The Risk of Civil Lawsuits for Improper Regulatory Action

A recent decision of the Supreme Court of British Columbia reminds regulators of the importance of completing fair and impartial investigations, and of the possible consequences of improper conduct: not only can it result in the failure of regulatory action, but it could give rise to a civil claim that the regulator and its staff acted in bad faith.

Background

The British Columbia College of Nurses and Midwives (the “College”) investigated Ms. Thmbran, a Registered Nurse (“RN”) and Director of Care at a long-term care home. The complainant alleged that the RN covered up and failed to report a resident’s inappropriate sexual behaviour towards another resident. The inspector appointed to investigate the complaint on behalf of the College was found to have misrepresented the facts to implicate the RN, such as altering the incident date to fit the long-term care home’s progress notes.

The College found the RN’s conduct unsatisfactory and tried to resolve the complaint by reaching a settlement agreement with the RN. The RN rejected both agreements. In the normal course, this would have resulted in the referral of allegations of misconduct to the College’s Discipline Committee, where the College would have had the onus of proving the misconduct and the RN would have had the right to contest the evidence against her. Instead, however, the College unexpectedly resolved the complaint with a letter of expectation (i.e., a caution) that the RN could not challenge.

Civil Claim against Regulator and Staff

Without the ability to appeal the regulatory action, the RN advanced civil and Charter claims against the College for conducting a “malicious, deceitful and fraudulent” investigation. Furthermore, the RN made civil and Charter claims against the College’s inspector, legal counsel, and registrar for acting “with malice, without reasonable and probable cause, and in bad faith”.

The College moved to strike the RN’s claims based on its statutory immunity for acts done in good faith in the exercise of its powers under the applicable legislation [1], arguing that the RN’s claim could not proceed as a matter of law and that there was no genuine issue for trial. A claim will be struck under BC’s Supreme Court Rules if it is plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action or if the claim as pleaded cannot succeed as a matter of law.

Court Decision on Motion to Strike Claim

The College was partially successful, and the claims of abuse of process, civil conspiracy, civil fraud or deceit and all of the Charter claims were all struck. However, the Court found that some of the RN’s claims demonstrated genuine issues for trial and, as such, allowed those claims to proceed to trial.

The Court upheld the claim for malicious prosecution because the College and its staff demonstrated “improper motive or purpose” during the investigation. The Court found that there was evidence that the inspector changed the facts, the College issued arbitrary consent orders, and the College resolved the complaint with a letter of expectation (LOE) that the RN could not challenge.

In addition, the Court upheld the claim of intentional infliction of emotional distress because the College’s conduct was “plainly calculated to produce harm” to the RN. The RN’s pre-existing mental illness worsened due to the College’s conduct. Furthermore, the Court upheld a claim for the tort of misfeasance against the inspector and legal counsel.

The inspector changed the allegations (date, location and facts) in order to strengthen the case against the RN instead of questioning the veracity of the complaint, changed the facts in order to implicate the RN, failed to conduct a full investigation, and after advising the Inquiry Committee that the evidence was not as strong as she had previously represented, was involved in the decision to “resolve” the matter through a LOE knowing that the RN vehemently denied the allegations and wanted to prove her innocence through the disciplinary hearing and that this decision would cause her emotional distress.

With respect to the claims against the Inquiry Committee’s legal counsel, the Court permitted these to proceed on the basis that legal counsel was present for all Inquiry Committee meetings, was responsible for giving legal advice to the Inquiry Committee and to the Inspector, and was at least aware that there were credibility/ reliability issues with the complainant and that the facts upon which the Inquiry Committee was basing its decisions kept changing. Legal counsel was also found to have made an offer to settle to the RN, indicating to the Court that she was part of the decision-making team. The Court was therefore satisfied that there is some evidentiary basis for the tort of misfeasance against legal counsel that would not be protected by statutory immunity.

Notably, the Court did not uphold the tort of misfeasance against the registrar because she performed her statutory duties.

The Court identified issues of procedural fairness, including:

• the apparent arbitrariness of the process

• the ever-changing “facts” and dates

• the significantly different consent orders offered with the significantly different penalties on the same facts

• that the final resolution was procedurally unfair (and perhaps in bad faith) as it robbed the RN of proper notice, the opportunity, to clear her name (which the college knew she wanted), made final findings of “fact” that the College knew she refuted and took away from her any avenue of review or appeal.

Noting that these issues were appropriately the subject of an application for judicial review rather than a civil claim, the Court allowed the RN to bring an application for judicial review to address these and extended time for doing so.

Conclusion

The RN has a long way to go to prove liability on the part of the College or its staff, but this decision permits her to proceed with her action and requires the College to defend the allegations on their merits in order to avoid liability for whatever damages the RN is ultimately able to prove.

Takeaway

A regulator and its staff must conduct all aspects of regulatory proceedings according to their official duties and responsibilities. For example, the staff should not intentionally change facts of a matter or engage in conduct that has an improper purpose. Those who fail to conduct regulatory proceedings pursuant to their official duties and responsibilities can face a civil lawsuit.

For registrants facing regulatory proceedings, this case serves as a reminder that breaches of procedural fairness can not only give rise to a basis for judicial review or appeal, where there is evidence of bad faith, they can form the basis of a civil claim against the regulator.

For guidance on regulatory proceedings, please connect with us. Furthermore, please refer to our blog posts for future updates on this case.

[1] Health Professions Act, R.S.B.C.1996, c. 183, s. 24(1).