Overview

[1] This is an application for judicial review of the May 30, 2019 decision of the Executive Officer appointed under the Ontario Drug Benefit Act, R.S.O. 1990, c. O.10.

[2] In her Decision, the Executive Officer found that between September 1, 2015 and October 1, 2017 the applicant, a pharmacy in London, Ontario, had made unsubstantiated billings of over $87,000 and improper billings of over $62,000 to the Ontario Drug Benefit Program. She revoked the applicant’s billing privileges.

[3] The applicant alleges that the Decision is unreasonable and that the Executive Officer did not afford adequate procedural fairness. There are three issues:

(1) standard of review;

(2) was the Decision unreasonable? and

(3) was the applicant denied procedural fairness?

[4] For the reasons that follow, I would dismiss the application for judicial review.

Background

[5] The Ontario Drug Benefit Program provides coverage for most of the cost of over 4,400 prescription drug products and therapeutic substances for persons eligible to receive benefits, such as seniors, residents in long-term care homes, and those receiving social assistance. The Program is administered under the authority of the Ontario Drug Benefit Act. Among other things, the purposes of the Act include providing taxpayers with value for money and ensuring the best use of resources at every level of the system.

[6] The Executive Officer is the official charged with administering the Program. She has broad authority under the Act to administer the Program, grant and revoke billing privileges, and make payments for drug claims submitted in accordance with the Act and Ontario Regulation 201/96.

[7] A pharmacy operator that obtains billing privileges under the Act submits claims for payment from the Program electronically. It is an honour system. The pharmacy operator is paid directly by the Program; customers do not have to pay the operator and later seek reimbursement. Pharmacy operators who do not have billing privileges under the Act may still dispense drugs to Program recipients. However, in the absence of billing privileges, Program recipients must pay the pharmacy directly and later seek reimbursement from the Program.

[8] A pharmacy operator cannot bill the Program as of right. Section 4.1 of the Act provides that a pharmacy operator can apply to the Executive Officer for billing privileges. The Executive Officer may grant billing privileges to a pharmacy operator if he or she believes it is in the public interest to do so, after considering any factor that he or she deems appropriate.

[9] The Regulation requires all pharmacy operators to enter into a Health Network System Agreement (“HNS Agreement”). The HNS Agreement sets out the terms governing the pharmacy operator’s submission of claims for payment to the Program and the manner in which the Executive Officer or pharmacy operator may terminate the Agreement. The relationship between the Executive Officer and a pharmacy operator under the Program is governed by the Act, the Regulation, and the HNS Agreement.

[10] Section 27 of the Regulation also requires pharmacy operators to comply with all applicable legislation, including the Drug Interchangeability and Dispensing Fee Act and the Drug and Pharmacies Regulation Act which require pharmacies to keep detailed records of all purchases and sales of drugs. The obligation to comply with these statutes is reiterated in section 3.2 of the HNS Agreement.

[11] The Executive Officer has the authority to revoke a pharmacy operator’s billing privileges under the Act, terminate the HNS Agreement, and permanently suspend the operator’s entitlement to payment under the Act where a significant abuse of the honour system has occurred. A pharmacy operator’s billing privileges under s. 4.1 of the Act are a privilege and not a right. The Executive Office may grant billing privileges in the public interest and may also revoke them.

[12] Section 11.1(1) of the Act provides the Executive Officer with the authority to order the suspension of a pharmacy operator’s entitlement to receive payment under the Act if she has reasonable grounds to believe that the operator has breached a condition prescribed in the Regulation or agreed to by the operator. Section 11.1(2) provides that beginning on the day set out in the order, the operator is not entitled to payment by the Executive Officer under the Act. Section 11.1(6) provides that the Executive Officer may rescind a suspension made under s. 11.1(1) with or without conditions. The rescission of an order under s. 11.1(6) is discretionary, so an order of suspension under s. 11.1(1) may be permanent if the Executive Officer declines to rescind it.

[13] A breach of the prescribed conditions in s. 27 of the Regulation may lead to suspension of billing privileges under s. 11.1 of the Act. The conditions include connecting electronically and submitting claims for payments through the HNS and complying with the terms of the HNS Agreement, the Act, the Regulation, and the Ontario Drug Programs Reference Manual published by the Ministry of Health. Further, the Regulation requires that a pharmacy operator not submit any claims that the operator “knows or reasonably ought to know are false, inaccurate or misleading”.

[14] Inspectors appointed by the Executive Officer as a delegate of the Minister of Health under s. 14 of the Act conduct inspections of pharmacies to assess the validity of claims submitted to, and paid by, the Program. If an inspection leads to the finding that a pharmacy operator has submitted false, inaccurate or misleading claims to the Program, the Executive Officer may issue a Notice of Order and Termination. The notice advises the pharmacy operator that the Executive Officer proposes to terminate its HNS Agreement, revoke its billing privileges, and suspend its entitlement to receive payment under the Act.

[15] Section 12.3 of the HNS Agreement authorizes the Executive Officer to terminate the agreement on 30 days’ notice of the breach of any of its terms by the pharmacy operator. It also allows the pharmacy operator to make written submissions within 21 days to dispute the facts relied upon by the Executive Officer and to make submissions supporting the revocation of the Notice of Order and Termination. After consideration of any submissions made by the pharmacy operator, the Executive Officer’s decision is then sent to the operator in the form of a Notice of Decision.

[16] Section 11.5 of the HNS Agreement prohibits operators from having any relationship with the operator of a pharmacy subject to either a Notice of Order and Termination or Notice of Decision, or any of its officers, directors, designated managers, or shareholders. This provision exists to prevent a suspended or terminated pharmacy from surreptitiously obtaining new billing privileges under another name or from running its suspended business through another subscriber’s computer system.

Events Giving Rise to the Decision

[17] The Applicant entered into an HNS Agreement with the Executive Officer in November 2008 and was deemed to have been granted billing privileges under the Act.

[18] In September 2017, the Ministry received a complaint from a person working at the applicant’s pharmacy alleging fraudulent billing activities in respect of Program claims. The Executive Officer appointed an inspector under s. 14 of the Act to begin an inspection of the applicant’s pharmacy.

[19] The inspector conducted a review of claims submitted for payment by the applicant’s pharmacy during the two-year period from September 1, 2015 to October 1, 2017. The inspector conducted two physical inspections of the Applicant’s pharmacy in October and November 2017 and requested purchase records and invoices for 26 products during the period of analysis to determine whether the claims for these products could be substantiated.

[20] The 26 drugs were selected based on drugs identified in the complaint and an analysis of the top-ranking drugs most frequently billed to the Program by the applicant’s pharmacy. The 26 products represented 43.4% of the dollars billed to the Program by the applicant during the period analyzed.

[21] The inspector conducted a “purchase/sales analysis”. This analysis compared the quantity of Program claims submitted by the pharmacy (the “sales”) against the pharmacy’s total acquisitions of each product (the “purchases”).

[22] The inspector delivered her report in January 2018. The report identified $87,294.49 in claims made by the applicant which were unsupported by purchase records. The report found that sales of 10 out of the 26 drugs included in the analysis were unsubstantiated by records of purchases (e.g. “sales” to the Program exceeded “purchases” of sufficient inventory of the same drug). The inspector found another $62,006.67 in overpayments for claims which did not comply with the Act.

[23] The inspector reviewed these findings with the applicant during the course of the inspection and offered the applicant an opportunity to ask questions, dispute the findings, and/or provide additional information. The applicant provided purchase records from 2013 to 2014, some from more than a year before the beginning of the period of analysis, but none for the eight months leading up to the period of analysis.

[24] In January 2018, the Ministry advised the applicant that it would begin recovering the overpayments by way of setoff and that the applicant had until February 8, 2018 to provide reasons why the overpayments should not be setoff. The applicant did not respond to this letter and recovery of the overpayments was initiated and successfully completed thereafter.

[25] In May 2018, the Executive Officer issued a Notice of Order and Termination to the applicant. The notice stated that the Executive Officer had reasonable grounds to believe that the applicant had violated the Act, the Regulation and the HNS Agreement. The notice advised the applicant that the Executive Officer may terminate the applicant’s HNS Agreement and terminate the applicant’s billing privileges. The notice also advised the applicant of its right to make submissions disputing the facts set out in the notice or explaining why the notice should be revoked, consistent with s. 12.3 of the HNS Agreement.

[26] The applicant was provided with a series of significant extensions to provide submissions in response to the notice. The applicant ultimately made written submissions in October 2018. The applicant’s response included a forensic accounting report and an email from the president of the the IDA and Guardian, a division of the applicant’s drug wholesaler.

[27] On May 30, 2019, the Executive Officer issued her Decision. The Decision terminated the applicant’s HNS Agreement, revoked its billing privileges, and suspended its entitlement to receive payment under the Act. The Executive Officer determined that the Applicant had failed to explain the significant quantity of unsubstantiated claims and overpayments found in the inspection report and that the applicant had failed to reverse billings to the Program that it knew or ought to have known were billed in error. The Executive Officer concluded that it was not in the public interest to allow the Applicant to retain its billing privileges.

Standard of Review

[28] The parties agree that the standard of review of the Decision itself is reasonableness. The parties also agree that there is no standard of review, as such, on whether procedural fairness was afforded; rather, the Court determines for itself whether the Executive Officer afforded the requisite level of procedural fairness.

[29] A decision is reasonable if it is based on internally coherent reasoning and is justified in light of the legal and factual constraints that bear on the decision. The reasoning is assessed in relation to its justification, intelligibility and transparency. Elements of the legal and factual context relevant to evaluating reasonableness include: (a) the governing statutory scheme; (b) other relevant statutory or common law; (c) the principles of statutory interpretation; (d) the evidence before the decision maker and facts of which s/he may take notice; (e) the submissions of the parties; (f) the past practices and decisions of the administrative body; and (g) the potential impact of the decision on the party to which it applies: Minister of Citizenship and Immigration (Canada) v Vavilov, 2019 SCC 65 at paras. 105-106.

Is the Decision Unreasonable?

[30] The applicant, in its factum, sets out numerous grounds upon which it argues the Decision was unreasonable. It submits the Decision lacked justification, intelligibility and transparency and fell outside the scope of available results based on the relevant facts and law, because it:

(i) was based upon an inspection that was fundamentally flawed and unreliable in the absence of an opening or closing inventory;

(ii) was based upon assumptions that were unreasonable and not supported by the evidence;

(iii) contained findings that were contrary to the evidence;

(iv) dismissed expert evidence provided by the Applicant in response to the inspection report in the absence of evidence to the contrary;

(v) failed to consider the applicant’s pharmacy practice as a whole and the small percentage of that practice that related to claims deemed to be overpayments;

(vi) relied upon unfounded speculation and circular reasoning, for example, that the small quantum of unsubstantiated claims could suggest that the applicant may have intentionally submitted false, inaccurate or misleading claims in small amounts to avoid detection, despite there being a complete absence of evidence of intentional fraud; and

(vii) failed to give appropriate consideration or weight to the possibility of an honest error or oversight, although such errors are “not uncommon” according to one senior pharmacist who submitted evidence on the applicant’s behalf.

[31] It can readily be seen that a number of these arguments involve the Executive Officer’s assessment of the relevance, weight, credibility and reliability of the evidence presented, as well as inferences to be drawn from that evidence. Thus, a number of the errors complained of are clearly questions of fact or mixed fact and law. Whether on a statutory appeal or on a judicial review, the reviewing court will be highly deferential to the administrative decision maker on these issues. Findings of fact are not immune from judicial oversight but the court will intervene, even in a statutory appeal, only if the alleged errors are shown to have been both “palpable and overriding.” On judicial review, the standard of reasonableness on issues of fact-finding and assessment of evidence requires a similarly high standard of deference, as set out in Vavilov at para. 125:

It is trite law that the decision maker may assess and evaluate the evidence before it and that, absent exceptional circumstances, a reviewing court will not interfere with its factual findings. The reviewing court must refrain from “reweighing and reassessing the evidence considered by the decision maker”: CHRC, at para. 55; see also Khosa, at para. 64; Dr. Q, at paras. 41-42. Indeed, many of the same reasons that support an appellate court’s deferring to a lower court’s factual findings, including the need for judicial efficiency, the importance of preserving certainty and public confidence, and the relatively advantageous position of the first instance decision maker, apply equally in the context of judicial review: see Housen at paras. 15-18; Dr. Q, at para. 38; Dunsmuir, at para. 53.

See also: Yatar v. TD Insurance Meloche Monnex, 2021 ONSC 2507 (Div. Ct.) at para. 44.

[32] Mr. Frost, in oral argument, acknowledged the limitations of arguments attacking the decision maker’s assessment of the evidence on a judicial review. Accordingly, Mr. Frost narrowed his oral submissions to four discrete issues, none of which involve disputed facts, which, he submits, demonstrate that the Decision was unreasonable:

(1) the small number and value of the products involved in the unsubstantiated claims relative to the product and dollar throughput of the pharmacy as a whole;

(2) the small number and the circumstances of the overpayments;

(3) the failure to “reverse” claims; and

(4) the remedy of revocation.

Small Number of Unsubstantiated Claims

[33] The unsubstantiated claims of $87,294.49 arose from the inability of the applicant to demonstrate that it had actually purchased the products from manufacturers that it claimed to have dispensed to patients and billed to the Program. The applicant advanced a number of explanations for these discrepancies, including human and administrative error given the volume of transactions conducted during the review period. The Executive Officer considered, and rejected, these purported explanations.

[34] The applicant submits, however, that although acknowledging that the value of these claims was small in relation to total throughput, the Executive Officer failed to take adequate account of the fact that the pharmacy was compliant with respect to over 99% of its doses/pills billed to the Program. There was no discrepancy for 16 of the 26 drugs reviewed. The discrepancy with respect to the amount claimed for the 10 other drugs was small in comparison to the total amount billed. The unsubstantiated claims represented less than one percent (0.74%) of the total amount billed to the Program during the review period.

[35] The applicant takes particular issue with the concluding sentence of the Executive Officer’s discussion of this issue, where she wrote, in para. 32: “If a pharmacy operator were to intentionally submit false, inaccurate or misleading claims to the ministry, the operator may choose to do so a small number of times for a large number of products in an attempt to avoid detection.”

[36] The applicant submits that this is tantamount to a finding that the unsubstantiated billing was a deliberate and wilful overbilling of the Program – in effect, that the applicant was engaged in a fraud. The applicant argues that this conclusion is unsupported by the evidence and does not logically follow from the “fact” that there was unsubstantiated billing of a little over $87,000 in a business billing a total of almost $12 million during the same period.

Analysis

[37] I start with the general observation that the Executive Officer presides over a highly complex province-wide payment system involving 4,400 pharmacies. Billing and payment under the Program are based on the honour system. The principal reason for this is to achieve efficiency and avoid the cost of significant accounting and review processes to enable the maximum amount of available funds to be deployed for patient benefit rather than be used up in administration of the Program. The role of the Executive Officer in this case falls squarely within the mandate of her home statute. In the context of these complex rules applying to 4,400 pharmacies in the province, the expertise of the Executive Officer is entitled to significant deference.

[38] The applicant’s argument on this issue, in my view, falls into the category of the “treasure hunt for error” that the Supreme Court held in Vavilov was to be avoided. The concluding comment in para. 32 of the Decision must be read in the context of the Decision as a whole. The challenged passage is merely a rhetorical device employed in rejecting the applicant’s de minimus argument. The Executive Officer is not saying the applicant committed a fraud. The Decision is clear, however, that the wrongdoing went beyond ‘mere oversight’. In the Executive Officer’s assessment, the administrative errors were sufficiently glaring as to support the inference of wilful blindness. This was an inference available to her on the evidence. There was nothing unreasonable in her analysis or conclusion on this issue.

[39] I would not give effect to this ground of review.

Small Number of Overpayment Claims

[40] The applicant makes a similar point about the overpayment claims.

[41] The overpayment claims of $62,006.67 were identified in the inspector’s analysis as claims which were improperly billed to the Program. There were various reasons why the claims were improperly billed, ranging from unauthorized “no substitution” claims (where a more expensive brand drug was dispensed instead of a less expensive generic), to failing to meet the prescribed clinical criteria or otherwise not being in compliance with applicable regulations or guidelines. In some cases, the Program was billed for drugs dispensed after the date of the patient’s death. Notably, the applicant did not take issue with the inspector’s findings on the overpayments and took no issue with the Ministry’s recovery of these amounts by way of setoff.

[42] However, at $62,000, the applicant argues, these claims represent a minuscule portion of the overall business of this pharmacy. The Executive Officer accepted that it was the designated manager, Mr. Blad, who had consistently failed to ensure the pharmacy followed the rules. The overpayments did not result from intentional conduct. Rather, the concern was that they could have been avoided by better record-keeping, management systems, supervision, and attention to detail.

[43] The applicant argues that these administrative errors were, indeed, the responsibility of the designated manager, who was not Mr. Kassam, the owner. Mr. Kassam, in fact, lived in Richmond Hill, not London, and was largely not on site to manage ongoing operations; that was the role of Mr. Blad, the designated manager. The full amount of the overpayments was recovered by way of setoff after the overpayments were discovered. The operator had taken steps to prevent similar errors in the future. These were all facts accepted by the Executive Officer.

Analysis

[44] It may well be the case that, if the inspector had documented only these infractions, further action by the Executive Officer would not have been taken. On the other hand, the unchallenged facts found in the inspector’s report, combined with the admissions of the applicant in response to it, may have been sufficient to justify the revocation of the applicant’s billing privileges because, on the facts admitted by the applicant, it lacked the necessary consistency, internal controls, and inventory management systems to comply with the Act and prevent overbilling the Program. The applicant did not dispute that it had overbilled the Program by $62,006.67.

[45] In any event, the Decision to revoke the Applicant’s billing privileges was based on both the overpayments and the unsubstantiated billing; a sum totalling in excess of $149,000.

[46] The Executive Officer found that when improper claims are submitted, whether due to inattention to the Program rules or worse, wilful blindness or disregard for the rules, it is the taxpayers of Ontario that suffer. She also found that the value of the overpayments in this case demonstrated that the pharmacy consistently failed to operate in accordance with the Program rules. These were conclusions available to her on the evidence. There is nothing unreasonable about the Executive Officer’s assessment of this issue.

[47] I would not give effect to this ground of review.

Failure to Reverse Claims

[48] The issue of “reversals” arises when a prescription is dispensed and billed but the patient fails to pick it up. The applicant submitted that some of the unsubstantiated claims may have resulted from increased inventories due to this phenomenon.

[49] The Executive Officer rejected this argument. She found that the applicant reasonably ought to have known about the failed pickups and the resulting billing errors. Sections 24 and 26 of the Regulations set out how claims are to be reversed in such circumstances. At the time, the billing claim could be electronically reversed if done within seven days or manually reversed if done beyond the seven days.

[50] Failing to reverse a billing claim through laxity or administrative error, the Executive Officer found, is “just as serious as intentionally billing false or misleading claims” in the sense that, in either scenario, the Ministry is billed for a drug that was not received by the patient. The Executive Officer concluded, in the circumstances, that the applicant’s failure to reverse these billings could only have been the result of intentional disregard or wilful blindness of the rules.

[51] The applicant also submits that the Executive Officer unreasonably leapt to the conclusion, set out in her final paragraph, that the applicant submitted “false claims” or failed to reverse claims that “the Operator knew were false or misleading”. The applicant submits there was a complete absence of evidence of deliberate acts or instances of deliberate falsehood in this case, making the Executive Officer’s Decision unreasonable.

[52] The applicant also argues that the Executive Officer failed to acknowledge that the available billing reversal regime was a known “administrative burden” on pharmacy operators, a circumstance that the Ministry, around the same time, was proposing to change in order to lessen that burden.

[53] To support this argument, the applicant brought a motion to adduce fresh evidence. The burden of the fresh evidence is to show that the seven-day window for electronic claim reversals was later expanded to 90 days. In October 2019, the Ministry indicated it was committed to reducing administrative burdens on pharmacies, one of which was the narrow window for electronic drug claim reversals. Ultimately the Regulation was amended, effective April 1, 2020, to extend the period for electronic claim reversals from seven days to 90 days.

[54] The applicant argues that the Ministry’s acknowledgement of and relief from what, even in 2018/2019, was regarded as an “administrative burden” lends credence to the applicant’s defence, advanced before the Executive Officer, that the errors were administrative in nature, not intentional or the result of wilful blindness.

Analysis

[55] I would decline to admit the fresh evidence. The scope for the introduction of new evidence not before the decision maker is highly restricted in applications for judicial review. Here, the very fact that the new evidence (i.e., the April 2020 amendment to the Regulation expanding the time for electronic reversals to 90 days) was not available at the time of the Executive Officer’s deliberations is the reason why it is irrelevant and could not possibly be dispositive of the outcome. The Executive Officer was obliged to determine the issues on the basis of the law as it was at the time, not as it might someday be in the future.

[56] More to the point, the Executive Officer was alive to the scheme for managing reversals. She considered the applicant’s argument but, having regard the totality of the circumstances and the scale of the pharmacy’s mishandling of these improper payments, she was unable to accept that this was anything less than wilful disregard for or blindness toward the rules. This too was an inference available to her on the evidence and in light of her expertise in the field. There was nothing unreasonable in her conclusion on this issue.

[57] I would not give effect to this ground of review.

Remedy of Revocation

[58] While acknowledging the Executive Officer’s legislative authority to revoke billing privileges, the applicant argues there was a range of possible outcomes available to the Executive Officer under ss. 4.1(3), 11.1(6) and 11.1(7), which empower the Executive Officer to agree to specific conditions relating to billing privileges where it is in the public interest to do so. The applicant submits that the penalty should not be more onerous than necessary to ensure the object of the regulatory scheme is met. Generally, an important purpose of regulatory proceedings is to obtain future compliance. Here, the applicant submits, it proposed terms and conditions that would have ensured future compliance: Megens v. Ontario Racing Commission, 2003 26509 (ON SCDC).

[59] In addition, the applicant points out that the revocation of the applicant’s billing privileges has a direct impact on Mr Kassam’s personal ability to engage in the practice of pharmacy. While Program billing privileges are not necessary where the pharmacist is dispensing prescriptions to paying clients, the reality is that the vast majority of billings, and certainly of the billings of this pharmacy, were derived from billings to the Program.

[60] Because of the terms of the HNS Agreement and the consequences of its breach, the revocation of the applicant’s billing privileges goes beyond the applicant itself. The practical effect of the Executive Officer’s order was to close a multi-million dollar pharmacy and disqualify a number of individuals, including the applicant’s officers, directors, and shareholders, from owning or operating a pharmacy in Ontario. The Executive Officer’s order, for example, prohibits any pharmacy operator in which Mr. Kassam has an ownership or management connection from exercising billing privileges under the Program. The applicant sought a waiver from these strictures but the Executive Officer declined to grant one. Given the findings of the Executive Officer that billing was entirely the responsibility of the designated manager in this case, it was not necessary for her to have revoked the billing privileges of the applicant (including Mr. Kassam) and it was overly harsh and draconian for her to have done so.

Analysis

[61] It is well established that in order to overturn a penalty imposed by an administrative decision maker, it must be shown that the decision maker made an error in principle or that the penalty was “clearly unfit.” The courts have used a variety of expressions to describe a penalty that reaches this threshold, including “demonstrably unfit”, “clearly unreasonable”, “clearly or manifestly excessive”, “clearly excessive or inadequate” or representing a “substantial and marked departure” from penalties in similar cases. To be clearly unfit, the penalty must be disproportionate or fall outside the range of penalties for similar offences in similar circumstances. A fit penalty is guided by an assessment of the facts of the particular case and the penalties imposed in other cases involving similar infractions and circumstances, College of Physicians and Surgeons of Ontario v. Peirovy, 2018 ONCA 420 at para. 56.

[62] In my view, the Executive Officer’s decision on remedy is reasonable and is one to which the court ought to defer in light of the Executive Officer’s particular expertise with this complicated system: AS169988 Consultants Inc. v. Her Majesty the Queen (in the right of the Province of Ontario), Ministry of Health and Long-Term Care (Ontario), 2019 ONSC 2967 (Div. Ct.) (Warden Pharmacy), para. 48.

[63] I would adopt the words of Myers J. in Warden Pharmacy when he wrote, in para. 45, that “having decided to make an honour system available to registered professionals so as to minimize enforcement costs and thereby to maximize the availability of funds for needy beneficiaries, it is not at all surprising that termination would be the usual remedy for significant abuse of the honour system. The applicant’s position would require the Ministry to incur ongoing enforcement costs monitoring the pharmacy.” So it is here.

[64] Although it is true that rehabilitation is an important objective in the penalty process, so is the preservation of the public purse and general deterrence. This is especially true in the context of a large, province-wide benefit program operated on the honour system. The potential for abuse is high, as is the harm to the public given that drug benefit resources are not unlimited.

[65] As to the argument about the primary responsibility of the designated manager, while there is no doubt that the designated manager must bear responsibility, this does not mean that the pharmacy, or its owner, bear no responsibility. The designated manager was the applicant’s agent. The applicant had an obligation to ensure the designated manager was doing his job. This is not a case where the operator has provided evidence that it did everything reasonably possible to ensure compliance but the designated manager went off on a secret frolic of his own.

[66] In addition, the Executive Officer expressly held that nothing in her Decision prevents Mr. Kassam from working as a pharmacist (in a non-ownership/non-managerial capacity) or re-applying for Program billing privileges. Section 11.1(6) of the Act permits the applicant to apply for revocation of the Executive Officer’s order and s. 4.1 permits the applicant to reapply for billing privileges.

[67] The applicant has not shown that the penalty imposed by the Executive Officer involved an error in principle or that the penalty was “clearly unfit”.

[68] I would not give effect to this ground of review.

Did the Executive Officer Fail to Afford Procedural Fairness?

[69] The applicant argues that its procedural fairness rights were breached in two ways. First, the applicant says it had a legitimate expectation that its billing privileges would continue until a pending sale of the pharmacy to a third party closed. The Executive Officer breached that expectation when she released her Decision on May 30, 2019. Second, the applicant says the Executive Officer failed to a respond to a request for a clarification/waiver of a condition of the sale until it was too late, causing the applicant to suffer financial harm.

[70] As to the first procedural fairness ground, the applicant has adduced no evidence capable of supporting any viable legitimate expectation of the kind alleged. Further, there is no duty on the Executive Officer to give notice of the date of the release of her Decision or to defer the effective date of her Decision. The pharmacy had over a year to prepare a response to the Notice and to prepare for a possible adverse outcome from the investigation. The pharmacy had notice of the inspector’s investigation and report, notice of the allegations against it including the potential remedies that could be ordered against it, and an opportunity to respond to the investigative findings. The duty of fairness was met in this case: Warden Pharmacy, para. 50.

[71] With respect to the second ground, the allegation is that one of the Executive Officer’s conditions for approval of the sale to the third party was that Mr. Kassam have no relationship, financial or otherwise, with the purchaser. Under the transaction as planned, Mr. Kassam was to retain ownership of the building and lease the premises to the purchaser. Mr. Kassam sought advice from the Executive Officer as to whether this landlord-tenant relationship would be allowed. The applicant’s complaint now is that the Executive Officer was slow to respond, requiring the parties to the sale transaction to restructure the agreement, placing the applicant (or, more precisely, Mr. Kassam) in a disadvantageous bargaining position and requiring him to sell the building. By the time the Executive Officer communicated her consent to a landlord-tenant relationship, it was too late and, according to Mr. Kassam, the damage was done.

[72] There are at least two problems with this argument First, as with the first procedural fairness argument, there is no duty on the Executive Officer to respond to a request for clarification or waiver. Nor, again, is there any evidentiary basis to establish a legitimate expectation that a favourable, or even prompt, response would be provided. Second, the decision to revoke the applicant’s billing privileges and to suspend its entitlement to receive payment under the Act is a separate, analytically distinct, decision from whether to grant billing privileges to the purchaser of a pharmacy under the Act. The former decision applies to the applicant, not to the purchaser. The latter decision applies to the purchaser, not to the applicant. There is no application for judicial review of the Executive Officer’s decision to grant/not grant billing privileges to the purchaser. And in any event, because the Executive Officer ultimately granted the purchaser billing privileges and the applicant’s pharmacy was sold, any issue concerning the conditions of the sale is now moot.

[73] I would not give effect to this ground of review.

Conclusion

[74] For the foregoing reasons, I would dismiss the application for judicial review.

Costs

[75] The parties agreed that costs of $12,000 (all inclusive) should be awarded to the successful party. Costs are therefore awarded to Ontario in the agreed amount.

Penny J.

I agree _______________________________

McKelvey J.

I agree _______________________________

Newton J.

Released: June 22, 2021

2099065 Ontario Inc. v. Ontario (Ministry of Health and Long-Term Care), 2021 ONSC 4319

Case Summary

Overview

Background

Events Giving Rise to the Decision

Standard of Review

Is the Decision Unreasonable?

Small Number of Unsubstantiated Claims

Analysis

Small Number of Overpayment Claims

Analysis

Failure to Reverse Claims

Analysis

Remedy of Revocation

Analysis

Did the Executive Officer Fail to Afford Procedural Fairness?

Conclusion

Costs

Judges

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 2

Legal Tests 1

Legislation 4