Date: 20040811
Docket: T-414-03
Citation: 2004 FC 1107
Ottawa, Ontario, this 11th day of August 2004
Present: THE HONOURABLE JOHANNE GAUTHIER
BETWEEN:
1018025 ALBERTA LTD.
O/A GRANDE PRAIRIE HEALTH AND HOME CARE
Applicant
- and -
THE MINISTER OF HEALTH
Respondent
REASONS FOR ORDER AND ORDER
(i) The Applicant sells home health care products which include medical equipment such as wheelchairs, walking aids, etc. Its business comprises the sale and the servicing of these products in private homes or in long-term care facilities. It is based in Grande Prairie, Alberta.
(ii) The Respondent, pursuant to its general powers under the Department of Health Act, S.C. 1996, s.8, and the Canada Health Act, R.S.C. 1985, C-6 and in accord with the Indian Health Policy adopted by Cabinet in 1979 and the 1997 Reviewed Mandate in that respect, created the Non-Insured Health Benefits Program (the Program) to provide to eligible registered members of the First Nations and recognized Inuits and Innus medically necessary health related goods and services not covered by other federal, provincial, territorial or third party health insurance plans. Among other things, these include medical supplies and equipment (MSE). The items covered by the Program vary by province because of differences in the extent of the coverage of the various provincial health insurance programs. In Alberta, for example, a lot more MSE are covered by the Program whereas those items would be covered in Ontario by the provincial plan.
(iii) The First Canadian Health Management Corporation (FCHMC) administers the billing and payment process for Health Canada. It processes all claims from the registered service providers.
(iv) In order to participate in the Program at no cost to an eligible beneficiary, a supplier must have a service provider number which is issued after entering into an agreement entitled "Pharmacy - Medical Supply and Equipment Provider Agreement" (the Agreement) with FCHMC.
(v) On or about February 3, 2003, in the course of acquiring the business of the Applicant, its new owner applied for a service provider number by filing an application for registration in Ottawa[1]. Up till then, the Applicant had not been a service provider registered for the Program.
(vi) On February 11, 2003, the Applicant was informed that its application could not be accepted because the Program was managed on a regional basis and there was a moratorium on the issuance of new service provider numbers in Alberta as a result of financial audits that revealed several problems with registered service providers in that region.
(vii) Many of the issues identified during these audits which started in April 2000 appear to remain unresolved and the Director, Non-Insured Benefits, Alberta region, issued a verbal direction that no new MSE suppliers would be registered until a revised service provider information kit and guidelines for the management of the MSE program were issued on a national basis.
(viii) The Applicant seeks judicial review of that refusal to consider his application on its merits.
ISSUES
(ix) The Applicant raises the following issues:
(i) The decision to reject its application on the sole basis that there was a moratorium constitutes an improper fettering of the Minister's delegate discretion.
(ii) The decision is patently unreasonable because it is based on an irrelevant consideration or made without regard to a relevant consideration. In effect, given that the Applicant is the only supplier of certain medical supplies having a store located north of Edmonton, it could not have been made with due regard to the main object of the Program which is the accessibility of those services to the beneficiaries.
(iii) The decision was based on a discriminatory, therefore illegal and abusive, policy. In effect, the moratorium allowed for the continued issuance of new service provider numbers to pharmacists and to persons acquiring the business of an MSE supplier who already had a service provider number.
(x) The Applicant submits that the decision was made in breach of the Respondent's duty of fairness which required that its application be considered on its own merits.
(xi) The Respondent raised a preliminary issue. He argues that he was not appropriately named as a Respondent and that the style of cause should be amended to substitute the Attorney General of Canada as the Respondent. No specific reasoning was offered in support of this argument. The Applicant did not raise any objection. However, considering Rule 303 of the Federal Court Rules, 1998, SOR/98-106, as amended, and that the applicant seeks an order mandating that its application be reviewed on the merits, the Court is not convinced that a substitution is warranted.
(xii) The Respondent also says that this Court cannot review the policy behind the refusal to accept the Applicant's application because it is not the decision that is the object of the present application for judicial review.
ANALYSIS
The decision under review
(xiii) It is clear from the Notice of Application that the Applicant challenged the refusal of Health Canada to accept his application because of the underlying policy which precluded its evaluation on the merits. There is nothing that prevents such indirect attacks on an underlying policy. However, as indicated in Carpenter Fishing Corp. v. Canada (C.A.), [1998] 2 F.C. 548 (F.C.A.) at para. 29, the Court must be careful to apply the proper standard of review to the policy for it may require more deference then the decision that is the subject of the direct attack.
(xiv) In any event, as will be explained later on in these reasons, the Court finds that in this case there was only one decision maker involved in the refusal of the Applicant's application for a service provider number. This was not the person who screened the application or advised the Applicant that his application would not be reviewed or accepted. It is the person who decided to temporarily freeze the expansion of the Program to new MSE suppliers until proper guidelines and a revised provider kit are put in place.
(xv) The following extract from the cross-examination of Loretta Bellerose, the Manager of the Program in Alberta, makes it clear that nobody in her department had any authority to accept or even consider this application.
Right now, at this point in time, our policy, I guess, if you would refer to it as that - I mean, it's certainly not a written - my direction from my manager is there are no new service provider numbers being issued for no one. Absolutely no one. And we have not approved any for new applicants at all. That's the direction right now for the Program.
(xvi) As in David Hunt Farms Ltd. v. Canada (Minister of Agriculture), [1994] F.C.J. No. 314 (QL)[2], I come to the conclusion that the person who reviewed this application had no decision to make. By the time the application was filed, the Program had effectively been amended insofar as new billing privileges for MSE suppliers are concerned, so that registration was simply not available to any new MSE supplier like the Applicant.
(xvii) Because the same application form was also used by pharmacists to obtain a service provider number and by persons acquiring the business of a registered service provider, the application still had to be reviewed to determine whether or not a particular application was subject to the moratorium.
(xviii) The Applicant sought to distinguish the situation reviewed by the Court in David Hunt, supra, by saying that in that case, the policy was made by the Minister and it was based on relevant considerations. In other words, it was legal.
(xix) If the decision to impose a moratorium was illegal, the refusal of the application will be set aside. But, focussing only for the moment on the Applicant's argument that the person who reviewed his application made a reviewable error by fettering his or her discretion by applying blindly this policy, the Court must conclude that when one has no authority, there can be no issue that one fettered his or her discretion. Thus, the Applicant's argument in that respect is without merit.
(xx) As mentioned, this finding does not put an end to the matter for as in David Hunt, supra, one must ensure that the administrative decision which resulted in the refusal of the application was properly made.
(xxi) The parties both used the term "policy" when referring to the decision of the Director, Non-Insured Benefits, Alberta region, to impose this moratorium.
(xxii) If it is indeed a policy decision, both parties submit that it would be reviewable only on the grounds set out in Maple Lodge Farms Ltd. v. Government of Canada, [1982] 2 S.C.R. 2, namely, whether the decision was made in good faith[3], was in accordance with the principles of natural justice where required, and whether reliance was placed upon considerations irrelevant or extraneous to the statutory purpose. The Applicant has not made any Charter claim.
(xxiii) However, in light of Ms. Loretta Bellerose's testimony referred to at paragraph 15, it may well be that this verbal direction is simply a managerial decision that is subject to the standard of the patently unreasonable decision based on a straightforward application of the pragmatic and functional approach.
(xxiv) As mentioned, there is no specific statutory provision relating to this Program. It is undisputed that the Director, Non-Insured Benefits, Alberta region, is responsible for the delivery of the Program in his region and is specifically accountable for its financial administration and the effective management of the public funds allocated to it. There is thus no privative clause applicable to this decision. Both parties agree that the decision to impose a moratorium involved the consideration of the various policy goals of Health Canada and the need to protect public interest by ensuring proper spending of public funds. The Court has no expertise on such issues. All factors considered, the decision deserves the highest degree of deference.
(xxv) The Respondent argues that as a policy decision, the imposition of this moratorim is not subject to any duty of fairness because none is specifically imposed by statute. Thus, one could argue that the qualification of the decision as a policy or simply as a managerial decision could have some importance in determining this issue.
(xxvi) However, in this case, it has none, for by applying the five factors set out in Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817, I find that the content of the duty of fairness on the Director, Non-Insured Benefits, Alberta region, was quite limited. I am satisfied that it was not breached in this case.
(xxvii) As mentioned, the decision here was clearly based on an administrative and political concern. Inasmuch as there is no statutory provision dealing with the Program, there is no specific appeal provision. As indicated by Loretta Bellerose, there was only a political remedy.
(xxviii) The Applicant is not a beneficiary of the Program but a third party claiming a direct billing privilege to improve its business prospect. Loretta Bellerose indicated that the beneficiaries could purchase their supply from non-registered service providers but they would then have to pay for them and seek reimbursement themselves[4]. Although the Court recognizes that the imposition of this moratorium has some economic impact on the Applicant's business, the evidence with respect to the significance of this impact is quite speculative. In his affidavit, Mr. Christopherson who acquired the Applicant in February 2003 says that based on his prior experience as a sales person in the field, sales of medical supplies under the Program represent about 20% of the total sales of such equipment north of Edmonton. On that sole basis, he anticipates that the Applicant could increase its sales significantly.
(xxix) Still and despite this, before Mr. Christopherson's involvement, the Applicant had not been registered under the Program and by the time Mr. Christopherson acquired the business, the moratorium was in place. What could the Applicant legitimately expect. There is no evidence that the Respondent made any special promises to the Applicant.
(xxx) Also, this is not a case where the Applicant argued that it should have been consulted prior to the imposition of the moratorium or anything of the sort. What is argued is that fairness itself required that the application be assessed on its own merits.
(xxxi) It is not disputed that, in appropriate cases, the Minister and its delegates have the power to impose a moratorium.
(xxxii) Thus, regardless of how one applies or evaluates the five Baker factors and of the exact content of the duty of fairness, I find that the concept of fairness as such could not force the decision maker to review the Applicant's application on its merits.
(xxxiii) That being said, only one issue remains. Is the decision to impose this moratorium abusive or irrational because (i) it did not consider the need to make the Program more accessible to the beneficiaries, especially in the area north of Edmonton, and (ii) it discriminates in favour of pharmacists and new owners of previously registered service providers.
(xxxiv) The Applicant says that the Respondent and its delegates have broad powers but that such powers must be exercised to further the ends of Health Canada policies and the needs of the beneficiaries of the Program. More particularly, it argues that the main goal of the Program is to improve the accessibility of these non insured services to its beneficiaries. Therefore, the imposition of a moratorium that applies without regard to the particular needs in the area where an applicant is located is abusive.
(xxxv) It is not fatal to a policy decision that some irrelevant factors be taken into account; it is only when such a decision is based entirely or predominantly on irrelevant factors that it is impeachable. "It is not up to the Court to pass judgment on whether a decision is 'wise or unwise'." (Canadian Association of Regulated Importers v. Canada (Attorney General) (C.A.), [1994] 2 F.C. 247, at page 260, and also in Carpenter Fishing, supra, at paragraph 13). In my view, this statement also applies to managerial decisions reviewed under the standard of the patently unreasonable decision.
(xxxvi) It is undisputed that the Respondent and his servants had to ensure that only valid claims were paid under the Program and that appropriate documentation was retained to facilitate audits. This is a prime consideration in the administration of any and all governmental programs funded by Canadian tax payers.
(xxxvii) The evidence is unequivocal. The moratorium was imposed because of specific concerns with respect to MES suppliers.
(xxxviii) Because MES suppliers are not subject to a professional regulatory body, such as the Alberta College of Pharmacists that could independently address and solve such concerns as they arise, Health Canada had to do so itself by setting more comprehensive guidelines and information kits for such suppliers.
(xxxix) Those administrating the Program in Alberta chose to suspend any further extension of billing privileges to new MSE suppliers rather than, for example, suspending the whole Program with respect to MSE which would undoubtedly have seriously affected the beneficiaries.
(xl) The decision was predominantly based on a relevant consideration and whether or not there was an even better solution is not for this Court to review.
(xli) The Respondent says that his policy is not discriminatory because it prevents the registration of all new MSE suppliers.
(xlii) The Respondent could have decided that new owners of an existing registered service provider for MSE would keep the existing service provider number. He chose to have a more transparent system and to require that a fresh agreement with the new owners be entered into and a new number be issued. But these conditions that apply to the transfer of an existing registration do not change the principle that no new MSE supplier is added to the Program.
(xliii) With respect to pharmarcists, as indicated by the title of the Agreement itself, they are in a different class or category of suppliers. For one, they are subject to a regulatory body. It is also evident that pharmacists are prime participants in the Program for other insured benefits and that they have sophisticated claim process managements system in place that even operates in real time (online).
(xliv) The evidence that a pharmacist could use his service provider number to sell MSE is somewhat speculative but even if the Court were to assume for the purpose of this case that there is some discrimination in favour of pharmacists in that respect, I find that in view of the very broad powers granted to the Minister and his delegates, such discrimination in the establishment of categories of supplier does not per se constitute an abuse of power (Sunshine Village Corporation v. Canada Parks, 2004 FCA 166; [2004] F.C.J. 756 (QL).
(xlv) The Court is not satisfied that the establishment of different categories of suppliers differentiating pharmacists from MSE suppliers like the applicant is patently unreasonable.
(xlvi) In the circumstances, the application for judicial review must be dismissed.
ORDER
THIS COURT ORDERS that:
[1] The application is dismissed with costs.
"Johanne Gauthier"
Judge
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-414-03
STYLE OF CAUSE: 1018025 Alberta Ltd. O\A Grande Prairie Health and Home Care v. The Minister of Health
PLACE OF HEARING: Edmonton, Alberta
DATE OF HEARING: February 10, 2004
REASONS FOR ORDER
AND ORDER BY: THE HONOURABLE JOHANNE GAUTHIER
DATED: August 11, 2004
APPEARANCES:
Ms. Elizabeth A. Johnson FOR THE APPLICANTS
Ms. Tracy J. King FOR THE RESPONDENT
SOLICITORS OF RECORD:
Ackroyd, Piasta, Roth & Day LLP FOR THE APPLICANTS
1500 - 10665 Jasper Avenue N.W.
Edmonton, Alberta T5J 3S9
Morris Rosenberg FOR THE RESPONDENT
Deputy Attorney General of Canada
Edmonton, Alberta T5J 3Y4
[1] It is not clear if this application was sent to FCHMC or to Health Canada in Ottawa. The affidavit of Mark Christopherson only refers to Anita Furino in Ottawa (para. 12 to 14). It appears however that the screening and approval of those applications are done by Health Canada on a regional basis. (p. 7 line 1 to 8 of the transcript of the cross-examination of Loretta Bellerose.)
[2] confirmed by the Federal Court of Appeal in 1994 FCJ No. 677 (F.C.A.) (QL), leave to appeal to the Supreme Court of Canada was dismissed.
[3] This case does not involve bad faith.
[4] Page 6, lines 20 to 26 of the transcript of the cross-examination of Loretta Bellerose.