Citation: 9897224 Canada Inc. c.o.b as Back2Life Wellness and Rehab v. Ontario (Superintendent Financial Services), 2017 ONFST 14 Decision No. SP729-2017-1 Date: 2017/10/30

IN THE MATTER OF the Insurance Act, R.S.O. 1990, c. I.8, as amended (the “Act”), in particular sections 288.5 and 288.7;

AND IN THE MATTER OF a Notice of Proposal to Refuse to Issue a Service Provider’s Licence dated March 10, 2017 issued by the Director, Licensing Branch by delegated authority from the Superintendent of Financial Services;

AND IN THE MATTER OF a Hearing in accordance with subsection 288.7(3) of the Insurance Act, R.S.O. 1990, c. I.8.

9897224 CANADA INC. c.o.b as BACK2LIFE WELLNESS AND REHAB

and

BEFORE:

Paul Farley Chair of the Panel and Member of the Tribunal

Ian McSweeney Member of the Panel and Chair of the Tribunal

Jeffrey Richardson Member of the Panel and Member of the Tribunal

For the Applicant – Khalida Akmal

For the Superintendent of Financial Services – Me-Hae Hur

DATES HEARD: September 21 and 22, 2017

1On March 10, 2017, the Superintendent issued a Notice of Proposal (“NOP”) to Refuse to Issue a Service Provider’s Licence (“Licence”) to 9897224 Canada Inc. c.o.b. as Back2Life Wellness and Rehab (“Back2Life”) pursuant to section 288.5 and 288.7 of the Act.

2On March 31, 2017, Khalida Akmal, on behalf of Back2Life, filed with the Registrar a Request for Hearing with respect to the NOP.

3On September 21 and 22, 2017, the Tribunal heard evidence and argument from the Superintendent and Ms. Akmal.

4After carefully considering all the evidence and the submissions of the parties, and, for the reasons that follow, the Tribunal determined that it was appropriate in the circumstances to order the Superintendent to issue a Service Provider’s Licence to Back2Life with Ms. Akmal as the Principal Representative.

II. The Issues

5On May 24, 2017, a pre-hearing conference was held with respect to this matter. At that time, the issues to be determined by the Tribunal were agreed upon as follows:

a) Is 9897224 Canada Inc., c.o.b. as Back2Life Wellness and Rehab, suitable to hold a licence having regard to such circumstances as may be prescribed?

b) Given the answer to a), should the Service Provider’s Licence application of 9897224 Canada Inc., c.o.b. as Back2Life Wellness and Rehab be refused pursuant to subsection 288.5(5) and section 288.7 of the Act? If not, is there an appropriate alternative?

III. THE FACTS

The Agreed Statement of Fact

6An Agreed Statement of Fact was filed by the Parties. The Agreed Statement disclosed that on November 4, 2016 Ms. Akmal filed a Service Provider’s Licence Application on behalf of Back2Life naming herself as the Principal Representative. Previously, Back2Life did not hold a Service Provider’s Licence.

7Back2Life was incorporated on September 9, 2016. Ms. Akmal is one of the owners and a Director of the company.

8Ms. Akmal was previously listed as the Principal Representative for a service provider, 2398550 Ontario Inc. c.o.b. as Physiotouch Wellness & Rehab (“Physiotouch”). It was alleged that, in 2015, while named as Principal Representative of Physiotouch, Ms. Akmal failed to file the Annual Information Return (“AIR”) and pay the Annual Regulatory Fee (“ARF”) on behalf of Physiotouch. There were other alleged filing deficiencies, including a failure to update Physiotouch’s email and mailing address, telephone number and status as a service provider with the Financial Services Commission of Ontario (“FSCO”) and failure to respond to FSCO staff enquiries. At issue between the parties was whether Ms. Akmal held the responsibilities of a Principal Representative with Physiotouch at the time FSCO accepted her as Principal Representative in 2015.

9On January 16, 2017 Physiotouch’s Service Provider’s Licence was revoked by the Superintendent for failure to submit the AIR and to pay the ARF.

IV. THE POSITIONS OF THE PARTIES

10The Superintendent takes the position that Ms. Akmal prepared a draft Service Provider’s Licence Application on behalf of Physiotouch before she left the company in October 2014. That Application, like the final one filed with FSCO on January 29, 2015, describes Ms. Akmal as the proposed Principal Representative.

11The Superintendent then submits that, because Ms. Akmal prepared the draft Application for Physiotouch and described herself as the Principal Representative and because the Application filed with FSCO on January 29, 2015 reflects the draft Application and because FSCO then accepted Ms. Akmal as Principal Representative, ergo, she is the Principle Representative for Physiotouch during the relevant period of time and holds all of the responsibilities of a Principal Representative for Physiotouch mandated by the Act and the Regulations.

12Ms. Akmal’s position is that while she did prepare the draft Service Provider’s Licence Application, she had no responsibility for, nor involvement in, the filing of the final Service Provider’s Licence Application in January 2015 since she left Physiotouch in October 2014. She testified further that she did not know she had been named Principal Representative at the time of the 2015 filing and did not discover that she had been so named until June of 2017 when she obtained documents regarding this case from FSCO. Ms. Akmal states that since she left the employ of Physiotouch in October 2014 before Physiotouch’s final Service Provider’s Licence Application was filed with FSCO and was unaware that the final application had been filed naming her as proposed Principal Representative, she cannot be held responsible for failing to carry out the responsibilities of that position. Moreover, Ms. Akmal takes the position that since Physiotouch no longer employed her when the final Service Provider’s Licence Application was filed, she was not properly designated as Principal Representative based on the provisions of the Act and Regulations.

Findings of Fact by the Tribunal

13There was no dispute, and we find as a fact, that a Service Provider’s Licence Application was filed for Physiotouch on January 29, 2015. That Application showed Khalida Akmal as the Applicant and as the Proposed Principal Representative. It also described her as an Officer of the corporation. Based on that application a licence was granted to Physiotouch and Ms. Akmal was accepted by FSCO as the Principal Representative.

14At the time the Service Provider’s Licence Application was filed Ms. Akmal was no longer employed by, nor associated with, Physiotouch. While there was some dispute as to exactly when she left Physiotouch, the Tribunal finds as a fact that Ms. Akmal was no longer involved with Physiotouch after October 2014 and was certainly not employed by Physiotouch at the time the final Service Provider’s Licence Application was filed on January 29, 2015. Ms. Akmal provided clear and convincing testimony, which we accept, that she left Physiotouch in October 2014. That evidence was not seriously challenged by the Superintendent’s counsel who took the position that it did not matter when Ms. Akmal left employment with Physiotouch in the circumstances. We disagree with the Superintendent’s counsel and, as noted below, find this to be a crucial finding of fact with respect to our decision.

15The Tribunal accepts the evidence of Ms. Akmal that, notwithstanding the fact that she prepared a draft Service Provider’s Licence Application for Physiotouch in October 2014, she did not file that application, was unaware that an application had been filed on January 29, 2015 naming her as the Proposed Principal Representative and did not know she had been so named until contacted by a FSCO representative in June 2017.

16The Tribunal concluded that it makes no logical sense for Ms. Akmal to agree to being named as Principal Representative for Physiotouch on an application filed on behalf of Physiotouch on January 29, 2015 when she had no continuing relationship with the entity in any capacity, let alone as an Officer or Director.

17The Superintendent called Mr. Viswanadhapalli Pallam Raju to give evidence and filed his affidavit dated September 20, 2017. The Tribunal did not find his testimony particularly credible and concluded that there were several inconsistencies in his evidence. Mr. Raju was a former owner of Physiotouch and testified that Ms. Akmal prepared the draft Service Provider’s Licence Application in October of 2014. He also testified that Ms. Akmal left Physiotouch in 2014 or early 2015. This evidence did corroborate that of Ms. Akmal with respect to leaving in October 2014.

18Prior to testifying Mr. Raju swore an affidavit, which was filed in evidence. In his affidavit, Mr. Raju swore that Ms. Akmal filled out the Service Provider’s Licence Application designating herself as Principal Representative and filed same with FSCO. He also swore that after Ms. Akmal left Physiotouch it was difficult to contact her to have her name removed as Principal Representative. There was no explanation given as to why Ms. Akmal, three months after she left Physiotouch, would be filing a Service Provider’s Licence Application on behalf of Physiotouch designating herself as Principal Representative.

19The Tribunal concluded that Ms. Akmal did prepare a draft Service Provider’s Licence Application in October 2014, but did not file that application. The Tribunal further concluded that the final Service Provider’s Licence Application filed with FSCO January 29, 2015 naming Ms. Akmal Principal Representative was filed without Ms. Akmal’s knowledge and that she was unaware that she was named as Principal Representative until she was advised by FSCO staff in June 2017.

20Moreover, the Tribunal concluded that Ms. Akmal was not eligible to be designated as Principal Representative at the time the final Service Provider’s Licence Application was filed in January 2015 since she was no longer employed by nor associated with Physiotouch at that time.

V. DECISION

21 Section 288.4(1) of the Act provides that;

“The holder of a service provider’s license is eligible to be paid directly by an insurer for listed expenses in connection with statutory accident benefits.”

22Section 288.4(2) provides that:

“It is a condition of the service provider’s licence that the licensee is required to comply with such standards as may be prescribed with respect to the business systems and practices, in connection with statutory accident benefits, and such standards as may be prescribed with respect to matters of integrity in the management of the licensee’s operations.”

23 Section 288.4(6) of the Act requires a service provider to designate an individual as the licensee’s Principal Representative.

24 Section 288.4(7) of the Act provides that “An individual who satisfies the prescribed criteria is eligible to be designated as a licensee’s principal representative.” Under section 1 of Ontario Regulation 349/13:

An individual who satisfies the following criteria is eligible under subsection 288.4(7) of the Act to be designated as its principal representative:
The individual has the following status in relation to the licensee:

i. If the licensee is a corporation, he or she is a director or officer of the corporation…

The individual has the authority to make decisions on behalf of the licensee with respect to matters related to the licence and matters related to the licensee’s compliance with the Act and to communicate with the Superintendent about those matters.
The individual has the authority to exercise the powers and perform the duties described in section 2. O. Reg. 349/13, s. 1.

At the time the final Service Provider’s Licence Application was filed in January 2015, Ms. Akmal did not meet these criteria and was not eligible to be a Principal Representative for Physiotouch.

25There is no question that a Principal Representative plays an important, if not crucial, role in the licensing regime involving service providers. O Reg. 349/13 (the “Service Provider Standards Regulation”) sets out the requirements for service providers.

Powers and duties

(1) The principal representative of a licensed service provider shall take reasonable steps to ensure that the licensee, and every person authorized by the licensee to provide, on the licensee’s behalf, goods or services in connection with listed expenses, complies with the Act. O. Reg. 349/13, s. 2 (1).

(2) The principal representative shall take reasonable steps to ensure that the licensee’s business systems and practices and the management of the licensee’s operations are carried on in accordance with the law and with integrity and honesty. O. Reg. 349/13, s. 2 (2).

(3) The principal representative shall ensure that the licensee takes reasonable steps to deal with any contravention of the Act by,

(a) the licensee;

(b) any person who is authorized to provide goods or services on behalf of the licensee to a person who claims statutory accident benefits; or

(c) any person who is authorized to provide goods or services on behalf of the licensee for the purposes of determining whether a person is or continues to be entitled to statutory accident benefits. O. Reg. 349/13, s. 2 (3).

(4) The principal representative shall make recommendations to the licensee regarding changes in its business systems and practices and the management of its operations, as necessary, to ensure that the standards described in subsections (1), (2) and (3) are achieved. O. Reg. 349/13, s. 2 (4).

(5) The principal representative shall take reasonable steps to ensure that a system of supervision is in place to ensure that the standards described in subsections (1), (2) and (3) are achieved. O. Reg. 349/13, s. 2 (5).

(6) The principal representative shall provide such attestations on the licensee’s behalf relating to the licensee and relating to its compliance with the Act, as may be required by the Superintendent and within the time required by the Superintendent. O. Reg. 349/13, s. 2 (6).¹

26There is no dispute that Ms. Akmal did not fulfill the responsibilities required of a Principal Representative for Physiotouch. Clearly this failure would call into question her suitability to be Principal Representative for Back2Life if she had known she was the Principal Representative and was acting as such. Were that the case, the Proposal to Refuse to Issue a Service Provider’s licence by the Superintendent would be based on cogent grounds.

27The Tribunal accepts the importance of the Principal Representative’s role to the licensing regime. We have concluded in this case, however, that the fact that FSCO accepted the Service Provider’s Licence Application made by someone on behalf of Physiotouch and accepted the proposal that Ms. Akmal be the named Principal Representative cannot burden Ms. Akmal with all the responsibilities placed on Principal Representatives under the Act. One cannot be burdened with the responsibilities of a Principal Representative unknowingly. It is clear on the evidence that, in addition to being unaware of her designation as Principal Representative in the final application filed with FSCO, Ms. Akmal was not eligible to be so designated based on the criteria prescribed under section 1 of Ontario Regulation 349/13. The application was, therefore, flawed at the time of filing.

VI. ORDER

28As the Superintendent noted in their submission “The Superintendent must issue a service provider licence to an applicant, unless the Superintendent has reasonable grounds to believe that the applicant is not suitable to hold a licence, having regard to such circumstances as may be prescribed in the Act as it relates to the business systems, practices and the management of the service provider’s operation.” The Superintendent has argued that the applicant is not suitable to hold a licence on the basis that Ms. Akmal is not a suitable Principal Representative.

29The Tribunal has concluded that there are no reasonable grounds to believe that Ms. Akmal is not a suitable Principal Representative in the circumstances established in this case.

30The answer to the first issue “Is 9897224 Canada Inc., c.o.b. as Back2Life Wellness and Rehab, suitable to hold a licence having regard to such circumstances as may be prescribed?” is yes.

31The answer to the second issue “Given the answer to a), should the Service Provider’s Licence application of 9897224 Canada Inc., c.o.b. as Back2Life Wellness and Rehab be refused pursuant to subsection 288.5(5) and section 288.7 of the Act?” is no.

32The Tribunal Hereby Orders that 9897224 Canada Inc., c.o.b. as Back2Life Wellness and Rehab, be issued a Service Provider’s Licence with Khalida Akmal named as the Principal Representative.

Dated at Toronto, this 30th day of October, 2017.

“Paul Farley” Paul Farley

“Ian McSweeney” Ian McSweeney

“Jeffrey Richardson” Jeffrey Richardson

Footnotes

Insurance Act, Ontario Regulation 349/13, Service Providers – Principal Representatives