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HEALTH SERVICES (GOVERNANCE AND ACCOUNTABILITY) BILL 2004

                                                             Health Services (Governance and
                                                                   Accountability) Bill
Victorian Legislation Parliamentary Documents




                                                                             As Sent Print

                                                               EXPLANATORY MEMORANDUM


                                                                                 Overview
                                                This Bill contains amendments to the Health Services Act 1988 to--
                                                         ·    implement certain recommendations of the Victorian Public
                                                              Hospital Governance Reform Panel 2003 report by--
                                                              ·      introducing a new class of public hospital to be known
                                                                     as "public health services" which is to apply to public
                                                                     hospital services provided in the metropolitan area and
                                                                     also to certain large regional public hospitals, for the
                                                                     purpose of enabling consistent governance and
                                                                     accountability arrangements to apply to all of these
                                                                     services;
                                                              ·      clarifying the roles and responsibilities under the
                                                                     Principal Act of the boards and the chief executive
                                                                     officers of public health services, the Minister and the
                                                                     Secretary to the Department of Human Services; and
                                                         ·    enable the re-organisation of public hospital services to ensure
                                                              that these services are provided effectively and efficiently and
                                                              in accordance with the other objectives of the Principal Act;
                                                              and
                                                         ·    amend the Principal Act to ensure that no new privately
                                                              operated hospitals can be established in Victoria for the
                                                              treatment of public patients.




                                                                                      1
                                                551169                                                BILL LA AS SENT 4/6/2004

 


 

Clause Notes Clause 1 sets out the main purposes of the Bill. Clause 2 is the commencement provision. All of the provisions will Victorian Legislation Parliamentary Documents come into operation on the day after Royal Assent, except for clauses 52 and 53(2). Clauses 52 and 53(2) relate to the change of status of Ballarat Health Services, Barwon Health, Bendigo Health Care Group, Goulburn Valley Health and Latrobe Regional Hospital from public hospitals established under Division 4 of Part 3 into public health services established under Division 9B of that Part. This change will take effect on 1 July 2004. Clause 3 states that the Principal Act being amended is the Health Services Act 1988. Clause 4 inserts new definitions into the Principal Act, including "public health service" and repeals the definition of "metropolitan health service". The definition of "public hospital" is amended so that it includes a "public health service" (except in Division 4 of Part 3 and new Parts 12 and 13). Other existing definitions are amended that relate to the preservation and interpretation of trusts. (The effect of the Bill on trusts is outlined in the notes in relation to clause 51, regarding new sections 237, 238 and 266). Clause 5 amends section 8 of the Principal Act to-- · enable Schedule 5 to the Principal Act to be amended to add, remove or change the name of a public health service; and · clarify that if the name of a public hospital in Schedule 1 changes or the name of a public health service in Schedule 5 changes, that the relevant Schedule may be amended by Order of the Governor in Council to reflect this change. As a change of name of a body does not, of itself, affect the incorporation of that body, a body continues to be the same body for all purposes despite any change of name. Clause 6 amends section 9 of the Principal Act to provide that one of the objectives of the Act is to ensure that public hospitals (including public health services) are governed and managed effectively, efficiently and economically. 2

 


 

Clause 7 inserts a new section 11A to clarify the role of the Secretary to the Department of Human Services ("the Secretary") by specifying certain functions of the Secretary to ensure that the objectives of the Principal Act are met. Victorian Legislation Parliamentary Documents Clause 8 amends section 18 of the Principal Act, which sets out criteria for public funding of agencies. In the case of a public health service (and also of any denominational hospital that have agreed to a statement of priorities), the Secretary must consider whether the body has met the objectives, priorities and key performance outcomes specified in its current statement of priorities and in such statements relating to the previous two financial years. Clause 9 repeals section 18F of the Principal Act. That provision currently confers an immunity against civil or criminal proceedings upon a case mix auditor appointed under section 18C. The immunity is to be removed as it is no longer appropriate. In future such auditors (along with auditors appointed under new section 63B) will, in practice, need to be covered by appropriate insurance rather than relying on an immunity. Clause 10 amends section 24 of the Principal Act. The main change is to give the Secretary power to require an agency to amend its constitution or by-laws in relation to a matter consequent upon the making of an Order under new section 248 in relation to the re-organisation of a public hospital or a public health service. For instance, if a public health service is to become responsible for an additional campus and its associated services, it may need to update its by-laws to ensure that they are appropriate for this new role. Clause 11 inserts a new section 25(2) into the Principal Act. Section 25 currently provides that a registered funded agency (such as a public hospital) must not appoint a person as chief executive officer unless the appointment is approved by the Secretary. This new section 25(2) retains this requirement, and adds that in the case of a public hospital (which includes a public health service), the remuneration and terms and conditions of appointment (including in relation to any performance bonuses) must also be approved by the Secretary. Clause 12 inserts a new immunity provision into the Principal Act in relation to members of boards of public hospitals that are established under Division 4 of Part 3. It provides that a member is not personally liable in certain circumstances for anything done or omitted to be done in good faith in relation to his or her powers and duties under the Act. It also provides that any liability that does not attach to a member as a result of this 3

 


 

provision attaches instead to the public hospital of which the person is the member of the board. This means that an affected person may seek to recover damages from the hospital instead of the member. This new immunity provision will replace the current section 39 that is to be repealed by clause 13. This will Victorian Legislation Parliamentary Documents make the immunity for board members consistent with that which applies to the directors of the boards of public health services. Clause 13 repeals section 39 of the Principal Act. That section provides for the immunity of members of the board of a public hospital under Division 4 of Part 3. A new immunity provision is to be inserted by clause 12. Despite the repeal of section 39, it will continue to apply in respect of things done before its repeal by reason of section 14 of the Interpretation of Legislation Act 1984 which preserves rights or privileges acquired or accrued under a repealed provision. Clause 14 inserts new sections 40A, 40B, 40C, 40D and 40E into the Act. These sections apply to public hospitals established under Division 4 of Part 3 which, in practice, includes most rural public hospitals. Section 40A sets out the procedure that the Minister must follow when proposing to issue a direction to the board of a public hospital. Section 40B enables the Minister to give such a direction if the Minister considers it to be in the public interest and for the purpose of giving effect to the objectives of the Act. It is envisaged that in practice this would usually relate to an area of Government policy that is relevant to the public hospital. A direction cannot be given in relation to the health care to be provided to a particular person or to the employment of a particular person. Section 40C enables the Minister to appoint 1 or 2 delegates to a board of a public hospital if the Minister considers that such an appointment will assist the board to improve the performance of the hospital, and sets out the terms and conditions of appointment. It also provides that a delegate is not a member of the board. Section 40D provides that the functions of a delegate are to attend meetings of the board and observe its decision-making processes, to provide advice or information to the board to assist it in understanding its obligations under the Act, and to advise the Minister and the Secretary on any matter relating to the public hospital or the board. 4

 


 

Section 40E provides that the board of a public hospital must permit a delegate appointed to the board to attend board meetings, and provide the delegate with all information that is given to members of the board. This is to enable the delegate to perform his or her functions effectively. Victorian Legislation Parliamentary Documents Clause 15 repeals Division 4A of Part 3 of the Act. This Division is redundant as it relates to metropolitan hospitals. These legal entities no longer exist under the Principal Act. (These entities were transformed into metropolitan health services in 2000). Clause 16 inserts new section 44A into the Act to enable the board of a denominational hospital to agree to an annual statement of priorities with the Minister. New section 65ZFB will apply, with any necessary modifications, to such a statement. That section specifies the matters that are to be included in the statement. (Clause 39 inserts new section 65ZFB). Clause 17 repeals Division 7 of Part 3 of the Principal Act. This Division relates to a transitional management agreement entered into by the Minister to enable a specified public hospital to be managed by a particular person or a body, with the intention that the services to be provided by that hospital would eventually be replaced by services provided by a "privately operated hospital". This Division is to be repealed to prevent any further agreements from being entered into under which a public hospital would be managed by a private operator. Clause 18 amends section 58 of the Principal Act. Section 58 currently allows the Minister to exercise certain powers such as censuring an agency, suspending admissions or appointing an administrator, for example where there are serious defects in the performance of an agency. These powers are, in practice, measures to be relied on as a "last resort" where other measures cannot remedy problems in relation to the agency. This amendment enables the powers under section 58 also to be exercised where-- · a public health service has-- · substantially failed to meet any of the objectives, priorities or key performance outcomes specified in its current statement of priorities or such a statement made in relation to the last two financial years; and · failed to identify and adequately address any problems relating to such a failure in a timely manner; or 5

 


 

· a public health service or public hospital has failed to comply with a direction issued by the Minister under new section 40B or 66A. Clause 19 inserts a new Division 8A into Part 3 of the Act regarding audits Victorian Legislation Parliamentary Documents of public hospitals, public health services, multi purpose services and denominational hospitals. Section 63 provides that in this Division, "agency" means a public hospital (which, under the amended section 3 includes a public health service), a multi purpose service or a denominational hospital. All of these bodies are either public bodies, or, in the case of denominational hospitals, are for many purposes of the Act treated as akin to a public body because they are publicly funded to provide public patient services. Section 63A enables the Secretary, after having regard to the public interest and the objectives of the Principal Act, to commission an audit to determine whether an agency is using public funds effectively, is providing health services of a high quality, or in the case of an agency with a statement of priorities, to determine whether the objectives, priorities and key performance outcomes specified in that statement are being met. The Secretary must set the terms of reference for an audit, including when the auditor is to report to the Secretary. Section 63B provides for the appointment or engagement of auditors. It also requires the Secretary to give written notice to the chief executive officer of an agency that it is to be subject to an audit, and to provide a copy of the terms of reference and the name of the auditor. Section 63C establishes the powers of an auditor. These include inspecting premises and documents, taking copies of documents and asking questions of staff and members or directors of the board of the agency. Any original document seized must be returned to the agency within 7 days. It is an offence for a person to hinder or obstruct an auditor, or to fail to answer questions to the best of his or her knowledge. An auditor must produce on request a copy of his or her authority to act as an auditor. Section 63D provides that an auditor must keep information acquired in his or her capacity as an auditor confidential, and may generally only use or divulge such information for the purposes of carrying out his or her functions as an auditor. 6

 


 

Clause 20 substitutes a new heading into Division 9B of Part 3 of the Principal Act, referring to "Public Health Services". This, and related amendments, are necessary to ensure that the bodies established under this Division are classified as "public health services" rather than "metropolitan health services". Victorian Legislation Parliamentary Documents Clauses 21, 22, 23, 24(1) and (3), 25 to 29, 31, 32, 34 to 38 and 40 respectively remove the references to "metropolitan health service" in sections 65P to 65Z and sections 65ZA to 65ZG of the Principal Act and amend these provisions so that they refer instead to "public health service". Clause 24(2) substitutes a new section 65S(2) to establish the functions of the board of a public health service. These include developing a strategic plan and statement of priorities, maintaining effective systems to ensure that the public health service meets the needs of the communities served by the public health service, monitoring the performance (financial and clinical) of the service, and ensuring that the Minister and Secretary are advised about significant board decisions and about issues of public concern or risks that may affect the public health service. Clause 24(4) provides for the factors that the board must take into account in performing its functions. Clause 30 inserts new sections 65XA and 65XB into the Principal Act. Section 65XA provides that the board of a public health service must appoint a chief executive officer of the public health service, and determine, subject to the Secretary's approval, the remuneration and terms and conditions of employment of the chief executive officer. The chief executive officer is subject to the direction of the board in controlling and managing the public health service. Section 65XB sets out the functions of the chief executive officer. These include managing the public health service in accordance with the instructions of the board and the financial and business plans, strategies and budgets developed by the board, implementing systems to monitor the quality and effectiveness of health services provided by the public health service, and informing the board, Secretary and the Minister without delay of any significant issues of public concern or significant risks affecting the public health service. This provision also provides for the factors that the chief executive officer must have regard to in performing his or her functions. 7

 


 

Clause 33 inserts new sections 65ZAA, 65ZAB and 65ZAC into the Principal Act. Section 65ZAA enables the Minister to appoint 1 or 2 delegates to a board of a public health service if the Minister considers that Victorian Legislation Parliamentary Documents such an appointment will assist the board to improve the performance of the service. This section provides for the appointment, the terms and conditions of appointment, and states that a delegate is not a director of the board. Section 65ZAB provides that the functions of a delegate are to attend meetings of the board and observe its decision-making processes, provide advice or information to the board to assist it in understanding its obligations under the Act, and to advise the Minister and the Secretary on any matter relating to the public health service or the board. Section 65ZAC provides that the board of a public health service must permit a delegate appointed to the board to attend board meetings, and provide the delegate with all information that is given to directors of the board. This is to enable the delegate to effectively perform his or her functions. Clause 39 inserts new sections 65ZFA and 65ZFB into the Principal Act. New section 65ZFA provides that the board of a public health service must prepare, in consultation with the Secretary, a proposed statement of priorities in respect of each financial year and submit it to the Minister. If the board and the Minister fail to agree on a statement of priorities before 1 October of the financial year to which the statement relates, the Minister may make a statement of priorities for that public health service. A statement must be made available on request to members of the public. New section 65ZFB specifies what must be included in a statement of priorities. It must set out the objectives, priorities and key performance outcomes to be met by the public health service. Clause 41 inserts new sections 66 and 66A into the Principal Act. Section 66 sets out the procedure that the Minister must follow when proposing to issue a direction to the board of a public health service. Section 66A enables the Minister to give such a direction if the Minister considers it to be in the public interest and for the purpose of giving effect to the objectives of the Act. It is envisaged that in practice this would usually relate to an area of Government policy that is relevant to the public health service. 8

 


 

A direction cannot be given in relation to the health care to be provided to a particular person or to the employment of a particular person. Clause 42 amends section 69B(3) of the Principal Act. That section Victorian Legislation Parliamentary Documents currently permits the Minister to enter into an agreement with a person or a body for the provision of health services to public patients from a "privately operated hospital". This clause amends section 69B(3) to "sunset" this provision by providing that such an agreement cannot be entered into on or after the day on which this clause takes effect (which is to be the day after this Bill receives the Royal Assent), except in the case of an agreement in relation to the New Mildura Base Hospital. (The New Mildura Base Hospital is the only "privately operated hospital" currently operating in Victoria.) Clause 43 inserts a new immunity provision into the Principal Act in relation to members of boards of multi purpose services. It provides that a member of such a board is not personally liable in certain circumstances for anything done or omitted to be done in good faith in relation to his or her powers and duties under the Act. It also provides that any liability that does not attach to a member as a result of this provision attaches instead to the multi purpose service of which the person is the member of the board. This means that an affected person may seek to recover damages from the service instead of the member. This new immunity provision will replace the current section 115K, which is to be repealed by clause 44. This will make the immunity provision for board members consistent with that which applies to directors of the boards of public health services, and it is also consistent with the new immunity provision that is to apply to public hospitals that is to be inserted into the Act by clause 12. Clause 44 repeals section 115K of the Principal Act, which provides for the immunity of members of the board of multi purpose services. A new immunity provision is to be inserted by clause 43. Despite the repeal of section 115K, it will continue to apply in respect of things done before its repeal by reason of section 14 of the Interpretation of Legislation Act 1984, which preserves rights or privileges acquired or accrued under a repealed provision. Clauses 45, 46 and 47 respectively amend sections 134D, 134E and 134F of the Principal Act to substitute references to "metropolitan health services" with references to "public health services", to take into account this change of terminology in Division 9B of Part 3. 9

 


 

Clause 48 amends section 141 of the Principal Act. That section restricts the circumstances in which identifying information regarding patients of a public hospital (including a public health service) can be disclosed to anyone outside a hospital by staff of the hospital or by members or directors of the board of the hospital. Victorian Legislation Parliamentary Documents This clause makes two amendments-- · it provides that a person appointed as a delegate to the board of a public hospital or a public health service is subject to the requirements of section 141, if in the course of acting as a delegate, he or she becomes aware of patient information; and · it enables the bodies that are subject to section 141 (such as public hospitals, public health services and denominational hospitals) and the staff and the directors or members of the boards of such bodies, to give information to an auditor appointed under new Division 8A of Part 3 (which is to be inserted by clause 19). For example, if an auditor is assessing the standard of clinical care, the auditor may need to inspect relevant patient records. Clause 49 inserts a new section 157H to provide that it is the intention of new sections 243 and 270 to alter or vary section 85 of the Constitution Act 1975. (Refer to notes on sections 243 and 270 in clause 51). Clause 50 repeals redundant provisions of the Principal Act. Section 177(1) is a spent transitional provision, and Division 4 of Part 9 enabled the appointment of an administrator to a metropolitan hospital and is not required as metropolitan hospitals no longer exist under the Principal Act. Clause 51 inserts new Parts 12 and 13 into the Principal Act. Part 12 contains transitional provisions relating to public health services. This Part applies to-- · all metropolitan health services when they each become a public health service on the commencement day [as reflected in the amendments to repeal the definition of "metropolitan health service" and the insertion of the definition of "public health service" (clause 4), and associated amendments to Division 9B of Part 3 and Schedule 5 which will now apply to public health services (clauses 20, 21 and 53(1)]; 10

 


 

· Ballarat Health Services, Barwon Health, Bendigo Health Care Group, Goulburn Valley Health and Latrobe Regional Hospital which, on 1 July 2004, cease to be public hospitals established under Division 4 of Part 3 and become public health services established Victorian Legislation Parliamentary Documents under Division 9B of that Part [as a result of clauses 52 and 53(2)]; and · any other public hospital that as a result of an Order made under section 239 ceases to be a public hospital established under Division 4 of Part 3 and becomes a public health service. In all of these situations the body remains the same body despite its change of status or classification under the Act or the fact that it is established under, and governed by, different provisions. For example, the incorporation of these bodies is not cancelled, but is to continue unaffected. The overall effect of this Part is to ensure that the property, rights and liabilities of a body subject to this Part, and the eligibility or entitlement of such a body to benefit from a trust, are not disturbed despite the change of status under the Act, and that these changes do not render any relevant agreements frustrated, unenforceable or otherwise adversely affected, or give rise to any remedy for a party to a contract. Section 232 defines a number of terms used in this Part that are relevant to preserving the property, rights, liabilities, eligibilities and entitlements of a body to which this Part applies. For example, the definition of "old metropolitan health service instrument" is used in new section 237. The term means an instrument, subsisting immediately before the day on which a metropolitan health service becomes a public health service under the Act, under which a metropolitan health service was a party, or which refers to a metropolitan health service, that was given to or in favour of a metropolitan health service, or under which money is or may become payable to or by a metropolitan health service or where property is to be or may become liable to be transferred to or by a metropolitan health service. This provision will apply regardless of whether the instrument relates directly to a metropolitan health service, or whether it is to be construed as relating to a metropolitan health service for example by reason of a provision of this Act that provides that instruments of various kinds that relate to a former agency of a metropolitan health service are to be construed as relating to a metropolitan health service (such as existing sections 197, 198(1), 210 or 213). 11

 


 

A similar definition of "old public hospital instrument" is used in section 238. It applies to instruments in relation to public hospitals under Division 4 of Part 3 that become a public health service, either on 1 July 2004 or subsequently under an Order made at any time under new section 239. Victorian Legislation Parliamentary Documents This section also provides that "commencement day" means the day on which clause 53(1) of this Bill comes into operation, which is to be the day after the day on which this Bill receives the Royal Assent. This is the day on which metropolitan health services become public health services, and "commencement day" is used in provisions that relate to this change. Section 233 gives this Part extra-territorial application. (For example, in recognition of the fact that a hospital subject to this Part may own land outside Victoria or have entered into agreements outside Victoria.) Section 234 provides that a body listed in Schedule 5 as a metropolitan health service that on the commencement day becomes a public health service is to be taken to be the same body that it was before that day. Section 235(1) provides that although on 1 July 2004, Ballarat Health Services, Barwon Health, Bendigo Health Care Group, Goulburn Valley Health and Latrobe Regional Hospital each become a public health service, they are each to be taken to be the same body that they were before that day. Section 235(2) provides that on the date on which any other public hospital becomes a public health service under an Order made under section 239, it is to be taken to be the same body that it was before that date, even if its name is also changed. Some of the effects of sections 234 and 235 are that the body in question continues to be the same body corporate, all property, rights and liabilities of the body remain with that body, any legal proceedings in relation to that body continue unaffected, and that employees continue to be employed by the body on the same terms and conditions. Section 236 provides that-- · the directors of the board of a metropolitan health service that becomes a public health service on the commencement day continue to hold office as directors of the board of that public health service for the same period on the same terms and conditions; 12

 


 

· the members of the board of a public hospital that on 1 July 2004 becomes a public health service continue to hold office as directors of that public health service for the same period on the same terms and conditions, and any member who was chairperson or president of the Victorian Legislation Parliamentary Documents board is taken to be the chairperson of the board of the public health service until 31 October 2004. Section 237 builds on section 234. It must be read with the definition of "old metropolitan health service instrument" in section 232. Section 237 provides that-- · all instruments in relation to a metropolitan health service have effect and are to be construed on and after the commencement day as if they refer to the public health service that the metropolitan health service has become; and · trusts in relation to a metropolitan health service (or any of its former agencies that it has succeeded) continue to have effect as if the trust were in relation to the public health service that the metropolitan health service has become. Section 238(1) to (3) builds on section 235 and must be read with the definition of "old public hospital instrument" in section 232. It provides that-- · all instruments in relation to Ballarat Health Services, Barwon Health, Bendigo Health Care Group, Goulburn Valley Health or Latrobe Regional Hospital have effect and are to be construed on and after 1 July 2004 as if the instruments refer to the public health service that they have each become; and · a trust in relation to such a public hospital (or any of its former agencies) continues to have effect as if the trust were in relation to the public health service that the public hospital has become. Section 238(4) to (6) builds on section 235 and must be read with the definition of "old public hospital instrument" in section 232. It provides that-- · all instruments in relation to a public hospital that is the subject of an Order under section 239 have effect and are to be construed on and after the effective date of the 13

 


 

Order as if the instruments refer to the public health service that the public hospital has become; and · a trust in relation to such a public hospital (or any of the former agencies it has succeeded) continues to have Victorian Legislation Parliamentary Documents effect as if the trust were in relation to the public health service that the public hospital has become. For further background about terms used in this section in relation to trusts, refer to the explanation about new section 266. Section 239 provides that if following consultation with the board of a public hospital, the Minister considers that it is in the public interest that the public hospital become a public health service, the Minister may recommend that an Order in Council be made to this effect. This provision also sets out the factors that the Minister must consider in making such a recommendation. An Order under this provision establishes a public health service by the name specified in the Order. The name of the public hospital is deleted from Schedule 1, and the name of the public health service it has become is inserted into Schedule 5. Section 240 provides that on the effective date of an Order under section 239, the members of the board of the public hospital go out of office and a board must be appointed in accordance with section 65T. It is not feasible to provide for all members of the public hospital to continue to hold office under section 65T as, whilst there can be up to 12 persons appointed to the board of a public hospital, section 65T provides that boards of public health services may only have a maximum of 9 members. Section 241 provides that if a public hospital becomes a public health service (either as a result of clause 53(2) or by an Order made under section 239), the by-laws of the public hospital are revoked. The Governor in Council may, by Order, specify the by-laws, including the core objects, of the public health service. This is to ensure that new by-laws which are suitable for the operation of the body as a public health service can apply immediately. Section 242 enables the Registrar of Titles to make any amendments to the Register that are necessary because of the operation of this Part (for example if the name of a body has changed upon it becoming a public health service under section 239). 14

 


 

Section 243 provides that nothing done under Part gives rise to any cause or right of action or application before any court or tribunal. (This includes the making of an Order under section 239.) New section 243 therefore limits the jurisdiction of the Supreme Court, and new section 157H includes the Victorian Legislation Parliamentary Documents statement of intention to do this as required under the Constitution Act 1975. Part 13 includes provisions to enable the re-organisation of public hospitals and public health services. The general effect of this Part is to create the flexibility to allow health services to be provided in the future by the appropriate agencies, whilst guaranteeing the continuity of legal rights and responsibilities with the appropriate agencies. A transferring agency under this Part may have multiple successors, in respect of its property, rights, liabilities and in relation to trusts. New section 244 defines various terms used in this Part to facilitate succession in the case of a re-organisation. In particular-- · "agency" means a public hospital or a public health service; · "old instrument" is a term used in new section 258. It means an instrument subsisting immediately before the effective date of an Order under section 248 to which a transferring agency was a party, or which refers to a transferring agency, that was given to or in favour of a transferring agency, or under which money is or may become payable to or by a transferring agency or where property is to be or may become liable to be transferred to or by a transferring agency. This provision will apply regardless of whether the instrument relates directly to a transferring agency, or whether it is to be construed as relating to the transferring agency for example by reason of either a provision of this Act which provides that instruments of various kinds that relate to a former agency of a metropolitan health service are to be construed as relating to a metropolitan health service (such as existing sections 197, 198(1), 210 or 213), or under existing section 65 or new sections 237(1), 238(2) or 238(5). 15

 


 

Section 245 gives this Part extra-territorial application. (For example, in recognition of the fact that an agency subject to this Part may own land outside Victoria or have entered into agreements outside Victoria.) Victorian Legislation Parliamentary Documents Section 246 provides that if there is any inconsistency between this Part and Division 9 of Part 3 or Division 5 or 6 of Part 9 (which related to the disaggregation of metropolitan hospitals and the creation of metropolitan health services in 2000), Part 13 prevails to the extent of any inconsistency. Section 247 establishes the process that is to be followed before an agency or the services it provides can be re-organised. The Minister must cause a report of the proposed re-organisation to be made available to the board of each agency to be affected. After having regard to any written submission on the report made within 30 days, the objectives of the Act and the public interest, the Minister may recommend that an Order or a series of Orders be made under section 248. This provision also provides for a shortened process that is to apply in relation to Women's and Children's Health. In that case, a report and consultation process is not required; the Minister may make a recommendation in relation to it after having regard to the objectives of the Act and the public interest. This is to enable the re-organisation to take effect on 1 July 2004 under Orders that are to be made under section 248. Section 248 provides that the Governor in Council, by Order published in the Government Gazette, may do one or more of the following in one, or a series, of Orders-- · establish an agency; · appoint a chief executive officer of such an agency for no more than 6 months; · specify the by-laws of such an agency; · allocate to an agency or agencies such of the property, rights and liabilities of another agency as are specified in the Order. (This may be done by reference to a campus of the agency or another place, to a class or category of property, rights or liabilities, or by a combination of both methods); 16

 


 

· cancel the incorporation of an agency from which property, rights and liabilities are transferred. (This may only be done if the Minister is satisfied that as far as practicable the property, rights and liabilities of the transferring agency have been Victorian Legislation Parliamentary Documents transferred to another agency or agencies.) Orders may be made over a period of time, which can deal with different aspects of the property, rights and liabilities of the one transferring agency. For example, an Order could allocate all liabilities in tort (which would include future liabilities) in relation to services provided, or activities carried out, at or in relation to a named campus of an agency. This would ensure that, from the date upon which that campus becomes the responsibility of a receiving agency, that agency would assume full and sole responsibility for those liabilities, to the exclusion of the transferring agency. If a person subsequently brings legal proceedings alleging negligent medical treatment at the campus, the action would only lie against the receiving agency. Section 249 provides that if an agency is established under section 248, a new agency comes into existence and Schedule 1 is amended accordingly (if the agency is a public hospital) or Schedule 5 is amended (if the agency is a public health service). Section 250 provides for the establishment of the first board of an agency created by Order under section 248. Section 251 provides that if an Order under section 248 specifies the by-laws of a new agency, the by-laws are to be taken to have been made by the board of the agency and approved by the Secretary under section 24. Section 252 provides that if an Order under section 248 appoints a chief executive officer of a new agency, the appointment is taken to have been made by the board of the agency and approved by the Secretary under section 25. Section 253 provides that if an agency's incorporation is cancelled by Order under section 248-- · the name of the agency is to be omitted from the relevant Schedule of the Act; and · the members or directors of the board of the agency, and the chief executive officer, go out of office. 17

 


 

This section also provides that in such a case, if all of the agency's property, rights and liabilities have not been allocated to another agency under this Part, the remaining property and rights vest in the Crown (except in relation to trusts), the remaining liabilities become the liabilities of the Crown, and the Crown Victorian Legislation Parliamentary Documents becomes the successor in law of the agency for these purposes. This Part therefore applies as if references to a "receiving agency" were a reference to the Crown. References in this Part to an effective date of an Order mean the date on which an agency's incorporation is cancelled by reason of section 248(1)(e). Section 254 provides that if property, rights or liabilities are allocated by Order under section 248 from one agency to another agency, on the effective date of the Order the property and rights vest in the receiving agency, the liabilities become the liabilities of the receiving agency, and the receiving agency becomes the successor in law of the transferring agency in respect of that property and those rights and liabilities. The property, rights and liabilities therefore no longer attach to the transferring agency. This Part also includes a series of provisions that apply wherever property, rights or liabilities have been transferred under this Part-- · agreements and instruments are to be construed as applying to the relevant successor (receiving agency) rather than the transferring agency (sections 255 and 258); · the relevant successor (receiving agency) is substituted as a party to any legal proceedings to which the transferring agency was a party (section 256); · the relevant successor (receiving agency) is the registered proprietor of any land which is registered in the name of the transferring agency (section 257); · no taxes are payable as a result of anything done under this Part (section 259); and · evidence admissible for or against the transferring agency is admissible for or against the relevant successor (receiving agency) (section 260). 18

 


 

Section 261 is a savings provision in relation to approved quality assurance bodies. Under section 139 of the Principal Act, the Minister may declare a committee, council or other body established by a transferring agency to be an approved quality assurance body. This ensures that discussions by the members of Victorian Legislation Parliamentary Documents the body for the purposes of quality improvement are confidential. New section 261 provides that the Minister may declare that a designated committee, council or body of a transferring agency is to be taken to be established by a designated receiving agency. The declaration under section 139 can therefore continue to have effect in relation to the designated receiving agency. Sections 262 to 264 relate to the transfer of staff of an agency that is being re-organised. Where campuses and services are to be allocated to more than one successor body, it may also be necessary for staff to be transferred to more than one successor. To enable the transfer of staff to the appropriate body, these sections provide that-- · the Minister may, by notice published in the Government Gazette, determine a date that is to be the "staff transfer date" for the purposes of transferring staff of a transferring agency; · there may be more than one notice in relation to a transferring agency; · before the relevant staff transfer date, the Secretary must prepare a list of employees of the transferring agency (other than the chief executive officer) who are to become the employees of a specified receiving agency on that date; · the list may specify employees by name or position, class or category, by reference to a campus or other place, or a combination of these methods; · on the relevant staff transfer date, a specified employee of the transferring agency is to be regarded as being employed by the specified receiving agency on and from that date; · the person is employed by the specified receiving agency on the same terms and conditions as when employed by the transferring agency, with continuity of employment; and 19

 


 

· the employee has the accrued entitlements in his or her employment with the specified receiving agency that are equivalent to those he or she had with the transferring agency. Victorian Legislation Parliamentary Documents Section 265 provides that the future terms and conditions of transferred employees can be altered according to law after the transfer. Section 266 is intended to preserve the operation of trusts, and to transfer their application to the appropriate successor of a transferring agency. This means that the appropriate successor will be eligible or entitled to benefit from a relevant trust. This will ensure that a trust does not fail simply because of the changes to the governance of agencies. (i) Background to section 266 "Trust" as currently defined in the Act has a wide meaning, and includes any type of trust, charitable or non-charitable. It applies to discretionary trusts, and outright gifts or bequests. The Act currently provides that a "successor agency" benefits from trusts that apply to any of its "former agencies". For the purposes of trusts, a new body is the successor of an old body that it replaces in a variety of ways, including when-- · an amalgamation, aggregation, declaration, disaggregation or other change of status has occurred under the Health Services Act 1988 or one of the Hospitals and Charities Acts; and · a new body became the successor of the old body or where new and old bodies are deemed to be the "same body" for all purposes or for the purposes of any trust. An agency is to be taken to be the successor not only of the agency that it immediately succeeds, but also of any earlier agencies that can be traced as one of its "ancestors". This can occur where an agency existed in the past and forms part of the chain of succession which leads up to the agency that has just been created, due to a series of prior amalgamations, aggregations, declarations or other Orders over time. 20

 


 

(ii) Clause 4--amendments to relevant definitions Clause 4 amends the definitions of "trust" and "former agency" in the Act to extend their scope to all cases, including in relation to a metropolitan health service, a public hospital or a public health Victorian Legislation Parliamentary Documents service. In particular, new sections 237, 238 and 266 apply in relation to trusts of such bodies, or bodies that they have succeeded. (iii) Section 266(1) and (2) The Governor in Council may, by Order on recommendation of the Minister, designate an agency as the successor of a designated transferring agency, for the purposes of any trust or class or category of trusts specified in the Order in relation to the transferring agency. This refers to trusts that apply to the transferring agency directly on their own terms, or which apply by reason of the current section 65 or under new sections 237 or 238 to the transferring agency as the same body or successor of a former agency. In recommending that an Order be made, the Minister must have regard, where relevant, to the campuses operated or to be operated by the designated agency. This is intended to allow trust funds or property to 'follow the campus'. For example, an Order could apply from the day on which the relevant campuses or other services to which the trust funds are to be applied, are to be transferred to a receiving agency. (iv) Section 266(3) provides that-- · a trust specified, or of a class of trust specified, in an Order, in relation to either a transferring agency designated in the Order or in relation to a former agency of the transferring agency, continues to have effect, and is to be construed on and after the effective date of the Order, as if the trust relates to the successor agency designated in the order; and · such a successor agency is to be taken to be the same body as the transferring agency for the purposes of such a trust. A designated successor agency is therefore entitled or eligible to benefit from specified trusts or classes of trusts in relation to the designated transferring agency referred to in the Order, and also from such relevant trusts that apply to all of the former agencies of that transferring agency. The trust no longer relates to the transferring agency. There is to be taken to be no break in the 21

 


 

operation of a trust, or failure or lapsing of the trust (including a gift). Section 5A of the Act will apply to trusts that can be applied for the benefit of a designated agency under section 266, and also in Victorian Legislation Parliamentary Documents relation to trusts referred to in section 237 and 238. It has the effect of requiring that where an instrument specifies the purposes of a former agency for which a trust is created, the allocation from the trust must be applied for a corresponding or similar purpose of the successor agency. Section 267 clarifies that nothing in section 266 affects the operation of an order or authority that a trust be applied cy pres. For example, if a trust in relation to an agency (or one of its former agencies) which no longer exists has been altered cy pres by the Supreme Court to enable the trust property to be applied for another purpose unrelated to health care, the trust will continue to be applied for that other purpose. However, if a trust has been applied cy pres in favour of an agency (or a body it has succeeded), the Part will enable the trust to be applied in relation to the appropriate successor of that agency. (For example, by re-construing the court order under section 266). Section 268 clarifies that the amendments relating to trusts (by the insertion of Part 12 or Part 13) apply whether the trust was created before, on or after the commencement of clause 51 of this Bill. Section 269 provides that nothing done under or by this Part is to be regarded as, for example-- · placing any person in breach of contract; · placing a person in breach of an Act or agreement; · giving rise to a remedy for a party to a contract; · causing a contract to be void or unenforceable. This is intended to ensure that any changes to the governance of an agency, and the associated transfer of property, rights and liabilities under this Part, do not in themselves affect the validity of contracts previously entered into by an agency. Section 270 provides that nothing done by or under this Part gives rise to any cause or right of action or application before any court or tribunal. (This includes the preparation of a report or the making of a recommendation under this Part, the making of an Order under section 248, 266 or 271, or anything done under sections 262, 263 or 264 in relation to the transfer of staff). 22

 


 

New section 270 therefore limits the jurisdiction of the Supreme Court, and new section 157H includes the statement of intention to do this as required under the Constitution Act 1975. Section 271 provides-- Victorian Legislation Parliamentary Documents · for the appointment of an administrator for an agency by Order of the Governor in Council to assist the efficient re-organisation of an agency or the services it provides; and · that on the appointment of an administrator, the directors of the board of the agency go out of office; and · that an Order may also remove the chief executive officer from office. (For example this may be appropriate where the agency is no longer providing services and the administrator's role is to make necessary arrangements before the cancellation of the incorporation of the body). Section 272 provides that the functions of an administrator are to carry out the functions of the board of the agency and to facilitate the transfer of property, rights and liabilities of an agency to another agency or agencies under this Part. Section 273 provides that the Secretary may give directions to an administrator. Clause 52 amends Schedule 1 to remove the names of the following hospitals: Ballarat Health Services, Barwon Health, Bendigo Health Care Group, Goulburn Valley Health and Latrobe Regional Hospital. When this section comes into effect on 1 July 2004, these bodies will cease to be public hospitals within the meaning of Division 4 of Part 3 of the Act because they will become public health services under clause 53(2). Clause 53(1) removes the heading "Metropolitan Health Services" in Schedule 5 and replaces it with "Public Health Services". Clause 53(2) inserts the names of the following hospitals into Schedule 5: Ballarat Health Services, Barwon Health, Bendigo Health Care Group, Goulburn Valley Health and Latrobe Regional Hospital. By virtue of this Bill, these bodies will become public health services on 1 July 2004. 23

 


 

 


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