No rebate? Patients will have their day in court

One Federal Court case has failed, but there are good legal arguments to be made that Australians are not getting what they pay for.

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It is unusual for the daily Federal Court mail blast to deliver surprises. But on 30 September 2022, it produced something stunning.

A brave Australian by the name of Toby Chambers had taken Medicare to court for denying him a Medicare rebate.

The judgment is short, and would probably be viewed by many as of no consequence. One of those nothing-to-see-here stories of a disgruntled individual wasting the court’s time and resources.

But Chambers’ case is much more important than that. It represents the thin edge of the consumer wedge. The story is a powerful wakeup call. A reminder that if we keep shifting costs to consumers, and continue to deny them access to a system they pay for, they will eventually take matters into their own hands, and revolt.

Chambers’ woes began on 12 March 2020, when he had an MRI. He lodged a claim to Medicare for a rebate of $300, but on 8 April 2020, his claim was rejected with the rejection code “Medicare benefits are not payable for the service/s listed on the account/s you provided”.

On 10 September 2021, Chambers applied to the Administrative Appeals Tribunal (AAT) for a review of Medicare’s decision. When that didn’t work, he appealed to the Federal Court.

Just to be clear, I do not know which specific MRI service was the subject of this dispute. There is no Medicare item number reported in the judgment, and the earlier AAT decision is unavailable.

But item numbers aside, an important component of the case involved Chambers’ argument that the Medicare rebate is a type of social security benefit, which he believed he was entitled to as a tax-paying citizen. And he was right. The characterisation of Medicare benefits as social security or welfare benefits was settled decades ago in the High Court case of Health Insurance Commission v Peverill. Yet somewhat astonishingly, the Federal Court rejected this argument! So, we appear to have been plunged into uncharted territory – because if Medicare benefits are no longer welfare benefits, what are they?

Unfortunately, we will have to save that question for another day because ultimately, Chambers lost his case on technical grounds, and Rangiah J. pointed out that a successful social security argument would not have changed the outcome anyway.

It is also true that there is no right to sue for Medicare benefits. This is because, being welfare payments (!), Medicare benefits remain subject to the ongoing will of the parliament, and can be removed or changed any time.

By the time the matter was heard in the Federal Court, Chambers had prepared the following list of constitutional arguments that he wished to run:

Whether s 51(xxiiiA) of the Constitution “enlivens” a Medicare claim under the “social security law”; whether “concessional” medical, hospital and/or pharmaceutical benefits under the Social Security Act and the Administration Act, fall, “within the ambit of social security law pursuant to s 51(xxiiiA) (sic) of the Constitution”; whether, “practical steps could be authorised and implemented to avoid … a breach”, of s 117 of the Constitution caused by differing and “discriminatory” elective surgery wait times between States; and whether the respondent is in “breach” of s 118 of the Constitution by refusing to authorise the payment of an MRI…In his outline of submissions, the applicant also submits that the Tribunal’s finding that a Medicare payment is not a “social security benefit” is, “inconsistent with s 51(xxiiiA)” of the Constitution.

For someone without legal representation, you’d have to agree it’s a pretty impressive list. His arguments around the operation and meaning of s 51(xxiiiA) are not without merit. It is, after all, the central constitutional force around which our entire health system orbits.

Ultimately, though, the court held that the constitutional issues didn’t have anything to do with the appeal and Chambers had not demonstrated any legal error on the part of the AAT. So, game over.

In 2020 during a panel discussion on Medicare law during covid, as part of NSW Government Solicitor’s Week, I explained that without necessary structural reform we would inevitably find ourselves thrashing Medicare out in the High Court. I believe Chambers’ case is the first step in that direction.

For those who know a little about s 51(xxiiiA), you will know that the federal government has no constitutional authority to set or control doctors’ fees, so you may feel comforted in the knowledge that consumer arguments framed around affordability will never get up. But what the federal government does control is access. So, arguments carefully framed around consumers’ inability to access health services under Medicare (such as by requiring patients to enrol, or rules like the 12-month existing relationship rule, or by removing rebates for MRIs) are much more likely to succeed.

In fact, it’s very easy to see a possible line of argument from the consumer perspective: “I can no longer access a system I pay for, so I don’t think I should have to pay for it any more.”

With the right team of lawyers working pro bono for the greater good, compelling arguments along these lines, argued in court, are almost a certainty given the current direction reform is taking.

We should never forget that Medicare belongs to the Australian people. Chambers’ case is the first of this kind, but you’d be a fool to think it will be the last.

Dr Margaret Faux is a health system administrator, lawyer and registered nurse with a PhD in Medicare compliance, and is the CEO of AIMAC, which offers courses and explainers on legally correct Medicare billing.