Klein v. American Medical Systems, Inc. et al.

[Indexed as: Klein v. American Medical Systems, Inc.]

84 O.R. (3d) 217

Ontario Superior Court of Justice, Divisional Court,

Cunningham A.C.J., Chapnik and Kealy JJ.

December 22, 2006

Civil procedure -- Pleadings -- Statement of claim -- Striking out -- Plaintiff suing manufacturer and distributor of medical device and also suing Attorney General of Canada on basis that Health Canada was negligent in its regulation of device -- Motions judge erring in dismissing Attorney General's motion to strike claim against it -- Motions judge erring in not engaging in analysis of proximity and policy considerations that might negate duty of care -- Motions judge misapprehending question before her in finding that full factual record was necessary -- Issue of whether it was plain and obvious that there was no private law duty of care could be determined without factual record.

Torts -- Negligence -- Duty of care -- Public authorities -- Plaintiff suing manufacturer and distributor of medical device and also suing Attorney General of Canada on basis that Health Canada was negligent in its regulation of device -- Motions judge erring in dismissing Attorney General's motion to strike claim against it -- Federal government not owing private law duty of care to plaintiff -- Sufficient relationship of proximity between federal government and plaintiff not existing -- Any duties imposed by legislation with respect to regulation of medical devices by Health Canada being owed to public at large and not to private individuals -- Policy considerations making it unwise to impose duty of care even if sufficient proximity existed -- Food and Drugs Act, R.S.C. 1985, c. F-27 -- Medical Devices Regulations, SOR/98-282.

The plaintiff brought an action against the manufacturer and distributor of a medical device designed to alleviate or cure female incontinence and against the Attorney General of Canada. The federal government, through Health Canada, regulates the sale and marketing of medical devices. The device in question was authorized to be imported or sold in Canada in accordance with a licence issued by Health Canada to the manufacturer pursuant to the Food and Drugs Act and the Medical Devices Regulations. The plaintiff claimed that Health Canada was negligent in its regulation of the device. A motion by the Attorney General to strike the claim against it pursuant to rule 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 on the grounds that the federal government did not owe a private law duty of care to the plaintiff was dismissed. The Attorney General appealed.

Held, the appeal should be allowed.

The standard of review of the motions judge's decision was correctness. The motions judge did not engage in an analysis of proximity and did not directly address the policy considerations that might make it unwise to impose a duty of care. Her finding that a full factual record was necessary appeared to have been based on a misconception as to the issues that were placed before her. A determination as to whether it was plain and obvious that there was no private law duty of care could be made without a factual record.

It was plain and obvious that a sufficient relationship of proximity between the federal government and the plaintiff did not exist. It does not follow from a legislative decision to regulate an activity, product or industry that the legislative [page218] scheme created for this purpose is intended to protect individual users and consumers. In order for a public authority to be found to owe a private law duty of care, the purpose of the statutory scheme at issue must be to benefit individual members of an identifiable class or group, and the loss at issue must be the type of loss the statute was intended to guard against. There can be no private law duty of care where the purpose of the legislative scheme is to facilitate a public authority to act in its discretion in the public interest. In this case, any duties imposed by the legislation with respect to the regulation of medical devices by Health Canada were duties owed to the public at large and not to private individuals. Moreover, it was not possible for Health Canada to regulate on behalf of individuals directly. Even if there was a sufficient relationship of proximity, there were policy considerations which made it unwise to impose a duty of care. First, recognizing a duty of care would create a spectrum of unlimited liability to an unlimited class. Second, recognizing a duty of care would effectively create an insurance scheme for medical devices funded by taxpayers, which was not the intention of Parliament. Third, recognizing a duty of care may have a negative impact on the government's ability to balance all relevant interests when making regulatory decisions regarding medical devices. Fourth, recognition of a duty of care is not consistent with the societal interest in promoting advances in medical science and technology. Finally, recognizing a duty of care in these circumstances might open the door to potentially innumerable claims in any number of similar cases.

Appeal from a decision of the motions judge dismissing a motion to strike a claim as against the moving party.

Cases referred to Anns v. Merton London Borough Council, [1978] A.C. 728, [1977] 2 All E.R. 492 (H.L.); Cooper v. Hobart, [2001] 3 S.C.R. 537, [2001] S.C.J. No. 76, 96 B.C.L.R. (3d) 36, 206 D.L.R. (4th) 193, 277 N.R. 113, [2001] 11 W.W.R. 221, 2001 SCC 79, 8 C.C.L.T. (3d) 26, apld Edwards v. Law Society of Upper Canada (2001), 2001 SCC 80, 56 O.R. (3d) 456n, [2001] 3 S.C.R. 562, [2001] S.C.J. No. 77, 206 D.L.R. (4th) 211, 277 N.R. 145, 2001 SCC 80, 8 C.C.L.T. (3d) 153, 13 C.P.C. (5th) 35; Eliopoulos v. Ontario (Minister of Health and Long Term Care), [2004] O.J. No. 3035, 132 A.C.W.S. (3d) 485 (S.C.J.); Odhavji Estate v. Woodhouse, [2003] 3 S.C.R. 263, [2003] S.C.J. No. 74, 233 D.L.R. (4th) 193, 312 N.R. 305, 2003 SCC 69, 19 C.C.L.T. (3d) 163, 11 Admin. L.R. (4th) 45, consd Other cases referred to A.O. Farms Inc. v. Canada, 2000 17045 (FC), [2000] F.C.J. No. 1771, 101 A.C.W.S. (3d) 288, 28 Admin. L.R. (3d) 315 (T.D.); Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 219 Sask. R. 1, 211 D.L.R. (4th) 577, 286 N.R. 1, 272 W.A.C. 1, [2002] 7 W.W.R. 1, 30 M.P.L.R. (3d) 1, 2002 SCC 33, 10 C.C.L.T. (3d) 157; Klein v. American Medical Systems Inc., [2005] O.J. No. 4910, 143 A.C.W.S. (3d) 946 (S.C.J.); Klein v. American Medical Systems Inc., [2006] O.J. No. 2188, 147 A.C.W.S. (3d) 523 (S.C.J.); Rogers v. Faught, [2001] O.J. No. 850, 103 A.C.W.S. (3d) 1227 (S.C.J.) Statutes referred to Class Proceedings Act, 1992, S.O. 1992, c. 6 Food and Drugs Act, R.S.C. 1985, c. F-27, ss. 22-29 Health Protection and Promotion Act, R.S.O. 1990, c. H.7 Law Society Act, R.S.O. 1990, c. L.8 Mortgage Brokers Act, R.S.B.C. 1996, c. 313 Rules and regulations referred to Medical Devices Regulations, SOR/98-282, ss. 11-20, 25, 32, 36, 38, 40 Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 21, 21.01(1)(b) [page219]

Paul R. Jewell and Tina Radimisis, for plaintiff. Gina M. Scarcella, for defendant (appellant) The Attorney General of Canada.

The judgment of the court was delivered by

Chapnik J.: --

Overview

[1] This appeal concerns the existence and scope of the federal government's duty of care to private individuals when exercising its discretion in the regulation of medical devices under the Food and Drugs Act, R.S.C. 1985, c. F-27 (the "FDA") and the Medical Devices Regulations, SOR/98-282 (the "Regulations").

[2] The Attorney General of Canada ("AG") appeals the order of Sanderson J. dated November 15, 2005 [Klein v. American Medical Systems Inc., [2005] O.J. No. 4910, 143 A.C.W.S. (3d) 946 (S.C.J.)], in which she refused to strike the claim against the AG pursuant to rule 21.01(1)(b) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194].

[3] The claim was brought by Lorraine Klein (respondent on appeal) pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. 6, against the AG and the manufacturer and distributor in Canada of a medical device designed to alleviate or cure female incontinence. Ms. Klein seeks to represent a national class consisting of females who have allegedly suffered damages as a result of this device.

[4] The federal government, through Health Canada, regulates the sale and marketing of medical devices. Ms. Klein claims that Health Canada was negligent in its regulation of the device. She claims that Health Canada has "a duty to examine and test, or review tests of products to be sold in Canada". She seeks a declaration that the federal government was negligent in allowing the device to be licensed for sale and use in Canada. The AG moved to strike the claim on the grounds that the federal government does not owe a private law duty of care to the plaintiff. Sanderson J. dismissed the motion, stating that the issue should be determined on a full factual record.

[5] Leave to appeal the decision of Sanderson J. was granted by Swinton J. in reasons released April 11, 2006 [Klein v. American Medical Systems Inc., [2006] O.J. No. 2188, 147 A.C.W.S. (3d) 523 (S.C.J.)]. Swinton J. was satisfied there was good reason to doubt [page220] the correctness of the decision, [and] held that there were issues of general importance such that leave to appeal be granted.

Facts

[6] The Silicone-Coated Sling/Mesh with InhibiZone is a medical device, the purpose of which is to alleviate or cure female incontinence by supporting the bladder from an anchored position inside the body. The device was manufactured and distributed by the defendant, American Medical Systems, Inc. and its Canadian subsidiary, the defendant, American Medical Systems Canada, Inc.

[7] The device was authorized to be imported or sold in Canada in accordance with a license issued by Health Canada to the manufacturer pursuant to the FDA and the Regulations.

[8] The plaintiff underwent surgery at Toronto East General Hospital at which time the device was inserted into her body. The claim alleges that the plaintiff suffered personal injury and other losses as a result of the presence of the device in her body.

Relevant Legislation

[9] The legislation relevant to this case is the Food and Drugs Act ("FDA" or the Act) and associated Medical Devices Regulations.

[10] Part II of the FDA deals with the administration and enforcement of the Act with respect to inspections. Specifically, ss. 22-29 set out the powers and duties of inspectors designated by the Minister.

[11] The Regulations set out at ss. 11-20 details stipulating, among other things, that a medical device shall not adversely affect the health or safety of an individual. Section 32 sets out the application process for a medical device license and outlines what documents are required for this process. Section 36 describes the power of the Minister to issue a medical license and attach conditions where deemed warranted. Section 38 states that the Minister may refuse to issue a medical device license, and s. 40 sets out the powers of the Minister to suspend licenses.

Standard of Review

[12] The Supreme Court of Canada addressed the standard of review of a judge's decision in Housen v. Nikolaison, 2002 SCC 33, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 211 D.L.R. (4th) 577.

[13] On a pure question of law, the basic rule with respect to a judge's findings is that an appellate court is free to replace the opinion of the trial judge with its own, and therefore, the standard of review on a question of law is correctness. [page221]

[14] In this case, the appellant alleges that the motions judge failed to properly apply the Anns test (Anns v. Merton London Borough Council, [1978] A.C. 728, [1977] 2 All E.R. 492 (H.L.)) as required by the Supreme Court of Canada in a case such as this. She also erred in finding the need for a full factual record to enable a decision to be made on the motion. Accordingly, as these are pure matters of law, the standard of review would be correctness.

Analysis

1. The reasons of Sanderson J.

[15] In rendering her decision on the rule 21.01 motion, the motions judge reviewed the parties' submissions in detail, including the relevant jurisprudence and concluded, at [para. 46-48] of her reasons:

I accept the submission of counsel for the Plaintiff that a full factual record is necessary here to determine whether the AG negligently failed to enforce its own detailed requirements for licensing.

In my view, it is not plain and obvious that the AG/Health Canada [having made a decision to impose standards for the licensing of medical devices, and having created a detailed plan to protect against such devices causing physical harm to users] does not have a private law duty of care to the Plaintiff in implementing the Plan.

Nor is it plain and obvious that to impose a private law duty of care in the circumstances here would unduly fetter Health Canada in protecting the safety of the Canadian public.

[16] In order to prove negligence the respondent must first show that Health Canada owed her a private law duty of care . The AG argued before the motions judge on both occasions that it owed no private law duty of care to the plaintiff and therefore, it is plain and obvious that her claim must fail. The existence of a duty of care is to be determined in accordance with the two-part Anns test (Anns v. Merton London Borough Council, supra, at pp. 751-52 and 754 A.C.).

[17] In Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537, [2001] S.C.J. No. 76, at para. 30 ("Cooper"), the Supreme Court of Canada confirmed that the existence of a duty of care is to be determined in accordance with this test:

(1) In stage one, it must first be determined that the harm that occurred was the reasonably foreseeable consequence of the defendant's act. Second, the parties must be in a relationship of sufficient proximity to give rise to a duty of care.

(2) In stage two, the court must determine whether there are residual policy considerations which negate the imposition of a duty of care. [page222]

[18] Clearly, the motions judge did not in her reasons engage in an analysis of proximity, as required by the relevant jurisprudence. Moreover, her finding that a full factual record is necessary appears to be based on a misconception as to the issues that were placed before her.

[19] As noted by Swinton J., at para. 9, p. 4, of the leave decision:

While the motions judge indicates that a full factual record is necessary to determine whether there has been negligence (para. 46 of the reasons), that was not the issue before her. Rather, she was to determine whether it was plain and obvious that there was no private law duty of care, given the pleading before the Court. Such a determination has been made on numerous motions without a factual record, including the Supreme Court of Canada trilogy cited above. (Emphasis added)

[20] In addition, the motions judge did not directly address the policy considerations relevant to stage two of the test in Cooper. In short, the motions judge erred in her analysis of the duty of care and misapplied the Anns test. She failed to analyze the parties' relationship to determine whether sufficient proximity exists to make it just and fair to impose a duty of care on the defendant/appellant.

[21] Given those errors, the decision of Sanderson J. cannot stand. It falls to this court to determine whether the claim should be struck on the grounds that the federal government does not owe a private law duty of care to the plaintiff.

2. The Anns test

(a) Stage one of the Anns test: Foreseeability and proximity

[22] As indicated above, to determine whether a public authority owes a private law duty of care to an individual or a class, the court must apply the two-part test first described by the House of Lords in Anns v. Merton London Borough Council, supra, at pp. 751-52 A.C., and refined by the Supreme Court of Canada in Cooper. Since the courts have not previously recognized a private law duty of care on the part of the federal government to individual members of the public with respect to the regulation of medical devices, the question becomes whether a new duty of care should be recognized in the circumstances. In order to establish a prima facie duty of care, the plaintiff must therefore demonstrate both foreseeability and proximity. The parties do not dispute the issue of foreseeability.

[23] The factors that may satisfy the requirement of proximity are diverse, depend upon the circumstances of each case, and include broad considerations of policy. Such factors include the [page223] expectations of the parties, physical closeness, representations, reliance, the nature of the property or interest involved, assumed or imposed obligations, and whether there is a close causal connection between the alleged misconduct and the complaint of harm.

[24] It does not follow from a legislative decision to regulate an activity, product or industry that the legislative scheme created for this purpose is intended to protect individual users and consumers. The courts have held that in order for a public authority to be found to owe a private law duty of care:

(1) The purpose of the statutory scheme at issue must be to benefit individual members of an identifiable class or group; and

(2) The loss at issue must be the type of loss the statute was intended to guard against. As noted by the Federal Court of Canada in A.O. Farms Inc. v. Canada, 2000 17045 (FC), [2000] F.C.J. No. 1771, 101 A.C.W.S. (3d) 288 (T.D.) ("A.O. Farms"), at para. 11:

The relationship between the government and the governed is not one of individual proximity. Any, perhaps most, government actions are likely to cause harm to some members of the public. That is why government is not an easy matter. Of course, the government owes a duty to the public but it is a duty owed to the public collectively and not individually. The remedy for those who think that duty has not been fulfilled is at the polls and not before the Courts.

[25] Thus, a statute must demonstrate a legislative intent to provide a private remedy to individuals. There can be no private law duty of care where the purpose of the legislative scheme is to facilitate a public authority to act in its discretion in the public interest.

[26] The Supreme Court of Canada in Cooper, supra, examined the provisions of the B.C. Mortgage Brokers Act, R.S.B.C. 1996, c. 313, to determine whether the Registrar owed a private law duty of care to members of the investing public, giving rise to liability in negligence for economic losses the investors sustained. The court concluded there was insufficient proximity between the Registrar and the investors to ground a prima facie duty of care.

[27] Similarly, where the plaintiffs claimed damages from the Law Society of Upper Canada ["LSUC"] regarding the improper monitoring of a solicitor's trust account in a fraudulent gold delivery, the Supreme Court in Edwards v. Law Society of Upper Canada (2001), 2001 SCC 80, 56 O.R. (3d) 456n, [2001] 3 S.C.R. 562, [2001] S.C.J. No. 77, 206 D.L.R. (4th) 211, found that the Law Society Act, R.S.O. 1990, c. L.8 regulates the legal profession, and is geared to the protection of the public as a whole. Thus, the investigative and [page224] disciplinary powers that the LSUC has over its members could not serve to ground a private law duty of care to a member of the public who deposits money into a solicitor's trust account.

[28] In the case of Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263, [2003] S.C.J. No. 74, when police officers failed to comply with their statutory duty to cooperate with a Special Investigations Unit ("SIU") investigation into the shooting death of Mr. Odhavji by the police, the plaintiff's actions against the province of Ontario and the Metropolitan Toronto Police Services Board was struck as disclosing no reasonable cause of action. Iacobucci J. found that those defendants were not under a statutory obligation to ensure that members of the police force cooperate with the SIU; and there was no relationship of proximity sufficient to give rise to a duty of care on the part of either of these parties.

[29] In the recent decision in Eliopoulos v. Ontario (Minister of Health and Long Term Care), [2004] O.J. No. 3035, 132 A.C.W.S. (3d) 485 (S.C.J.), the Court of Appeal found it was plain and obvious that the Ontario Minister of Health does not owe a private law duty of care to the plaintiff in implementing a plan it created to deal with West Nile virus. The court stated that the discretionary powers given to the Minister in the Health Protection and Promotion Act, R.S.O. 1990, c. H.7, are to be exercised in the general public interest. They are not geared toward protecting the private interests of particular individuals.

[30] Clearly, the above cases do not deal with the statutory regulation of manufacturers and products. The elements crucial to the existence of a private law duty of care, particularly the factors relevant to the relationship between the parties, differ in each case.

[31] However, as with the legislation therein, any duties imposed by the legislation with respect to the regulation of medical devices by Health Canada are duties owed to the public at large and not to private individuals.

[32] A review of the FDA and Medical Devices Regulations indicates that the manufacturer bears the responsibility for the safety and efficacy testing of its product, including the duty to provide all necessary information to the user, as prescribed by law. There is no explicit duty imposed on Health Canada in the legislation with respect to assessing the safety of a product. Rather, any duty is limited to a review of information should it be brought to the Minister's attention that a medical device does not meet safety and effectiveness requirements under s. 25. In such cases, the Minister may request the manufacturer to submit information to enable him or her to determine whether the device meets those requirements. As no duty for independent testing or [page225] assessment can be inferred from the intent of the legislation, the imposition of such a duty would be inconsistent with the purpose of the legislation and the intention of Parliament.

[33] Finally, we agree with the submission of the appellant that it is impossible for Health Canada to regulate on behalf of individuals directly. Health Canada is not the manufacturer of the device, nor a physician, hospital or supplier. The manufacturer is responsible for the manufacturing process and labeling for each particular device, as well as the conditions for its intended use. The initial and continued use of the device is determined by the physician and the user. All of these factors may be associated with the damages allegedly sustained by the plaintiff. Health Canada is only one player in the complex regulatory and delivery scheme governing medical devices in Canada. It has no direct role in the commercial transaction or the medical decision-making that leads to individual use. The duties of care toward the patient or consumer are qualitatively different from any public duty owed by Health Canada as the government regulator.

[34] With particular reference to the plaintiff's claim: there is no duty on the Minister to test devices. The only mandatory provisions for the Minister confirm minimum requirements or general procedural matters. As noted in Rogers v. Faught, [2001] O.J. No. 850, 103 A.C.W.S. (3d) 1227 (S.C.J.), the role of Health Canada in exercising administrative discretion in the public interest is incompatible with the exercise of a private law duty of care. In that case, the court rejected the proposition that regulators have a fiduciary duty to individual members of the public.

[35] Thus, an analysis of the legislation as required using the Anns test demonstrates that it is plain and obvious that a sufficient relationship of proximity between the federal government and the plaintiff does not exist. The relevant jurisprudence dictates the outcome of this appeal.

(b) Stage two of the Anns test -- Residual policy considerations.

[36] The second stage of the Anns test involves a consideration of residual questions of policy, in the broad sense of that word. In this case, several policy considerations make it unwise to impose a duty of care.

[37] First, recognizing a duty of care would create a spectrum of unlimited liability to an unlimited class. At the time the device was available in Canada, it was not possible for Health Canada to control its manufacture or sale, and the spectrum of unlimited liability would therefore loom large. Second, recognizing a duty of [page226] care would effectively create an insurance scheme for medical devices funded by taxpayers, which, according to the legislation, its content and emphasis, was not the intention of Parliament. Third, recognizing a duty of care may have a negative impact on the government's ability to balance all relevant interests when making regulatory decisions regarding medical devices. The regulatory scheme focuses on the requirements of manufacturers, distributors and importers, among other things, to demonstrate the safety and effectiveness of the products they seek to introduce in the marketplace. Fourth, recognition of a duty of care is not consistent with the societal interest to promote advances in medical science and technology. Public health involves placing considerations of collective risk and benefit to a population above consideration as to the possible effects on individuals. Finding a private law duty of care would run counter to the population-based approach of modern public health. Finally, recognizing a duty of care in these circumstances may open the door potentially to innumerable claims in any number of similar type cases. The nature of drug and device pre-approval testing is such that it is not possible to predict the emergence of long-term adverse events before such products come to market. If Health Canada were held liable for every adverse effect that became apparent during post-marketing surveillance, the courts would be inundated with lawsuits. The proper defendant in such cases is clearly the manufacturer who is responsible for the careful monitoring and long term safety of the drug or device.

[38] As noted previously, the federal government has no direct relationship with the patient/consumer. It is not involved in the individual's decision to use the device. It is neither the manufacturer, physician, supplier, nor hospital. It does not own the product.

[39] Accordingly, overriding residual policy considerations would militate against the imposition of a private law duty of care on the part of the federal government in these circumstances. As the Court of Appeal stated in Eliolpoulos, supra, the "authorities should be left to decide where to focus their attention and resources without the fear or threat of lawsuits" (at para. 33).

Conclusion

[40] Without analyzing the factors outlined in the Anns case, the motions judge held that the question of negligence and whether the government failed to enforce its own licensing requirements must be determined on a full factual record. This [page227] may be relevant to the determination of liability where a duty of care exists. It is not relevant, however, to the determination on a Rule 21 motion, as to whether the federal government owes a private law duty of care to the plaintiff.

[41] In each of the recent leading cases dealing with the duty of care of public authorities (Cooper, Edwards, Odhavji and now, Eliopoulos), the appeal court concluded that the claims against the institutional defendants should be struck out on the facts as pleaded.

[42] An analysis of the issue of proximity leads to the same conclusion on the facts of this case. Even if a private law duty of care had arisen, it would be negated at the second stage of Anns by overriding policy considerations.

[43] Further, while the motions judge indicated that a full factual record is necessary to determine whether there has been negligence, such a determination has been made on numerous motions without a factual record, including the Supreme Court of Canada trilogy cited above.

[44] The appeal is allowed. An order shall issue striking out the respondent's Amended Statement of Claim and dismissing the action against the Attorney General of Canada.

[45] If unable to agree, the parties may make written submissions on costs within 20 days of the release of these reasons.

Appeal allowed.