary judge found “that the administration of low dose Xanax by the Oral Sedation Procedure can constitute an anaesthetic service and can attract [item 42739] when it is required or, in other words, when it is medically necessary in an individual case”.2

Additionally, the Court declared Bupa breached the Contract as a result of Bupa’s decision to deregister Dr Chang from the Gap Scheme. Dr Chang consequently brought a cross-claim against Bupa arising from this deregistration.

Issues on appeal

There were two main contentions on appeal, namely:

  1. the proper interpretation and application of MBS items (MBS appeal); and
  2. the Declaration (Gap Scheme appeal).

Bupa contended the primary judge erred in rejecting its alternative unpleaded case. That is, even if administering Alprazolam was considered to be an anaesthetic service, it was not for a patient requiring an anaesthetic service.3

It was held whilst some of the evidence provided by Mr Chang was not specifically referred to by the primary judge, his Honour accepted other unchallenged evidence given by Dr Chang about the circumstances in which the administration of low-dose Xanax might be medically necessary.4 Ultimately, the MBS Appeal was not allowed.5

The Gap Scheme Appeal considered the proper construction of the critical phrase “reasonable opinion”.

On appeal, the Federal Court held the proper construction of the relevant terms of the Contract was for Dr Chang, on his cross-claim, to establish on the balance of probabilities that the opinion that Bupa formed was not arrived at reasonably, and that the opinion was not reasonably based on available material.6

Reasonableness is to be evaluated by reference to the reasons that Bupa notified to the practitioner in its reasons for deregistration. The Court stated Bupa could not rely on the opinion of an expert anaesthetist that the procedure Dr Chang performed did not involve an anaesthetic service after the notice of re-registration was issued.7

What was held?

  • Bupa’s deregistration of Dr Chang from the Bupa Medical Gap Scheme was invalid and thereby remains a “Registered Medical Gap Scheme Practitioner” within the meaning of the Gap Scheme.
  • Bupa be required to take all steps necessary to reinstate Mr Chang to the register of Registered Medical Gap Scheme Practitioners maintained by Bupa for the purpose of the Gap Scheme.

Bupa was also ordered to pay Dr Chang’s costs of the appeal, the notice of contention, the application for leave to appeal and the cross-appeal.

Providers of health services are reminded to familiarise themselves with the appropriate Medicare rebate item descriptors and keep abreast of the constant changes to the MBS. Failure to submit Medicare claims appropriately may attract penalties under the Australian Consumer Law.