Perlmutter v. Ministry of Health, 2016 ONSC 2080

CITATION: Perlmutter v. Ministry of Health, 2016 ONSC 2080

DIVISIONAL COURT FILE NO.: 146/10 DATE: 20160331

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

ACJ MARROCCO, J. M. WILSON AND PATTILLO JJ.

BETWEEN:

DR. DAVE HYMAN PERLMUTTER Applicant

– and –

HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO as represented by THE MINISTRY OF HEALTH AND LONG-TERM CARE and the GENERAL MANAGER of the ONTARIO HEALTH INSURANCE PLAN Respondents

Wayne Brynaert and Matthew Estabrooks, for the Applicant Lise G. Favreau and Judith Parker, for the Respondents

HEARD at Toronto: February 9, 2016

L. A. PATTILLO J.

Introduction

[1] This is an application by Dr. David Perlmutter, for judicial review of the decision of the General Manager (the “General Manager”) of the Ontario Health Insurance Plan (“OHIP”) on behalf of the Ministry of Health and Long-Term Care (the “Ministry”) dated April 3, 2008 in which the General Manager determined that the maximum payable to Dr. Perlmutter in respect of his claims for services rendered during the period of July 1, 1993 to January 31, 1996 was $203,864.07 (the “Decision”).

[2] Dr. Perlmutter seeks an order directing the General Manager to pay the full amount of his claims ($572,462.41) or, in the alternative directing the reassessment of his claims by either a Master of this court or by the Physician Payment Review Board.

[3] Dr. Perlmutter submits that s. 18(4) of the Health Insurance Act, R.S.O. 1990, c. H.6 (the “Act”) as amended, requires the General Manager to pay all of his claims and then take the steps set out in the Act to obtain repayment of the amounts the General Manager determines should not have been paid.

[4] In the alternative and if s. 18(4) of the Act, as amended, does not apply, Dr. Perlmutter submits that in reaching the decision he did, the General Manager acted unfairly and breached Dr. Perlmutter’s right to procedural fairness by failing to agree to meet with him to discuss the claims. Finally, Dr. Perlmutter submits that the General Manager’s determination of the amount awarded was unreasonable and should be set aside.

[5] For the reasons that follow, I dismiss Dr. Perlmutter’s application. Having regard to the Act as a whole, I do not consider that the General Manager’s discretion to review Dr. Perlmutter’s claims under s. 18(3) of the Act, as amended, is restricted or otherwise impacted by s. 18(4) of the Act. Nor am I of the view that the General Manager breached Dr. Perlmutter’s right to procedural fairness in the way in which she handled his claims or that the Decision was unreasonable.

Overview

[6] Dr. Perlmutter was a family doctor practicing in Ottawa until 1996 when he stopped practicing.

[7] On November 20, 1998, the then General Manager of OHIP advised Dr. Perlmutter that he was withholding payment of his February to May, 1997 accounts to OHIP. At Dr. Perlmutter’s request, the Medical Review Committee reviewed the decision and on December 14, 2000 directed the General Manager to pay Dr. Perlmutter’s accounts.

[8] In January, 2001, Dr. Perlmutter requested, through counsel, that OHIP, consider un-submitted claims for 1993 to 1996 based on extenuating circumstances. On May 6, 2002, Dr. Perlmutter submitted billings for services alleged to have been rendered during the period July 11, 1993 to April 30, 1996 and requested payment. The services all were in regards to house calls.

[9] The Act and regulations provide that accounts for services must be submitted to OHIP no later than six months after the insured services were performed. At the time Dr. Perlmutter submitted the claims, s. 18(4) of the Act contained a prohibition on paying claims not submitted within the prescribed period or six months. It also gave the General Manager discretion to pay for such services “if there are extenuating circumstances.”

[10] On September 23, 2004, based on information provided by Dr. Perlmutter concerning the reasons why he was unable to submit the accounts within the required time period, the General Manager concluded there were extenuating circumstances in relation to the delay in submitting the claims “for special visits” and that Dr. Perlmutter could proceed to submit claims for the period July 1, 1993 to and including January 31, 1996, subject to the following conditions for submission and payment:

(a) Claims would have to meet the content and form requirements in place as of September 23, 2004, as well as the eligibility, validity and assessment rules applicable at that time;

(b) With respect to payment: the claims would be subject to any thresholds and clawbacks that existed at the time the service was rendered, such as, for example, the House Call Rule; (ii) an assessment in accordance with s. 18(1) and (2) of the Act would be conducted by the Ministry; and to facilitate the assessment, Dr. Perlmutter would be required to submit clinical patient records relating to the claims.

[11] On April 15 and May 31, 2005, Dr. Perlmutter submitted approximately 8,000 claims totaling $572,462.41. The General Manager conducted an initial verification/eligibility check of the 8,000 claims which revealed a number of errors. Dr. Perlmutter was provided with the results which he disputed. The next step was a pre-payment audit of Dr. Perlmutter’s patient records. Rather than requiring Dr. Perlmutter to submit clinical records for all 8,000 claims, OHIP generated a random sample of 90 claims and requested patient records for those 90 claims.

[12] Between November 2005 and January 2006, Dr. Perlmutter submitted patient records for 86 of the 90 claims. Apart from the missing patient records for four of the claims, the records revealed a number of concerns arising from the information provided by Dr. Perlmutter including claims outside the accepted period; incorrect health numbers and/or version codes; duplicate claims; missing or illegible information; and pattern and frequency of visits engaging rules barring or reducing payment. OHIP’s concerns were provided to Dr. Perlmutter and he provided some additional information.

[13] OHIP’s concerns with Dr. Perlmutter’s submitted and/or lack of account information for the 90 claims remained. Rather than reject the claims altogether, the General Manager requested a second sample involving 85 patient-specific records. Dr. Perlmutter refused to provide additional patient records. Rather he requested a meeting to address the General Manager’s concerns. The General Manager was not prepared to meet unless the purpose of the meeting was to provide the records requested to be able to process Dr. Perlmutter’s claims. A stalemate ensued.

[14] Eventually, on July 6, 2007, Dr. Perlmutter requested that OHIP conduct the assessment of the claims based on the first patient record review of 90 claims. The General Manager agreed.

[15] By letter dated April 3, 2008, the General Manager advised Dr. Perlmutter that following a review of the claims based on the random sample of 90 claims, the maximum amount payable to him was $203,864.07. The letter set out in some detail the basis for the Decision.

[16] On May 21, 2008, Dr. Perlmutter rejected the General Manager’s Decision on the grounds it was arbitrary in its application of the Schedule of Benefit rules and its analysis of the records. The General Manager reviewed the Decision and in a letter to Dr. Perlmutter’s counsel on August 8, 2008, confirming the Decision, set out a number of concerns arising from the claims which were not taken into account in reaching the Decision.

[17] On November 19, 2008, Dr. Perlmutter’s counsel wrote to the General Manager’s counsel and took the position that because the conditions to withhold payment in s. 18(4) of the Act, as amended, were not present, the General Manager was obliged to pay Dr. Perlmutter the full amount of his claims not already paid.

[18] By letter dated December 2, 2008, the General Manager’s counsel replied to the November 19, 2008 letter and advised that because Dr. Perlmutter’s claims were being considered under s. 18(3) of the Act, (formerly s. 18(4)), s. 18(4) of the Act did not apply.

[19] Dr. Perlmutter’s application for judicial review of the Decision was commenced on March 23, 2010. It was perfected in April 2011.

The Issues

[20] This application raises the following issues:

1. Whether the Decision to reduce Dr. Perlmutter’s claim was ultra vires;
2. Whether the Decision is unreasonable;
3. Whether the General Manager breached Dr. Perlmutter’s right to procedural fairness; and
4. Whether Dr. Perlmutter’s application should be dismissed for delay.

Standard of Review

[21] The decision of the General Manager concerning the payment of Dr. Perlmutter’ s stale dated claims is discretionary and involves the interpretation of the Act by the General Manager and the application of its provisions. In my view, the standard of review is reasonableness. While the General Manager’s decision must be made within the bounds of the jurisdiction conferred by the Act, considerable deference is given to the General Manager in reviewing both the exercise of discretion and the scope of the General Manager’s jurisdiction.: Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817 (S.C.C.).

[22] Issues of statutory interpretation require the Court to consider the words of the Act in context, having regard to the scheme of the Act, its object and the intention of the legislature (Re Rizzo & Rizzo Shoes Ltd., 1998 837 (SCC), [1998] 1 S.C.R. 27 at para. 21).

[23] With respect to the issue of procedural fairness, the standard of review analysis does not apply. Rather, the court must determine whether the requisite level of procedural fairness has been accorded having regard to the factors set out in Baker, including the nature of the decision, the statutory scheme, the importance of the decision, the legitimate expectations of the person challenging the decision and the procedures of the agency involved.

The Health Insurance Act

[24] The Act and regulations (R.R.O. 1990, Reg. 552, as amended) provide the statutory and regulatory framework for Ontario’s health care system.

[25] The General Manager has authority to administer OHIP as the chief executive officer, to determine and verify patient eligibility and to make payments for insured services, including the determination of eligibility and amounts.

[26] Section 18 of the Act governs the payment of physician accounts. Section 18(1) authorizes the General Manager to make payments to physicians in accordance with the Act and the Schedule of Benefits for Physician Services (the “Schedule”) as contained in the regulations.

[27] A service is an “insured service” if it is referred to in the Schedule and rendered in such circumstances or under such conditions as specified. The Schedule lists fee codes for over 5,000 services and includes detailed conditions for the payment of insured services. The General Manager is permitted to pay only the fee for the physician services as set out in the Schedule. Further, to be eligible for payment, the physician must have rendered the insured service to an “insured person” as set out in the Act and regulations.

[28] Section 37.1 of the Act requires physicians to maintain such records as may be necessary to establish that they provided an insured service to an insured person under OHIP; to demonstrate that a service for which they submit a claim is the service that they provided; and that the service for which they submit a claim is the service that they provided; and that the service was medically necessary. If the physician does not maintain the required records, the services are deemed insured but the fee payable is presumed to be nil.

[29] As noted, physicians are required to submit accounts for insured services to the General Manager no later than six months after the service is rendered. Section 18(3) (formerly s. 18(4)) of the Act) prohibits the General Manager from paying for an insured service if, among other reasons, the account is not submitted within the six months but also gives the General Manager discretion to pay if there are “extenuating circumstances.”

[30] In September 2004, when the General Manager determined that there were extenuating circumstances in respect of Dr. Perlmutter’s delay in submitting stale dated claims, s. 18(1), (2) and (4) of the Act provided as follows:

Payment of accounts

18. (1) The General Manager shall determine all issues relating to accounts for insured services in accordance with this Act and shall make the payments from the Plan that are authorized under this Act.

(2) The General Manager may refuse to pay for a service provided by a physician, practitioner or health facility or may pay a reduced amount in the following circumstances:

1. If the General Manager is of the opinion that all or part of the insured service was not in fact rendered.
2. If the General Manager is of the opinion that the nature of the service is misrepresented, whether deliberately or inadvertently.
3. For a service provided by a physician, if the General Manager is of the opinion, after consulting with a physician, that all or part of the service was not medically necessary.
4. For a service provided by a practitioner, if the General Manager is of the opinion, after consulting with a practitioner who is qualified to provide the same service, that all or part of the service was not therapeutically necessary.
5. For a service provided by a health facility, if the General Manager is of the opinion, after consulting with a physician or practitioner, that all or part of the service was not medically or therapeutically necessary.
6. If the General Manager is of the opinion that all or part of the service was not provided in accordance with accepted professional standards and practice.
7. In such other circumstances as may be prescribed.

Refusal to pay

(4) The General Manager shall refuse to pay for an insured service if the account for service is not prepared in the required form, does not meet the prescribed requirements or is not submitted to him or her within the prescribed time. However, the General Manager may pay for the service if there are extenuating circumstances.

[31] Subsequently, on September 4, 2007, the Act was amended (S.O. 2007, c. 10, Sched. G, s. 8(2)). In particular, the above s. 18(4) was repealed and reenacted as s. 18(3). A new s. 18(4) was enacted as follows:

s. 18(4) Despite subsection (2), the General Manager may refuse to pay a physician for a service or pay a reduced amount for the service only if a circumstance described in subsection (2) that is also set out or described in the payment correction list exists in respect of the claim or claims, or if permitted to do so by an order of the Review Board.

[32] The effect of the addition of the new s. 18(4) to the Act in 2007 is to limit the General Manager’s previous broad discretionary powers to refuse or reduce payment for claims under s. 18(2) such that the General Manager can only refuse payment in circumstances where the claim not only comes within s. 18(2) but is also listed on a “payment correction list.” Otherwise, the physician is paid for the claim and, in accordance with ss. 18(5) to (18), the General Manager is required to seek an order from the Physician Payment Review Board regarding whether the amount was properly billed and if not, the physician can be required to reimburse OHIP.

Ultra Vires

[33] Dr. Perlmutter submits that in the absence of any of his claims being caught by the conditions set out in s. 18(4) of the Act, the General Manager is required to pay the total amount of the claims to him. The General Manager lacked the jurisdiction to reduce his claim as he did and accordingly her decision to reduce Dr. Perlmutter’ s claim was ultra vires and cannot stand.

[34] The Respondent submits that while s. 18(4) of the Act modifies the General Manager’s discretion under s. 18(2) of the Act to reject claims, it does not modify her discretion to pay claims where extenuating circumstances are found under s. 18(3). In the alternative, the Respondent submits that the provisions of the Act which govern Dr. Perlmutter’ s claim and the decision of the General Manager were those in force in 2004 when the General Manager made her decision to accept the claims. The new s. 18(4) cannot be applied retrospectively.

[35] Dr. Perlmutter submits that when the General Manager granted his request to consider his stale dated claims, she was obliged to review those claims in the ordinary course as though they had been submitted on time. Accordingly, because none of the circumstances in s. 18(4) of the Act which permit the General Manager to refuse to pay his claims existed when the General Manager rendered her payment decision on April 3, 2008, Dr. Perlmutter submits, pursuant to s. 18 of the Act, the General Manager is obliged to pay the full amount of his claims, with the right of the General Manager to seek a refund from him by order of the Physician Payment Review Board.

[36] I disagree. Having regard to the wording of ss. 18(3) and (4) of the Act together with the scheme and object of the Act, in my view, s. 18(4) does not apply to claims which the General Manager has decided to consider under s. 18(3) based on extenuating circumstances. Accordingly, by agreeing to accept Dr. Perlmutter’s stale dated claims pursuant to s. 18(3), the General Manager is not obliged to review them as if they were submitted in the ordinary course or to pay them in accordance with s. 18(4).

[37] Section 18(3) contains an exception to the mandatory requirement prohibiting the General Manager from paying a claim or claims in certain circumstances. The section provides that the General Manager “shall” refuse to pay for an insured service for one of three reasons: if the account is not prepared on the required form; if the account does not meet the prescribed requirements; or if the account is not submitted within the prescribed time (which is 6 months). The exception to the prohibition to payment is contained in the last sentence of s. 18(3). It states: “However, the General Manager may pay for the service if there are extenuating circumstances.” [Emphasis added.]

[38] The exception by its plain wording together with its placement in s. 18(3) provides the General Manager with discretion to not only determine whether there are extenuating circumstances to permit the claim but also to establish the conditions upon which the claim will be reviewed. The latter is particularly important given that claims arising from each of the three circumstances in s. 18(3) will necessarily involve different issues and considerations than claims submitted in the ordinary course.

[39] Further, s. 18(4) of the Act refers to s. 18(2). Section 18(2) gives the General Manager the power to refuse payment for regularly submitted claims. Notably, s. 18(4) does not refer to nor does it apply to claims the General Manager has decided to consider under s. 18(3) which, by their very nature, are different than regularly submitted claims.

[40] The fact that the General Manager specifically stated in allowing Dr. Perlmutter to submit his late claims that they would be reviewed pursuant to s. 18(1) and (2) of the Act does not somehow change the authority under which the General Manager was acting (s. 18(3) at the time, now s. 18(4)) or that Dr. Perlmutter’s claims will be subject to the same process as claims submitted in accordance with the Act. Rather it sets out one of the factors that will be used to assess Dr. Perlmutter’s late claims.

[41] In my view, the General Manager’s decision to reduce Dr. Perlmutter’s claim was within his jurisdiction pursuant to s. 18(3) of the Act and accordingly was not ultra vires. Accordingly, the position taken by the General Manager in the letter of December 2, 2008 was correct.

[42] In light of my conclusion that s. 18(4) of the Act, as amended, does not apply to the General Manager’s determination of claims allowed pursuant to s. 18(3), it is not necessary to address the General Manager’s submissions that s. 18(4), as amended, cannot be applied retrospectively.

The General Manager’s Decision was not Reasonable

[43] Dr. Perlmutter submits that the General Manager’s decision to reduce his claim based on a sample of 90 claims was unreasonable. Specifically, he submits that given the “misunderstandings, errors and false assumptions” present in the sample selection, it was unreasonable for the General Manager to continue.

[44] As noted, Dr. Perlmutter submitted over 8,000 stale dated claims. The General Manager’s decision to conduct a pre-payment audit of patient records based on a randomly generated sample of 90 claims was reasonable given the errors that were discovered in the initial verification/eligibility check. Given the number, the time period involved and the historic nature of the claims, it would have been unreasonable to require Dr. Perlmutter to submit clinical records for all the claims or to require the Ministry to review them all.

[45] Further, the 90 claim sample audit was accepted by Dr. Perlmutter. He complied with the General Manager’s request. He submitted clinical records for 86 of the 90 patients. Unfortunately, when the records were reviewed, the General Manager found a number of problems with the claims. Rather than rejecting the claims outright, the General Manager requested a second sample of 85 patient-specific records based on a range of service dates for a particular claim code. Dr. Perlmutter refused to provide such records and eventually proposed that his claim be determined based on the 90 claims. In the circumstances, I cannot conclude the General Manager’s approach in considering the claims was unreasonable.

[46] In my view, in all of the circumstances, the General Manager’s decision to pay Dr. Perlmutter $203,864.07 was reasonable. The decision was based on an application of the parameters for payment set out in the letter of September 24, 2004 accepting submission of the stale-dated claims.

[47] Further, the basis for the determination of the amount paid based on the sample of 90 claims was set out in an attachment to the Decision. From the material supplied by the General Manager both in the Decision and in subsequent correspondence to Dr. Perlmutter, I am satisfied that the payment analysis done by the General Manager was not only reasonable but fair given that a number of concessions were made in determining the amount owing that were favourable to Dr. Perlmutter.

Procedural Fairness

[48] Dr. Perlmutter submits that the General Manager failed to fulfil her duty of procedural fairness owing to him in three ways: she failed to follow the statutory process established by the Act; she failed to grant Dr. Perlmutter a meeting; and she failed in the Decision to offer cogent reasons for imposing a significant reduction in his claims.

[49] As I have already noted, as permitted by s. 18(3) of the Act, as amended (then s. 18(4)), the General Manager set out the parameters upon which Dr. Perlmutter’s claims would be considered in the September 24, 2004 letter and followed that procedure. I do not consider that the General Manager failed to follow the procedures established by the Act.

[50] I also do not consider, having regard to the Act and the nature of the decision being made here, that there is any requirement for the General Manager to meet with Dr. Perlmutter as part of the claims assessment process. Dr. Perlmutter had ample opportunity to provide the information requested and to respond to any questions or concerns the General Manager had.

[51] Nor is there any basis in the evidence to establish that Dr. Perlmutter had a “reasonable expectation” of a meeting with the General Manager. Although he requested such a meeting numerous times, it was almost always declined. There was one occasion in early 2008 when the General Manager’s counsel indicated in a telephone conversation with Dr. Perlmutter’s counsel that she would be prepared to recommend a meeting but nothing further transpired in that regard. That statement cannot give rise to any expectation on Dr. Perlmutter’s part that a meeting would occur.

[52] Finally, I consider the General Manager’s reasons in the Decision, when read as a whole and in the context of the entire assessment process the parties were engaged in, were more than adequate to “understand why the tribunal made its decision and permit [the reviewing court] to determine whether the conclusion is within the range of acceptable outcomes”: Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62 (S.C.C.), at para. 16.

Delay

[53] The General Manager submits that as a result of Dr. Perlmutter’s delay in bringing this judicial review application, it should be dismissed on that ground. Having decided the matter on its merits, it is not necessary to deal with the delay issue. I note, however, that it is important to commence a judicial review application as soon as possible following the decision complained of. That did not occur here. At the same time, this entire matter was fraught with delay by both sides.

Conclusion

[54] For the above reasons, Dr. Perlmutter’s application for judicial review is dismissed.

[55] As agreed by the parties, costs to the Respondents in the amount of $15,000.

L. A. PATTILLO J.

ACJ MARROCCO

J. WILSON J.

Date of Release: March 31, 2016

CITATION: Perlmutter v. Ministry of Health, 2016 ONSC 2080

DIVISIONAL COURT FILE NO.: 146/10 DATE: 20160331

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

ACJ MARROCCO, J. M. WILSON AND L. A. PATTILLO JJ.

BETWEEN:

DR. DAVE HYMAN PERLMUTTER Applicant

– and –

HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO as represented by THE MINISTRY OF HEALTH AND LONG-TERM CARE and the GENERAL MANAGER of the ONTARIO HEALTH INSURANCE PLAN Respondents

REASONS FOR JUDGMENT

L. A. PATTILLO J.

Date of Release: March 31, 2016