CA019445 Vancouver Registry Court of Appeal for British Columbia BETWEEN: ELMER HARRY RATZLAFF PETITIONER (APPELLANT) AND: THE MEDICAL SERVICES COMMISSION OF BRITISH COLUMBIA and THE AUDIT SUBCOMMITTEE OF THE MEDICAL SERVICES COMMISSION RESPONDENTS (RESPONDENTS) Before: The Honourable Mr. Justice Cumming The Honourable Mr. Justice Hollinrake The Honourable Mr. Justice Donald David Roberts, Q.C. Counsel for the Appellant H. Groberman and J. M. Walters Counsel for the Respondents Place and Date of Hearing: Vancouver, British Columbia November 2 and 3, 1995 Place and Date of Judgment: Vancouver, British Columbia January 12, 1996 Written Reasons by: The Honourable Mr. Justice Hollinrake Concurred in by: The Honourable Mr. Justice Cumming The Honourable Mr. Justice Donald Court of Appeal for British Columbia ELMER HARRY RATZLAFF v. THE MEDICAL SERVICES COMMISSION OF BRITISH COLUMBIA and THE AUDIT SUBCOMMITTEE OF THE MEDICAL SERVICES COMMISSION Reasons for Judgment of Mr. Justice Hollinrake: 1 This is an appeal from an order made by a judge sitting in chambers. The petitioner/appellant sought an order of prohibition under the Judicial Review Procedure Act, R.S.B.C. 1979, c.209 to prevent the Audit Subcommittee of the Medical Services Commission ("the Commission") from proceeding with a hearing pursuant to s.32(1) of the Medical and Health Care Services Act, S.B.C. 1992, c. 76. The hearing before the Audit Subcommittee would decide whether the Commission had paid an amount to the appellant by reason of an unjustifiable departure from the patterns of practice or billing of practitioners in the practitioner's category. If the Audit Subcommittee were to answer this question in the affirmative, the statute empowers it to order that the appellant repay the discrepancy. Subject to one qualification, the appellant was denied the order he sought in the court below, and now appeals to this Court. The qualification was that the respondents were directed not to make any order against him as a result of the proposed hearing for repayment of money paid to him prior to January 8, 1988. 2 The appellant is a medical doctor who in 1977 gave up his practice as an anesthetist to pursue a specialization in the treatment of alcoholism and drug dependency. Although he operated a general family practice, the great majority of his patients were alcoholics. The system of treatment that he developed was unique and quickly earned him a reputation and a high patient volume practice. This system involved intensive treatments over short periods of time and considerable counselling. This pattern of treatment did not conform to that contemplated by the established fee billing schedule for family practitioners. The chambers judge described the appellants practice as a square peg that did not fit into the round holes of the established Medical Services Commission billing scheme. This, combined with the high volume of his practice, caused the appellant's billing profile to differ markedly and to his pecuniary advantage from those of other family practitioners. 3 The appellant's unusual billing profile had been subject to periodic scrutiny by the Commission and by an advisory body called the Pattern of Practice Committee ( POPC) from 1977 through the appellant 's retirement from this practice in 1990 and up until the bringing of this petition. This has given rise to a history of differences between the Commission and the appellant, which differences have generally been resolved in his favour. Apart from an altercation in 1985 that was settled to the appellant's undoubted satisfaction, the Commission itself has never taken substantial steps to restrict the appellant's billing practices. As well, it did not take any concrete steps to recover monies which are said to be overpayments until March 1994. At that time the Audit Subcommittee gave the appellant notice of the hearing that he now seeks an order prohibiting. 4 The relationship between the institutional actors that oversee health care billing in British Columbia is somewhat complex. The Medical Services Commission administers the Medical Services Plan ( the Plan) pursuant to the Medical and Health Care Services Act (the Medical Services Act, R.S.B.C. 1979, c. 255 prior to 1992). Patients enroll in the Plan and pay premiums. Physicians enroll in the Plan and are thereby entitled to bill it for their treatment of registered patients. These bills are then paid by the Plan in accordance with a fee schedule which is negotiated by the Commission with the B.C. Medical Association, the professional association for doctors. The Audit Subcommittee (the Audit Committee prior to 1992) is an arm of the Commission created pursuant to statutory authority that reviews the periodic billings of practitioners. The Audit Subcommittee is named as a distinct respondent in this petition, but little hangs on the distinction between it and the Commission itself. Although it is the Audit Subcommittee that gave the appellant the 1994 notice of hearing, that would conduct this hearing, and that would make any order for payment against him, these acts have been and would be performed pursuant to the authority of the broader Commission. The same is not true of the Patterns of Practice Committee. The POPC is a purely advisory body appointed by the Commission but in effect a committee of the B.C. Medical Association. It conducts quarterly reviews of the billing profiles of all British Columbia medical practitioners, and advises the Commission on billings that it feels to be questionable. The recommendations of the POPC are not binding on the Commission, nor as we shall see are they always followed. 5 The events giving rise to this petition began in 1977, when the appellant wrote a letter to the POPC explaining that due to the nature of his new practice his billing profile would be unusual. He specifically noted that he would be using FSI 0120 more frequently than other practitioners. FSI 0120 is the billing code for counselling, a significant feature of the appellant's treatment method. In 1978 the POPC noticed that the appellant's billings were unusually high and requested clarification. It appears that the POPC accepted his explanation that the unusual billings were due to his having an unusual type of practice, but indicated that it would pay attention to future billings. In 1980 the POPC again became concerned with the appellant's billing profiles and met with him to discuss them. The committee expressed the view in a letter that his pattern of practice was defensible, but that the total costs that it generated were troubling. It seems that the total cost of his care for a patient was more than twice the average for general practitioners. The POPC revisited the appellant's profiles in 1983, again expressing concern about the unusually high cost of his treatment. The committee began to consider developing a tailored billing arrangement, and also resolved to make deeper inquiries into his practice. 6 In early 1984 two physicians visited the appellant's office on a fact finding mission authorized by the POPC. They were critical of him, reporting that his record keeping was inadequate, that he was seeing patients for too short a time to practice a good standard of medicine, and that he was over billing. The POPC concluded that his unusual profiles were in part due to his billing the Plan for each participant in group therapy sessions. The POPC's disquiet over his billing profiles increased. His file was referred to the College of Physicians and Surgeons for possible disciplinary action. In September 1984 the POPC made its first recommendation to the Commission in respect of the appellant. It recommended that he be paid half of the full rate for certain of the primary services that he was performing, including counselling. The POPC advised that if this step did not improve his billing pattern, more drastic steps would be taken. 7 In 1984 Dr. Bolton was the chairman and sole member of the Commission. He received the POPC's recommendations, and informed the appellant in a letter dated September 14 of his intention to accept them. The appellant and his solicitor then met with Dr. Bolton and raised doubts in his mind which lead him to refer the matter back to the POPC. After consulting with the appellant, the POPC decided to accept his billing for several of the services in issue. His billing for counselling, however, remained in dispute. Correspondence and discussions continued through the winter of 1984-85. Dr. Bolton did not seem prepared to accept the POPC's position. The POPC made an eventual moderate recommendation in March 1985 that the appellant be paid only 60% of the normal rate for his counselling. Dr. Bolton then notified him that he would be accepting this last recommendation of the POPC. He also confirmed a decision made in December 1984 to establish a special billing number for the appellant for his group therapy sessions. Dr. Bolton's decision became effective in May 1985. 8 The appellant was advised by Dr. Bolton in a letter written in the course of the discussions leading up to the May 1985 decision that change in the manner in which he would be billed was without prejudice to any decision that the Commission might make to seek restitution from him for money that had been paid out previously. This was the first written mention of restitution that the appellant received. It was reiterated in May 1986. I note this not because the present petition concerns those funds, but because the comment is indicative of the indecision that Dr. Bolton was communicating to the appellant in respect of issues other than the management of his billing practice. Dr. Bolton was suggesting that restitution for overpayments might be sought once future billing arrangements had been settled. 9 Dissatisfied with the Commission's decision to pay him 60% of the regular rate for his counselling services, the appellant filed a petition for judicial review in October 1985. This petition was settled in April 1986. The appellant agreed to discontinue his petition without claiming costs, and the Commission agreed to reverse its decision to pay him only 60% of the full rate for his FS 120 counselling services. The Commission also agreed to pay him retroactively with respect to bills that had already been submitted and paid at the lower rate. Before us counsel for the respondents suggested that the Commission's willingness to settle this petition may have had something to do with a moderation in the appellant's billing profiles that occurred around this time. On the facts the Commission does not appear to have suggested at this time that all of the questions surrounding the appellant's billings had been settled. 10 The POPC remained concerned about the appellant's prodigious billings, and continued to monitor them, as it was to do until he retired from this practice in 1990. In December 1986 it took action by recommending to the Commission that it order restitution of the difference between his total billings and what it viewed as an acceptable figure for the 1983-1986 period. This amounted to something in the area of $325, 000. This figure was not disclosed to the appellant, and he was advised that restitution was only being recommended for the 1986-87 period. His solicitor objected to this to the chairman of the Commission, Dr. Bolton. Dr. Bolton appears to have elected not to follow the POPC's recommendation at that time, but he did claim in a 1987 letter that he continued to be troubled by the appellant's billing practices. He noted that the payment schedule may not have been suitable to his method of treatment. It should be pointed out that although Dr. Bolton did not ask that the appellant to pay restitution as the POPC would have liked, his correspondence suggests that he considered the question of the appellant's billing profile to remain unresolved. Dr. Bolton did not give him reason to believe that they were of one mind on all issues. By December 1987 the POPC had become apparently agitated by Dr. Bolton's refusal take its advice on this and other matters pertaining to other practitioners. Further letters were sent to Dr. Bolton recommending that the appellant be asked to pay back overpayments in respect of the 1986-87 period and expressing concern about the Commission's apparent unwillingness to take such steps. The appellant's position is that he was only bound to pay attention to the acts and communications of the Commission itself. He takes the view that in relation to him the recommendations of the POPC have a status similar to discussions between a lawyer and client, being no status until they are acted upon. The POPC wrote to the appellant on 11 December 1987 telling him that he would soon be hearing from the Commission about its recent recommendation. Nothing, however, happened. 11 Two significant events occurred in early 1988. First, on January 8 the Health Statutes Amendment Act 1987, S.B.C. 1987, c. 55 came into force. This first enacted s.8.31 of the Medical Service Act, which is now s.32 of the Medical and Health Care Services Act. What is now s.32 authorizes the Commission to hold a hearing and to order repayment of money to the Plan where it is found that a practitioner's pattern of practice constitutes an unjustified departure from the patterns of practice of practitioners in the practitioner's class. The proceeding that the petitioner asks this Court to prohibit is brought pursuant to this provision. The second significant event was the retirement in February of Dr. Bolton as Commission chairman, and his replacement by Mr. Lovelace who was not a medical practitioner and who took the position on an acting basis. In April 1988 the appellant instructed his solicitor to write a lengthy letter to Mr. Lovelace explaining his version of the events that had transpired and summarizing his position. The appellant was, as I see it, understandably eager to kindle in Mr. Lovelace the same sympathy or indecision that appear to have been the cornerstone of his dealings with Dr. Bolton. The appellant asked whether Mr. Lovelace was intending to follow up on the December 1987 recommendation of the POPC, and requested a meeting. I take it that it was this letter that the chambers judge had in mind when he described the appellant as "literally requesting [that] action be taken". Mr. Lovelace did not reply to this letter. In fact, it would be three years before the Commission made any further communications with the appellant in this respect. 12 The chambers judge found that there was no reasonable explanation for the Commission's delay in the 1988 through 1990 period. Through this period the Commission honoured all of the bills the appellant submitted. The POPC continued its quarterly reviews of his practice and sent him a letter in September 1988 expressing continuing concerns. It does not appear, however, to have reiterated until April 1990 its recommendation that the Commission seek restitution. The appellant then objected to this proposal on the ground of delay, and threatened to bring a second petition for judicial review. At any rate, the April 1990 recommendation does not seem to have stimulated the Commission; certainly the appellant heard nothing more of it. He appears to have come to believe that the dispute was behind him. On August 20, 1990 he retired from practice in British Columbia. In February 1991 his solicitor closed his file. 13 Mr. Lovelace was replaced by Dr. Henderson, a medical practitioner, as chairman of the Commission at some point prior to the summer of 1990. I say this because in July 1990 this new chairman wrote to the POPC asking it to review the appellant's case with a view to reaching a timely resolution of what he saw as outstanding differences. It is not clear that this letter had any effect on the activities of either the POPC or the Commission. Both Dr. Henderson and a medical consultant to the Commission noted around this time the lengthy delays that had been occasioned in addressing the appellant's unusual billing profiles. No notice was given to the appellant of any serious intention that the Commission might have had to investigate further his billings. He only found out about the Commission's renewed interest in May 1991, and then it was quite by accident. In July 1991 he was formally advised that the April 1990 recommendation of the POPC had been referred to the Audit Committee of the Commission for an inquiry. This was one year after Dr. Henderson had asked the POPC to update its recommendations in a timely fashion. Dr. Henderson wrote the appellant saying he would receive copies of all pertinent material as soon as possible. It should be pointed out that Dr. Henderson's referral of the case to the Audit Committee in 1991 was the first step that the Commission ever took to follow up on the persistent recommendations of the POPC that restitution be sought. 14 The 1991 referral of the appellant's case to the Audit Committee was not the end of the delays that characterize the Commission's handling of it. Following the July 1991 letter there seem to have been efforts to arrange a meeting between counsel, but that failed to materialize. In July 1992 the appellant's solicitor wrote a letter to counsel for the Audit Committee setting out his position. Two months later he received a response, indicating that delays were being occasioned by a change in the legislation which eliminated the Audit Committee and replaced it with the Audit Subcommittee. The appellant was advised that the Audit Subcommittee anticipated "responding to [his] concerns shortly." Several more months passed, and on February 16, 1993 the appellant received a package of documents and a request that he reply in writing within thirty days. A response was returned. Nothing more was heard from the Audit Subcommittee for almost a year. In March 1994 the appellant was served with a Notice of Hearing. The period that the Audit Subcommittee sought to review was April 1, 1987 through December 31, 1990. 15 In his reasons for judgment the chambers judge concluded on these facts as follows: No reasonable explanation for the delay in issuing a Hearing Notice until March 199[4] has been demonstrated. Bureaucratic bungling, internal politics of the Medical Services Commission and its Committees, and an inability to control billing administratively without more draconian powers to cap a member's income or recover monies already paid, are not acceptable reasons for delay. Those matters appear, however, to have occurred here. It seems quite incredible that despite the petitioner literally requesting action be taken, if there was any thought of doing so, nothing stirred the appropriate group into action. 16 This finding is not challenged by the respondents on this appeal. 17 The conclusion of the chambers judge was this: The prejudice alleged by the petitioner caused by the delay is that he has paid income tax on monies received and will not be able to recoup those taxes paid, now that he has wound up his practice and moved from the jurisdiction. He also alleges that he will suffer losses from overhead he cannot now recover and that he is unable to be compensated for time he put into the practice that he would otherwise not have done if he knew he would not be paid the fees that he billed. I do not suggest that matters which sound only in money as opposed to matters of liberty, freedom of practice, and clouds upon one's character, are not of importance. Their impact as a matter of degree or weight in considering delay, however, must be substantially less. I conclude that the possible prejudices to the petitioner in all the circumstances here, do not prevent a fair hearing occurring, nor is there evidence to support the respondents acting in any improper manner tha[t] could found a finding of oppression. I find the evidence of whether the petitioner could recoup income tax paid is equivocal and vague. I do, however, consider that it is a proper matter for the respondents to consider the effect of these matters prior to reaching any decision as to whether monies should be re-paid and if so, in what amount. The parties will have the opportunity to obtain and present more concrete evidence as to tax impact, overhead losses, and time invested in rendering services. Notwithstanding the unreasonable delay that has occurred here, the ability for a fair hearing to occur, still exists. I suggest the respondents should be very sensitive to the evidence and argument of losses that can be causally related to the delay that has occurred and take full account of the financial impact of those matters. In the result, I will grant an order prohibiting any order for re-payment of monies paid to the petitioner prior to January 8, 1988, being the date I understand the respondents received the statutory power it now seeks to exercise, the petition is otherwise dismissed. 18 In the court below the appellant raised the issues of limitation, estoppel and delay. The chambers judge found against him on the issues of limitation and estoppel. I need not deal with these issues because I have concluded that this is a case where the delay is so egregious that it must be seen as an abuse of power and on that ground alone I would allow the appeal. 19 The appellant does not quarrel with the finding of the chambers judge that the delay in this case is not such that it would necessarily result in a hearing that lacks the essential elements of fairness. This is so because the hearing would largely be conducted on the basis of statistics and documentary evidence. Further, it is a finding of fact made by the chambers judge that, in my opinion, cannot be successfully attacked on this appeal. However, the position of the appellant is that where the delay is so egregious that it amounts to an abuse of power or can be said to be oppressive, the fact that the hearing itself will be a fair one is of little or no consequence. I agree with the appellant on this. 20 Counsel for the respondents submits that as the order made refers only to the period after January 8, 1988 we should disregard the facts as they unfolded prior to that time. With respect, I cannot agree. Where the position of the party at risk, here the appellant, is that the delay is such as to amount to an abuse of power, I think the whole of that period of delay must be looked at in determining whether it is such as to amount to oppression or an abuse of power. 21 I should say here that at the hearing counsel for the respondents, quite properly in my view, conceded that this Court could interfere where it could be said the delay was oppressive or an abuse of power. 22 Agencies have an implied duty to perform their duties in a fair manner: H.T.V. Ltd. v. Price Commission, [1976] I.C.R. 170. Unless specifically permitted or required, unfair performance of agency duties is impermissible as being in effect outside of the jurisdiction deemed to have been conferred on agencies by their parent statutes. Judicial review is available to prevent such abuses of power: In re Preston, [1985] 1 A.C. 835 (H.L.) per Lord Templeman at 864-67 and Lord Scarman at 851-52; Laker Airways Ltd. v. Department of Trade, [1977] 1 Q.B. 643 (C.A.) per Lord Denning M.R. at 707. Lord Templeman is clear in Preston at 866-67 that the doctrine is not limited to acts giving rise to procedural unfairness. Abuse of power is a broader notion, akin to oppression. It encompasses procedural unfairness, conduct equivalent to breach of contract or of representation, and, in my view, unjust delay. I should add that not all lengthy delays are unjust; regard must be had to the causes of delay, and to resulting reasonable changes of position. 23 Where a party in the position of the appellant relies on delay as amounting to an abuse of power it is incumbent on that party to demonstrate a resulting change of position. In my opinion, the very fact that the appellant continued with his practice as he did and throughout the whole period of time in issue is sufficient to establish such a change of position. There can be no doubt that the appellant carried on his practice as he did and arranged as he must have his financial affairs thinking his billing problems were being handled in a manner satisfactory to him and, as time progressed, were behind him. I think the words of Abbott C.J. as far back as 1825 in the case of Skyring v. Greenwood, (1825) 4 B. & C. 282 at 288-290 (107 E.R. 1064) are apposite: It is of great importance to any man, and certainly not less to military men than others, that they should not be led to suppose that their annual income is greater than it really is. Every prudent man accommodates his mode of living to what he supposes to be his income; it therefore works a great prejudice to any man, if after having had credit given him in account for certain sums, and having been allowed to draw on his agent on the faith that those sums belonged to him, he may be called upon to pay them back. Here the defendants have not merely made an error in account, but they have been guilty of a breach of duty, by not communicating to Mr. Skyring the instruction they received from the Board of Ordinance in 1816; and I think, therefore, that justice requires that they shall not be permitted either to recover back or retain by way of set-off the money which they had once allowed him in account. 24 This case has been cited with approval many times over the years. 25 In conclusion, I would allow the appeal and direct that an order of prohibition issue as sought by the appellant. "The Honourable Mr. Justice Hollinrake" I AGREE: "The Honourable Mr. Justice Cumming" I AGREE: "The Honourable Mr. Justice Donald"