The SRC Report: Conflict of Interest and Bias in Decision-Making – What Are They, and How Can We Avoid Them?

Welcome, everybody, to the SRC Report. I'm Athena Cains, Principal of Commonwealth Compensation, and I'm joined today by Caitlin Connole, Principal of our Regulatory and Compliance division. Welcome, Caitlin.

Hi, Athena. How are you going?

Very well, thank you. This is your first SRC Report!

So exciting!

So, I invited Caitlin in here today to talk about conflict of interest because she's an incredibly talented administrative lawyer working in the regulatory space. I thought she'd have some really great insights and could take us through the legal principles relating to conflict of interest.

So, Caitlin, please take us through conflict of interest.

Yeah, well, today we're talking about conflict of interest in the government space. Everyone likes to always start with the APS Code of Conduct, right? So, let's just remind everybody about section 13 of the Public Service Acts, which obviously requires that APS employees disclose and take reasonable steps to avoid any conflict of interest, real or apparent, in connection with their employment.

I mean, Athena, in an ideal world, we'd all like to avoid all possible conflicts of interests, wouldn't we? But we're in the real world, and, unfortunately, that's not the case. And really, it's important that we're able to identify the conflicts and deal with them as they arise.

So, perhaps we should talk about: what is a conflict? I think everyone knows the classic conflict of interest that comes up between someone's personal and professional life, and usually, people think of it in some kind of financial terms. But, obviously, conflicts of interests can be between any kind of competing interests, with their rise from employees' own interests, or it can also encompass employees' business associations, or perhaps their family or friends' interests as well. So, they need to be mindful of that.

Conflicts that can come up can either be actual or perceived. So, the important point is: it's not necessary to show that there was an actual bias. Of course, actual biases do come up from time to time, but it's obviously a grave matter if there's been an administrative decision and there's an actual bias that's occurred. So, it's not something that is a common finding. More often than not, when we're looking at the cases or talking in this space, it's about whether there's been an apprehended bias.

Sometimes it can be hard to identify an apprehended bias, but I think one of the things we talk about, down in Canberra (and you'll often hear public servants talk about), is whether or not a decision or a potential risk passes the 'pub test'. And I think that's kind of apt when we talk about apprehended bias in an administrative law sense - certainly, in making decisions under sections 36 and 37 - would it pass the pub test if you were explaining to somebody in the pub who made the decision and what that decision was?

Yeah, so judges have taken on a little bit more of a sophisticated turn on that. Actually, it'd be great if the judges just embraced the pub test.

They've actually made it the 'fair-minded observer', which did this whole raft of fictional characters that we end up with out of decisions. But the fair-minded observer is basically the person that looks back and concludes whether, on the material objective facts in front of it, they might entertain a reasonable apprehension that there might not be an element of impartiality or that the decision-maker might not be bringing an unprejudiced mind to question in front of it. So, to break that down. . . Whether there's apprehended bias involved is a two-fold test. You first must identify the factor and then hypothesise to cause a question to be resolved other than as a result of a neutral evaluation of the merits. So, that might be the financial, family connections, or a close relationship. And then secondly, it must be articulated how the identified factor might cause that deviation from a neutral evaluation of the merits. So here, the connection between the factor and the actual decision made needs to be realised.

So, I suppose maybe we should talk about what can amount to a biased conflict and how they come up in the administrative law space, and probably in the space you're working, Athena, too.

So, generally, an appearance of bias can arise from an interest, conduct, association, or some other kind of information, and all these categories in the real world tend to overlap. As I mentioned previously, the financial interest is the one that's most easily identifiable. Next is the association test. So, there might be some kind of personal connection between the decision-maker, the accused, complainant, witnesses, et cetera, that might be relevant because it might tend to lead to a perception that the decision-maker might prefer someone's evidence over another. Or discredit someone's evidence for a certain reason. So, that could be where bias might take the form of an association.

Sometimes, bias might take the form of conduct, or statements on a matter, which might give rise to that reasonable apprehension. So, this is when people might express a view early on. Or even if in a case it was found that a juror, for instance, was giving flowers to the case victim's mother. This would obviously be a matter which would lead the court to find that a reasonable apprehension of bias might be there because that juror might not be able to detach themselves enough to act impartially.

I had a case many, many years ago. . . I'd have to say they don't come up very often, bias in court cases. It's not ahead of administrative review that it tends to succeed, but in this case, whilst the Tribunal member was listening to the evidence of the applicant, he was muttering under his breath. He wasn't necessarily saying all that much, although he did tend to speak over the applicant when the applicant was giving evidence, and just making sort of noises that indicated that he was being dismissive of the applicant and the evidence, and ultimately found against the applicant.

And that was appealed. I was in the Federal Court, and what was tendered as part of the evidence was not just a transcript but the actual recording because you didn't get the sense from the transcript. And the transcript, as it read, was fine, but the way that The tribunal member interacted with the applicant did lead to apprehended bias in that case. And I think the applicant was successful in having that decision overturned and remitted.

So, it's more than just how you take evidence or how you interact. Like when you said expressing a view at the start before you can make a decision. Those can be indicators of apprehended bias, but also just the interactions and body language if it's repeated over a period of time, that as well can be enough.

Yeah, that's right. It certainly can be evidence of there being some kind of bias there. The other one that comes up, and probably comes up more in your space, is, I suppose, participation by the accuser in a process. So, people might not often remove themselves when they should from conversations, or they might even just be a lay observer of something being discussed, and sometimes that can be enough. So, people need to watch out for or remove themselves from matters where they've obviously been involved in an incident or witnessed an incident, or are in some way the complainant. But there's always a blur. I mean, it sounds pretty simple, but it's amazing how these lines get blurred sometimes. Or people don't step back and continually assess the conflict situation before going into these things.

I see it sometimes, certainly, with those really complex employees who have multiple complaints or have had multiple complaints made by them and about them. And departmental HR teams will only have so many people with the capacity and the capability to undertake investigations. And there's a question then, if they've done an investigation in relation to that employee, are they then conflicted out of doing further investigations in relation to that employee?

And the answer to that is probably, yes, I would say. Particularly with complex employees. And we can get to a stage where there's simply nobody left in the department who can bring an unbiased mind to a complaint made by or about that employee, and they need to send those investigations probably externally, and then have a really good think about who will be the delegate to make decisions about a breach of the APS code. And then, obviously, we have to have a separate delegate on sanction. It can be very tricky and difficult in small agencies, but even in large agencies, where we can have employees who are well-known to all of the usual delegates.

Hmm. Yeah, that does happen, but I mean, it also brings us to where there are exclusions because there can be an exclusion from the rule of bias because of necessity. But obviously, the necessity rule comes in when you've got limited decision-makers and delegates, and you've got a situation where no one else can actually perform it. So, there is that exception that comes up in very rare circumstances of necessity.

But that certainly is the case under sections 36 and 37 because delegates can only be APS employees or officers of the rehabilitation authority. And I would usually recommend that if, certainly in relation to making decisions of non-compliance under those provisions, that it's a more senior decision-maker, probably sitting at the EL2 level. And when we apply the guidelines as well, the guidelines require delegates to be properly trained and, clearly, there are processes with being trained by Comcare and understanding your role as a rehabilitation case manager. All those kinds of things.

We can't just pick anybody from a department to be making valid decisions under those provisions. So, you start to get a very, very small pyramid. If we have an employee who is seeking review of those decisions regularly or is regularly being made non-compliant, if we do it too many times, we may end up in a situation where there is some apprehended bias. But as you said, out of necessity, the only delegates who can make the decisions are the same people - the same couple of people.

But I suppose in those cases, it's really then a question of, well, what do you do, and how do you best manage the situation? Because you know where you have got those live issues that you really got to tread carefully and make sure that you identify the potential conflict and have a proper management procedure in place to deal with it.

What would such a procedure look like?

Essentially, I think you've got to first identify that you've got an issue. It's not something that you should ever try to bury, I suppose.

That just makes you look more biased if you cover it up.

A hundred percent. And I think what you've got to do is, it's got to be managed up. So, the issue, the conflict, or whoever the conflict arises with, has to be taken the next step up. And every department organisation has a different way of dealing with conflicts, and usually, there's a policy in place.

Hmm. I'm gonna throw a really hairy one at you.

What about inherent bias? That is, the biases that are almost environmental biases. Not that we're born with biases, but we do acquire them over our lifetime, and they change depending on our environment as well.

And we talk about inherent bias a fair bit in the public service. Where does it sit at?

Well, that's the thing. With inherent bias, you have to acknowledge that it comes into every matter.

And every judge, as well, will. Without casting any aspersions, they will. We will.

But that's it. No one comes to look at a decision with an empty mind. That is just fiction. And so, I think you just have to identify where those issues are. I suppose to answer how do you deal with that, well, that comes down to making sure that your process of making decisions is really good. Really good. I was trying to think of a better word. But really, really thorough and solid.

Defensible.

Defensible. We can back what you've said. And I always think that that comes down to the procedure you take in making a decision, to make sure that the decision really is parked till the end of the process and that your process looks at all the evidence first. Evaluate any gaps in evidence, assess the credibility of each bit of evidence, and then run through the matrix of that to make your decision whilst always keeping in mind that you might have these inherent biases there.

And I think it is your job as a decision-maker. Being a decision-maker is actually a hefty responsibility, and it is your job to identify your inherent biases or be conscious that you may have them. If you feel you cannot bring an unbiased mind to this decision, you need to recuse yourself. You need to take that responsibility and raise it, as you said, escalate it, Caitlin, and say, "Look, I don't think I can make this decision with an unbiased mind for these reasons", and get somebody else to make the decision.

It is worse to deny and cover up your feelings or your thoughts when you know that you can't be unbiased in this situation, and there is nothing wrong with saying, "I have to stand aside. On this occasion, I have to stand aside and let somebody else do this." And I think what you said, what's really important, is to have a matrix of decision-making and have a process because all administrative decisions have material findings of fact that you need to be satisfied with before you can make a decision.

And it's not a gut feeling. Administrative decision-making is not about feelings, it's about facts, and you do need to follow a process. And there is a lot of comfort in following a process because it does enable you, firstly, to identify potential biases and, secondly, to manage them. And, obviously, procedural fairness and all the other administrative processes we need to follow.

One hundred percent because ultimately, you always have these competing interests, but the integrity of the decision or the task, or your duties in front of you have to be the higher duty. And if you think that you can't fulfil that duty, you have to put your hand up and say when that arises. Because for. one reason or another, that occurs in people's professional bias.

Yeah, and it can certainly occur in HR where it can be quite a motive, and it can be very difficult as well for people. So, I think it's worthwhile if you think it's the right time, Caitlin, to talk about some specific conflicts of interest that might arise for delegates under sections 36 and 37. So, I think Caitlin mentioned the really obvious one is a financial benefit, and that's where the decision you make will or may lead to a financial benefit for you or one of your loved ones.

So, generally speaking, under 36 and 37, we're not really committing funds, but what we are doing is committing Comcare to pay for some funds. So, clearly, what a decision-maker wouldn't be doing is deciding that the rehabilitation provider is their partner, their child, or even their neighbour, to a certain extent. You would be making sure that this person is at arm's length. Or, if it is somebody very close, that it's not you making the decision because sometimes it could be the case that the perfect rehabilitation provider for a particular employee is somebody you know, somebody you're related to. And there are really, really defensible and sound reasons why that person should be the one who's appointed to the role. If that is the situation, it's far better for you to declare this and to let somebody else make the decision, and either they'll agree with you or they won't agree with you.

Now, that kind of situation is easy to manage, easy to identify, and probably not gonna come up all that often. But the other, as Caitlin said, the other big-ticket, a conflict of interest, is the bias question. And, to me, this is a much bigger risk in decision-making under sections 36 and 37 because the people making decisions, generally speaking, are rehabilitation case managers who get to know an employee quite well.

And if you do have an employee who potentially is quite resistant to rehabilitation, who changes rehabilitation case managers frequently, and tends to make a lot of complaints about rehabilitation case managers and lots of other people, it can lead to impressions or decision-makers having ideas or assumptions about that employee that could lead to situations where the decisions could be biased. And I think that's a really difficult situation to manage, and it will particularly be a problem when we're looking at suspending employees under sections 36 and 37.

In that situation, because those decisions deny employees' entitlements to incapacity payments, it is so important that those decision-makers are a step removed from the employee. So, they should be, in my view, sitting at that EL2 level, potentially the EL1 level, but at the EL2 level. I've said before, and Caitlin and I discussed, that sometimes you need to have a few different people who have the capacity and have the delegation to make those kinds of decisions because they tend to be quite serious. And they also tend to be likely to be reviewed by Comcare and on to the AAT if they're upheld by Comcare.

So, that's one way of identifying and managing the conflict of interest when we're looking at bias and making those kinds of decisions. The other thing that can sometimes come up is when we're drafting our request to independent medical examiners for their assessment under section 36, and I think this can be a really risky process for delegates. And the reason for that is, sometimes. . .and I'm really focusing on complex employees here rather than your standard, very straightforward rehabilitation assessments. For our more complex employees who are struggling to return to work or have had multiple failed returns to work, who have a lot of complaints in relation to them and by them. That's the category of employee that I'm talking about.

When we're drafting our letters to our doctors, it can sometimes come across, if it's written by the rehabilitation case manager who's responsible for this employee, they can come across, even with all the best will in the world, if we're looking at them externally and objectively, if we're the man in the pub, or we're the fair-minded observer, they can come across as trying to get the examiner to make a certain type of decision. And believe me, that's a risk for us as lawyers as well when we're trying to get experts to give us their expert evidence. One of the things I would really recommend, to avoid any allegations of apprehended bias in the briefing, is to have somebody review it and to really focus on the facts. What are the facts? How is that supported by the evidence that you have? And leave it up to the IME to review the evidence and make their assessment because, in general, if we ask leading questions, if we include too much commentary about what the employee may have thought, or what you thought about what the employee may have thought, it really does start coming across as if you hold a view about this employee. And that is not conducive to good decision-making. It's not conducive to getting good evidence from an assessor, and it really can be detrimental to the overall process and the overall rehabilitation of that employee.

Yeah, that's right. Independence of expert is a big one in all spheres, isn't it? Because in these cases, the expert's evidence is crucial. So, it's where the challenges can come up.

Absolutely. We rise and fall on our experts, if I can put it like that. Which doesn't really reflect where it sits, but it's a hundred percent true. Certainly, in the Comcare space, medical evidence is everything, and we need to ensure that we're getting the best possible medical evidence, so that does take a bit of effort to get a good briefing together.

So, thank you so much for your time here today, Caitlin. It's been an absolute pleasure having you on the SRC Report, and I can't wait to have you back.

Thanks, Athena, it's been good fun.

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