The Department of Health published misleading information about whether there was an increase in deaths during the Hazelwood mine fire, the Board of Inquiry has found.
The reopened Hazelwood Mine Fire Inquiry report heavily criticises the department, stating it did not appear to have met its obligations under the Public Health Act in relation to community collaboration and engagement.
Health Minister Jill Hennessy has directed the department to conduct a full-scale review of the functioning and resourcing of the Chief Health Officer and start a department-wide review of the manner in which contracts for independent expert advice are entered into and managed.
The Board of Inquiry found the department had not adequately communicated, nor meaningfully engaged with advocacy group Voices of the Valley or the broader community regarding concerns about "the vital issue" of whether the fire contributed to an increase in deaths.
It criticised fact sheets published by the department in September and October 2014 about whether there was an increase in deaths, labelling them "incomplete, misleading and unbalanced".
The report examined the department's engagement in late 2014 and early 2015 of the University of Melbourne to undertake three analyses to consider whether there was an increase in deaths in the Latrobe Valley caused or contributed to by the Hazelwood mine fire.
Epidemiologist Dr Louisa Flander provided three reports to the Department of Health and each of those went through several drafts, the inquiry report stated.
It stated, the board received evidence demonstrating former chief health officer Rosemary Lester - prior to her retirement - and departmental officers provided "extensive commentary" to Dr Flander on these drafts prior to them being finalised.
"This commentary related to substantial content in the reports and led to substantial changes to content before the reports were finalised," the report stated.
"In particular, the Department of Health communicated to Dr Flander, at various stages during her engagement, the proposition that the data did not show an increase in deaths in the Latrobe Valley.
"Having examined all of the numerous and lengthy emails from the department to Dr Flander commenting on her draft reports and suggesting changes to those drafts on matters of substance and opinion, the Board does not consider the Department of Health engaged in a process that was transparent or appropriate."
The report stated Dr Lester maintained control over the department's investigation despite controversy surrounding her conduct during the mine fire itself and her investigations "gave rise to a real or perceived conflict of interest".
In a statement yesterday Dr Lester rejected the determination she had a conflict of interest and attempted to influence the independence of the report she commissioned.
"This research was conducted by the internationally renowned School of Population and Global Health at the University of Melbourne," Dr Lester said.
"Its first report, delivered while I was still at the department, concluded that 'we do not find this increase to be conclusive evidence of any particular effect'.
"Opinions have been expressed that my investigation of the issue was conflicted and lacked rigor. I outright reject both claims as unfounded and deeply insulting."
She said she had at all times acted professionally with the best interests of the community in mind and she did not accept the board's criticisms of her.
A spokesperson said the Department of Health was looking through the inquiry report.