Explanatory Memorandum
(Circulated by the authority of the Parliamentary Secretary to the Treasurer, the Hon Bernie Ripoll MP)Chapter 4
Health Insurance Act 1973
Outline of chapter
4.1 The Bill amends the Health Insurance Act 1973 (HIA) toreform certain provisions involving personal criminal liability for corporate fault in line with the COAG Principles; and make clear those circumstances in which corporate officers can be held personally criminally liable for corporate fault.
Context of amendments
4.2 The HIA imposes personal liability for corporate fault on company officers in a range of circumstances.
4.3 In particular, the HIA makes it an offence for a practitioner or medical entrepreneur to receive or obtain a bribe from a proprietor of a private hospital in return for enabling a person to be admitted as a patient, and for the proprietor of a private hospital to offer such a bribe. The audit of Commonwealth legislation identified this as a provision that applied personal criminal liability on officers in a manner that was not consistent with the COAG Principles.
4.4 The HIA also makes executive officers of companies providing certain health services personally criminally liable for breaches of that Act by the company where the company engages in conduct that is intended to induce a person to request pathology or diagnostic imaging services from a provider.
4.5 The offence was developed in consultation with the pathology industry, and is aimed at providing fairer bargaining between pathology providers and owners of clinics. Previous legislation that did not impose personal criminal liability on the officers of these companies was not effective in deterring the prohibited practices in question.
4.6 These offences are aimed at preventing inappropriate referrals for pathology and diagnostic services. The cost of such inappropriate referrals is in part borne by the Commonwealth Government, and by extension taxpayers, through payments made to the service provider as part of the Medicare Benefits Scheme. The retention of personal criminal liability in relation to this offence is therefore justified on the basis that there are compelling public policy grounds, and that corporate penalties alone are not effective in deterring the prohibited practices.
Summary of new law
4.7 The Bill amends the HIA to remove the personal criminal liability on company officers of the proprietor of a private hospital who wilfullyauthorise or permit the bribery of a medical practitioner, midwife or nurse by their corporation, where the officer has not personally been responsible for the offence.
Comparison of key features of new law and current law
| New law | Current law |
|---|---|
| Where an offence is committed by a corporation in relation to section 129AA, an officer of the corporation who is in default is not guilty of an offence. | Where an offence is committed by a corporation in relation to section 129AA, an officer of the corporation who is in default is guilty of an offence. |
| Notes in the Act draw attention to section 23DZZIT, which indicates where personal liability is imposed on an executive officer of a body corporate. | Provisions in the Act do not currently explicitly highlight where personal liability is imposed on an executive officer of a body corporate. |
Detailed explanation of new law
4.8 Section 129AA of the HIA makes it an offence for a practitioner or medical entrepreneur to receive or obtain a bribe from a proprietor of a private hospital in return for enabling a person to be admitted as a patient, and for the proprietor of a private hospital to offer such a bribe. Subsections 129AA (2), 129AA (3) and129AA (6) extend this liability to an officer of the corporation who is in default. This is defined to include an officer who wilfully authorises or permits the commission of the offence and by implication may extend to officers beyond those with this level of involvement.
4.9 The Bill amends the HIA to repeal subsections 129AA (2), 129AA (3) and 129AA (6) and prevent the extension of personal criminal liability to officers of the corporation where those officers were not directly involved in the conduct. [ Schedule 3, Items 1 and 2 ]
4.10 There are a number of offence provisions in the Act which could be contravened in such a way as to trigger the imposition of personal criminal liability for corporate fault where the company engages in conduct that is intended to induce a person to request pathology or diagnostic imaging services from a provider as provided for under section 23DZZIT. The Bill amends the HIA to make clear upon the reading of the provisions that trigger liability under section 23DZZIT, that executive officers may incur personal liability for the offence. [ Schedule 3, Items 3, 4, 5 and 6 ]
4.11 The Bill corrects a typographical error in section 23DZZIO, to correctly refer to offences against the Division. [ Schedule 3, Item 7 ]
Application and transitional provisions
4.12 These amendments apply from the day after Royal Assent. [ Section 2 ]
4.13 The amendments apply only in relation to acts or omissions occurring on or after the day the Bill commences. [ Schedule 7, Item 1 ]