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.

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.

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

 
 
 

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Related Links

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.

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 story so far....
• The Key Players (off page, return with back arrows)
• Medi-leak Probe
• ABC TV 7:30 Report Oct 1st 1999
• Sixty Minutes Report  No transcript available.  If you have a video please contact me
• Ministerial Statement October 18th 1999
• Response by the Opposition Shadow Health Minster 18th October
• ABC TV 7:30 report Tuesday October 19th
• Comments by the public

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 ABC national current affairs programme "7:30 Report" ran a programme on October 1st 199 canvassing the allegation that radiologists had purchased MRI scanners before the budget because they had received leaked information of the government policy to be announced in the May 12 1998 budget speech, specifically it was alleged that these radiologists had acted on the information that there would be a medicare rebate for MRI services paid to scanners installed at budget night.
• the following is a transcript from the programme.  Please note that this is the audio track to a film piece probably using an interview with Jenny Macklin and Ralph Watlaff, in addition to sound bites from Michael Wooldridge, probably taken from parliamentary TV. With that in mind it is a bit easier to read.

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

• Pretty straight recounting of the history and the key questions.  The opposition at this stage was trying to bring to light matters that would result in considerable extra cost to the Federal budget, and could embarrass the Minister or form the basis for censure.
• The comment that MRI scanners cost $3,000,000 (Australian) has been commonly cited in this debate but is a general overestimate.   Full capacity state of the art scanners are more likely to cost $2M to $2.5M but private practice scanners with perfectly capable options can cost $1.7M, and low field scanners are available for slightly  less than $1,000,000.  Funding is the same for all devices, so the potential to recoup initial investment is greater than publicly stated.

Ministerial Statement October 18th 1999

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

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

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.