1582235 Ontario Limited v Ontario, 2020 ONSC 1279
In a recent blog post, we wrote about the amendments to the Ontario Health Insurance Plan (“OHIP”) and the process through which the province’s physicians submit their billings. A recent decision by the Ontario Superior Court sheds light on the practical implications of some of these amendments and in particular, how they may impact ongoing disputes related to a physician’s billings.
Before reviewing this decision, we will provide a high-level overview of both the OHIP billing process in general as well as some of the relevant amendments implemented by the passing of Bill 138 in December 2019.
OHIP Billing Process
Medical services performed by physicians in Ontario are funded on a fee-for-service model through OHIP. Under this model, physicians submit billing claims for insured medical services to the Ministry of Health and Long-Term Care  (the “Ministry”). OHIP will then pay the physician a fee for each service according to the appropriate fee codes. This billing regime is governed by the Health Insurance Act (“HIA”) and its regulations. It operates on somewhat of an honour system, as claims are generally processed as submitted. Funding for Independent Health Facilities (“IHFs”) are governed by a separate regime, the Independent Health Facilities Act (“IHFA”). IHFs may charge facility fees on a fee-for-service basis with regard to overhead costs and services that support the provision of insured medical services.
Physician billings claims are generally processed as submitted, primarily because the initial screening process provides for limited oversight. However, claims flagged as potentially inaccurate or inappropriate will proceed through a post-payment review process known as the Payment Integrity Program, wherein a physician’s billings will be further audited. A claims assessor may approve or deny the payment, or may refer the claim back to the physician for resubmission with supporting information. If the Ministry considers the supporting information and denies the claim for the submitted billings, the physician can seek a review of the decision by the Physician Payment Review Board (“PPRB”). The PPRB is independent of the Ministry and conducts hearings to resolve billing disputes upon the request of either the physician or the General Manager of OHIP.
Bill 138 Amendments
The passing of Bill 138 brought numerous changes to the manner in which the OHIP billing process is administered pursuant to the HIA and the Commitment to the Future of Medicare Act. While these changes are outlined in greater detail in our aforementioned blog post, of particular relevance were the resulting changes to the post-payment review process and the PPRB.
Among other changes contained in Bill 138, the amendments to the HIA and IHFA overhauled the billing audit and review process for physician and facility fees and transferred the responsibilities of the PPRB to the Health Services Appeal and Review Board (“HSARB”). Prior to the amendments, there was no authority for the Ministry to set-off for facility fees resulting from a billing dispute or alleged overbilling. Further, there was no venue for an independent review of billing disputes for facility fees under the IHFA. As a result of the amendments, the Ministry is expressly authorized to form an opinion on the overbilling of facility fees. This will immediately give rise to a debt which the Ministry can set-off against the IHF’s outstanding claims, and gives the license-holder a right to an independent adjudication of the billing dispute by HSARB. These amendments were relevant in the below decision, as the Court took issue with both the substance and the timing of the Ministry’s actions.
1582235 Ontario Limited v Ontario, 2020 ONSC 1279
This decision involved an application arising from a billing dispute between the Ministry and Dr. Hartman (an IHF licence holder) and three corporations owned and operated by Dr. Hartman and his family (the “Applicants”). The dispute centered around alleged overbilling of physician’s fees in the amount of $985,000 as well as $1.6 million in facility fees, incurred through the provision of medical services in IHFs operated by the Applicants pursuant to the IHFA. The facility fees and physician fees are related to the same claim of overbilling. The Ministry had imposed a set-off against future fees payable to the Applicants.
The Applicants applied for judicial review, challenging the Ministry conduct in imposing set-off as being contrary to its statutory authority, and arguing that the Ministry had acted unreasonably and in bad faith.
In brief, the Ministry had determined that the Applicants had overbilled for physician and facility fees, and advised that the $1.6 million in facility fees were to be set off against future payments made to the Corporate Applicants over a 12-month period. Although the Applicants had sought a review of the Ministry’s decision before the PPRB, the Ministry had only issued an “initial opinion,” which the PPRB had no jurisdiction to review. Under the HIA, there could only be an independent adjudication by the PPRB once the Minister had issued a final opinion, which therefore precluded the Applicants from seeking a review of the Minister’s decision.
In the judicial review, the Applicants argued that the Ministry had acted in bad faith in intentionally delaying the review process. The Ministry’s review of the billing claims was initiated in December 2015, though its initial opinion was not provided to the Applicants until November 2017. A contentious dispute over the Applicants’ billings was fought over many months before the Ministry advised the Applicants in April 2019 that it would set-off the $1.6 million facility fees it was allegedly owed against future payments to be made to the Applicants based on its “initial opinion” of the claims submissions. The Ministry neglected to issue a final opinion, despite the fact that it had undertaken an investigation of the claim over several years, and had taken steps to recover the money via set-off. The Applicants argued that the Ministry’s failure to issue a final opinion was an underhanded attempt to avoid review by the PPRB, all while basing its decision to set-off the amount owing on its initial opinion. Further, the Applicants argued that the Ministry did not have statutory authority under the IHFA to set-off the facility fees.
The parties agreed that the reasonableness of the Ministry’s conduct must be determined based on the statutory scheme in force at the time it took its set-off action. Therefore, the provisions of the HIA and IHFA in force prior to the December 2019 amendments were the relevant provisions for the Court’s analysis. With regard to the Ministry’s decision to impose set-off, although the December 2019 amendments to the IHFA would have allowed the Ministry to obtain or recover overpaid facility fees by way of set-off against future facility fees, no such provision existed prior to the amendments, which is when the Ministry had taken such action. The Ministry conceded that there was no express statutory provision upon which they had relied to authorize the set-off at issue, but argued that it had an implied authority to seek reimbursement of the facility fees under the IHFA, and that its decision was also permitted under equitable set-off.
The Court disagreed with the Ministry, holding that the Ministry’s decision to impose set-off against any future facility fees owed was unreasonable under both the IHFA and equitable set-off. The Court pointed to the fact that although the December 2019 amendments provided authority to impose set-off, those amendments were not in place at the time of the Ministry’s conduct. Further, the Court stated that the fact that the Legislature had enacted new provisions conferring an express power to recover facility fees via set-off indicates that there was no implied statutory authority to do so prior to the amendments.
The Court also held that the Ministry acted unreasonably in imposing set-off while attempting to preclude the Applicants from reviewing its decision before the PPRB. The Ministry attempted to exercise a right to set-off but refused to do so in a manner that would afford the Applicants a right to a review. The Court accepted the Applicants’ argument that the Ministry’s failure to issue a final opinion despite taking steps to recover the money owed via set-off was unreasonable under both legal and equitable principles.
The full text of the decision can be found here.
The Court held that the Ministry acted in a manner that would have given way to a more Draconian process than either the December 2019 amendments, or the previous legislation, had contemplated. It had acted without statutory authority, and had purposely done so in a manner that undermined the intent of the legislation by precluding any avenue for review. In effect, the Ministry attempted to both “have its cake and eat it”. The Court held that to allow the Ministry to avoid review by way of an implied authority would be to allow an administrative body to perpetuate unfairness against the Applicants. The Court ordered relief by way of mandamus, requiring the Ministry to reimburse the Applicants for the monies recovered by way of set-off.
The case sheds light on a unique set of circumstances faced by the Applicants, and also illustrates how the amendments to the OHIP billing process may impact billing disputes going forward.
Please contact us if you have any questions about the recent amendments, or about the OHIP billing process in general.
 In June 2019, the Ministry split into the Ministry of Health and the Ministry of Long-Term Care. References to the Ministry means either the combined entity or the Ministry of Health.
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