MRI Scan Scam

A compilation of media postings and resources on the controversy surrounding the introduction of a Medicare rebate for MRI scanning in Australia.

Prepared by Greg Brown
 
Number of Visitors Since October 11th 2000

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Last Updated October 11th 2000   Still under construction
Presented and compiled to aid understanding of the issue and to collate disparate resources.
Copyright for all items remain with the original authors.


Abbreviations
ABC Australian Broadcasting Commission DPP Commonwealth Director of Public Prosecution
SMH Sydney Morning Herald HIC Health Insurance Commission
RACR Royal Australasian College of Radiologists RANZCR Royal Australian & New Zealand College of Radiologists (the current correct name)


September 27th 2000  The end of the Scan Scam saga ?
Australian TV and Radio carried the DPP announcement that there was insufficient evidence to proceed with any criminal prosecutions on this matter. Damian Bugg QC said there was evidence that some of the contracts were backdated, but not sufficient to prove criminal intent.  In each instance the DPP investigations failed to establish a prima facie case for a reasonable prosecution.   The DPP does not envisage further investigation, but has not ruled out civil action against 8 other similar instances.
 Reactions from the major players have been predictable.  The Minister accepted the DPP decision and noted there are "lessons to be learned" from the situation and the Auditor General's report.   The opposition have again called for the Minister's resignation.  The Prime Minister has been silent. The RANZCR says it members have been exonerated, and want the machines excluded from Medicare rebates by the November 1999 regulations to be reinstated.
The saga may not be over yet; arguments may well continue, but it appears that the repercussions will be minimal.
In my opinion the only instrument to control the effect of the commercially motivated surge of scanners was the November regulation change. I believe any considered examination of that measure will show it to be a coarse device that dealt with those who made their purchase decision regardless of impending policy changes in the same manner as those who took a punt on the arrival of a new income stream.
Greg

Closing Comments ??
Radiologists want Medicare benefits restored for MRI machines
ABC News Online
27 Sept 2000
College of Radiologists urges MRI funding to be restored
ABC News Online
28 Sept 2000
No Charges over radiology machines buy up
ABC News Online
28 Sept 2000
MR Scam suspects absolved
John Kerin
News.com.au
28 Sept 2000
recommended reading
Scan Doctors won't be Charged
Mark Metherell
Sydney Morning Herald
28 Sept 2000
Doctors avoid court over scan affair
Darren Gray
theage.com.au
28 Sept 2000
A healthy result for Wooldridge 
Louise Dodson
theage.com.au
28 Sept 2000

 
 
 


Related Links

Australian MRI Funding Policy Index of References to MRI from Australian Federal Parliament Adelaide MRI Web site Comments or other perspectives

Media Reports & Press Releases
Please remember that some of these postings come from political organization with some bias. I have included all I can find and will leave it to the readers to draw their own conclusions.   Copyright and responsibility for the opinions remain with the original authors.

A search on the Parliament of Australia Hansard collection shows a lot more newspaper articles than I have listed here.  I assume these are not available on the web but if your research requires that degree of completion, use the hansard site and restrict the search to media.
 Alternately contact the offices of :-
Jenny Macklin: The Honorable Jenny Macklin MP, member for Jagga Jagga and opposition spokesperson on health
Michael Wooldridge The Honorable Michael Wooldridge MP, member for Casey. Minister of Health
 

Wooldridge responsible for MRI cost blowout
Media release
Jenny Macklin
February 16 1999

ABC TV 7:30 Report Stories
1/10/99
18/10/99
19/10/99
23/12/99

Wooldridge on the defense over "scam scam'
A compilation by YAHOO!

DPP Probes in Rebate Investigation
The Age October 10 1999

MRI cover-up starts to unravel
Media release
Jenny Macklin
September 27 1999

Minister Backs into a corner
Media release
Jenny Macklin
October 12 1999

Minister repeatedly warned of scan scam
Media Release
Jenny Macklin
March 29 2000

Miister must release memo
Media Release
Jenny Macklin
May 31 2000

ALP continues with baseless allegations
Media release
Michael Wooldridge
October 21 1999

Letter to Auditor General
Media release
Sen John Falukner
October 20 1999

Doorstop Interview
Kim Beazley
March 7 2000

Doorstop Interview
Kim Beazley
May 1 7 2000
Date Title & Link Authors Type
May 12 1998 Summary of 1998-99 Budget announcements in health Michael Wooldridge Media release
October 20 1999 Labor claims rubbish Michael Wooldridge Media release
Minister admits radiologists had knowledge
Media release
Jenny Macklin
September 29 1999
Wooldridge shuts stable door behind radiologists
Media release
Jenny Macklin
October 11th 1999
MRI Scan Scam: Minister must stand down, Royal Commission must be held
Media release
Jenny Macklin
October 18th 1999
Minister slams alleged MRI scam
Media Release
Michael Wooldridge
October 19 1999
Wooldridge misleads on Auditor General's inquiry
Media release
Jenny Macklin
October 20th 1999
Scan Scam: Doctors face Court
Mark Wetherell &  Judy Whellan
smh.com.au
October 21 1999
Doorstep Interview
Kim Beazley
October 20th 1999
Doorstop Interview
John Howard 
October 19 1999
MRI review announced
Media Release
Michael Wooldridge
November 17 1999
Chair of MRI review announced
Media Release
Michael Wooldridge
October 20 1999
Government refuses to release scan scam papers Media release
Jenny Macklin
November 23 1999
Doorstop Interview
Kim Beazley & Jenny Macklin
October 18 1999
Doorstop Interview
Kim Beazley
October 19 1999
Health & Wooldridge snubbed by government
Media release
Jenny Macklin
December 9 1999
Wooldridge culpable over MRI scam
Media release
Jenny Macklin
December 23 1999
How Dr. Wooldridge has changed his tune
Media release
Jenny Macklin
December 24 1999
Health Department reveals half the MRI negotiating team placed orders
Media release
Jenny Macklin
February 2 2000
Government secret deal leaves mothers out of pocket
Media release
Chris Evans
January 11 2000
Doorstep Interview
Kim Beazley
May 11 2000
MRI REPORT BY PROFESSOR BLANDFORD MUST BE RELEASED
media release
Jenny Macklin
April 19 2000
ABC TV 7:30 Report Stories
1/10/99
18/10/99
19/10/99
23/12/99
HEALTH DEPARTMENT HAD EARLY WARNING OF SCAN SCAM
December 1 1999
Jenny Macklin 
Media Release
Federal Health Minister announces results of Health Insurance Commission into MRI
Media Release Dr Wooldridge
December 23  1999
Wooldridge misleads on Auditor General's enquiry
Media release
Jenny Macklin
October 20th 1999

Media Release 
Jenny Macklin 29/3/00
Media Release by Jenny Macklin calling for public release of Blandford Report 
April 19 2000
Blandford Report on MRI services in Australia 
March 2000
Auditor General's report on the 1998 budget decision on Australian MRI Funding  May 2000

Main Story transcript
Wooldridge's comments
ABC TV  7:30 Report
10th  May 2000
Charges Loom in Australian "scan scam"
Diagnostic Imaging June 2000
Robert Bruce
Health care Watch on Monster.com
May 21 1999
Dr Andrew Gunn's (Doctors reform Society) public letter on the topic
October 22 1999
Australia's MRI "scandal" diverts attention from government restrictions on medical diagnosis.
Laura Mitchel  29 January 2000
World Socialist Web site
The Scam You can almost see through.
The Zeitgeist Gazette Archive
"Scrooge at Christmas"
Doctors Reform Society Media Release
"Scannergate rocks the liberals"
by Peter Mac
Communist Party of Australia
"Scan Scam Lies Exposed"
Andrew Herrington
ALP net
15 May 2000
Conflict of Interest (Kevan Gosper, The Scan Scam, Love Bug) 
Bob Mendelson
15 May 2000
"Health official had next day MRI visit"
by Mark Metherell & Marion Wilkinson
Sydney Morning Herald On-line 
May 23rd 2000
Labor questions scan scam report oversight 
ABC News On-Line
May 23 2000
MRI row: another error found
by Michelle Grattan
Sydney Morning Heral On-line
May 15 2000
Wooldridge again denies wrongdoing as ALP maintain heat 
ABC News On-Line
May 15 2000
New flaw found in scan scam defense
by John Kerin
Australian News Network
May 15 2000
Scan scam mire deepens
by John Kerin
Australian News Network
May 12 2000
'Twas folly that made the monster
Editorial comment by John Kerin
Australian News Network
May 15 2000
Radiologists accused in scan scam
Christopher Zinn
BMJ.com
October 30 1999
New Twist in Scan Scam Saga
by Darren Gray
TheAge.com.au
May 23 2000
Wooldridge digs in over scan scam
by Darren Gray
TheAge.com.au
May 11 2000
Government refuses request on scan scam
by Darren Gray
TheAge.com.au
April 11 2000
Minister's pain over 'scan scam'
By Mark Metherell
SMH.com.au
October 20 1999
Scan scam leak: radiologists at odds with Wooldridge
By Mark Metherell
SMH.com.au
May 11 2000
Scan scam a mere blip for radiologists rich list
By Mark Metherell
SMH.com.au
March 13 2000
Includes comments on Radiology business and share floats
Editorial: Get to bottom of 'scan scam'
SMH.com.au
March 13 2000
 'Conflict' casualty in scan scam 
 By Mark Metherell
SMH.com.au
October 29 1999
Editorial: Wooldridge and scan scam
SMH.com.au
October 21 1999
Minister calls for scan-scam jailings
by Brendan Nicholson
theage.com.au
Sunday 14 May 2000 
Doctor is named in "scan scam' 
by Brendan Nicholson
theage.com.au
December 9 1999
Health Department had early warning of scan scam
Media Release
Jenny Macklin
December 1 1999
Scan scam report set for release 
Transcript of ABC radio story
December 23 1999
'Scan scam' haunts Health Minister 
Transcript of ABC radio story
May 12 2000
Compilation of MRI funding stories
SMH.com.au
October 20 1999
PM Should Sack Wooldridge
AAP World News 
May 15 2000
Technology Issues Report - May 2000
Records Management Association of Australia RMAA
Records go missing
Technology Issues Report June 2000
RMAA
A profile of Barry Catchlove
Business Review Weekly
May 5 2000
Opposition Exposes "scan scam" meeting
Transcript of ABC radio story
May 23 2000
Radiologists deny controversial scan scam
Transcript of ABC radio story
October 22 1999
Renewed calls for scan scam Royal Commission
Transcript of ABC radio story
October 29 1999
Radiologists speak out on scan scam
Transcript of ABC TV  7:30 report
Radiologists face possible fraud charges in 'scan scam' fallout.
7:30 report ABC TV transcript
December 23 1999
Scan scam leak: radiologists at odds with Wooldridge
Mark Wetherell  smh.com.au
May 11 2000
Negative imaging.  News Review
Marian Wilkinson  smh.com.au
May 13 2000
Wooldridge shocked at 'scan scam' investigation outcome
Transcript of ABC TV  7:30 report
23 December 1999
Wooldridge under more pressure over 'scan scam' 
Transcript of ABC radio story
May 11 2000
Wooldridge under more pressure over 'scan scam' 
Transcript of ABC radio story
May 11 2000
What the doctors ordered
Feature Article by Michelle Gratten
SMH.com.au
October 22 1999
No salve for any reputations when truth is still hidden
Analysis by Marian Wilkinson
SMH.com.au
May 11 2000
Wooldridge under stress as Labor pushes "scan scam" 
Transcript of ABC radio story
October 21 1999
Calls for Wooldridge to resign over 'scan scam' 
Transcript of ABC radio story
May 11 2000
MRI scan scam is back
Transcript of ABC radio story
May 10 2000
Wooldridge passes the buck on scan scam
Transcript of ABC radio story
May 11 2000
Opposition hits out at scan scam
Transcript of ABC radio story
November 29 1999
Scan blow-out to cost $10 million
Darren Gray
theage.com.au
May 16 2000
Australia's MRI "scandal" diverts attention from government restrictions on medical diagnosis
Laura Mitchell
World Socialist website
January 29 2000
Government stalling on MRIs: Labor
Darren Gray
theage.com.au
January 14 2000
Radiologists who spent $100m face Medicare ban
Mark Metherell
smh.com.au
April 19 2000
Health chief spared in MRI investigation
Mark Metherell
smh.com.au
May 13 2000
PM should sack Wooldridge, says Labor 
Ken Davis  AAP
May  15 2000
Howard stands by Wooldridge 
Transcript of ABC radio story
May 12 2000
Health Minister concedes mistake, under fresh attack 
Transcript of ABC radio story
May 15 2000
Waiting lists fall for affordable scan
Judith Whelan
smh.com.au
October 20 1999
Minister should go over MRI scam, says Beazley 
Darren Gray
theage.com.au
May 12 2000
Report uncovers new MRI scam
Darren Gray
theage.com.au
December 29 1999
(radiologist requesting MRI for GP)
Rebate denied to some patients
Judith Whelan
smh.com.au
October 20 1999
Wooldridge says Labor laundered cash for personal use
Darren Gray
theage.com.au
April 7 2000
Wooldridge admits approach by doctor on scan machines 
Mark Metherell
smh.com.au
May 12 2000
MRI audit unaffected by blunder
Darren Gray
theage.com.au
May 13 2000
Technology Issues Report (Part 1) April 2000
RMAA
Minister responsible for radiology blow-out
Media release
Jenny Macklin
May 27 2000
MRI row: another error found
Michelle Gratten
smh.com.au
May 15 2000
Doctor is named in scan scam
Darren Gray
theage.com.au
December 9 1999
Political donations on menu for doctors
Marian Wilkinson
SMH.com.au
April 4 2000
Scanner scandal rattles minister
Mark Metherell
smh.com.au
October 22 1999
Minister's scan scam cover up exposed
Media release
Jenny Macklin
May 13 2000

MRI cases go to DPP
Mark Metherell
smh.com.au
February 12 2000
Beazley says Wooldridge trying to shift blame
theage.com.au
May 31 2000
Small MRI quota angers radiologists
Mark Metherell
smh.com.au
April 20 1999
Senate hears evidence of MRI cover up
Media release
Jenny Macklin
April 12 2000
Senate must call minister ot account
Media release
Jenny Macklin
April 6 2000

Unrelated Links

The Indian "Scan Scam"

"Medi-leak"
Medi-leak is the term coined in a piece  published in The West Australian newspaper February 11 1999 page 42.
The article is typed below.
This controversy was raised in the Budget Estimates Committee of the Australian Federal Senate, and was accompanied by a string of questions to the Health Minister in the House of Representatives and the Senate.   The resulting HIC audit resulted in a memo from the Health Insurance Commission to the Minister on October 15th 1999.

Medi-leak Probe ordered
Canberra
By Carlina Tan-Van Baren

The Health Insurance Commission is investigating a possible Budget leak that could see a $22.5 million blow-out in the cost of Medicare rebates for radiology services.
A Senate estimates committee has been told of Health Department concerns of inside knowledge over the signing of 15 contracts to buy magnetic resonance imaging units between the printing of budget papers and their release on May 12 last year.
On Budget night, Health Minister Michael Wooldridge announced the extension of Medicare rebates for diagnostic services using MRI equipment.  Department officials have told the committee that, after the printing of the Budget papers, Dr. Wooldridge took the decision to backdate eligibility for new MRI units which were not yet in service but had been bought on contracts signed before the Budget was released.
In the light of fears about a possible leak, Opposition health spokeswoman Jenny Macklin asked Dr Wooldridge who he had discussed the backdating with before Budget night and whether any of those people were involved in the contracts under investigation.
Dr Wooldridge said he could not answer the question because he was not aware of who was under investigation.   But he had sought the investigation in which each of the 15 radiology services would be asked to sign a statutory declaration of their knowledge relating to the Medicare rebate changes.
He said the HIC audit would be "very robust".  Anyone who perjured themselves by signing a statutory declaration would be dealt with by the full effect of the law, Dr Wooldridge said.
Ms Macklin later called for Dr Wooldridge to explain his role in deciding to backdate eligibility.
"There is no medical need for Australia to have these additional 15 machines and the circumstances under which these contracts were written must be publicly disclosed," she said.


ABC TV 7:30 Report Story on Possible MRI funding Budget Leak

The URL of this transcript is http://www.abc.net.au/7.30/stories/s56474.htm and the copyright belongs to the Australian Broadcasting Commission
The transcript

ABC TV 7:30 Report Transcript 1/10/99
Government Denies Budget Leaks

MAXINE McKEW: Did a federal budget leak two years ago allow some of the country's radiologists to get in early and make millions of dollars? The Federal Opposition says there is enough evidence to demand an inquiry into what they say is a version of insider trading. The 1998 budget for the first time allowed Medicare rebates to apply to magnetic resonance imaging machines -- or MRIs. As a result, those machines became far more lucrative to operate. And in the months leading up to that budget, the number of MRI machines either bought or placed on order skyrocketed. The Government -- and the College of Radiologists -- deny any leaks occurred. But in a late development today the 7:30 Report has learnt that an inquiry looking into the matter now expects to refer 12 cases to the Director of Public Prosecutions.
Political Editor Barrie Cassidy.

BARRIE CASSIDY: This is a magnetic resonance imaging machine, an MRI. It diagnoses a whole range of illness. Up until the May 1998 budget, a scan would cost $700 with no Medicare rebate. There were 62 in existence, most of them in the private system. People were waiting too long to get access. And so the Government held an inquiry.

JENNY MACKLIN, SHADOW HEALTH MINISTER:That official committee said that the number of machines we had way back at the end of 1997 would have been enough to meet the needs of Australians for these scans.

BARRIE CASSIDY: There was no need for any new machines?

JENNY MACKLIN: No need for any new machines -- a need to bring more into the publicly-funded system, but no need for more to come onto the market.

BARRIE CASSIDY: In the May 1998 budget, the Government introduced a Medicare rebate of $475 for MRI scans.
Overnight that made ownership of the machines a far more lucrative proposition. These machines cost $3 million but, thanks largely to the rebate, operators could draw as much as $1.5 million a year for the life of the machine. So just imagine, if you were a radiologist, how valuable that information would have been, that the scans were about to be covered by a Medicare rebate Though, if you were going to invest $3 million, you would want to know whether a cut-off date was going to apply.
What the Government decided wa,s that the rebate would apply not only to existing machines but any machine on order, on the books in the run-up to the budget.

JENNY MACKLIN: Apparently it was widely known as far back as February in 1998 that the Government was going to make this decision and it seems that a number of people took advantage of that knowledge and went out and ordered machines.

BARRIE CASSIDY: And there is some evidence of informed guesswork from February onwards. The Minister concedes as much.

MICHAEL WOOLDRIDGE, HEALTH MINISTER: (historical sound bite, maybe in parliament)
So there was considerable speculation in the industry that there would be a supply measure months ahead of when we did it.
What happened, and what I am informed only on Monday, is that as early as February in 1998 one of the companies that sells MRIs was going around a conference in Sydney saying, "You had better sign up now.  It's coming in the budget."

BARRIE CASSIDY:Informed speculation maybe, but a lot of money was punted on a hunch. Up until February 1998, Australia had accumulated 62 of these machines over 10 years.In just three months leading up to the budget that year, another 31 were ordered -- $90 million worth, a 50 per cent increase, in three months.

JENNY MACKLIN: What we're talking about here is people taking advantage of inside information, of information about a budget decision to be made by the Government and then the public purse paying for that information. So really the taxpayer is the bunny in all this.

MICHAEL WOOLDRIDGE: I don't concede there was a budget leak. I do concede some people in the College of Radiologists knew about it. I do not know how those people behaved. I don't know whether or not they ordered machines. If they did, I think it's quite improper. But I don't want to speculate on that.

BARRIE CASSIDY: A crucial meeting happened on 6 May, one week before the budget, when the Minister met a group of radiologists in Sydney. At that meeting was Dr Peter Carr, president of the college's economics policy committee. He says the Minister discussed options including extending the rebate to machines on order but not installed. And at that stage he, Dr Carr, declared his own interests.

MICHAEL WOOLDRIDGE: Dr Peter Carr's comments are incorrect. I'll also say that his comments that he divulged that he had a conflict of interest are not correct.

BARRIE CASSIDY: Dr Wooldridge has had his staff draw up statutory declarations in which they say the meeting pressed him for details but he gave none.  Now, another radiologist, Dr George Clempfner, who was on the MRI task force, told the 7:30 Report he went overseas a week before the budget and he had no sense that the rebates would apply to machines on order. And yet, when he returned, he discovered others had bought a machine, in some cases more than one. He believes the leak occurred, but not through the task force.

RALPH WATZLAFF, HEALTH INSURANCE COMMISSION: We would, and we do, examine the matter further if there appears to be any irregularity or if we have any suspicion about the accuracy of what's stated.

BARRIE CASSIDY: The Health Insurance Commission has been looking at this matter for nearly a year. It's been a slow process, partly because some of the radiologists are not co-operating. The commission has had to serve 24 notices in cases where radiologists have refused to volunteer information. And now the commission has told the 7:30 Report that it expects to refer up to 12 cases to the Director of Public Prosecutions.  They include cases where there is a suspicion that the orders were either backdated or signed on the condition that the budget delivered the rebates as expected. But it is not part of the commission's brief to investigate where the leaks occurred.

JENNY MACKLIN: The minister consistently refuses to have a proper inquiry into who knew and how they found out and whether or not anybody has in fact been able to take advantage of the government's decision.

MAXINE McKEW: And we should point out that the Minister for Health Michael Wooldridge was approached, but declined to be interviewed for that story.
 

Greg's Comments


Ministerial Statement October 18th 1999

Dr KMichael Wooldridge, Australian Minister for Health
Australian Parliament House of Representatives October 18th 1999
The following is the Hansard account of Dr Wooldridge's statement. Copyright belongs to the Parliament of Australian..
I have highlighted the key points (in my opinion) in bold

Dr WOOLDRIDGE  (Casey-Minister for Health and Aged Care)(4.01 p.m.) -by leave-As members would be aware, the government decided in the context of the negotiations around the agreement of the Royal Australian and New Zealand College of Radiologists covering the three years from 1998-99 to 2001-02 to introduce Medicare benefits funding for magnetic resonance imaging machines. This decision was announced on 12 May 1998 as part of the 1998 budget. It was announced at that time that eligibility for benefits was to be limited to machines that were in place or on order on that day. Subsequently, the government decided to require operators of machines to notify the Health Insurance Commission of any machines they considered to be eligible by no later than 11 October 1999.

Last Friday I received a minute from the Managing Director of the Health Insurance Commission advising me that 111 machines have now been notified to the commission. Of these, 59 were in place on 12 May 1998, the date of the 1998 budget, and 52 were claimed to be on order on that day. No fewer than 13 of the machines claimed to be on order last May were advised to the Health Insurance Commission in the fortnight before the cut-off on 11 October this year-that is, in the last week or so, 13 radiologists have just remembered that they spent $3 million 18 months ago on an MRI machine. Of the 52 on order, 48 were ordered between 10 February, when negotiations with the royal college commenced, and the budget on 12 May 1998. I table a minute from the Health Insurance Commission.
While the Health Insurance Commission is continuing to investigate the bona fides of orders, their investigations so far indicate `that a significant number of the applications have question marks around both the accuracy of the date itself claimed for the contract and the conditional nature of the contract'. Given that an additional 13 machines have just turned up and given the comments from the Health Insurance Commission, I have decided to recommend to the Executive Council meeting this Wednesday a regulation to limit access to Medicare benefits to those machines that were on order on 10 February 1998 when formal negotiations with the Royal College of Radiologists got under way.
This is an interim measure that will ensure that an advantage does not accrue to any person who may have taken advantage of backdating of a contract, a non-binding contract or any form of inside knowledge as a result of the negotiation process to order a machine before 12 May 1998. The regulation will take effect from 1 November to ensure that people who have MRI scans booked are in no way disadvantaged. Where a machine is located outside a capital city, is operating as of today and where no other machine is readily available, that MRI will be able to continue to operate, thus not in any way disadvantaging people in rural and regional Australia.

In total, the measure I am proposing will leave in place a Medicare benefit subsidy for at least 66 machines-the 59 that were in place on 12 May, four that were ordered before 10 February 1998 and at least three machines that were on order on 12 May 1998 for location in regional and rural areas and unknown to the Health Insurance Commission to be in operation as of today. If there are other machines operating in regional and rural areas as at today, they too will be included.
I should remind the House that the extension of Medicare benefits to these 66 machines has widened access to MRI technology in a way that those opposite were not prepared to fund when in government. The regulation will in no way be retrospective as it will only limit benefits from 1 November 1999. Doctors with machines operating or on order that are affected by this regulation may be disappointed but have no reason to complain. They took their own counsel and claimed to order machines with irrevocable contracts without any knowledge that the government would agree to allow Medicare benefits for services for those machines.

As I have said before, the proposal to extend Medicare benefits to MRI services dates back to at least the Australian Health Technology Advisory Committee report in 1997. Following this report, I stated publicly that I would like to see MRI better funded. It was also widely known the college was discussing this with the government in the context of a possible broad financing agreement that would cover all radiologists. These negotiations were specifically authorised by the Expenditure Review Committee and noted in its minutes. The negotiations were with the representatives of the college who were expected to seek the views of their membership about the arrangements.
I do not know whether or how members of the profession may have gained inside knowledge or if indeed any inside knowledge existed. In the weeks before the budget, MRI suppliers were openly and aggressively offering non-binding contracts to radiologists. The apparent rush of orders may be explained by this, combined with some backdating. If one has had to sign a non-binding order or backdate an order, by definition you could not have had advance knowledge of the measure. Whatever the cause, the larger number of orders than I ever contemplated and the advice that a significant number have question marks around them require more resolute action than to await possible legal action by the Health Insurance Commission.

In view of concerns that have been raised about the integrity of the process of negotiating the diagnostic imaging agreement, I am today writing to the Auditor-General, Mr Barrett, asking him to conduct a probity audit of the process and to report to parliament as soon as possible. When I have written to Mr Barrett, I will table a copy of the letter.

I have also been informed that Health Care of Australia is one of the companies that had machines on order on 12 May 1998. Given that it is such a large provider of radiology services, there is nothing surprising in this. At that stage, however, Dr Barry Catchlove was the Managing Director of Health Care of Australia-although he informs me, having announced his retirement, that he was no longer involved in the day-to-day running of the business. He was appointed as Chairman of the Health Insurance Commission from 30 July 1998.
Dr Catchlove advised me last Friday that he has applied for leave of absence from his position in the commission while it concludes its investigations into the machines ordered by Health Care of Australia. I seek leave to table Dr Catchlove's letter to me. I would like to make it clear that there is no suggestion of any impropriety in the conduct of Dr Catchlove. The investigation by the Health Insurance Commission to date has been carried out at arms-length from the board of commissioners and the chairman has had no contact or involvement in any way with the investigation. Further, Dr Catchlove was not involved in and nor did he have any knowledge of budget negotiations with the college. However, Dr Catchlove has told me that, in view of the possible perception of the conflict of interest and so that we can maintain absolute probity in this matter, he considers it appropriate to take no further part in the affairs of the Health Insurance Commission until any investigation of the activities of Health Care of Australia has been completed.

When the government decided to extend Medicare benefits to MRI, it did so on the understanding that the number of machines in the country was on the basis of the 1977 Health Technology Committee's report finding-that is, that it was about right, but some increase might be warranted, particularly to ensure appropriate access across Australia. It now appears that the number of machines in place or on order is considerably in excess of what is required to meet the needs of the Australian population. On the other hand, the 66 machines that will now be eligible for Medicare benefits may not be the optimal number given further advancements in diagnostic imaging. They also may not be optimally distributed across Australia. When MRI was introduced to the Medicare Benefits Schedule, I announced that there would be a review after 18 months. I have now decided to bring forward this review by several months. I am deciding on the terms of reference for the review and I will table them when they become available.
The terms of reference will ask the review to recommend, among other things, the appropriate number and distribution of machines and to identify options to achieve this. At that time, the government will review the interim regulation that I have announced today to operate from 1 November. I will announce the membership of the review shortly and I will ask it to report by the end of February next year.

As for the Health Insurance Commission investigation, I will make available all necessary resources to ensure that it is conducted in a thorough and timely manner. I am loath, however, to rush this investigation, as to do so may limit the likelihood of the success of any prosecution that might be appropriate. When I receive the final report from the Health Insurance Commission, I will consult the Attorney-General and the Australian Government Solicitor as to what further action, if any, should occur.

I have no doubt that the majority of radiologists are honourable and honest people. It would appear, however, that a significant number have behaved in a manner that can only be described as a scam. Had people behaved in a similar manner in the share market, they would be expected to be treated with the utmost severity. I have no intention of allowing precious taxpayers' money that could be used in our immunisation, asthma or diabetes programs to go into the pockets of radiologists who have behaved improperly. This measure was designed for the benefit of the Australian public. It has dramatically increased the availability of MRI services. It was not designed for the benefit of radiologists, and it will not be allowed to be.


Response by Opposition Health Spokesperson

Hansard of the response by Jenny Macklin Opposition spokesperson on health. Source URL
I have deleted the interjections of other parlimentarians except where they are relevant to this issue

Ms MACKLIN  (Jagajaga)(4.11 p.m.) -By leave-The Minister for Health and Aged Care has been covering up this issue for eight months. Day after day, week after week, we have asked him question after question. Just last week, he said, `I think my answers to these questions over the last seven months show that in fact we have been highly proper.' Highly improper is the only way that it can be described. He has abused us, vilified us and hoped that we would stop asking him questions. Apparently, he was informally advised by the Health Insurance Commission last Wednesday that there were problems-that in fact there was a huge rush of new MRI applications. He did not of course come into the House at the earliest opportunity when he had been told that in the last week or so 13 radiologists remembered-they just somehow remembered-that they had each spent $3 million on an MRI machine 18 months ago but that they remembered only just last week. This minister has misled this House either deliberately or through an extraordinary lack of diligence or incompetence.

Mr SPEAKER -The shadow minister knows that she cannot accuse deliberate misrepresentation-

Ms MACKLIN -I do not know which it is, Mr Speaker.

Mr SPEAKER -The shadow minister knows better than to interrupt the chair, I would have thought. The shadow minister knows that she cannot accuse any minister of deliberately misleading the House without a substantive motion.

Ms MACKLIN -I do not know which he has done, but we will find out soon enough.

Mr SPEAKER -But the shadow minister is obliged to withdraw any implication of deliberately misleading the House.

Ms MACKLIN -I will withdraw it, Mr Speaker-until the time comes that we move further motions on this minister. This minister stands condemned of course by his own words. On 11 February this year, he said to the parliament:

I completely and categorically deny and repudiate any suggestion whatsoever that there was any leak from me or my office.

Also on 11 February, he said:

. . . there is no evidence that all these machines were ordered in the weeks before the budget. You are quite wrong there.

Well, that is not what the Health Insurance Commission says now. On 27 September, he said:

I would be deeply concerned if I knew that someone at the meeting-

remember the meeting on 6 May, the one that we still have not got to the bottom of-

had a potential conflict of interest.

We have not been able to get an answer from this minister as to whether he even asked whether people had a conflict of interest or for statements of pecuniary interest. We have had no answers to any of the questions that we have asked of this minister. This minister does stand condemned, and there are a number of allegations which he himself has yet to answer. By the minister's own statement today, it is true that he failed to adopt a measure to control the supply of MRI machines in accordance with the recommendations of the Australian Health Technology Advisory Council.

If he had followed their recommendations back in December 1997, we would not be in the mess we are in today. He personally decided to extend Medicare rebates to MRI units under contract without properly researching how many contracts there were. We know that from his statement today. He says that he did not know until Friday-or maybe it was last Wednesday-that there were 111 MRI machines. This is a minister supposedly responsible for one of the most significant portfolios in this country, and he says that he did not have any idea.

He is guilty of incompetence and failure in his duty as a minister by failing to properly check the effectiveness of the proposed supply-side measure. The proposed supply-side measure, you might remember, was that only those contracts signed before budget night would be able to claim Medicare rebates. That was going to mean that the whole thing did not blow out and that we would not get more machines than we needed. Has that been effective? Absolutely not: we have ended up with nearly 100 per cent more machines than this minister now claims the country needs.

He failed to obtain declarations of pecuniary interest from the radiologists he negotiated with and failed to bind those radiologists not to take advantage of discussions that he and his department had with them. Indirectly or directly-we still do not know-he allowed the radiologists with whom he was negotiating to confidently know that he intended to include contracted machines in the new arrangements. And, funnily enough, a lot of them went out and spent quite a lot of money, confident in the belief that this minister would extend Medicare rebates to machines under contract. I wonder how it was that they were so confident in their belief.

Days prior to the budget, the department-and we have had this from the department-actually advised the minister that there was a problem, but the minister took no notice of the department's advice and went ahead with his original plan. The department then failed to investigate the allegations of insider trading-and let us not forget that is the seriousness of what we are talking about today. We are talking about allegations of insider trading. These allegations of insider trading were not investigated when they were first raised by the department. They have not been investigated since they were first raised in the parliament by the opposition. There has not been any investigation of any of these allegations.

The minister failed to amend his agreement with the radiologists prior to signing it a week after the budget, even though once again the department had warned him that a problem existed. Now we know-the opposition has known for eight months-that the investigation that the Health Insurance Commission commenced has been limited in scope and carried out so slowly that the damage had been done by the time it was completed.

The minister himself set up a system to require statutory declarations. He said that an adequate way to make sure that everything was done adequately would be for everyone to sign a statutory declaration saying that they had signed their contracts before the budget. They were not those sorts of shonky contracts that say, `If he doesn't really do it, we'll just rip these up afterwards.' The minister told this House that this investigation was at his instigation, not anyone else's. We now know it was a weak and ineffective means of preventing abuse of the public purse.

Finally, this minister stands charged with his failure to act when he was warned of this problem and his failure to ensure a prompt investigation of a major fraud risk to the Commonwealth. Given this minister's direct and personal involvement in the negotiations about the extension of Medicare rebates to new MRI machines, this minister should stand aside while this matter is further investigated. It is not good enough for this matter to only be referred to the Auditor-General. That will not inquire into ministerial misconduct, illegality or conflict of interest.

We need to find out who knew what, how they knew and what the role of this minister was in allowing the Commonwealth to be defrauded in this way. We have been told today that Barry Catchlove, the Chairman of the Health Insurance Commission and former Chief Executive Officer of Health Care of Australia, has stood aside. He has stood aside only today, not when this investigation started-only today when problems finally got too much and something had to be done.

Mr Cox -Something stinks!

Ms MACKLIN -Something stinks and, finally, Barry Catchlove has stood aside. This minister should stand aside because, by his own words in a statement written in the minister's own handwriting, `It would appear that a significant number of radiologists have behaved in a manner that can only be described as a scam.' It is a scam. It is a scam that this minister is involved in right up to his neck.

He should stand aside not just while the Auditor-General investigates it but while we have a full judicial inquiry into the role of this minister, into whether there has been any illegality and into the conflicts of interest that exist in this case that can be described only as a scam. The minister was planning to go overseas today. What he must do is stay here, stay in this parliament and make sure that he is available to answer the questions that a full judicial inquiry will put to him. He has to stand up, take responsibility and face the music for the horrific cover-up of what we can only imagine is a major fraud against the Commonwealth.


ABC TV 7:30 Report Story October 19th 1999

MRI radiologists linked to Wooldridge election fund-raisers: Labor

Source URL
Copyright ABC
Transcript
19/10/99

KERRY O'BRIEN: There were new allegations today in the growing scandal over the possibility that some radiologists cashed in on a Federal Budget leak for a windfall gain of tens of millions of dollars.
The Federal Opposition sought to link the involvement of some radiologists in some of Health Minister Michael Wooldridge's fund-raising functions, leading to the 1998 election.
In the May Budget that year, the Government brought magnetic resonance imaging scans, or MRIs, under the Medicare rebate scheme for the first time.
Coincidentally, there was a rush of orders for the MRIs in the few months before Budget night.
The Minister now accepts that some radiologists may have abused the Government's initiative, but he still maintains there is no evidence of a Budget leak.
In a moment, political editor Barrie Cassidy will speak with Dr Wooldridge, but first, some excerpts from today's Parliamentary Question Time.

JENNY MACKLIN, SHADOW HEALTH MINISTER: Minister, did you have an informal private meeting, which up until now you have not disclosed, with members of the College of Radiologists, without officers of your department present?

Did you foreshadow the Budget decision which put insiders into a position to benefit substantially?

DR MICHAEL WOOLDRIDGE, HEALTH MINISTER: The only meeting I have any recollections of at all was the one I've talked about on 6 May, which did have one of my staff members at and did have a departmental officer and both of them have tabled statutory declarations as to the content of that meeting.

BOB McMULLEN, SHADOW INDUSTRY & TECHNOLOGY SPOKESMAN: Minister, is it the case that fund-raising functions were organised for you by Dr Jack Best, who you appointed to the National Health and Medical Research Council and Dr Ronald Michael, a radiologist with the Victorian Imaging Group, who you'd appointed as a director of Medibank Private?
Is it the case that Dr Michael's Victorian Imaging Group has installed new MRI units in Box Hill, Frankston and the Monash medical centre since the 1998 Budget?
Is it also the case that the people attending these fund-raising functions included radiologists who benefited from your 1998 Budget decision, each of whom were asked to donate several thousand dollars?

DR MICHAEL WOOLDRIDGE: Similar with every member of this House, I attend fund-raising functions.
It's part of being a member of Parliament.
Any money that's been raised has been in accordance with the Liberal Party's fund-raising guidelines and has been properly disclosed.

KIM BEAZELY, OPPOSITION LEADER: We are calling for a royal commission.
It's the first we've called for in three years of opposition.

DR MICHAEL WOOLDRIDGE: The Opposition has put up nothing other than cowardly and scurrilous allegations.
And quite frankly, Kim, on your polling, I think I'll be around a lot longer than you are.