FINANCIAL SERVICES TRIBUNAL
IN THE MATTER OF the Insurance Act, R.S.O. 1990, c. I.8, as amended (the “Act”), in particular sections 441.1, 441.2 and 441.3;
AND IN THE MATTER OF a Notice of Proposal to Impose an Administrative Monetary Penalty dated June 2, 2017 issued by the Executive Director, Licensing and Market Conduct Division by delegated authority from the Superintendent of Financial Services;
AND IN THE MATTER OF a Hearing in accordance with subsection 441.3(5) of the Insurance Act, R.S.O. 1990, c. I.8.
B E T W E E N:
1631776 ONTARIO INC. o/a SOUTH BARRIE HEALTH GROUP
APPLICANT
and
SUPERINTENDENT OF FINANCIAL SERVICES
RESPONDENT
BEFORE:
Bethune Whiston Chair of the Panel and Vice-Chair of the Tribunal
Jill Wagman Member of the Panel and Member of the Tribunal
Christopher Portner Member of the Panel and Member of the Tribunal
APPEARANCES:
For the Applicant – Dr. Alexander Ryzhykh, Principal Representative
For the Superintendent of Financial Services – Mr. Michael Spagnolo, Counsel
REASONS FOR DECISION
I. INTRODUCTION
1On June 2, 2017, the Superintendent of Financial Services (the “Superintendent”) issued a Notice of Proposal to Impose an Administrative Penalty (“NOP”) of $4,000 on the Applicant, 1631776 Ontario Inc., operating as South Barrie Health Group (“South Barrie”). The Superintendent alleges that South Barrie, on two occasions, charged an amount in consideration for the provision of goods or services to or for the benefit of a person who claims statutory accident benefits or who otherwise claims payment under a contract of insurance, but did not provide the goods or services. The Superintendent alleges, in this regard, that South Barrie contravened paragraph 1 of subsection 3(2) of Ontario Regulation 7/00 and thereby engaged in unfair or deceptive acts or practices contrary to section 439 of the Act.
2At the hearing, South Barrie was represented by its Principal Representative, Dr. Alexander Ryzhykh (“Dr. Ryzhykh”). South Barrie did not challenge the fact that, in the case of two invoices submitted to insurance carriers, errors were made in one case in recording who performed certain services and, in the other case, there were inconsistencies between the clinic calendar and the invoice. Dr. Ryzhykh did, however, challenge the Superintendent’s allegations that amounts were charged for services that were not performed.
3Having heard the evidence of both parties and considered all the evidence and submissions before us, we are not satisfied that the services were not performed. We direct the Superintendent not to carry out the NOP to impose an administrative penalty on South Barrie. The reasons for our decision follow.
II. The Issues
4The issues have been framed as follows:
a) Did the Applicant charge an amount in consideration for the provision of goods or services to or for the benefit of a person who claims statutory accident benefits or who otherwise claims payment under a contract of insurance, where the goods or services were not provided, in contravention of paragraph 1 of subsection 3(2) of Ontario Regulation 7/00 and therefore engage in unfair or deceptive acts or practices contrary to section 439 of the Act?
b) If the answer to issue (a) is yes, is the imposition of the proposed administrative monetary penalty appropriate under section 441.3 of the Act and will it serve the purposes of subsection 441.2(1) of the Act?
c) If the answer to issue (b) is yes, what is the appropriate quantum of penalty taking into consideration the five criteria prescribed by section 4 of Ontario Regulation 408/12?
5As the Tribunal is not satisfied that the services were not performed, we have found the answer to issue a) is no. Therefore, we do not need to deal in these Reasons with issues b) and c).
III. The Facts
6The following facts are taken, in modified form, from a very brief Agreed Statement of Facts:
a) 1631776 Ontario Inc., operating as South Barrie, is a licensed Health Service Provider under the Act, licence number SP13742.
b) Dr. Ryzhykh is designated as the Principal Representative of South Barrie.
c) Mr. P was an employee of South Barrie from February 5, 2015 to December 18, 2015.
7We also find the following key facts, based on the evidence of the Superintendent’s two witnesses, Mr. Vishal Batta and Mr. Sean Mitchell, the evidence of Dr. Ryzhykh, and the Agreed Book of Documents:
a) Dr. Ryzhykh practices as a registered chiropractor.
b) Mr. Vishal Batta, a Senior Compliance Officer (the “Compliance Officer”) with the Market Conduct Compliance Unit at the Financial Services Commission of Ontario (“FSCO”), attended at the South Barrie clinic on October 26, and November 9, 2016. He performed limited scope on-site examinations of South Barrie’s billing practices, business systems and practices, including established and implemented policies and procedures. In connection with the examinations, Mr. Batta sampled five specific files and found irregularities in at least two of them.
c) There were two OCF-21s, or Auto Insurance Standard Invoices, (the “Invoices”) included in the Book of Documents in which irregularities were discovered by the Compliance Officer: we will refer to these as the Commonwell Invoice and the Peel Invoice. Definitions and other information respecting these two Invoices is set out below.
d) Commonwell Invoice - During the examination, the Compliance Officer observed an OCF-21 dated February 11, 2016 submitted by South Barrie to The Commonwell Mutual Insurance Group (the “Commonwell Invoice”) for chiropractic and massage therapy treatment sessions. These sessions were performed pursuant to an approved OCF-18 (a Treatment and Assessment Plan) for a specific individual (the “Patient”). We were advised, and there was no evidence to contradict it, that there were inconsistencies between the calendar kept by the clinic and the Invoice. We note that excerpts from the calendar were not submitted into evidence. The Invoice billed for two chiropractic sessions that were not shown in the calendar. Mr. Batta claimed that there were other irregularities with the Invoice. We will address those irregularities below, in Part V – The Positions of the Parties and Analysis.
e) Included in the Agreed Book of Documents was an excerpt from a sign-in sheet for the Patient. This sheet did not include sign-in and sign-out times but it did show that the Patient had received chiropractic sessions on the two occasions where the calendar did not include a chiropractic session.
f) Peel Invoice - Also during the examination, the Compliance Officer observed an OCF-21 dated June 21, 2016 submitted by South Barrie to Peel Mutual Insurance Company (the “Peel Invoice”) for certain treatment sessions pursuant to an approved OCF-18. The Invoice was signed by Dr. Ryzhykh and billed for a number of treatment sessions rendered by Dr. Ryzhykh, and a number of treatment sessions allegedly rendered by Mr. P. The sessions rendered by Mr. P were indicated to have taken place between April 7, 2016 and June 21, 2016, which was subsequent to the termination of Mr. P’s employment at the clinic.
g) Included in the Book of Documents at Tab 7 was a DVD with additional information for the Tribunal to consider. This information included detailed notes taken during the examination relating to the five sampled files. Superintendent’s counsel drew the Tribunal’s attention to two specific entries from excerpts taken from the DVD material and entered separately into evidence. One of the entries was in respect of the Commonwell Invoice, as follows: “I was told by Chiro the appointment calendar was still new and I should go by signing sheet. Later, on December 13, 2016 I called Mira to reconfirm how good the appointment calendar is and she said it can be fully trusted”. It was not confirmed in evidence brought to our attention at the hearing, but we understand that Mira was the clinic administrator at that time (the “Clinic Administrator”).
h) The Tribunal’s attention was also drawn to a comment respecting the Peel Invoice. The following is noted: “[Principal Representative] claimed this was an error and he had notified the physiotherapist of this error. I told him that I accept this is an error, but still it was violation as he signed OCF 21 himself and it should be verified before it is submitted”. [Emphasis added]
i) Exit Meeting Notes were prepared by the Compliance Officer and signed by him and Dr. Ryzhykh. The specific Invoices are not mentioned in these Notes. However, the below quoted comments, under columns titled “Issues Noted” and “Remedial Plan”, appear to be made in respect of the following Invoices:
i. Commonwell Invoice – Issues Noted: “Healthcare Service Provider is charging maximum hourly rate for chiropractic/massage treatment but providing only half an hour treatment to the patient as verified from the appointment calendar”. Remedial Plan: “Healthcare Service Provider should take reasonable steps to ensure that the invoices are submitted based on the rates prescribed under Professional Services Guideline with proper disclosure of actual duration of services provided to the patient.”
ii. Peel Invoice – Issues Noted: “OCF 21 form was incorrectly submitted by PR under physiotherapist after he left the facility for the services not provided by physiotherapist”. Remedial Plan: “Service Provider should not submit invoice with inaccurate or false information.”
IV. statutory framework
8Section 439 of the Act indicates, “No person shall engage in any unfair or deceptive act or practice.”
9Subsection 3(1) of Ontario Regulation 7/00 (the “Unfair or Deceptive Acts or Practices Reg”), reads as follows:
“For the purposes of the definition of “unfair or deceptive acts or practices” in section 438 of the Act, each act and omission listed in subsection (2) is prescribed as an unfair or deceptive act or practice if it is committed by or on behalf of a person with the expectation that a benefit will be received that is funded, directly or indirectly, out of the proceeds of insurance.”
10Paragraph 1 of subsection 3(2) of the Unfair or Deceptive Acts or Practices Reg lists the following as one of the acts to which reference is made in the excerpt from subsection 3(1) set out in paragraph [9] above:
“Charging an amount in consideration for the provision of goods or services to or for the benefit of a person who claims statutory accident benefits or who otherwise claims payment under a contract of insurance, if the goods or services are not provided.” [Emphasis added]
11Therefore, the Superintendent has the burden of proving that the services were not provided.
V. The Positions of the Parties aND ANALYSIS
12In his written submissions, Superintendent’s counsel would have us find that South Barrie contravened the Act by engaging in two instances of unfair or deceptive acts or practices, and, in particular, that South Barrie twice charged an amount in consideration for the provision of goods or services to or for the benefit of a person who claims statutory accident benefits or who otherwise claims payment under a contract of insurance, where the goods or services were not provided.
13The Superintendent has submitted evidence of inconsistencies between the OCF-21 forms that were filed with two insurance companies and the appointment calendar kept on the premises at South Barrie. In respect of the Commonwell Invoice, the Superintendent has shown inconsistencies between the Invoice and the calendar with respect to the scheduling of chiropractic services. With respect to the Peel Invoice, the Superintendent has shown that the Invoice identified a physiotherapist having performed services at a time subsequent to the termination of employment of that physiotherapist.
14The analysis in respect of the Peel Invoice is more straightforward. We have found as a fact that Mr. P was listed on the Invoice as providing services and it is clear that he did not actually provide those services, as he had left the clinic by that time.
15Dr. Ryzhykh admitted to submitting the Peel Invoice with this inaccuracy but indicated that it was submitted in error. In the Tab 7 materials discussed above, the Compliance Officer accepted that it was an error. Dr. Ryzhykh indicated that it was based on the Treatment and Assessment Plan, which had been put together months previously and had not initially been approved by the insurance company. When the plan was finally approved either Dr. Ryzhykh or the Clinic Administrator would have pulled up the form, clicked on the dates the services were provided, saved it, signed it and sent it to the insurance company. The service provider expected to have completed the services (Mr. P) was not changed but the services had been performed. Dr. Ryzhykh indicated that he had performed the services, and we found his evidence persuasive.
16The inaccuracies with respect to the Commonwell Invoice are more complex. We have found as a fact, that the Commonwell Invoice charged for two chiropractic sessions that were not listed in the calendar. However, there was a sign-in sheet that showed the sessions had occurred on those days. In those cases, there is evidence that the services were provided.
17In addition to those two chiropractic sessions, the Superintendent, through the documentation and one of his witnesses, submitted there were additional inaccuracies in the Commonwell Invoice. There was one chiropractic session which was billed at one hour whereas the calendar showed that particular session lasted only half an hour. In addition, the Compliance Officer noted that there were two dates where a one-hour massage session was charged on the Invoice, but the calendar only showed half hour sessions booked for those two dates.
18This requires us to find that the Invoice actually listed how long the sessions lasted.
19Little evidence was elicited at the hearing, and no direct submissions were made by counsel for the Superintendent to assist the Tribunal in understanding some of the information on the Invoices, including information set out under columns titled “Code”, “Quantity”, “Measure” and “Cost”. We note that on the two OCF-21s included in the Book of Documents, Quantity was always shown as “1.00” or “1”, “Measure” was shown as either “PR” or “HR” and on the Commonwell Invoice the cost shown differed significantly, from $50.00 up to $112.81, whereas, on the Peel Invoice, the cost was consistently $112.81.
20We note this because it was not clear to the Tribunal that when “Quantity” was indicated as “1.00” it related to an hour of services. In his testimony, Dr. Ryzhykh explained the day-to–day workings of the clinic. He indicated that there are no legislative rules requiring a daily calendar kept at a clinic to be fully accurate. According to Dr. Ryzhykh, the calendar changes frequently, and no final version is prepared at the end of the day. It is just meant to provide an idea of what the day will look like. Some patients miss appointments, other patients decide to have a further treatment while they are there. Some patients are squeezed in, on an emergency basis.
21In addition, according to Dr. Ryzhykh, there is no way to be exact in calculating how long a session will take. In fact, there is no need to keep track of exactly how long a session has taken, as many people are just charged the “base” rate. No evidence was led as to how much was charged by the clinic for one hour versus 30 minutes of chiropractic or massage therapy. An hourly basis did not seem to be the basis on which services were charged. There was also no detailed explanation of how the base rate might change depending on the provider or the services provided.
22Evidence was entered, both in hard copy and orally, respecting the comments of South Barrie’s Office Administrator as to the accuracy of the Calendar. We find this to be of little value, considering the remainder of our analysis in this Part V.
23Included in the Book of Documents at Tab 12, was a document titled “Ontario Chiropractic Association OCA Recommended Service Codes and Fee Schedule”. No detailed comments were made respecting this document and why it was included in the Book of Documents, however, we note on page 2, under the heading “Fees are Recommendations” it is indicated as follows: “The Fee Schedule is issued for information purposes only. Adoption of the recommended fees remains at the discretion of the practitioner. The Ontario Chiropractic Association does not set fees for chiropractors”. [Emphasis added]
24This seems to be at odds with the Remedial Plan suggested by the Compliance Officer in respect of the Commonwell Invoice, which we repeat here: “Healthcare Service Provider should take reasonable steps to ensure that the invoices are submitted based on the rates prescribed under Professional Services Guideline with proper disclosure of actual duration of services provided to the patient.” However, we will not say more on this issue as the note does not clearly indicate to which Professional Services Guideline it is referring, nor does it clearly indicate to which services it is referring.
25Based on the above, it does not seem possible, without more information, to make a determination as to how much time was spent on the particular chiropractic and massage patient in question, just by the amount he or she was charged for the service as indicated on the Commonwell Invoice.
26We are not able to assign any particular significance to the fact that the Exit Meeting Notes of the Compliance Officer were signed by Dr. Ryzhykh. No submissions were made specifically on this point and no oral evidence was provided to us to assist our understanding. Therefore, we make no findings on this point.
27The “Issues Noted” on the Commonwell Invoice indicated that the Service Provider was charging a maximum hourly rate, but providing only a half hour treatment. As adoption of the OCA recommended fees is at the discretion of the practitioner, and, further, as it is not clear to us that the Commonwell Invoice indicates hourly sessions, we cannot find either that the Service Provider was charging the maximum rate or that the length of the actual sessions differed from what was shown on the Invoice.
28Superintendent’s counsel spoke briefly to the contraventions themselves and referred us to his written submissions for the legal argument. He initially argued that we should find that the services were not provided based on the inconsistencies in the paperwork. However, on several occasions it appeared as if counsel was admitting that the services may have been performed but asking us to impose the penalty because of the errors made in the paperwork. On one occasion, when asked by a member of the Tribunal, Superintendent’s counsel replied, in respect of the Peel Invoice, that it was immaterial if Dr. Ryzhykh provided the services. He indicated that South Barrie should be penalized if the Invoice stated that Mr. P provided the services when he did not do so.
29This understanding seems to be corroborated by the evidence given by Mr. Sean Mitchell, a Regulatory Discipline Officer with FSCO, who also provided evidence with respect to his involvement with the health service provider licensing regime, and his involvement with providing instructions with regard to the drafting of the NOP in this case. He was involved with reviewing the evidence and determining whether a contravention had occurred. In his oral evidence, Mr. Mitchell indicated that the professional signing the invoices must ensure that all submissions are accurate, and since these submissions were not accurate, there were contraventions of the Act.
30The Superintendent included in its Book of Authorities, the Supreme Court of Canada decision in, La Souveraine, Compagnie d’assurance générale v. Autorité des marchés financiers 2013 SCC 63 (the “SCC Decision”). The Tribunal asked if its attention was intended to be brought to section 49 of that decision, which reads, in part, “…Those who engage in regulated activities agree in advance to adhere to strict standards, and they accept that they will be rigorously held to those standards, which are typical of such spheres of activity. It is therefore not surprising in the regulatory context to find strict liability offences…”, and the Superintendent’s counsel confirmed that it was.
31However, we note another excerpt from the SCC Decision that is relevant to the decision we have before us. Section 55 of the SCC Decision states that, “…the offence provided for…is one of strict liability. Once the actus reus has been proved beyond a reasonable doubt, the defendant can avoid liability only by showing that it acted with due diligence.”
32In our view, we first need to determine if the actus reus has been proved. In criminal matters actus reus is often understood to mean “guilty act”. Under the current circumstances we can consider it to refer to the “prohibited act”. It is prohibited to charge an insurance company for services which are not provided. In this case, the Superintendent has the burden of proving that the services were not provided.
33Based on the evidence, the Superintendent has not been successful in proving that the services listed in the Commonwell Invoice and the Peel Invoice, that Dr. Ryzhykh claims his clinic has provided, were not provided.
34It is unnecessary to comment in these Reasons on whether the appropriate test is “beyond a reasonable doubt” or “on a balance of probabilities” as on either scale the contravention of the Act has not been proved. We have looked at the evidence before us and cannot conclude that it proves South Barrie engaged in the unfair or deceptive act or practice specified in paragraph 1 of subsection 3(2) of the Unfair or Deceptive Acts or Practices Reg.
35Pursuant to subsection 441.3(6) of the Act, when the Tribunal has held a hearing following a notice of proposal to impose an administrative monetary penalty, the Tribunal may, by order, direct the Superintendent to carry out the proposal, with or without changes, or substitute its opinion for that of the Superintendent.
VI. ORDER
31For the foregoing reasons, the Tribunal hereby directs the Superintendent, by order, not to carry out his proposal to impose an administrative monetary penalty of $4,000 on the Applicant, 1631776 Ontario Inc., operating as South Barrie Health Group.
Dated at Toronto, this 25^th^ day of April, 2018.
“Bethune Whiston” Bethune Whiston
“Jill Wagman” Jill Wagman
“Christopher Portner” Christopher Portner