Rosenhek v. Windsor Regional Hospital, 2010 ONCA 13

CITATION: Rosenhek v. Windsor Regional Hospital, 2010 ONCA 13

Date: 20100118

Docket: C47611

COURT OF APPEAL FOR ONTARIO

Doherty, Moldaver and Epstein JJ.A.

BETWEEN

Dr. I.S. Rosenhek

Plaintiff (Respondent/ Appellant by way of cross-appeal)

and

Windsor Regional Hospital

Defendant (Appellant/ Respondent by way of cross-appeal)

Steven Stieber and Jacinthe I. Boudreau, for the appellant/respondent by way of cross-appeal

Paul J. Pape, David S. Steinberg and Shantona Chaudhury, for the respondent/appellant by way of cross-appeal

Heard: December 2, 2009

On appeal from the judgment of Justice Joseph G. Quinn of the Superior Court of Justice dated July 24, 2007, with reasons reported at, [2007] O.J. No. 4486 (S.C.).

By the Court:

I

[1] Dr. Rosenhek and the Metropolitan General Hospital (now part of the Windsor Regional Hospital) (the “Hospital”) have been in litigation for 20 years. These appeals are from the judgment of Quinn J. dated July 24, 2007, awarding Dr. Rosenhek damages of $3,000,000 plus pre-judgment interest. The Hospital appeals from the finding of liability and the damage assessment. Dr. Rosenhek cross-appeals from the damage assessment. We are satisfied that the appeal and cross-appeal should be dismissed for the reasons that follow.

[2] Dr. Rosenhek made several claims against the Hospital. They all centered around the contention that the Board of Governors of the Hospital (the “Board”) acted in bad faith in March 1989 when it summarily revoked Dr. Rosenhek’s privileges at the Hospital and effectively ended his ability to work there. Dr. Rosenhek alleged that the Board’s actions caused him to lose substantial income over the next 10 years. The trial judge found that the Board acted in bad faith. He also found that the Board’s conduct caused Dr. Rosenhek to lose income over several years. The trial judge was, however, critical of the evidence put forward by Dr. Rosenhek to quantify that loss and awarded damages that were significantly less than those sought by Dr. Rosenhek.

[3] On appeal, the Hospital’s arguments against the finding of liability target in one way or another the trial judge’s finding that in revoking Dr. Rosenhek’s privileges the Board acted in bad faith. Before turning to those submissions, a description of the background in which these events arose and a chronology of the relevant events is helpful.

II

(i) The Working Arrangements at the Hospital

[4] The Hospital is a community hospital in Windsor, Ontario. Community hospitals do not hire doctors. Instead, doctors are given privileges allowing them to admit and treat patients in the hospital. Doctors with privileges are not employees or party to any contract for service with the hospital. The doctors operate as “independent business persons”.

[5] If a doctor has privileges at a hospital, he or she can admit patients to that hospital and use the publically-funded resources there to care for patients. A patient who is admitted to the Hospital is the responsibility of the admitting physician. For specialists like Dr. Rosenhek, privileges are crucial to earning a livelihood. Without hospital privileges, he could not access hospital facilities to care for his patients.

[6] Applications for privileges at the Hospital proceed through a series of committees staffed by doctors who work there. That process culminates in a decision by the Board. The Board can grant privileges and place qualifications on those privileges. Privileges are granted for a specific time – usually a year – and the onus is on the doctor to reapply at the appropriate time for a renewal of their privileges.

[7] The Board has the statutory power to revoke or suspend the privileges of a doctor. In doing so, the Board must comply with certain statutory procedural requirements. When Dr. Rosenhek’s privileges were revoked in March 1989, the Board’s powers were governed by the Public Hospitals Act, R.S.O. 1980 c. 410.

(ii) The Chronology of Relevant Events

[8] Dr. Rosenhek first applied for privileges at the Hospital in May 1984. During the previous year, he had been certified as a specialist in cardiology. There were no cardiologists at the Hospital, although Dr. Rosenhek’s speciality overlapped with work done at the Hospital by specialists in internal medicine. The Board gave Dr. Rosenhek “associate staff” privileges for one year in July 1984. This was the equivalent of a probationary appointment and was typical for a first appointment at the Hospital.

[9] Dr. Rosenhek’s privileges were renewed from time to time between May 1985 and January 1989. Some issues did arise in respect of those renewals. There were personality conflicts. Dr. Rosenhek was seen by some as arrogant and overly demanding. The primary problem, however, arose out of Dr. Rosenhek’s inability to gain entry to the coverage group to which the other internists at the Hospital belonged.

[10] Under the coverage group scheme, one internist in the group was on call at any given time for the hospitalized patients of all the other doctors who belonged to the group. For a doctor like Dr. Rosenhek, who was not in a coverage group, the only relief from full-time responsibility for one’s hospitalized patients came through the “on call” roster available at the hospital. However, that facility provided only limited relief to physicians who were not part of a coverage group.

[11] The exclusion of Dr. Rosenhek from the coverage group stemmed, at least in part, from the circumstances that predated Dr. Rosenhek’s arrival at the Hospital. When Dr. Rosenhek arrived, there were plans to develop a critical-care unit. Under that proposed plan, the critical-care unit would be staffed by a limited number of specialists who would have responsibility for all patients who were in the critical care unit regardless of which doctor had admitted the patient. When Dr. Rosenhek came to the Hospital, it was anticipated that he would be one of the “super specialists” assigned to run the critical care unit.

[12] When the critical-care plan was put forward, it was opposed by a number of the internists who had privileges at the Hospital. Ultimately, the plan did not go ahead. After the critical-care plan was rejected, personal divisions that had developed among the doctors over its merits lingered. Dr. Rosenhek found himself excluded from the internists’ coverage group.

[13] In 1988, Dr. Rosenhek brought his concerns about his inability to become part of a coverage group to the attention of the Board. Dr. Rosenhek complained that he was on call at virtually all times and that the stress of this workload was adversely affecting his health. Dr. Rosenhek indicated he was under the care of a psychiatrist. The Hospital regarded the coverage controversy as a private matter among the doctors in the group and declined to become actively involved in any attempt to resolve the issue.

[14] The Board renewed Dr. Rosenhek’s privileges for three months in January 1989. He was given associate staff status. The limited length of the renewal and the associate staff status presumably reflected Dr. Rosenhek’s ongoing problems obtaining adequate coverage and getting along with the other specialists who were involved in the care of cardiac patients. It is important to note, however, that there was never any concern about Dr. Rosenhek’s competence as a cardiologist or his ability to effectively care for his patients. During the entire time Dr. Rosenhek worked at the hospital, neither was in issue.

[15] On March 20, 1989, some two months into his three-month renewal, the Hospital’s Medical Advisory Committee (“MAC”) recommended the immediate revocation of Dr. Rosenhek’s privileges. Two days later, without any notice to Dr. Rosenhek, the Board adopted that recommendation and revoked his privileges, effective immediately. Dr. Rosenhek was required to leave the Hospital at once. The Board later provided a letter to Dr. Rosenhek setting out the reasons for the revocation.

[16] Dr. Rosenhek appealed the Board’s revocation of his privileges to the Hospital Appeal Board (“Appeal Board”). For reasons that need not be set out, the appeal was not heard until December 1993. In January 1994, the Appeal Board found that the hospital had complied with its statutory obligations relating to a mid-term revocation of privileges but had failed to give Dr. Rosenhek adequate notice of the revocation. In so holding, the Appeal Board relied on decisions given by it subsequent to the revocation of Dr. Rosenhek’s privileges in 1989. The Appeal Board ordered a new hearing. Based on information placed before it, the Appeal Board declined to order Dr. Rosenhek’s reinstatement pending that re-hearing. The reasons of the Appeal Board were before the trial judge. The parties agreed that the findings of fact made by the Appeal Board were binding on the parties at trial.[^1]

[17] Eventually, the re-hearing took the form of a de novo appeal before a differently constituted panel of the Appeal Board. In April 1996, the Appeal Board (“1996 Appeal Board”) released reasons setting aside the order of the Board revoking Dr. Rosenhek’s privileges, and ordering that Dr. Rosenhek be granted active staff privileges at the Hospital. The 1996 Appeal Board gave detailed reasons for its decision. Those reasons were also before the trial judge and it was agreed that the findings of fact made in those reasons would apply at the trial. The trial judge, in making his findings, relied heavily on these reasons.

(iii) The Trial Judge’s Reasons

[18] The trial judge accepted the Hospital’s submission that Dr. Rosenhek did not have a contractual relationship with the Hospital, and was not an employee of the Hospital. The trial judge went on to hold, however, that as the Board was acting as a quasi-judicial body when it revoked Dr. Rosenhek’s privileges, the Hospital was liable for Dr. Rosenhek’s damages if the Board acted in bad faith in doing so. The relevant conclusion by the trial judge is found at para. 19:

I find there was a denial of natural justice on the part of the Board of Governors in the manner in which they conducted the revocation hearing. I find there was bad faith on the part of the Board of Governors in terminating the privileges of Dr. Rosenhek for a very minor problem and for which Dr. Rosenhek may have been only partially responsible. I find the defendant is liable for the damages sustained by Dr. Rosenhek on the grounds of a breach of a duty of good faith. The lack of good faith is based on the manner in which the hearing was conducted and the reason for the revocation of privileges. [Emphasis added.]

[19] The trial judge went on to find that the Hospital was also liable to Dr. Rosenhek for the tort of intentional interference with economic relations. While it is not entirely clear, it would appear that the trial judge found that the requirement that the interference be by illegal or unlawful means was satisfied by the proof that the Board, in revoking Dr. Rosenhek’s privileges, acted in violation of the procedural requirements of ss. 37(6) and 37(7) of the Public Hospitals Act.[^2]

III

The Hospital’s Appeal on Liability

[20] Counsel for the appellant submits that the trial judge’s finding of liability stands or falls on the bad faith finding. We agree. If that finding is set aside, then neither basis on which the trial judge found in favour of Dr. Rosenhek can stand.

[21] We are satisfied that a bad faith exercise of a statutory, public power can, in law, provide a basis for a tort claim by Dr. Rosenhek against the hospital: see Harris v. The Law Society of Alberta, 1936 CanLII 18 (SCC), [1936] S.C.R. 88; Brown v. Waterloo Regional Board of Commissioners of Police (1983), 1983 CanLII 1697 (ON CA), 43 O.R. (2d) 113 (C.A.), at pp. 121-22; Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263, at paras. 23-32; Freeman-Maloy v. Marsden (2006), 2006 CanLII 9693 (ON CA), 79 O.R. (3d) 401 (C.A.), leave to appeal to S.C.C. refused, [2006] 2 S.C.R. ix; Roncarelli v. Duplessis, 1959 CanLII 50 (SCC), [1959] S.C.R. 121. The Board’s power to revoke Dr. Rosenhek’s privileges is found in s. 33(c) of the Public Hospitals Act. That power, in turn, is part of a comprehensive statutory scheme governing the operations of public hospitals. Hospitals are funded largely through the public purse. A purposive reading of the statutory provisions relating to the power to revoke privileges demonstrates that it is exercised having regard to various public-interest factors relating to, in particular, the quality of care provided by the hospital. Having regard to these features, we think that the exercise of the revocation power is properly characterized as public in nature.

[22] Counsel for the appellant accepts that a bad faith exercise by the Board of its statutory power to revoke Dr. Rosenhek’s privileges would give rise to a personal cause of action for Dr. Rosenhek. Counsel contends, however, that a finding of bad faith against the Board requires more than a demonstration that the Board failed to comply with applicable statutory or common law procedural requirements, or that the Board’s decision was wrong on the merits. We do not understand counsel for the respondent to disagree with this submission.

[23] Counsel for the appellant makes three arguments challenging the bad faith finding. First, he argues that Dr. Rosenhek did not plead bad faith in the revocation of his privileges in his statement of claim and that the trial judge, therefore, erred in finding liability founded on bad faith. The pleadings were drafted by Dr. Rosenhek. They leave much to be desired. The pleadings do, however, refer to a breach of statutory duty and a breach of the duty to act fairly. They describe these breaches as “malicious”. We are satisfied that the bad-faith allegation was before the trial judge and was central to the dispute between the parties. The Hospital did not argue in its factum that it did not have adequate notice of the bad-faith allegation at trial. Indeed, this argument took shape only in the course of counsel’s reply submissions. Whatever inadequacies there were in the pleadings, they caused no prejudice to the Hospital and, in our view, posed no bar to the trial judge’s finding of bad faith.

[24] Second, counsel for the Hospital submits that the trial judge erroneously equated a failure to comply with the rules of natural justice in the process surrounding the revocation of Dr. Rosenhek’s privileges with bad faith by the Board. There is a distinction between the failure of an entity such as the Board to abide by statutory or other procedural requirements and a finding that the Board acted in bad faith in the exercise of its statutory powers. A failure to comply with the requirements of the statute or the dictates of natural justice may well give rise to a remedy on review of that decision but will not, in and of itself, give rise to a private cause of action: see Welbridge Holdings Ltd. v. The Metropolitan Corporation of Greater Winnipeg (1970), 1970 CanLII 1 (SCC), [1971] S.C.R. 957, at pp. 968-69. The trial judge’s reasons demonstrate that he was alive to the distinction between a finding that a hearing was procedurally flawed and the finding of a bad faith exercise of a statutory power (see above, at para. 18).

[25] However, the trial judge, correctly in our view, did consider the Board’s failure to accord procedural fairness to Dr. Rosenhek as part of the overall evidentiary picture. The manner in which the Board treated Dr. Rosenhek during the process, including its failure to give him fair notice of the revocation, could inform the trial judge’s assessment of whether the Board acted in bad faith in revoking Dr. Rosenhek’s privileges.

[26] The third and main argument advanced by the Hospital essentially comes down to a contention that the evidence cannot support a finding of bad faith. This argument focuses on the trial judge’s treatment of the reasons of the 1996 Appeal Board. The Hospital submits that, while it agreed to be bound by the findings of fact of the 1996 Appeal Board, the trial judge erroneously equated the 1996 Appeal Board’s finding that Dr. Rosenhek’s privileges were improperly revoked with a finding of bad faith. The Hospital contends, correctly, that the question of bad faith was not before the 1996 Appeal Board. It further argues that, properly understood, the reasons and findings of the 1996 Appeal Board do not provide a reasonable ground on which the trial judge could make a finding of bad faith. According to this submission, the findings of the 1996 Appeal Board go no further than to establish that those responsible for making the difficult decision to revoke Dr. Rosenhek’s privileges made an error in judgment.

[27] This submission cannot withstand a careful review of the trial record. That record, particularly the reasons of the 1996 Appeal Board, provides an ample basis on which the trial judge could make a finding of bad faith. Without attempting an exhaustive cataloguing of the evidence that could reasonably factor into a finding of bad faith, we will refer to the three significant areas of the evidence that supported the bad faith finding.

[28] We begin with the reasons advanced by the Board for revoking Dr. Rosenhek’s privileges. Reasons were given both in a letter to Dr. Rosenhek in April of 1989, and before the 1996 Appeal Board. The 1996 Appeal Board examined each of those reasons carefully and in detail. The 1996 Appeal Board concluded that none of the reasons advanced by the Board for revocation were made-out, and that most were devoid of any merit and contrary to the factual reality. Those conclusions of the 1996 Board were central to the trial judge’s analysis and deserve repetition here:

It is clear from the evidence, indeed, from the Hospital’s own evidence, that there is no question as to Dr. Rosenhek’s professional competence. It is equally clear that the revocation of his privileges cannot be justified by any reasonable concern over the quality of his patient care. In the end, the Hospital’s case comes down to the allegation that Dr. Rosenhek just did not fit in.

But a hospital is not a fraternity, and fraternity notions of “fitting in” do not apply. The fact is that Dr. Rosenhek walked into a hornet’s nest, not of his own making, in the form of the Critical Care Unit initiative. The very purpose of his recruitment by the Hospital left him on what turned out to be the losing side of the controversy. It is probably the case that he displayed a degree of arrogance in respect of his training and skills that exacerbated the situation … There can be little doubt that the lack of coverage faced by Dr. Rosenhek and the Hospital’s utter failure to take any steps, other than lip service, to assist in the resolution of that problem, further exacerbated the situation.

All that having been said, however, whatever the contributing factors to the alleged interpersonal problems may have been, the overwhelming weight of the evidence indicates that the problems were minor and certainly not such as to justify the extreme measure of revocation of privileges. When we are examining the question of ‘fitting in”, this Board must take very seriously the testimony of the twelve nurses, eight physicians, seven patients and family members of patients and two medical secretaries, all of whom sang Dr. Rosenhek’s praises. To be sure, hearings are not won or lost by counting the witnesses on each side. But against the evidence called by Dr. Rosenhek, the only first-hand evidence we have of his alleged inability to work within the Hospital structure, to work with professional colleagues and staff is that of Dr. Mandal. We find his evidence unconvincing.

[29] Based on the factual findings of the 1996 Appeal Board, it must be said that the Hospital had no basis on which to revoke Dr. Rosenhek’s privileges. While a wrong decision, even a very wrong decision cannot be equated to a decision made in bad faith, a decision may be so clearly wrong on the merits as to provide some evidentiary support for a finding of bad faith. We place this decision to revoke Dr. Rosenhek’s privileges in that category.

[30] The timing and manner of the Board’s decision to revoke Dr. Rosenhek’s privileges also informs the bad faith finding. The privileges were revoked in March 1989, when Dr. Rosenhek had a month remaining on those privileges. His privileges had been renewed only two months earlier. There is nothing in the record to suggest that anything had changed between January, when the Board renewed those privileges, and March, when it revoked them. This about-face appears arbitrary and entirely unwarranted given that there was never any legitimate issue about Dr. Rosenhek’s competence as a physician or the need to act to ensure the safety of his patients.

[31] Not only was there no explanation for the timing of the revocation of the privileges, the manner in which Dr. Rosenhek’s privileges were revoked also suggests bad faith. Dr. Rosenhek’s privileges were terminated effective immediately and he was told to leave the Hospital at once. This conduct is difficult to understand in the face of Dr. Rosenhek’s acknowledged competence, absent bad faith.

[32] The evidence, and the findings of fact made by the 1996 Appeal Board, also point to the existence of an oblique or improper motive for the revocation of Dr. Rosenhek’s privileges. This oblique motive permeates the conduct of the Hospital and is probably the most significant reason supporting a finding of bad faith by the Hospital. As outlined above, Dr. Rosenhek found himself at odds with those specialists who had opposed the plans to establish a critical care unit. That difference of opinion, and interpersonal differences, made Dr. Rosenhek an outsider who was not allowed to participate in the coverage group. As explained in the reasons of the 1996 Appeal Board, Dr. Rosenhek did not “fit in”.

[33] The Hospital was not prepared to take an active role to resolve the coverage problems. Dr. Mandal, the Chief of Medicine at the Hospital, was very much in the forefront of those who denied Dr. Rosenhek access to a coverage group. The 1996 Board concluded:

[I]t seems quite clear that a hospital does have an interest in ensuring appropriate coverage arrangements for physicians and that it has an obligation to interfere where such arrangements are not being made. For a responsible member of the Hospital management, the Chief of the affected department [Dr. Mandal], not only to fail to intervene, but to be a major source of the problem is, in our view, intolerable. While public hospital facilities are not public utilities available to all physicians for the asking, they are equally not the private preserves for those who are well and long established on staff. All physicians granted privileges to make use of public hospital facilities have an obligation to conduct themselves so as to maximize the ability of the institution to deliver patient care.

[34] The trial judge found, albeit in the context of considering the tort of intentional interference with economic relations, that the Hospital’s “predominant purpose” in revoking Dr. Rosenhek’s privileges was to “resolve a perceived problem among specialists”. No doubt, the revocation solved the coverage dispute. However, in using its revocation powers for that purpose, the Board acted for an oblique and improper motive. This motive provided perhaps the strongest evidence from which bad faith could be inferred.

[35] In summary, there was ample evidence before the trial judge to support his finding that the Board acted in bad faith. That finding stands.

[36] The Board, in bad faith, exercised its decision-making function for an ulterior purpose and not for the public good, in circumstances where it had to know that its conduct would likely injure the plaintiff. We are satisfied that the tort of misfeasance in a public office was made out: see Odhavji Estate, at paras. 26-32; Three Rivers District Council v. Bank of England (No. 3), [2000] 2 W.L.R. 1220 (H.L.), at p. 1230. We would not disturb the trial judge’s finding that the Hospital is liable to Dr. Rosenhek.

IV

The Damages Appeals

[37] In terms of the appeal as to damages, the Hospital, relying on Martin v. Goldfarb (1998), 1998 CanLII 4150 (ON CA), 163 D.L.R. (4th) 639, argues that since Dr. Rosenhek failed to adduce readily available evidence to prove his damages, he ought to be awarded only nominal damages. In Martin, Finlayson J.A. drew a distinction between damages that are difficult in nature to assess, an assessment that must be undertaken despite the need for “guess work”, and damages that are unproven due to a failure to adduce available evidence. In the latter case, only nominal damages should be awarded.

[38] However, even in Martin, Finlayson J.A. declined to award nominal damages based on insufficient support for the damage claim; instead, he referred the damages back to the trial judge on the grounds that the plaintiff had adduced enough evidence to prove a significant loss. The principle appears to be that nominal damages are not appropriate where a substantial loss has been demonstrated, even if evidence proving quantum is lacking.

[39] Dr. Rosenhek’s $6,731,480 damage claim was based on loss of income for the period during which he was denied privileges at the Hospital – March 1989 to December 1999.

[40] There is no dispute that, with no justification, Dr. Rosenhek failed to introduce evidence that would have allowed his damages to be quantified with any degree of precision. The missing evidence included his OHIP records and income tax returns. This was documentation that, on all accounts, should have been produced in the normal course. It was also the subject of a specific production order.

[41] Notwithstanding Dr. Rosenhek’s failure to meet his production obligations, in our view, the trial judge was entitled to make an assessment of damages despite having less than adequate evidence on lost income. Here, there was evidence to support the trial judge’s acknowledgment of the magnitude of Dr. Rosenhek’s loss. We refer to his finding that from 1989 to 1996 Dr. Rosenhek’s previously lucrative practice was reduced and limited to walk-in clinics. Furthermore, while, according to the trial judge, the evidence of the expert upon whom Dr. Rosenhek relied to support his damage claim was deficient, it constituted at least some evidence that the income loss was sizeable.

[42] The trial judge’s assessment followed the principle derived from Martin. In these circumstances, we see no reason to interfere with it.

[43] For these reasons the appeal as to damages is dismissed.

[44] Dr. Rosenhek cross-appeals from the damage award, saying the damages awarded should have been closer to the amount claimed.

[45] Dr. Rosenhek argues that his entire lost income has been sufficiently proven and should be ascribed to the tortious actions of the Hospital. However, there is no evidence as to the income the doctor could have made by working full time at the hospital – for example, evidence concerning whether the Hospital would have had capacity for Dr. Rosenhek to sustain a full-time roster of patients. Without such evidence, any award based on the assumption that he could have made more income from the Hospital during the loss years than he had in his previous time there, would be unsupportable.

[46] Dr. Rosenhek must accept that where he has not adduced the evidence that was justifiably expected and readily available, he has only himself to blame if the damages assessment is lower than hoped for. In such a situation there will inevitably be an element of arbitrariness to a court’s decision. That said, we are of the view that in the circumstances present here, the trial judge was fully justified in reducing the amount awarded to approximately half of that claimed.

V

Conclusion

[47] The Hospital’s appeal from liability and damages is dismissed. Dr. Rosenhek’s cross-appeal from damages is dismissed. The parties shall make submissions in writing as to the costs of the appeals. Those submissions should not exceed 5 pages and should be filed within 30 days of the release of these reasons.

RELEASED: “DD” “JAN 18 2010”

“Doherty J.A.”

“M.J. Moldaver J.A.”

“G.J. Epstein J.A.”

[^1]: Because the parties agreed to be bound by the findings, we need not pass on the appellant’s argument that the trial judge erred in holding that the parties were bound by the findings as a matter of law.

[^2]: Given our conclusion that the trial judge properly found the appellant liable for its bad-faith exercise of its statutory power to revoke Dr. Rosenhek’s privileges, we need not address his finding that the Hospital was also liable for intentionally interfering with Dr. Rosenhek’s economic interests by unlawful means. It must be said, however, that, to the extent the trial judge relied on his finding that the Hospital had breached certain statutory provisions in the Public Hospitals Act as a basis for his conclusion that the Board acted unlawfully (see para. 22), he erred. Those provisions were not engaged by the in-term revocation of Dr. Rosenhek’s privileges.