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Private Health Insurance Bill 2007

Part 5-2 General enforcement methods

Division 185 What this Part is about

185-1   Introduction

This Part gives the Minister and the Council powers that enable them to find out whether a private health insurer is complying with its enforceable obligations or (in the case of the Council) its Council-supervised obligations, and to encourage or compel an insurer to comply with those obligations.

The Minister can:

               (a)     set performance indicators for insurers;

              (b)     seek explanations from insurers;

               (c)     investigate insurers;

              (d)     obtain enforceable undertakings from insurers;

               (e)     direct insurers to do particular things;

               (f)     seek remedies in the Federal Court;

               (g)     revoke an insurer’s entitlement to offer tax rebates as premium reductions.

The Council can also do these things (except those mentioned in paragraphs (a) and (g)), as well as take action under Part 5-3 in relation to an insurer’s health benefits fund.

185-5   Meaning of enforceable obligation

                   All of the following provisions are enforceable obligations :

                     (a)  a provision of this Act;

                     (b)  a provision of any Private Health Insurance Rules made under section 333-20 or 333-25;

                     (c)  a provision of the regulations;

                     (d)  a direction given to a private health insurer under this Act;

                     (e)  if the insurer is a * restricted access insurer—a provision included in the insurer’s constitution in order to comply with subsection 126-20(6).

185-10   Meaning of Council-supervised obligation

                   All of the following * enforceable obligations are Council-supervised obligations , to the extent to which they relate to risk equalisation, * health benefits funds or Division 163 ( * prudential standards):

                     (a)  a provision of this Act;

                     (b)  a provision of any Private Health Insurance Rules made under section 333-20 or 333-25;

                     (c)  a provision of the regulations;

                     (d)  a direction given to a private health insurer under this Act.



 

Division 188 Performance indicators

188-1   Performance indicators

             (1)  The Private Health Insurance (Complying Product) Rules may set out performance indicators to be used by the Minister in monitoring private health insurers’ compliance with the principle of community rating in section 55-5 and the community rating requirements in Division 66.

             (2)  The performance indicators are to be framed:

                     (a)  to assist the Minister in detecting breaches of the principle of community rating in section 55-5 or the community rating requirements in Division 66; and

                     (b)  to alert the Minister to any practices of a private health insurer in relation to community rating that may require investigation; and

                     (c)  to alert the Minister to any practices of one or more private health insurers in relation to community rating that may be contrary to government health policy and may require a regulatory response.



 

Division 191 Explanation of private health insurer’s operations

191-1   Minister or Council may seek an explanation from a private health insurer

             (1)  If:

                     (a)  the Minister believes that, having regard to information available to the Minister or to any performance indicators under the Private Health Insurance (Complying Product) Rules, a private health insurer may have contravened an * enforceable obligation; or

                     (b)  the Council believes that, having regard to information available to the Council, a private health insurer may have contravened a * Council-supervised obligation;

the Minister (if paragraph (a) applies) or the Council (if paragraph (b) applies) may write to the private health insurer:

                     (c)  explaining the writer’s concerns; and

                     (d)  asking the insurer to explain its operations in relation to those concerns; and

                     (e)  specifying the period within which the writer requires the insurer’s response.

             (2)  The private health insurer must respond within the specified period, or any longer period that the writer, in writing before the end of the specified period, allows.

             (3)  If the writer refuses a request by the private health insurer for a longer period to respond, the writer must state the writer’s reasons for refusing.

Note:          Refusals of requests for longer periods to respond are reviewable under Part 6-9.

191-5   Writer must respond to insurer’s explanation

                   The writer under subsection 191-1(1) must, after receiving an explanation from a private health insurer in response, inform the insurer in writing:

                     (a)  whether the writer is or is not satisfied with the explanation; and

                     (b)  if the writer is not satisfied with the explanation—what steps the writer intends to take.



 

Division 194 Investigation of private health insurer’s operations

194-1   Minister or Council may investigate a private health insurer

             (1)  The Minister may, at any time and for any reason, begin an investigation of the operations of a private health insurer by doing either or both of the following:

                     (a)  giving a notice under any one or more sections of this Division;

                     (b)  authorising a person under section 194-25.

             (2)  The Council may, at any time, if for any reason it considers that a private health insurer might have contravened a * Council-supervised obligation or it otherwise has concerns about the insurer’s compliance with a Council-supervised obligation, begin an investigation of the operations of a private health insurer by doing either or both of the following:

                     (a)  giving a notice under any one or more sections of this Division;

                     (b)  authorising a person under section 194-25.

194-5   Notice to give information

             (1)  The Minister, or, if subsection 194-1(2) applies, the Council, may give a written notice to a person who is or who has been an * officer, employee or agent of:

                     (a)  a private health insurer; or

                     (b)  an entity that was a private health insurer at any time in the year ending on the day on which the notice is given;

requiring the person to give the notice-giver or the person specified in the notice, within the period specified in the notice, information about the area of the insurer’s operations specified in the notice.

             (2)  The notice-giver may require the person to give the information orally or in writing.

             (3)  The notice-giver may require the person to give the information on oath or affirmation. For that purpose, the notice-giver or the person specified in the notice may administer an oath or affirmation.

             (4)  The person is not excused from giving information on the ground that giving the information might tend to incriminate the person or make the person liable to a penalty. However, the information, or anything obtained as a direct or indirect consequence of the information, is not admissible in evidence against the person in any proceedings, other than proceedings for an offence against section 137.1 or 137.2 of the Criminal Code .

194-10   Notice to produce documents

             (1)  The Minister, or, if subsection 194-1(2) applies, the Council, may give a written notice to a person who is or who has been an * officer, employee or agent of:

                     (a)  a private health insurer; or

                     (b)  an entity that was a private health insurer at any time in the year ending on the day on which the notice is given;

requiring the person to produce, at the time and place specified in the notice, records, books, accounts and other documents of the insurer that are in the person’s custody or under the person’s control and that relate to the area of the insurer’s operations specified in the notice.

             (2)  The person is not excused from producing a document on the ground that the production of the document might tend to incriminate the person or make the person liable to a penalty. However, the production of the document, or anything obtained as a direct or indirect consequence of the production, is not admissible in evidence against the person in any proceedings, other than proceedings for an offence against section 137.1 or 137.2 of the Criminal Code .

194-15   Notice to give evidence

             (1)  The Minister, or, if subsection 194-1(2) applies, the Council, may give a written notice to a person who is or who has been an * officer, employee or agent of:

                     (a)  a private health insurer; or

                     (b)  an entity that was a private health insurer at any time in the year ending on the day on which the notice is given;

requiring the person to attend, at the time and place specified in the notice, before the notice-giver or the person specified in the notice and give evidence relating to an area of the insurer’s operations specified in the notice.

             (2)  The notice-giver may require the person to give the evidence orally or in writing.

             (3)  The notice-giver may require the person to give the evidence on oath or affirmation. For that purpose, the notice-giver or the person specified in the notice may administer an oath or affirmation.

             (4)  The person is not excused from answering a question on the ground that the answer to the question might tend to incriminate the person or make the person liable to a penalty. However, the answer, or anything obtained as a direct or indirect consequence of the answer, is not admissible in evidence against the person in any proceedings, other than proceedings for an offence against section 137.1 or 137.2 of the Criminal Code .

194-20   Offences in relation to investigation notices

             (1)  A person must not fail to comply with a requirement contained in a notice given to the person:

                     (a)  under section 194-5 (notice to give information); or

                     (b)  under section 194-10 (notice to produce documents); or

                     (c)  under section 194-15 (notice to give evidence).

Penalty:  10 penalty units.

             (2)  A person must not fail to be sworn or to make an affirmation when required to do so:

                     (a)  under section 194-5 (notice to give information); or

                     (b)  under section 194-15 (notice to give evidence).

Penalty:  10 penalty units.

             (3)  An offence under subsection (1) or (2) is an offence of strict liability.

Note:          For strict liability , see section 6.1 of the Criminal Code .

194-25   Authorisation to examine books and records etc.

             (1)  The Minister, or, if subsection 194-1(2) applies, the Council, may, in writing, authorise a person to examine and report on the records, books, accounts and other documents of:

                     (a)  a private health insurer; or

                     (b)  an entity that was a private health insurer at any time in the year ending on the day on which the authorisation is given.

             (2)  A person authorised under subsection (1) must, at all reasonable times, have full and free access to any * premises at which the records, books, accounts and other documents are kept and may take extracts from, or copies of, the records, books, accounts and other documents.

194-30   Minister may consult Council

                   If, in the course of an investigation conducted by the Minister, the Minister believes that there are issues concerning a * Council-supervised obligation, the Minister may:

                     (a)  consult the Council on that matter; and

                     (b)  if the Minister considers it appropriate—request the Council to take over any part of the investigation that relates to those issues.

194-35   Minister or Council must notify outcome of investigation

                   After completing an investigation under this Division of a private health insurer or former private health insurer, the Minister or the Council (whichever was the investigator) must inform the insurer in writing:

                     (a)  whether the investigator is or is not satisfied with the performance of the insurer; and

                     (b)  if the investigator is not satisfied with the performance of the insurer—what steps the investigator intends to take.



 

Division 197 Enforceable undertakings

197-1   Minister or Council may accept written undertakings given by a private health insurer

             (1)  The Minister may accept a written undertaking, given by a private health insurer at the Minister’s request, if the Minister considers that compliance with the undertaking will:

                     (a)  be likely to improve the performance of the insurer; or

                     (b)  if the Minister is satisfied that the insurer has contravened an * enforceable obligation—be likely to ensure that the insurer will cease to be in contravention of the enforceable obligation.

             (2)  The Council may accept a written undertaking, given by a private health insurer at the Council’s request, if the Council considers that compliance with the undertaking will be likely to improve the insurer’s operations in relation to its * Council-supervised obligations.

             (3)  The private health insurer may withdraw or vary the undertaking at any time with the consent of the acceptor of the undertaking.

197-5   Enforcement of undertakings

             (1)  If the acceptor of an undertaking under this Division considers that a private health insurer that gave an undertaking under this Division has contravened any of its terms, the acceptor may apply to the Federal Court for an order under subsection (2).

             (2)  If the Federal Court is satisfied that the private health insurer has contravened a term of the undertaking, the court may make one or more of the following orders:

                     (a)  an order directing the insurer to comply with the terms of the undertaking;

                     (b)  if there is a contravention of an * enforceable obligation—any other order of a kind set out in Division 203 that the court considers appropriate.



 

Division 200 Ministerial and Council directions

200-1   Minister or Council may give directions

             (1)  If, at any time and for any reason:

                     (a)  the Minister considers that it will assist in the prevention of * improper discrimination to do so; or

                     (b)  the Council considers that it will assist in the prevention of contraventions of * Council-supervised obligations to do so;

the Minister (if paragraph (a) applies) or Council (if paragraph (b) applies) may give a direction to the insurer requiring it:

                     (c)  to modify its day-to-day operations in a particular respect; or

                     (d)  to modify its * rules in a particular respect; or

                     (e)  if the insurer is a * restricted access insurer and the Minister gives the direction—to modify the provisions included in its constitution in order to comply with subsection 126-20(6) in a particular respect.

Note:          A decision to give a direction is reviewable under Part 6-9.

             (2)  If, at any time and for any reason:

                     (a)  the Minister considers that there appears to be a contravention of an * enforceable obligation involving * improper discrimination by the private health insurer; or

                     (b)  the Council considers that there appears to be a contravention of a * Council-supervised obligation;

the Minister (if paragraph (a) applies) or Council (if paragraph (b) applies) may give a direction to the insurer:

                     (c)  requiring it to modify its day-to-day operations; or

                     (d)  requiring it to modify its * rules; or

                     (e)  if the insurer is a * restricted access insurer and the Minister gives the direction—requiring it to modify the provisions included in its constitution in order to comply with subsection 126-20(6);

so as to address that contravention.

Note:          A decision to give a direction is reviewable under Part 6-9.

             (3)  A direction mentioned in subsection (1) or (2) may, if the person who gives the direction considers it proper to do so, include requirements with respect to the reconsideration by the private health insurer of an application or claim made to the insurer and dealt with by it before the direction takes effect.

             (4)  A private health insurer must, in reconsidering an application or claim in accordance with subsection (3), deal with the application or claim as if the direction had been in force at the time when the application or claim was first considered.

             (5)  A direction given under this section must be published:

                     (a)  if given by the Minister—on the Department’s website; and

                     (b)  if given by the Council—on the Council’s website;

not later than 5 working days after the direction is given.

200-5   Direction requirements

                   A direction given under this Division to a private health insurer:

                     (a)  must be in writing; and

                     (b)  must be signed by the person giving the direction; and

                     (c)  may be served on the insurer by serving a copy on the insurer’s * chief executive officer.

Note:          Private health insurers must keep the Department and Council informed about who the current chief executive officer is (see section 169-15).



 

Division 203 Remedies in the Federal Court

203-1   Minister or Council may apply to the Federal Court

             (1)  If the Minister is satisfied that a private health insurer has contravened an * enforceable obligation, the Minister may apply to the Federal Court for:

                     (a)  a * declaration of contravention; and

                     (b)  any one or more of the following orders:

                              (i)  a pecuniary penalty order under section 203-10;

                             (ii)  a compensation order under section 203-15;

                            (iii)  an adverse publicity order under section 203-20;

                            (iv)  any other order that the Minister considers to be appropriate to redress the contravention.

             (2)  If the Council is satisfied that a private health insurer has contravened a * Council-supervised obligation, the Council may apply to the Federal Court for:

                     (a)  a * declaration of contravention; and

                     (b)  either or both of the following orders:

                              (i)  a pecuniary penalty order under section 203-10;

                             (ii)  any order that the Council considers to be appropriate to redress the contravention, other than an order under section 203-15 or 203-20.

203-5   Declarations of contravention

             (1)  If the Federal Court is satisfied that a private health insurer has contravened an * enforceable obligation, it must make a declaration of contravention.

             (2)  The declaration must specify:

                     (a)  the * enforceable obligation that was contravened; and

                     (b)  the private health insurer that contravened the provision; and

                     (c)  the conduct that constituted the contravention; and

                     (d)  if the court is satisfied that an * officer of the private health insurer failed to take reasonable steps to prevent the insurer contravening the enforceable obligation—the officer.

             (3)  A * declaration of contravention is conclusive evidence of the matters mentioned in subsection (2).

203-10   Pecuniary penalty order

             (1)  If the Federal Court has made a * declaration of contravention (whether on application by the Minister or the Council) that specifies an * officer of a private health insurer (see paragraph 203-5(2)(d)), the court may order the officer to pay the Commonwealth a pecuniary penalty of up to 1,000 penalty units.

             (2)  The court must not make an order under subsection (1) if it is satisfied that a court has ordered the * officer to pay damages in the nature of punitive damages in respect of:

                     (a)  the contravention of the * enforceable obligation; or

                     (b)  the officer’s failure to take reasonable steps to prevent the insurer contravening the enforceable obligation.

             (3)  The penalty is a civil debt payable to the Commonwealth. The Commonwealth may enforce the order as if it were an order made in civil proceedings against the * officer to recover a debt due by the officer. The debt arising from the order is taken to be a judgment debt.

203-15   Compensation order

             (1)  If the Federal Court has made a * declaration of contravention on application by the Minister, the court may order the private health insurer specified in the declaration to compensate an individual for any injury or loss suffered by the individual as a result of the contravention.

             (2)  The order must specify the amount of compensation.

             (3)  The order may be enforced as if it were a judgment of the court.

203-20   Adverse publicity order

             (1)  If the Federal Court has made a * declaration of contravention on application by the Minister, the court may make an order requiring the private health insurer specified in the declaration to do either or both of the following:

                     (a)  disclose in a way, and to the person or persons, specified in the order, the information specified in the notice to correct or counter the effect of the contravention;

                     (b)  publish, in the way specified in the order, an advertisement to correct or counter the effect of the contravention in the terms specified in, or determined in accordance with, the order.

             (2)  The order may be enforced as if it were a judgment of the court.

203-25   Other order

             (1)  If the Federal Court has made a * declaration of contravention (whether on application by the Minister or the Council), the court may make any order that the applicant applies for.

             (2)  The order may be enforced as if it were a judgment of the court.

203-30   Time limit for declarations and orders

                   Proceedings under this Division may be started no later than 6 years after the contravention.

203-35   Civil evidence and procedure rules for declarations and orders

                   The Federal Court must apply the rules of evidence and procedure for civil matters in proceedings under this Division.

Note:          The standard of proof in civil proceedings is the balance of probabilities (see section 140 of the Evidence Act 1995 ).

203-40   Civil proceedings after criminal proceedings

                   The Federal Court must not make a pecuniary penalty order against an * officer of a private health insurer under section 203-10 if the officer has been convicted of an offence constituted by conduct that is substantially the same as the conduct to which the court had regard in satisfying itself that the officer failed to take reasonable steps to prevent the insurer contravening the * enforceable obligation.

203-45   Criminal proceedings during civil proceedings

             (1)  Proceedings for a pecuniary penalty order against an * officer of a private health insurer are stayed if:

                     (a)  criminal proceedings are started or have already been started against the officer for an offence; and

                     (b)  the offence is constituted by conduct that is substantially the same as the conduct to which the court had regard in satisfying itself that the officer failed to take reasonable steps to prevent the insurer contravening the * enforceable obligation.

             (2)  The proceedings for the order may be resumed if the * officer is not convicted of the offence. Otherwise, the proceedings for the order are dismissed.

203-50   Criminal proceedings after civil proceedings

                   Criminal proceedings may be started against a person for conduct that is substantially the same as conduct constituting a contravention of an * enforceable obligation regardless of whether:

                     (a)  a * declaration of contravention has been made that specifies the person; or

                     (b)  an order has been made against the person under this Division.

203-55   Evidence given in proceedings for penalty not admissible in criminal proceedings

                   Evidence of information given or evidence of production of documents by an * officer of a private health insurer is not admissible in criminal proceedings against the officer if:

                     (a)  the officer previously gave the evidence or produced the documents in proceedings for a pecuniary penalty order against the officer under section 203-10 (whether or not the order was made); and

                     (b)  the conduct alleged to constitute the offence is substantially the same as the conduct to which the court had regard in satisfying itself that the officer failed to take reasonable steps to prevent the insurer contravening the * enforceable obligation.

However, this does not apply to a criminal proceeding in respect of the falsity of the evidence given by the officer in the proceedings for the pecuniary penalty order.

203-60   Minister or Council may require person to assist

             (1)  The Minister may, in writing, require a person to give all reasonable assistance in connection with:

                     (a)  an application by the Minister:

                              (i)  for a * declaration of contravention in relation to a private health insurer; or

                             (ii)  for a declaration of contravention that specifies an * officer of a private health insurer; or

                            (iii)  for a pecuniary penalty order under section 203-10 in relation to an officer of a private health insurer; or

                     (b)  criminal proceedings against a private health insurer, or an officer of a private health insurer, for an offence against this Act.

The person must comply with the request.

Penalty:  5 penalty units.

             (2)  The Council may, in writing, require a person to give all reasonable assistance in connection with an application by the Council:

                     (a)  for a * declaration of contravention in relation to a private health insurer; or

                     (b)  for a declaration of contravention that specifies an * officer of a private health insurer; or

                     (c)  for a pecuniary penalty order under section 203-10 in relation to an officer of a private health insurer.

The person must comply with the request.

Penalty:  5 penalty units.

             (3)  The Minister or Council must not require the person to assist in connection with an application for a declaration or order unless:

                     (a)  it appears to the Minister or Council that someone other than the person required to assist may have contravened an * enforceable obligation; and

                     (b)  the Minister or Council suspects or believes that the person required to assist can give information relevant to the application.

             (4)  The Minister must not require the person to assist in connection with criminal proceedings unless:

                     (a)  it appears to the Minister that the person required to assist is unlikely to be a defendant in the proceedings; and

                     (b)  the person required to assist is an employee or agent (including a banker or auditor) of the private health insurer concerned.

             (5)  The Minister or Council may require the person to assist regardless of whether:

                     (a)  an application for the declaration or order has actually been made; or

                     (b)  criminal proceedings for the offence have actually begun.

             (6)  The person cannot be required to assist if the person is or has been a lawyer for:

                     (a)  in an application for a declaration or order—the person suspected of the contravention; or

                     (b)  in criminal proceedings—a defendant or likely defendant in the proceedings.

             (7)  The Federal Court may order the person to comply with the requirement in a specified way. Only the Minister and the Council may apply to the court for an order under this subsection.

203-65   Relief from liability for contravening an enforceable obligation

             (1)  If, in proceedings brought against a person under this Division, it appears to the Federal Court that:

                     (a)  the person has, or may have:

                              (i)  contravened an * enforceable obligation; or

                             (ii)  if the person is an * officer of a private health insurer—failed to take reasonable steps to prevent the insurer from contravening an enforceable obligation; but

                     (b)  the person has acted honestly and, having regard to all the circumstances of the case, the person ought fairly to be excused for the contravention;

the court may relieve the person either wholly or partly from a liability to which the person would otherwise be subject, or that might otherwise be imposed on the person, because of the contravention.

             (2)  A person who thinks that proceedings will or may be begun against the person under this Division may apply to the Federal Court for relief.

             (3)  On an application under subsection (2), the court may grant relief under subsection (1) as if the proceedings had been begun in the court.

             (4)  For the purposes of subsection (1) as applying for the purposes of a case tried by a judge with a jury:

                     (a)  a reference in that subsection to the court is a reference to the judge; and

                     (b)  the relief that may be granted includes withdrawing the case in whole or in part from the jury and directing judgment to be entered for the defendant on such terms as to costs as the judge thinks appropriate.

203-70   Powers of Federal Court

                   A provision of this Act conferring a power on the Federal Court does not affect any other power of the court conferred by this Act or otherwise.



 

Division 206 Revoking entitlement to offer rebate as a premium reduction

206-1   Revocation of status of participating insurer

             (1)  If a * participating insurer:

                     (a)  has repeatedly failed to comply with subsection 26-1(5) (receipt for payment of premiums); or

                     (b)  has failed to comply with a condition specified in the Private Health Insurance (Incentives) Rules as a condition of participation in the * premiums reduction scheme; or

                     (c)  refuses or fails to comply with:

                              (i)  a direction given by the Minister under section 200-1; or

                             (ii)  the principle of community rating in section 55-5;

the Minister may, by notice given to the insurer, revoke the insurer’s status as a participating insurer.

             (2)  Upon the giving of the notice, the insurer ceases to be a * participating insurer.

Note:          Decisions to revoke an insurer’s status as a participating insurer are reviewable under Part 6-9.