Her Majesty the Queen v. Bogart [Indexed as: R. v. Bogart]

61 O.R. (3d) 75

[2002] O.J. No. 3039

Docket No. C36612

Court of Appeal for Ontario,

Laskin, Rosenberg and Goudge JJ.A.

August 6, 2002

• Application for leave to appeal to the Supreme Court of Canada was dismissed March 20, 2003 (Gonthier, Major and Arbour JJ.). S.C.C. File No. 29310. S.C.C. Bulletin, 2003, p. 446.

Criminal law -- Sentence -- Conditional sentence -- Fraud -- Accused doctor defrauded OHIP of almost $1 million over period of seven years -- Conditional sentence of two years less a day inappropriate despite presence of unusual mitigating circumstances -- Offence amounted to egregious breach of trust -- Most important sentencing principle in cases of large-scale fraud committed by person in position of trust is general deterrence -- Sentence of four years' imprisonment would ordinarily be appropriate for fraud on OHIP of this magnitude -- Unusual mitigating circumstances and fact that accused had already served 13 1/2 months of conditional sentence taken into account and sentence varied to 18 months' incarceration.

The accused pleaded guilty to defrauding OHIP of almost $1 million over a period of seven years. The fraud was only detected when the accused's lover reported it to the Ministry of Health after the relationship ended. The accused had no criminal record. The accused suffered from bone cancer as a teenager and had his right leg and hip removed. He survived the cancer, attended medical school and became a doctor. His psychotherapy practice served a large number of patients who were HIV-positive or who had AIDS. At the sentencing hearing, he received overwhelming support from his patients, many of whom asked the court not to incarcerate him so that he could continue to practise medicine. The accused expressed great remorse and accepted responsibility for what he had done. The trial judge imposed a conditional sentence of two years less a day and made a free-standing restitution order of $791,780.53. The Crown appealed. By the time of the hearing of the appeal, the accused had repaid over $200,000.

Held, the appeal should be allowed.

Despite the mitigating factors in this case, a conditional sentence was demonstrably unfit. Fraud is a serious offence, and the accused's fraud ranked as one of the largest scale frauds ever committed against OHIP. The fraud amounted to an egregious breach of trust. The administration of the health care system in Ontario requires that doctors be trusted to submit claims in good faith. Effectively monitoring compliance is difficult, if not practically impossible, because of the large number of claims coming from a large number of doctors. Nothing in the accused's motives mitigated his breach of trust. He was at least partly motivated by greed, and used some of the proceeds of his crime to finance lavish vacations for his partner and himself. In cases of large-scale fraud committed by a person in a position of trust, the most important sentencing principle is general deterrence. The need to vindicate general deterrence is even more acute in the case of a large-scale fraud against OHIP. To be effective, usually a conditional sentence must be punitive. What ordinarily makes a conditional sentence punitive is house arrest or a stringent curfew. For the accused, those alternatives were impractical because his medical office was in his home. Thus, even while serving his conditional sentence, he continued to live and work as he did before, with virtually no restrictions on his liberty. For defrauding the public purse of nearly $1 million, his sentence amounted to little more than probation. A conditional sentence in this case [page76] sent the wrong message about health care fraud both to practitioners and the public at large.

A fraud on OHIP of this magnitude by a doctor would ordinarily call for a sentence of at least four years' imprisonment. However, the unusual mitigating factors in this case justified some reduction in the range. Moreover, the accused was entitled to credit for the 13 1/2 months of his conditional sentence which he had already served. The sentence was varied to 18 months' incarceration.

APPEAL by the Crown from a sentence for fraud over $5,000.

R. v. MacDiarmid (D.) (2001), 2001 24117 (ON CA), 140 O.A.C. 287 (C.A.); R. v. McCrystal (1992), 55 O.A.C. 167 (C.A.), distd Other cases referred to R. v. Bertram and Wood (1990), 40 O.A.C. 317 (C.A.); R. v. Dobis (2002), 2002 32815 (ON CA), 58 O.R. (3d) 536, 163 C.C.C. (3d) 259 (C.A.); R. v. Gray (L.V.) (1995), 1995 18 (ON CA), 76 O.A.C. 387 (C.A.); R. v. Pierce (1997), 1997 3020 (ON CA), 32 O.R. (3d) 321, 114 C.C.C. (3d) 23, 5 C.R. (5th) 171 (C.A.) [Leave to appeal to S.C.C. refused (1997), 224 N.R. 154n]; R. v. Proulx, 2000 SCC 5, [2000] 1 S.C.R. 61, 142 Man. R. (2d) 161, 182 D.L.R. (4th) 1, 249 N.R. 201, 212 W.A.C. 161, [2000] 4 W.W.R. 21, 140 C.C.C. (3d) 449, 49 M.V.R. (3d) 163, 30 C.R. (5th) 1 (sub nom. R. v. P. (J.K.D.)); R. v. Wismayer (1997), 1997 3294 (ON CA), 33 O.R. (3d) 225, 115 C.C.C. (3d) 18, 5 C.R. (5th) 248 (C.A.)

Gregory J. Tweney, for applicant/appellant. Robert B. McGee, for respondent.

The judgment of the court was delivered by

LASKIN J.A.: --

A. Introduction

[1] This is a Crown sentence appeal, and it is a difficult case. The respondent Michael Bogart is a physician. He survived cancer at a young age, went to medical school, and now treats a large group of devoted patients, many of whom are HIV positive or have AIDS.

[2] For seven years, however, the respondent submitted false billings to OHIP, thus defrauding the Plan of nearly $1 million. After a preliminary inquiry, the respondent pleaded guilty to fraud over $5,000. On June 13, 2001, he received a conditional sentence of two years less a day and three years' probation.

[3] The Crown appeals. It asks that the conditional sentence be set aside and that the respondent be sent to jail for the maximum reformatory term. The Crown submits that the trial judge erred by over-emphasizing the mitigating factors, by under-emphasizing the importance of general deterrence and by imposing a sentence that is "demonstrably unfit". [page77]

B. Factual Background

(a) The respondent's background

[4] The respondent is now 45 years old. He has no previous criminal record. During his growing up years he suffered greatly. His father, an alcoholic, verbally abused him. At the age of 15, the respondent was diagnosed with a form of bone cancer. The disease required the immediate amputation of his right leg just above the knee. A year later, after the respondent had learned to walk with a prosthesis, doctors discovered that the cancer had spread. The rest of his leg and his hip had to be removed. He had to learn how to walk again, this time with two artificial joints. The respondent was treated with chemotherapy until he was partway through university. The treatment often made him violently ill. Still, through perseverance and hard work, the respondent graduated from the University of Toronto medical school with a specialty in psychiatry. His cancer has been in remission for many years.

(b) The respondent's medical practice and community activity

[5] The respondent is licensed as a general practitioner but has restricted his practice to psychotherapy. He operates his practice from his home, which he shared with his same-sex partner, John Allan, during the period of the fraud. Allan acted as his medical secretary and receptionist.

[6] The respondent now has about 250 patients. About one- sixth of these patients are HIV positive or have AIDS. The respondent testified that he is the only psychotherapist in Toronto with this volume of AIDS patients.

[7] At the sentencing hearing, the respondent received overwhelming support from his patients, some of whom testified. They described him as a wonderful and gifted doctor, empathetic, compassionate, caring and devoted. Many claim that he is the only doctor they trust, and lamented that they might lose the benefit of his care. Thirty-five people signed a petition asking the court not to incarcerate the respondent so that he could continue to practise medicine.

[8] The respondent has also contributed significantly to the community. In the late 1980s, he participated actively on a steering committee whose work led to the establishment of Casey House, the world's first AIDS hospice.

(c) The fraud

[9] To obtain compensation for providing an insured service, a doctor must bill OHIP. For the insured services he provided, the respondent was entitled to bill OHIP $47.30 per half-hour. [page78]

[10] The Ministry of Health receives a large number of claims from Ontario doctors every year. In approximate numbers, 24,000 doctors submit 130 million claims annually to OHIP. The sheer volume of claims from so many doctors forces the Ministry to rely on the integrity of individual doctors. When a doctor submits a claim to OHIP for payment, the Ministry assumes that the claim was rendered in good faith, absent information to the contrary. The Ministry made this assumption for the claims submitted by the respondent.

[11] However, for the seven-year period from January 2, 1990 to December 31, 1996, the respondent submitted false billings to OHIP. Every month he billed OHIP for medical services that he did not provide. In some cases, he billed OHIP for services performed on Thursdays and Fridays, days when he did not see patients. In other cases, he billed OHIP for services performed while he was on vacation. He and Mr. Allan travelled extensively during this period, including trips to California, New York, Las Vegas, Europe, Australia and New Zealand.

[12] On average, the respondent fraudulently billed OHIP for more than 200 insured services every month. Over the seven-year period, he billed OHIP for a total of 19,892 insured services that he never performed. The dollar value of his fraudulent claims increased steadily over the seven years. In 1990, his fraudulent billings cost OHIP $47,632.80. By 1996, his false billings had increased to $192,821.50. In total, the respondent fraudulently billed OHIP $923,780.53.

[13] The fraud was detected because Mr. Allan complained to the Ministry of Health in February 1996, shortly after his relationship with the respondent ended. Even so, the respondent continued to submit false claims to OHIP for another ten months. After a two-year investigation, the respondent was arrested on March 3, 1998.

(d) The court and college proceedings

[14] On June 3, 1999, after a six-day preliminary inquiry, the respondent was committed to stand trial on the sole charge of fraud over $5,000. On September 11, 2000, after several adjournments of his trial date, the respondent pleaded guilty.

[15] The Crown sought a penitentiary sentence in the range of two to four years. But the trial judge accepted the defence's position and imposed a conditional sentence of two years less a day to be followed by three years' probation. He could not "see how society would benefit from [the respondent's] incarceration". Apart from the statutory conditions, the only conditions imposed by the [page79] trial judge were that the respondent perform 100 hours of community service and that he not communicate with John Allan. The trial judge also imposed a free-standing restitution order of $791,780.53.

[16] The respondent has complied with the terms of his conditional sentence, including performing the community service ordered. He has made restitution at a rate of $6,000 monthly. This money is deducted from his monthly gross income and remitted directly to OHIP. By the time of the hearing of the appeal, the respondent had repaid over $200,000.

[17] The College of Physicians and Surgeons took disciplinary proceedings against the respondent. During oral argument, counsel told the court that in July 2001 the College suspended the respondent's right to practise medicine for 18 months. Nonetheless, the respondent is entitled to practise psychotherapy without a licence.

C. Discussion

[18] The deference accorded to sentences imposed by trial judges is well-established. An appellate court is not justified in interfering unless the sentence imposed reflects an error in principle or is otherwise "demonstrably unfit".

[19] The respondent submits that we ought to defer to the conditional sentence he received even if we might have imposed a different sentence. He contends that no purpose would be served by incarcerating him now and that the many mitigating factors present in this case justify a conditional sentence.

[20] The respondent can certainly point to a powerful catalogue of mitigating circumstances. They include:

-- The respondent is a cancer survivor who has overcome this disease to become an excellent doctor;

-- He serves a sector of the population that few doctors treat: persons who are HIV positive or who have AIDS;

-- Perhaps because of his own disease, he has an empathy with his patients that others may not have, and his patients correspondingly depend on him and do not want him incarcerated;

-- Although he did not do so immediately, he eventually pleaded guilty to the charge against him;

-- At the sentencing hearing, he expressed great remorse and accepted responsibility for what he had done; [page80]

-- He has served over half of his conditional sentence and has complied with all its terms;

-- He is making regular monthly restitution payments and has now repaid approximately 25 per cent of the amount of the restitution order; and

-- He has no previous criminal record.

[21] Despite these mitigating factors, I agree with the Crown that a conditional sentence in this case is demonstrably unfit. Five considerations, taken collectively, warrant a jail term sentence. They are the seriousness of the offence, the respondent's moral blameworthiness, the need for general deterrence, sentences in previous cases of large-scale fraud and the ineffectiveness of a conditional sentence in this case.

(a) The seriousness of the offence

[22] Fraud over $5,000 is a serious offence, attracting a maximum sanction of ten years in jail. Moreover, both in amount and duration, the respondent's fraud ranks as one of the largest scale frauds ever committed against OHIP. It took place over seven years, amounted to nearly $1 million and involved nearly 20,000 fraudulent transactions.

[23] Some view a fraud on government or a government agency as a victimless crime. Those who do, assume that governments have many deep pockets to recover the loss. But a fraud like the one committed by the respondent causes many costs to our public health care system and those who rely on it. The victim impact statement filed by the Ministry of Health showed that the money stolen by the respondent could have financed over 30,000 well baby care visits, over 40,000 routine prenatal care visits, or more than 50,000 routine visits to the elderly in nursing homes.

[24] By his fraud, the respondent even put at risk the very patients who were so devoted to him. A false claim creates a false health record for a patient. This may cause the annual restriction on certain health services to be reached artificially and prematurely, thus depriving patients of necessary health care. Also, a false health record can adversely affect the patient's ability to obtain life or disability insurance because, if authorized, insurers have access to an individual's OHIP file. Admittedly, there was no evidence that these risks materialized for any of the respondent's patients. However, the respondent did create these risks when he embarked on his fraudulent course of action. [page81]

(b) The respondent's moral blameworthiness

[25] The respondent's fraud amounted to an egregious breach of trust. He breached his duty of good faith to the government and his fiduciary duty to his patients. As I said earlier, the administration of the health care system in Ontario requires that doctors be trusted to submit claims in good faith. Effectively monitoring compliance is difficult, if not practically impossible, because of the large number of claims coming from a large number of doctors. The respondent breached his duty of good faith for seven years and might have continued to do so but for Mr. Allan's complaint. The respondent owed a fiduciary duty to his patients to ensure that their health records with OHIP were accurate, a duty that he obviously breached during the course of his fraud.

[26] Nothing in the respondent's motives mitigated his breach of trust. Indeed he seems to have been at least partly motivated by greed. He used some of the proceeds of his crime to finance lavish vacations for his partner and himself.

[27] Even at the sentencing hearing, the respondent sought to shift some of the blame for his conduct onto Mr. Allan. He claimed to have suffered through years of physical and verbal abuse from Mr. Allan. He said that over time Mr. Allan became more demanding. He contended that it was Mr. Allan who wanted to take lavish vacations, stay in five-star hotels and eat in expensive restaurants. He testified that he used much of the money generated by his fraudulent billings to appease Mr. Allan.

[28] The trial judge, however, rejected the respondent's explanation. Instead, the trial judge concluded that the respondent alone must bear responsibility for his fraud.

What motivated Bogart to embark on this fraud? His position is that he was under the control of Allan, who not only demanded that they take vacations, but they do so first class. Further, Bogart claimed that he derived no enjoyment during the holidays as he was continually under Allan's control. Allan's position is that they mutually agreed as to the holiday and the accommodation. For the purposes of this case, it matters not who the dominant party was. Suffice it to say that Bogart readily provided the means to support the vacations.

Mr. McGee, counsel for Bogart, submitted that he should be responsible for only half of the loss due to the largesse received by Allan as his partner. I disagree. As I stated above, Bogart readily resorted to this scheme. He knew that the likelihood of detection was remote. I do not accept that he derived no enjoyment from the funds. In my view, he is responsible for the total loss.

(c) General deterrence

[29] Two aspects of the need to give effect to general deterrence come into play in this case. First, general deterrence is the most [page82] important sentencing principle in major frauds. Second, when general deterrence is "particularly pressing", as it is here, the preferable sanction is incarceration.

[30] This court has affirmed that in cases of large-scale fraud committed by a person in a position of trust, the most important sentencing principle is general deterrence. Mitigating factors and even rehabilitation become secondary. In R. v. Bertram and Wood (1990), 40 O.A.C. 317, this court observed that most major frauds are committed -- as this one was -- by well-educated persons of previous good character. Thus the court held at p. 319 O.A.C.,

The sentences in such cases are not really concerned with rehabilitation. Instead, they are concerned with general deterrence and with warning such persons that substantial penitentiary sentences will follow this type of crime, to say nothing of the serious disgrace to them and everyone connected with them and their probable financial ruin.

(Emphasis added)

[31] In R. v. Gray (L.V.) (1995), 1995 18 (ON CA), 76 O.A.C. 387 at pp. 398-99, our court again stressed the need for general deterrence in fraud cases:

[T]here are few crimes where the aspect of deterrence is more significant. It is not a crime of impulse and is of a type that is normally committed by a person who is knowledgeable and should be aware of the consequences. That awareness comes from sentences given to others.

[32] The trial judge, however, appears to have downplayed the importance of general deterrence in this case and instead emphasized other sentencing principles:

Section 718 sets out certain purposes of sentencing and s. 718.2 sets out certain principles of sentencing. They need not be repeated here. The Court is required to consider all of those purposes and principles of sentencing. In my view, the primary purpose in this case is to denounce the unlawful conduct of the accused, to provide reparation for harm done to victims or to the community and to promote a sense of responsibility in offenders and an acknowledgement of harm done to victims and to the community.

Dr. Bogart, . . . [y]ou are undoubtedly gifted with respect to treatment of patients, as shown by the persons who have come forward and spoke on your behalf, and of your assistance in their continuing in life, in some instances, if not recovery, at least to cope. I cannot see how society would benefit from your incarceration. Rather, there is a possibility that some will suffer.

[33] Still, the Supreme Court of Canada has acknowledged that a conditional sentence can meet the need for general deterrence in some cases. See R. v. Proulx, 2000 SCC 5, [2000] 1 S.C.R. 61, 140 C.C.C. (3d) 449. But where the need for general deterrence is "particularly pressing", incarceration will normally be the preferable option. In R. v. Wismayer (1997), 1997 3294 (ON CA), 33 O.R. (3d) 225, 115 C.C.C. (3d) 18, one of this court's leading decisions on conditional sentences, [page83] Rosenberg J.A. recognized at p. 243 O.R., p. 38 C.C.C. that the need for general deterrence is particularly pressing in the case of a large-scale, well- planned fraud by a person in a position of trust:

General deterrence, as the principal objective animating the refusal to impose a conditional sentence, should be reserved for those offences that are likely to be affected by a general deterrent effect. Large scale well-planned fraud by persons in positions of trust, such as the accused in R. v. Pierce, would seem to be one of those offences.

[34] Finlayson J.A. made the same point in R. v. Pierce (1997), 1997 3020 (ON CA), 32 O.R. (3d) 321 at p. 337, 114 C.C.C. (3d) 23 at p. 40 (C.A.):

I would . . . refuse the application to permit the appellant to serve the sentence in the community. The abuse of a position of trust or authority in relation to a victim is an express aggravating circumstance set out in the sentencing guidelines under s. 718.2. This factor has traditionally drawn a severe custodial term even with first offenders.

[35] Moreover, the need to vindicate general deterrence becomes even more acute in the case of a large-scale fraud against OHIP. Absent a complaint, OHIP fraud is nearly impossible to detect, a fact undoubtedly known to the respondent. Once detected, the typical investigation is long, arduous and costly. And the incidence of health care fraud is on the rise. The record discloses that the number of health care professionals referred to the police for investigation has more than tripled since the mid-1990s. In short, the need to give effect to general deterrence in this case argues strongly for a jail sentence.

(d) Sentences in previous cases of large-scale fraud

[36] Both before and after Parliament's introduction of conditional sentences, cases of large-scale fraud by persons in a position of trust have typically resulted in substantial jail sentences. In his recent judgment in R. v. Dobis (2002), 2002 32815 (ON CA), 58 O.R. (3d) 536, 163 CC.C. (3d) 259 (C.A.), my colleague MacPherson J.A. has thoroughly reviewed these cases. His review shows that ordinarily these frauds merit a penitentiary sentence in the range of three to five years. Even where mitigating considerations have reduced the sentence to the reformatory range, a jail term, not a sentence served in the community, has usually been imposed.

[37] Health care professionals who defraud provincial health care plans have also normally received a jail sentence. As this court said in R. v. McCrystal (1992), 55 O.A.C. 167 at p. 169, where a doctor defrauded OHIP of nearly $85,000 by submitting false claims for fees"[i]t is well-established that, in the absence of special circumstances, a custodial term should be imposed for an offence of this nature." [page84]

[38] Special circumstances that might justify a conditional sentence for OHIP fraud include circumstances where the amount of the fraud is relatively small, the doctor has made full restitution before sentencing or the doctor can point to exceptional personal circumstances such as ill health or advanced age. None of these special circumstances exists here.

[39] In contrast, in R. v. MacDiarmid (D.) (2001), 2001 24117 (ON CA), 140 O.A.C. 287 (C.A.) -- the only OHIP fraud sentencing case decided at the appellate level since conditional sentences were introduced -- this court upheld an 18-month conditional sentence plus two years' probation for a doctor who defrauded OHIP of about $155,000 but who did not profit from his crime and repaid the entire amount before being sentenced. McCrystal, which I referred to above, was another case in which incarceration was not imposed. But there, not only was the amount of the fraud much smaller than in the case before us, the doctor was 71 years old at the time of the appeal and in ill health. The medical evidence suggested that a jail sentence would be tantamount to a death sentence. MacDiarmid and McCrystal are very different cases from that of the respondent.

(e) A conditional sentence is ineffective in this case

[40] To be effective, usually a conditional sentence must be punitive. What ordinarily makes a conditional sentence punitive is house arrest or a stringent curfew. For the respondent, both of these alternatives are impractical because his medical office is in his home. Thus, even while serving his conditional sentence he continues to live and work as he did before, with virtually no restrictions on his liberty. For defrauding the public purse of nearly $1 million, his sentence amounts to little more than probation. A conditional sentence in this case sends the wrong message about health care fraud both to practitioners and the public at large.

[41] Taking these five considerations together, I am persuaded that a conditional sentence for the respondent is demonstrably unfit. He must receive a jail sentence for his crime. The remaining question is how long a jail sentence.

[42] Ordinarily, a fraud on OHIP of this magnitude by a physician would call for a jail sentence of at least four years in the penitentiary. However, the quite unusual mitigating factors that I referred to earlier in these reasons justify some reduction from this range. In addition, the respondent is entitled to credit for the 13 1/2 months of his conditional sentence he has already served. Taking these considerations into account, in my view, a fit sentence is 18 months in jail. [page85]

D. Disposition

[43] I would grant the Crown leave to appeal the respondent's sentence and I would allow the appeal against sentence. I would impose a jail sentence of 18 months, to begin the day the respondent surrenders into custody.

Appeal allowed.