Smyth v. The Medical Advisory Committee of the Perth and Smiths Falls District Hospital et al.

[Indexed as: Smyth v. Perth and Smiths Falls District Hospital]

92 O.R. (3d) 656

Court of Appeal for Ontario,

MacPherson, Cronk and Rouleau JJ.A.

November 26, 2008

Arbitration -- Judicial review -- Medical Advisory Committee of hospital recommending that doctor's application for reappointment be denied and giving two reasons for that recommendation -- Parties agreeing to binding arbitration -- Arbitration agreement referring to two issues raised by Committee and also providing that arbitration was to be full and final determination with respect to doctor's application for reappointment -- Arbitrator correctly deciding jurisdictional issue in determining that he was not restricted to two issues specifically referred to in arbitration agreement -- Arbitrator's decision denying doctor's application for reappointment reasonable.

The appellant hospital's Medical Advisory Committee ("MAC") recommended that the Board of Governors not accept the respondent doctor's application for reappointment, giving two reasons for that recommendation. The MAC, the hospital and the respondent agreed to binding arbitration. The arbitration agreement referred to the two specific issues raised by the MAC, but also provided that the arbitration was to be the full and final determination with respect to the respondent's application for reappointment. The arbitrator ruled that the respondent should be offered the opportunity to resign and that, if he did not do so, his application for reappointment should be denied. The respondent applied under s. 46(1)3 of the Arbitration Act, 1991, S.O. 1991, c. 17 to set aside the arbitration ruling on the basis that the award dealt with a dispute that the arbitration agreement did not cover. The application judge concluded that the arbitration agreement was limited to the two specific issues referred to in the agreement and that the arbitrator had improperly heard evidence about, and based his decision on, matters outside those issues. The application was granted. The appellant appealed. [page657]

Held, the appeal should be allowed.

The respondent's position that the arbitration agreement set out two specific issues for resolution and did not authorize the arbitrator to go beyond those questions raised a jurisdictional issue, and the application judge did not err in implicitly applying a correctness standard of review to that issue. However, the arbitrator's interpretation of his task was correct. If the arbitration had been limited to the two specific issues, without considering the conduct and events leading to the making of the MAC's recommendation, it would not have been the "full and final determination" of the respondent's application contemplated by the arbitration agreement. The arbitrator's decision denying the respondent's reapplication appointment was reasonable.

APPEAL from the order of Kershman J., [2007] O.J. No. 4284, 161 A.C.W.S. (3d) 813 (S.C.J.) setting aside an arbitration ruling.

Cases referred to Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, [2008] S.C.J. No. 9, 2008 SCC 9, 329 N.B.R. (2d) 1, 64 C.C.E.L. (3d) 1, 164 A.C.W.S. (3d) 727, EYB 2008-130674, J.E. 2008-547, [2008] CLLC Â220-020, 170 L.A.C. (4th) 1, 372 N.R. 1, 69 Imm. L.R. (3d) 1, 291 D.L.R. (4th) 577, 69 Admin. L.R. (4th) 1, 95 L.C.R. 65, apld Statutes referred to Arbitration Act, 1991, S.O. 1991, c. 17, s. 46(1) [as am.] Public Hospitals Act, R.S.O. 1990, c. P.40

Paula Trattner, for appellants. Mary Thomson and Adam Patenaude, for respondent.

The judgment of the court was delivered by

MACPHERSON J.A.: -- A. Introduction

[1] This appeal relates to an arbitrator's decision denying the application of the respondent, Dr. William Smyth, for reappointment to the medical staff of the Perth and Smiths Falls District Hospital ("Hospital"). Justice Kershman of the Superior Court of Justice set aside the arbitrator's ruling and referred the matter back to arbitration.

[2] The appeal from the application judge's decision, as framed by the appellant Medical Advisory Committee ("MAC") of the Hospital, raises an issue of the standard of review that applies on an application to set aside an arbitrator's award under s. 46(1)3 of the Arbitration Act, 1991, S.O. 1991, c. 17. The substantive question is whether the application judge erred by determining that the arbitrator rendered a decision on a matter beyond the scope of the arbitration agreement between the parties. [page658] B. Facts (1) The parties and events

[3] Under the Public Hospitals Act, R.S.O. 1990, c. P.40 ("PHA"), a physician's term of appointment to the medical staff of a public hospital is for one year. Accordingly, doctors must apply for reappointment annually. The PHA further provides that the Board of Governors of a hospital has the power to renew a physician's appointment. The PHA requires that a hospital's MAC, which is comprised of physicians from the hospital in question, must make a recommendation regarding a physician's application for reappointment prior to the board's decision. The board is not bound by the MAC's recommendation in deciding whether to grant or refuse the application for reappointment.

[4] Dr. Smyth is an orthopaedic surgeon whose privileges at the Hospital were renewed annually from 1999 to 2006. In the spring of 2006, a dispute arose at the Hospital in relation to allegations of a refusal by Dr. Smyth to complete delinquent patient charts, to provide any on-call services and verbal abuse by Dr. Smyth of other doctors at the Hospital, including the Hospital's Chief of Staff.

[5] In April 2006, the MAC hired a consultant, Dr. Isser Dubinsky, to examine the issues in conflict and provide recommendations for resolving them. Following the consultant's review, he recommended that Dr. Smyth be referred to an anger management evaluation and attend a course in communications skills.

[6] On December 8, 2006, the Board of Directors of the Hospital passed Resolution 107/06, which directed Dr. Smyth to participate in a conflict resolution program, to be brokered by Dr. Kaufmann of the Ontario Medical Association, as a condition of his continued appointment to the medical staff of the Hospital. The Resolution stipulated that confirmation of enrolment in such a program was required before February 1, 2007.

[7] In the fall of 2006, Dr. Smyth submitted his annual application for reappointment to the medical staff at the Hospital. His application was reviewed by the MAC, which in reasons dated April 26, 2007, recommended that the Board not accept Dr. Smyth's application for reappointment. The MAC gave two reasons for its recommendation: first, Dr. Smyth had not complied with the expectations set out in Board Resolution 107/ 06; and second, Dr. Smyth would not agree to perform minimum one-in-four on-call services without stipulations as required by the MAC.

[8] On June 15, 2007, the MAC, the Hospital and Dr. Smyth agreed to enter into binding arbitration. The Arbitration Agreement provided in part: [page659] ARBITRATION AGREEMENT

BETWEEN:

Dr. William Smyth

(hereinafter referred to as "Dr. Smyth")

--and--

The Medical Advisory Committee, Perth and Smiths Falls District Hospital

(hereinafter referred to as the "M.A.C.")

Perth & Smiths Falls District Hospital

(hereinafter referred to as the "Hospital")

WHEREAS disputes and differences have arisen and are still continuing between the parties as follows: (a) On December 6, 2006, the Board of Directors passed Resolution #107/06 directing Dr. Smyth to participate in a conflict resolution and communications skills program to be brokered by Dr. Kaufmann of the Ontario Medical Association. Confirmation of enrolment was required before February 1, 2007; (b) Dr. Smyth submitted an application for reappointment to Active Staff at the Hospital which was received by the Credentialing Committee and reviewed by the Medical Advisory Committee ("MAC") of the Hospital; (c) The MAC has, pursuant to the Public Hospitals Act, R.S.O. 1990, c. P.40, made a recommendation to the Board of Directors that Dr. Smyth's re-application be denied on the following basis set out in its reasons of April 26, 2007 and summarized: (i) Dr. Smyth has not complied with the expectations set out in the Board of Directors' Resolution #107/06; and (ii) Dr. Smyth will not agree to perform a minimum one in four on call without stipulations as required by the MAC.

IT IS HEREBY AGREED that the parties will refer all the disputes and matters and difference as identified above to the award and determination of a single arbitrator (the "Arbitrator"), who shall have all the powers given to arbitrator by the Arbitration Act, 1991, S.O. 1991, c. 17.

IT IS FURTHER AGREED that this arbitration will be the full and final determination with respect to Dr. Smyth's reapplication for privileges at the Hospital and that there shall be no appeal to the court or to the Health Professions Appeal and Review Board, and there shall be no hearing before the Board of Governors of the Hospital. (2) The arbitration

[9] The parties agreed on the appointment of Dr. Peter McLaughlin, Chief of Staff of the Peterborough Regional Hospital, as arbitrator. In his ruling dated August 28, 2007, the arbitrator ruled that Dr. Smyth be offered the opportunity to resign from the Hospital staff by submitting a signed letter of resignation no [page660] later than September 11, 2007, with his resignation to be effective no later than October 31, 2007. He further ruled that if Dr. Smyth did not provide such a letter, his application for reappointment should be denied effective September 11, 2007 and his privileges terminated as of that date.

[10] Dr. Smyth applied under s. 46(1)(3) of the Arbitration Act to the Superior Court of Justice seeking to set aside the arbitration ruling on the basis that the award dealt with a dispute that the Arbitration Agreement did not cover. The application judge concluded that the arbitration agreement was limited to the "Two Specific Issues" in para. (c) of the Arbitration Agreement and that the arbitrator had improperly heard evidence about, and based his decision on, matters outside these issues. Accordingly, he granted the application, set aside the arbitration award and ordered that a new arbitration hearing be held before a different arbitrator to deal with the "Two Specific Issues" set out in the Arbitration Agreement.

[11] With leave from a panel of this court, the MAC appeals the application judge's decision. C. Issues

[12] The sole issue is whether the application judge erred by setting aside the arbitral award. D. Analysis

[13] The application judge said nothing about the standard of review to be applied to the arbitrator's decision. However, it is clear from his reasons that he applied a correctness standard. He conducted his analysis under s. 46(1) of the Arbitration Act, which provides:

46(1) On a party's application, the court may set aside an award on any of the following grounds: . . . . . 3. The award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the agreement.

[14] The application judge referred to the terms of the Arbitration Agreement, focusing on the "Two Specific Issues" in para. (c). He referred to the MAC's argument that the arbitration related to these issues and the appropriateness of the MAC recommendation and the broader issue of the disposition of Dr. Smyth's application for reappointment. He rejected the MAC's submission and concluded: "The only two issues to be [page661] dealt with at the Arbitration Hearing were to be the 'Two Specific Issues'." In doing so, he implicitly applied a strict correctness standard of review.

[15] I cannot say that the application judge erred in his implicit application of a correctness standard of review. In Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, [2008] S.C.J. No. 9, which was released after the application judge's decision, Bastarache and LeBel JJ. stated, at para. 57, that "[a]n exhaustive review is not required in every case to determine the proper standard of review".

[16] In Dunsmuir, the court reduced the standards of review to two -- correctness and reasonableness. In its discussion of the correctness standard, Bastarache and LeBel JJ. said, at para. 59:

Administrative bodies must also be correct in their determinations of true questions of jurisdiction or vires... "Jurisdiction" is intended in the narrow sense of whether or not the tribunal had the authority to make the inquiry. In other words, true jurisdiction questions arise where the tribunal must explicitly determine whether its statutory grant of power gives it the authority to decide a particular matter. The tribunal must interpret the grant of authority correctly or its action will be found to be ultra vires . . . .

[17] By parity of reasoning, an arbitrator must address the issues, and only the issues, referred to him in the arbitration agreement. In this case, the respondent's position was that the Arbitration Agreement set out two specific issues for resolution and did not authorize the arbitrator to go beyond those questions in order to determine whether the board of the Hospital should accept or reject the respondent's application for reappointment. In my view, the respondent's position raised a jurisdictional issue within the description above in Dunsmuir. Accordingly, the application judge's review of the arbitrator's decision on this issue on a correctness standard was appropriate.

[18] Turning to the merits, I do not agree with the application judge's interpretation of the Arbitration Agreement. On the contrary, in my view the arbitrator's interpretation of his task was precisely right.

[19] The Arbitration Agreement was not limited to Dr. Smyth's response to and compliance with Board Resolution 107/06 and the MAC's on-call requirement. These are listed in para. (c)(i) and (ii) of the agreement. However, para. (b) also refers to Dr. Smyth's application for reappointment. Then the agreement sets out that "all the disputes and matters and differences as identified above" will be referred to arbitration. Crucially, the agreement continues with this language: "this arbitration will be the full and final determination with respect to Dr. Smyth's reapplication for privileges at the Hospital". [page662]

[20] With respect, the application judge's analysis renders this passage meaningless. If the arbitration was limited to considering Dr. Smyth's compliance with the "Two Specific Issues" in para. (c) of the agreement, without considering the conduct and events leading to the making of the recommendations of the MAC, the arbitrator would not have the background necessary to assess whether Dr. Smyth's response to these issues warranted denying his reappointment. In other words, the arbitral award would be nothing more than a determination of two issues, not "the full and final determination" of Dr. Smyth's reapplication.

[21] Once the jurisdictional issue is disposed of in favour of the arbitrator's interpretation of his mandate, the only remaining question is whether his award was reasonable.

[22] In Dunsmuir, Bastarache and LeBel JJ. discussed the contents and implications of the reasonableness standard of review in this fashion, at para. 47:

Reasonableness is a deferential standard animated by the principle that underlies the development of the two previous standards of reasonableness: certain questions that come before administrative tribunals do not lend themselves to one specific, particular result. Instead, they may give rise to a number of possible, reasonable conclusions. Tribunals have a margin of appreciation within the range of acceptable and rational solutions. A court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process. But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.

[23] In my view, the arbitrator's decision was clearly reasonable within these parameters. The arbitrator was a senior and experienced doctor and administrator chosen by the parties. He received substantial affidavit evidence and heard oral testimony from the witnesses, including Dr. Smyth. He prepared an 11-page arbitral award. He specifically addressed the two issues in para. (c) of the Arbitration Agreement and found that Dr. Smyth had remedied neither.

[24] The arbitrator then summarized the situation and his views about it in forthright fashion:

The burden of evidence presented clearly supports the recurrence of disruptive and aggressive behaviour by Dr. Smyth over a prolonged period of time. Dr. Smyth's behaviour has been bullying, obstructive and manipulative. Dr. Smyth has chosen to ignore the many opportunities offered by the MAC and his colleagues to meet deadlines and avoid this regrettable outcome. In fact, Dr. Smyth has consistently responded to his colleagues' attempts to resolve the problems in a professional, amicable and timely manner with obstruction and manipulation. Dr. Smyth has also exhibited a complete disregard and lack of respect for the authority of the MAC and the Board. [page663]

It is clear that Dr. Smyth's behaviour has had a profound impact on his colleagues, having permanently damaged professional relationships and trust between many of his colleagues and himself. His behaviour has created a poisoned environment which has extended beyond the Medical Staff to involve the Board and the community. Such an environment is not in the best interests of the hospital, the patients and the community.

Dr. Smyth has demonstrated no insight into his role in creating this environment, no understanding of the impact of his behaviour on his colleagues and no understanding of the permanent breaches in the relationships with his colleagues for which he is responsible. Most importantly, Dr. Smyth appears not to grasp the essential importance of collegial relationships to the continuum of patient care. It is simply not credible that granting renewal of appointment to Dr. Smyth will allow restoration of the Hospital and the Medical Staff to the level of function essential to optimally serve their patients and the community.

[25] In my view, these conclusions were open to the arbitrator in light of the documentary and oral evidence before him. The conclusions easily fulfil the "justification, transparency and intelligibility within the decision-making process" component of the Dunsmuir description of reasonableness. Moreover, the arbitrator's decision clearly comes "within a range of possible, acceptable outcomes which are defensible in respect of the facts and law". E. Disposition

[26] I would allow the appeal, set aside the decision of the application judge and restore the arbitral award.

[27] The appellant is entitled to its costs of the appeal, which I would fix at $25,000 inclusive of disbursements and GST.

Appeal allowed.