HEALTH LEGISLATION AMENDMENT ACT (NO. 3) 1999 NO. 159, 1999 - SCHEDULE 1 - Registration of registered o rganizations and related matters

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HEALTH LEGISLATION AMENDMENT ACT (NO. 3) 1999 NO. 159, 1999 - SCHEDULE 1

- Registration of registered o rganizations and related matters

National Health Act 1953

1 Subsection 4(1)

Insert:

rules , in relation to a registered organization, means the body of principles devised by the management of the organization that relate to the day-to-day operation of the health benefits fund conducted by the organization and include principles for determining the rates of contribution for contributors and the benefit entitlements, and the conditions relating to benefit entitlements, for contributors and for their dependants.

2 Section 68

Repeal the section, substitute:

68 Application for registration as health benefits organization

(1): Subject to subsection (2), an organization may apply to the Council for registration as a registered health benefits organization.
(2): An organization is not entitled to apply for such registration unless:

(a): it is a company limited by shares, by guarantee or by both shares and guarantee; and
(b): its constitution and its rules provide:

(i): that the organization is established for the purpose of conducting a health benefits fund and for no other purpose unless that purpose is incidental to the conduct of that fund; and
(ii): that there is to be credited to that fund the whole of the income of the organization arising out of the carrying on by the organization of business as a registered health benefits organization (including any income arising from the investment of money not immediately required for the payment of benefits).

(3): Subsection (2) does not imply that an organization established for profit may not seek to be registered as a health benefits organization.

3 Before subsection 69(1)

Insert:

(1A): An application for registration as a registered organization must be lodged with the Council.

: Note: The heading to section 69 is altered by omitting " Giving " and substituting " Lodgment of application and giving ".

4 Subsection 69(2)

Omit "Secretary", substitute "Council".

5 Paragraph 70(1)(b)

Omit "2 officers", substitute "an officer".

6 Section 71

Omit "Secretary" (wherever occurring), substitute "Council".

7 Section 71

Omit "Minister", substitute "Council".

8 Section 72

Omit "Minister" (wherever occurring), substitute "Council".

9 Section 72A

Omit "Minister" (wherever occurring), substitute "Council".

: Note: The heading to section 72A is altered by omitting " Ministers " and substituting " Council ".

10 Section 72A

Omit "Minister's", substitute "Council's".

11 After paragraph 72A(c)

Insert:

(ca): whether the organization will, if it is registered, meet the solvency standard established under Division 3A and the capital adequacy standard established under Division 3B;

12 Subsections 73(1), (2AA), (2AB), (2A), (2B), (3), (4), (7) and (8)

Omit "Minister" (wherever occurring), substitute "Council".

13 Transitional provision

The Register of Health Benefits Organizations maintained in accordance with subsection 73(2AA) of the National Health Act 1953 is to be transferred, on the date of commencement of this Schedule, to the Council so that the Council can, on and after that date, comply with the requirements of that subsection in relation to any organizations in respect of which the Council grants an application for registration.

14 Subsections 73(2A) and (2B)

Omit "rules" (wherever occurring), substitute "constitution or the rules".

15 Subsection 73(5)

Omit "Secretary", substitute "Council".

16 After subsection 73(5)

Insert:

(6): When the Council grants or refuses an application for registration of an organization, the Council must, as soon as practicable, and not later than 7 days after granting or refusing that application, inform the Secretary of the grant or refusal.

17 After section 73

Insert:

73AA Unincorporated registered organizations must become incorporated

(1): If a registered organization was, immediately before the commencement of Schedule 1 to the Health Legislation Amendment Act (No. 3) 1999 , not incorporated under any law of the Commonwealth or of a State or Territory, the governing body of that unincorporated entity must:

(a): within the time specified by the Minister by a notice in writing to the organization; or
(b): within such further time as the Minister allows;

arrange for the health insurance business of the organization to be transferred to a company of a kind that would be eligible under section 68 to apply for registration as a health benefits organization.

(2): The Minister must consult the registered organization concerned about what time should be specified or allowed under paragraph (1)(a) or (b).
(3): If a registered organization to which subsection (1) applies fails to comply with that subsection, the registration of the organization ceases to have effect on the expiration of the time specified by the Minister under that subsection or of that time as extended by the Minister under that subsection.
(4): When the health insurance business of the organization has been transferred in accordance with the requirements of subsection (1), the Council must issue a written certificate to that effect and, upon the date of issue of that certificate, the company is to be taken:

(a): to be the registered organization in lieu of the previous registered organization; and
(b): for all purposes relating to the health insurance business—to be its successor in title.

73AAB Registered organization to maintain eligibility status

The registration of a registered organization ceases to have effect if:

(a): in the case of a registered organization that is, or is taken to be, a company incorporated under the Corporations Law of a State or internal Territory (including an organization that has had business transferred to it under subsection 73AA(1))—it ceases to be such a company at any time; or
(b): in the case of a registered organization that is a friendly society (within the meaning of Part VIA) or an incorporated association—it loses its status as a corporate entity at any time after its registration; or
(c): in the case of any registered organization—it amends its constitution or rules in such a way that a health benefits fund cannot be conducted by it in accordance with this Act.

73AAC Certain duties of registered organization regarding assets of its health benefits fund

(1): In making any decision, or taking any action, relating to the application, investment or management of the assets of the health benefits fund conducted by it, a registered organization must give priority to the interests of the contributors to the fund.
(2): An act or decision of a registered organization in relation to the health benefits fund conducted by it does not contravene subsection (1) if, having regard to the circumstances existing at the time of the act or decision, it is reasonable to believe that the act or decision gives priority to the interests of contributors to the fund.
(3): Nothing in subsection (1) prevents a registered organization doing anything that the registered organization is permitted or required to do under this Act.

73AAD Payments from health benefits fund

(1): A registered organization must not apply, or deal with, the assets of the health benefits fund conducted by it, whether directly or indirectly, except in accordance with this section.
(2): An organization must ensure that payments from the health benefits fund conducted by it are used only for the following purposes:

(a): to meet the liabilities incurred in relation to the coverage of the contributors;
(b): to make payments to the Health Benefits Reinsurance Trust Fund;
(c): to make investments for the health insurance business;
(d): if the registered organization has been established for profit—to distribute profits generated by the conduct of the health insurance business to shareholders in the organization;
(e): any other purpose that is directly related to the health insurance business.

73AAE Restrictions on certain financial transactions by registered organizations

(1): If:

(a): a registered organization:

(i): borrows money for the purposes of the health benefits fund conducted by it; or
(ii): enters into a contract of guarantee which makes the assets of the fund wholly or partly available to meet a liability of the organization; or
(iii): gives a charge over the assets of the fund; and

(b): the Council or, if the fund or organization is under administration or being wound up, the administrator or liquidator of the fund or organization, believes that the transaction is manifestly not in the interests of the contributors to the fund;

the Council, administrator or liquidator may apply to the Court to set aside, or vary the terms of, the transaction.

(2): If, on an application under subsection (1), the Court is satisfied the transaction is manifestly not in the interests of contributors to the fund, the Court may:

(a): set aside the transaction; or
(b): make any order that the Court considers appropriate with respect of the persons or the property (other than the assets of the fund) that should most appropriately bear the burden of the transaction.

(3): For the purpose of determining whether a transaction is or is not manifestly in the interests of the contributors to the fund, the Court may have regard to any matter it considers relevant including, but not limited to, the following:

(a): if the transaction involves a borrowing:

(i): whether the borrowing is for the benefit of persons other than the contributors to the fund; or
(ii): whether the amount of the borrowing is clearly excessive in relation to the health insurance business conducted by the registered organization;

(b): if the transaction involves entering into a contract of guarantee—whether the contract was entered into solely in connection with a transaction made for the benefit of the fund;
(c): if the transaction involves the giving of a charge:

(i): whether the charge secures liabilities other than liabilities relating to the health insurance business conducted by the registered organization; or
(ii): whether the amount secured by a charge over the assets of the fund exceeds the sum borrowed for the purposes of the health insurance business conducted by the registered organization;

(d): in the case of any transaction:

(i): whether because of the transaction, or because of any act done, or omission made, in connection with the transaction, the registered organization does not comply with section 73BCD or 73BCI, or with any direction given under section 73BCE or 73BCJ; or
(ii): whether the transaction contravenes, or is not permitted by, the rules of the fund or the constitution of the registered organization.

(4): Despite subsection (2), the Court must not set aside a transaction if the Court is satisfied:

(a): that the party who entered into the transaction with a registered organization entered into the transaction in good faith and without knowledge of any matter referred to in subsection (3) that applies to the transaction; and
(b): that setting aside or varying the transaction would cause substantial hardship to that party.

(5): The Court has jurisdiction to hear and determine applications under this section and to make any necessary orders in respect of those applications.
(6): In this section:

Court means the Federal Court of Australia.

18 Subsection 73A(1)

Omit "The conditions that the Minister may impose under section 73 or 73B include", substitute "The registration of a health benefits organization is subject to".

19 After section 73ABC

Insert:

73ABD Further conditions and revocation or variation of conditions—Council's powers

(1): The Council may, after consulting the Minister:

(a): impose a further condition to which the registration of an organization is subject; or
(b): revoke or vary a condition imposed by the Council under paragraph (a) or section 73.

(2): If the Council makes a decision imposing, revoking or varying a condition under subsection (1) in relation to an organization, the Council must cause notice in writing of that decision to be served on the public officer of the organization.
(3): If the Council imposes, revokes or varies a condition under subsection (1) in relation to an organization, the Council must, within 1 month after taking that action, publish in the Gazette a notification setting out:

(a): the name of the organization; and
(b): the particulars of the action so taken, including:

(i): where a condition has been revoked—the condition so revoked; or
(ii): where a condition has been varied—the condition as so varied; or
(iii): where a condition has been imposed—the condition so imposed; and

(c): the date on which the action was taken.

(4): In this section, condition includes a term.

20 Subsection 73B(1)

Repeal the subsection, substitute:

(1): The Minister may, after consulting the Council:

(a): impose a further condition to which the registration of an organization is subject; or
(b): revoke or vary a condition referred to in paragraph (a).

: Note: The heading to section 73B is replaced by the heading " Further conditions and revocation or variation of conditions—Minister's powers ".

21 Saving and transitional provisions

(1) Any term or condition of registration imposed by the Minister under section 73 or 73B of the National Health Act 1953 that is in force immediately before the commencement of this Schedule has effect, on and after that commencement, as if it were a term or condition imposed by the Minister under section 73B as amended by this Act. However, subsections 73B(1A) and (2) do not apply to the imposition of a term or condition originally imposed under section 73.
(2) A form of record approved by the Secretary for the purposes of paragraph 73A(1)(b) of the National Health Act 1953 as in force immediately before the commencement of this Schedule has effect, on and after that commencement, as if it were a form of record approved by the Council for the purposes of that paragraph as amended by this Act.

22 Subsection 74(1)

After "Secretary", insert "and to the Council".

23 Subsection 74(5)

Omit "and the public officer", substitute "and, subject to subsection (5AA), the public officer".

24 After subsection 74(5)

Insert:

(5AA): A court must not impose a fine on the public officer of a registered organization under subsection (5) in respect of a contravention or failure by the organization (the primary contravention or failure ) that is deemed, by that subsection, to be a contravention or failure by the public officer, if the court is satisfied that:

(a): a pecuniary penalty has been imposed on the public officer under subsection 74A(1); and
(b): in relation to that pecuniary penalty, the contravention or failure in relation to which the Federal Court of Australia was satisfied as mentioned in paragraph 74A(1)(a) was the primary contravention or failure.

25 Subsection 74(7)

After "Secretary", insert "and to the Council".

26 Section 74A

Repeal the section, substitute:

74A Officers liable for non-compliance of registered organization

(1): If the Court is satisfied that:

(a): a registered organization has contravened, or failed to comply with:

(i): a provision of this Act or the regulations; or
(ii): a term or condition of registration imposed by or under this Act; or
(iii): a direction served under this Act on the organization; and

(b): an officer of the organization failed to take reasonable steps to ensure that the contravention or failure would not occur;

the Court may, subject to subsection (3), order the officer to pay to the Commonwealth such pecuniary penalty, not exceeding the amount stated in subsection 74(5), in respect of the officer's failure referred to in paragraph (1)(b) as the Court considers appropriate.

(2): Without limiting paragraph (1)(b), if

(a): the officer took reasonable steps to ensure that a class of contraventions or failures would not occur; and
(b): that class of contraventions or failures included the contravention or failure referred to in paragraph (1)(a);

the officer has, for the purposes of this section, taken reasonable steps to ensure that the contravention or failure referred to in paragraph (1)(a) would not occur.

(3): The Court must not make an order under subsection (1) if it is satisfied that:

(a): a fine has been imposed on the officer under subsection 74(5) in respect of the contravention or failure referred to in paragraph (1)(a); or
(b): a court has ordered the officer to pay damages in the nature of punitive damages in respect of:

(i): the contravention or failure referred to in paragraph (1)(a); or
(ii): the officer's failure referred to in paragraph (1)(b).

(4): A person authorised in writing by the Minister for the purposes of this section may, by application, institute proceedings in the Court for an order under subsection (1). An authorisation:

(a): may be of a specified person, or of all persons included in a specified class of persons; and
(b): may apply to all applications or be limited to:

(i): a specified class of applications; or
(ii): a specified application.

: Note: This subsection is not intended to exclude the operation of provisions of the Director of Public Prosecutions Act 1983 under which the Director of Public Prosecutions may make an application .

(5): An application for an order under subsection (1) may only be commenced within 6 years of the contravention or failure referred to in paragraph (1)(a).
(6): In hearing and determining an application for an order under subsection (1), the Court is to apply the rules of evidence and procedure that it applies in hearing and determining civil matters. A reference in this section to the Court being satisfied of a matter is a reference to the Court being satisfied of the matter on the balance of probabilities.
(7): An order under subsection (1) may be enforced as if it were a judgment of the Court.
(8): A registered organization must not:

(a): permit money of the organization to be used for the payment of a pecuniary penalty imposed on an officer by an order under subsection (1); or
(b): reimburse the officer in respect of a pecuniary penalty imposed on the officer by an order under subsection (1).

(9): The Court has jurisdiction to hear and determine applications under this section and to make any necessary orders in respect of those applications.
(10): In this section:

Court means the Federal Court of Australia.

officer , in relation to a registered organization, includes:

(a): if the registered organization is a company under the Corporations Law—a director of the company; and
(b): if the registered organization is a friendly society (within the meaning of Part VIA)—a director of the society; and
(c): if the registered organization is an incorporated association—a member of the management committee of that association; and
(d): if the registered organization is an unincorporated entity—a member of the governing body of the entity; and
(e): if a person has been appointed as a receiver of the property of the registered organization and manages, or has, under the terms of the receiver's appointment, power to manage, the affairs of the registered organization—that receiver.

27 Subsection 78(3)

Omit "or (2)", substitute ", (2) or (7)".

28 At the end of section 78

Add:

(7): After receiving notification from the Secretary that the Minister has not made a declaration under subsection (4) in relation to a notification by an organization, a registered organization must take all reasonable steps to notify each affected contributor, explaining (in plain English) the change before the change takes effect.

29 At the end of section 78

Add:

(8): The Minister must cause a report of changes in the rates of contribution by contributors of registered organizations to be laid before each House of the Parliament within 15 sitting days after the end of a quarter.
(9): The report shall relate only to changes in rates of contribution by contributors:

(a): that have been notified by the registered organization to the Secretary in accordance with subsection (1); and
(b): in respect of which the Minister has not made a declaration under subsection (4).

(10): If, during any quarter, there has been no notification by a registered organization of a change relating to rates of contribution by contributors, to which paragraphs (9)(a) and (b) apply, there is no requirement for a report under subsection (8) to be provided to the Minister in respect of that quarter.
(11): In this section:

quarter means a period of 3 months beginning on 1 January, 1 April, 1 July or 1 October of any year.

30 Subsections 79(3) and (4)

Omit "Minister" (wherever occurring), substitute "Council".

31 Subsection 79(5)

Omit "The Minister must cancel the registration of a registered organization if he or she", substitute "The Council must cancel the registration of a registered organization if the Council".

32 Subsection 79(6)

Omit "Minister" (wherever occurring), substitute "Council".

33 At the end of section 79

Add:

(7): The Council may cancel the registration of a registered organization if the Council is satisfied:

(a): that the organization has repeatedly contravened an obligation imposed on the organization by or under this Act or has contravened a number of such obligations; or
(b): that a contravention by the organization of such an obligation has serious implications for the interests of contributors to the health benefits fund conducted by the organization.

(8): For the purposes of subsection (7), and without limiting the generality of that subsection, any contravention of an obligation imposed by or under this Act on that organization that substantially and adversely affects:

(a): the non-discriminatory nature of the health benefits fund conducted by the organization; or
(b): the financial management of the organization or of the health benefits fund conducted by it;

has a serious implication for contributors to the fund.

(9): If the Council revokes the registration of an organization, the Council must, as soon as practicable, and not later than 7 days after the revocation, inform the Secretary of that revocation.

34 Subsection 81(1)

Omit "Secretary", substitute "Council".

35 Subsection 81(2)

Omit "Minister", substitute "Council".

36 Section 82A (definition of deputy )

Repeal the definition.

37 After subsection 82D(1)

Insert:

(1A): One of the members of the Council may be appointed in writing by the Minister, in accordance with the guidelines (if any) under subsection 82F(1), to be the Deputy Commissioner.

38 At the end of section 82D

Add:

(4): If a member is appointed as Deputy Commissioner, that appointment is on a part-time basis.

39 Paragraph 82F(1)(a)

Omit "other members and deputies", substitute "of the other members, and of a member as Deputy Commissioner".

40 After section 82PC

Insert:

82PCA Deputy Commissioner to act as Commissioner in certain circumstances

(1): The Deputy Commissioner is to act as Commissioner:

(a): during a vacancy in the office of Commissioner (whether or not an appointment has been made to the office) if no-one has been appointed to act as Commissioner; or
(b): during any period, or during all periods, when the Commissioner, and any person appointed to act as Commissioner, are absent from duty or from Australia or are, for any other reason, unable to perform the duties of the Commissioner.

(2): The Deputy Commissioner must not act as Commissioner during a vacancy in the office of Commissioner for more than 12 months.
(3): Anything done by or in relation to a person purporting to act as Commissioner under this section is not invalid because the occasion for the person to act as Commissioner had not arisen or had ceased.

82PCB Powers and duties of persons acting as Commissioner

(1): Subject to any direction by the Commissioner, an acting Commissioner, or the Deputy Commissioner when acting as Commissioner, has all the powers and functions of the Commissioner under this Act.
(2): A power or function of the Commissioner under this Act or any other Act, when exercised or performed by an acting Commissioner, or by the Deputy Commissioner when acting as Commissioner, is to be taken, for the purposes of this Act or any other Act, to have been exercised or performed by the Commissioner.
(3): The exercise of a power or the performance of a function of the Commissioner under this Act or any other Act by an acting Commissioner, or by the Deputy Commissioner when acting as Commissioner, does not prevent the exercise of the power or the performance of the function by the Commissioner.
(4): If, under this Act or any other Act:

(a): the exercise of a power or the performance of a function by the Commissioner; or
(b): the operation of a provision of this Act or that other Act, as the case requires;

is dependent on the opinion, belief or state of mind of the Commissioner in relation to a matter:

(c): that power or function may be exercised or performed by an acting Commissioner, or by the Deputy Commissioner when acting as Commissioner; and
(d): that provision may operate;

on the opinion, belief or state of mind in relation to that matter of the acting Commissioner, or of the Deputy Commissioner when so acting.

41 Section 82PD

Repeal the section.

42 Section 82PF

Omit "or a deputy".

43 Subsections 82PG(1) and (2)

Omit "or a deputy".

44 Subsection 82PG(2)

Omit "or deputy".

45 Subsections 82ZP(1), (2) and (4)

Omit "Minister" (wherever occurring), substitute "Council".

46 Subsection 82ZP(1A)

Repeal the subsection, substitute:

(1A): Subject to this section, the Council must, in writing signed by the Commissioner, approve the transfer, unless action is being taken, or proposed to be taken, under Part VIA, in relation to all or any of those organizations.

47 Subsection 105AB(1A)

Omit "Minister", substitute "Council".

48 Subsection 105AB(2)

Omit "Minister", substitute "Council".

49 After subsection 105AB(2)

Insert:

(2A): An application may be made to the Tribunal for review of a decision of the Minister:

(a): to specify a particular time, in a notice under paragraph 73AA(1)(a), for the transfer of the health insurance business of a registered organization; or
(b): to allow a particular further time under paragraph 73AA(1)(b) for such a transfer, or to refuse to allow further time under that paragraph for such a transfer.

The application can only be made within 28 days after the Minister makes the decision.

(2B): An application may be made to the Tribunal for review of:

(a): a decision of the Council under section 73ABD imposing a term or condition of registration of an organization; or
(b): a decision of the Council under section 73ABD varying a term or condition of registration of an organization.

50 Paragraph 105AB(3)(b)

Omit ", or a further term or condition,".

51 Saving provision pending establishment of new prudential standards

(1) In this item:

new prudential standards day has the same meaning as in subsection 4(1) of the Principal Act as amended by this Act.

Principal Act means the National Health Act 1953 .

(2) Despite the insertion of paragraph 72A(ca) of the Principal Act by item 11, the Principal Act continues to have effect until the new prudential standards day as if that insertion had not been made.

52 Other saving and transitional provisions

(1) The registration of a registered organization that was in force immediately before the commencement of this Schedule continues in force, subject to the provisions of the National Health Act 1953 , on and after that commencement, as if that registration had been granted by the Council under the National Health Act 1953 as amended by this Schedule.
(2) If, before the commencement of this Schedule:

(a): an application by an organization for registration as a health benefits organization had been lodged with the Secretary; but
(b): the application had not been referred to the Registration Committee as constituted in accordance with the National Health Act 1953 as in force before that commencement;

the Secretary must refer the application and all supporting documents and information to the reconstituted Registration Committee to be considered and dealt with as if it were an application made after the commencement of this Schedule.

(3) If, before the commencement of this Schedule:

(a): an application by an organization for registration as a health benefits organization had been referred to the old Registration Committee; but
(b): the Committee had not made a report under section 72 of the National Health Act 1953 ;

the Secretary must arrange for the application to be transferred to the reconstituted Registration Committee for the purpose of preparation of a report as if the application were an application made after the commencement of this Schedule and the reconstituted committee may, for that purpose, undertake such further inquiry (if any) as it considers necessary.

(4) If, before the commencement of this Schedule:

(a): a report had been made to the Minister concerning the application by an organization for registration as a health benefits organization by the old Registration Committee; but
(b): the Minister had not considered that report;

the Minister must refer the report to the Council and the Council must deal with the matter as if it were a report duly made to the Council by the reconstituted Registration Committee.

(5) In this item:

old Registration Committee means the registration committee constituted in accordance with the National Health Act 1953 as in force before the commencement of this Schedule.

reconstituted Registration Committee means the registration committee constituted in accordance with the National Health Act 1953 as in force after the commencement of this Schedule.

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