Behind the doors of a PSR investigation

9 minute read


Doctors are reluctant to talk about being investigated by the PSR, and after one shared his story with TMR, it’s easy to see why.


When ophthalmologist Dr David Kitchen was asked on the ABC’s 7:30 about his investigation by the Professional Services Review (PSR), his responses were often chilling.

“I fought it because I’d done nothing wrong,” he told 7:30, “getting up at 2:00am before work, 7:00pm till midnight, weekends, I didn’t go on family holidays. It dominated my life for four years.”

The interview formed part of Nine Newspapers and the ABC’s “investigation” of inappropriate Medicare billing to the tune of $8bn. That figure was scorned by senior figures from throughout the medical community, while recently Health Minister Mark Butler rejected it entirely.

The PSR’s investigation of Dr Kitchen was eventually struck down in February 2021 when the Federal Court quashed former PSR director Professor Julie Quinlivan’s decision to establish a PSR committee. That blunder not only voided the committee’s deliberations but also its very existence.

Getting a sense of how the PSR – Medicare’s investigative arm – operates is nigh on impossible.

Given the distress and professional humiliation experienced by practitioners who are selected for investigation by the secretive agency, the case for putting it under a very bright spotlight is undeniable.

But doctors are reluctant to talk about it, while revealing the determinations of a PSR committee, except in very limited circumstances, is prohibited by law. To do so risks criminal prosecution and 12 months’ jail.

So, for the moment, what went on between Dr Kitchen and a committee to which he was referred contrary to the Health Insurance Act, will remain under wraps.

The 17-minute ‘review’

Dr Kitchen, a consultant eye specialist for over 20 years, is the only full-time resident ophthalmologist in Central Queensland.

The Health Department began investigating him in June 2017 because of the large number of cataract surgeries he had performed the previous year compared to prior years, and in comparison with his peers. This was easily explained, since he had set up a centre to provide a bulk-billing cataract surgery for patients who would normally have trouble paying for the procedure. Many of these had been on long waiting lists with Queensland Health.

Understandably, the high-volume service which was established led to his being queried by Medicare for possible inappropriate practice.

Dr Kitchen had an initial phone interview and subsequently provided a 62-page submission to explain his billing patterns. But Medicare still wasn’t satisfied their concerns had been met and in December 2017, the Medicare chief executive asked the PSR director, Professor Quinlivan, to investigate his provision of MBS services between 1 February 2016 and 31 January 2017.

The director commissioned a report on Dr Kitchen by an ophthalmology peer, but this report expressed concerns about only three of Dr Kitchen’s attendances among the 110 attendances the director referred to him.

In August 2018, Dr Kitchen received the director’s report of the meeting and was invited to make a submission in response. That response comprised 929 pages with 207 attachments. Under the Health Insurance Act, the director must take this submission into account before taking any further action.

At 4:05pm on 6 November 2018, the PSR case manager emailed the submission, with a 1,200-word covering email of her own, to Professor Quinlivan. At 4:22pm – just 17 minutes later – she responded, noting that she intended to establish a committee and was “inclined to refer everything and the Committee can then refine as they see fit”.

That decision to establish a PSR committee without considering Dr Kitchen’s detailed submission, would, once discovered, be the nail in the coffin as far as the PSR’s investigation of Dr Kitchen went.

On 2 February 2021, the Federal Court’s Justice Collier declared that as director, Professor Quinlivan didn’t take into account Dr Kitchen’s submission before referring him to a committee under the Health Insurance Act and therefore her decision was void. Also void was her decision in November 2019 to fully disqualify him from access to MBS payments.

The legal battles

Regrettably for Dr Kitchen, in between the director’s flicking his case to an unlawfully-established committee and the judge’s order quashing it lay more than two years of professional and personal pain, brought on by the PSR’s investigation and several subsequent legal battles.

The committee’s investigation began on 14 May 2019 before the newly-established PSR committee 1157.

Dr Kitchen was told the investigation would examine randomly sampled MBS item services comprising 300 services provided by him. These were divided up into 10 lists, grouped by particular service.

Dr Kitchen had previously been asked for and had supplied 269 patient files related to these services.

He challenged whether the samples selected were actually random and requested the documents that would explain how they had been chosen, but his application was refused. The following day, he complained of stress and of feeling bullied and was granted a brief adjournment after obtaining a medical certificate.

In November, a report was provided by an expert statistician, Dr Nan Ye, which appeared to indicate the samples had not been randomly selected. 

Dr Kitchen also commenced legal proceedings against the PSR director and members of committee 1157 in the Federal Court, arguing she had not taken his submissions into account before setting up the committee. He also again challenged the purportedly random selection of the services under investigation.

He sought an interim injunction until these proceedings had been ruled on, but this was refused at a hearing on 20 November 2019.

Later that afternoon, Dr Kitchen’s solicitors provided the committee with a medical certificate which stated Dr Kitchen was unfit for work that day, noting he would provide a written response to the more general questions the committee might want to ask him orally. The committee re-convened but decided the certificate did not fulfil the requirements for an appropriate absence and adjourned the hearing.

Professor Quinlivan was notified Dr Kitchen had failed to attend and later that afternoon he was given notice that Medicare had disqualified him from claiming reimbursements for MBS services.

Counting the costs

Just over a week later, Dr Kitchen was successful in getting the Federal Court to suspend Professor Quinlivan’s decision to disqualify him.

In an affidavit, he argued the effects on his more than 8,000 patients per year – most of whom claim on Medicare and rely on safety net arrangements – would be significant. He also argued it would be difficult for all of his patients to be accommodated in other central Queensland practices given that some were unable to travel long distances due to age, poor vision and the costs of travel and accommodation.

According to the judgement in the case, counsel for the PSR argued that despite these disruptions, which would follow Dr Kitchen’s disqualification, they “constituted a sanction for failing to participate in the PSR review process which formed a crucial part of protecting the integrity of the publicly funded Medicare system”.

They also claimed, according to the judgement, the disruptions were not as significant or extensive as Dr Kitchen had alleged and that his personal financial circumstances and the impact of any disqualification should be given little weight.

While Dr Kitchen won some victories in his investigation by the PSR, they came at significant cost.

During its course, he spent hundreds of hours preparing for hearings, while his patients found clinics needed to be cancelled and his personal relationships suffered. For most of 2020, he fought legal battles to get the director to produce documents that would demonstrate she had not given due consideration to his submission in November 2018.

In early May this year, Dr Kitchen was finally advised after providing a further submission – this one of 11,167 pages with 1,063 attachments – that the investigation was complete and that both the creation and any deliberations of committee 1157 were once again confirmed to be void.

But Dr Kitchen had endured more than four years of extreme anxiety, humiliation, and damage to his professional reputation, including being disqualified from Medicare billings.

His legal costs had run to approximately $2.3 million.

While he lost a subsequent argument in court for indemnity costs, Dr Kitchen was granted party-party costs and is appealing the indemnity costs decision, with a directions hearing due next month.

Earlier this year, Dr Kitchen commenced a misfeasance suit against Professor Quinlivan for knowingly not taking his 2018 submission into account. That case is ongoing, with document discovery the next stage of the case.

Perhaps unsurprisingly, the PSR Director’s update, which lists agreements made with medical practitioners, committee final determinations, Federal Court decisions and referrals to AHPRA, has not mentioned Justice Collier’s order of 2 February 2021, despite this having been brought to their attention.

Fatally flawed?

Dr Kitchen’s experience – as well as the experiences of other practitioners who spoke to TMR about being investigated – speak to an urgent need for reform.

Earlier this month, Health Minister Mark Butler announced an independent review of Medicare compliance and while the terms of reference include the PSR, so far there is little to suggest the devastating experience faced by practitioners who are investigated will be high on the agenda, notwithstanding the possibility of legislative reform.

TMR would like to have discussed Dr Kitchen’s case, or even the PSR more broadly, with the health department and we sent emails to each of the three members of committee 1157 inviting comment. The following morning, we received a reply from PSR general counsel Bruce Topperwien advising us – as we had expected – that individual committee members do not respond to media enquiries and referring us to the PSR’s generic “enquiries” email address.

Mr Topperwien provided us the full text of section 106ZR of the Health Insurance Act, which prohibits disclosure of committee deliberations or evidence provided to a committee except under very limited circumstances.

Critics of the PSR process want 106ZR removed from the Act, saying that a combination of simple redactions and existing privacy legislation would protect both doctor and patient privacy very effectively.

As it stands, 106ZR is possibly the key element that allows the agency to operate so secretively and without proper accountability, hindering full and frank discussion of the PSR’s effectiveness or fairness.

Mr Topperwien also pointed out that “If [committee] members have an initial concern about a particular matter, they express those concerns so that the person under review has an opportunity to respond and allay those concerns”.

Dr Kitchen attempted to take full advantage of that opportunity even before his investigation reached the committee stage. His initial submission was not taken into account by the PSR director, as the Federal Court later recognised in its orders, and this surely speaks volumes about the way the agency can currently operate.

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