NOVA SCOTIA COURT OF APPEAL Citation: Taylor v. Nova Scotia (Health and Wellness), 2018 NSCA 57 Date: 20180628 Docket: CA 466554 Registry: Halifax Between: Mark Taylor, Jonathan Trites, Matthew Rigby, Rob Hart, David Morris, Manohar Bance, Emad Massoud, Harry Henteleff, Gerald MacKean, Min Lee, Patrick Casey, Chad Coles, William Oxner, Carman Giacomantonio, Marius Hoogerboord, Katherina Neumann, Lucy Helyer v. Her Majesty the Queen in right of the Province of Nova Scotia, as represented by the Minister of Health and Wellness, and the Attorney General of Nova Scotia Appellants Respondents Judge: Appeal Heard: Subject: Summary: The Honourable Justice Anne S. Derrick The Honourable Justice Elizabeth Van den Eynden March 28, 2018, in Halifax, Nova Scotia Contract Interpretation. Judicial Review Physicians in Nova Scotia are paid by MSI pursuant to Master Agreements that are negotiated between Doctors Nova Scotia (DNS), the bargaining agent for physicians, and the Department of Health and Wellness (DHW). MSI, while not a party to the Master Agreements, administers them for the DHW. Physicians claims to MSI may be subject to pre-
2 payment assessment, that is, review before payment is made with adjustment to, or rejection of, the claim. The 2016 Master Agreement in Schedule E introduced for the first time an appeal process for pre-payment assessments. The physicians argued that the Transition Provisions in Schedule E allowed them to appeal pre-payment assessments that pre-dated the 2016 Master Agreement. MSI and the reviewing judge disagreed. On judicial review, the judge held that only pre-payment assessments made by MSI after the Master Agreement s implementation date of October 9, 2016 could be appealed. She undertook an interpretation of Schedule E and concluded that it was intended by the parties DNS and DHW to deal with new pre-payment assessment appeals only and could not be employed by the physicians to appeal retroactively. Issues: Was the reviewing judge correct in finding that Schedule E to the 2016 Master Agreement applied only to pre-payment assessments made by MSI after the implementation of the Master Agreement on October 9, 2016? Result: Physicians appeal dismissed with costs. The reviewing judge was correct in her interpretation of Schedule E and her finding that Schedule E does not operate retroactively to apply to pre-payment assessments made by MSI before the implementation of the 2016 Master Agreement. This information sheet does not form part of the court s judgment. Quotes must be from the judgment, not this cover sheet. The full court judgment consists of 12 pages.
NOVA SCOTIA COURT OF APPEAL Citation: Taylor v. Nova Scotia (Health and Wellness), 2018 NSCA 57 Date: 20180628 Docket: CA 466554 Registry: Halifax Between: Mark Taylor, Jonathan Trites, Matthew Rigby, Rob Hart, David Morris, Manohar Bance, Emad Massoud, Harry Henteleff, Gerald MacKean, Min Lee, Patrick Casey, Chad Coles, William Oxner, Carman Giacomantonio, Marius Hoogerboord, Katherina Neumann, Lucy Helyer v. Her Majesty the Queen in right of the Province of Nova Scotia, as represented by the Minister of Health and Wellness, and the Attorney General of Nova Scotia Appellants Respondents Judges: Appeal Heard: Held: Counsel: Bryson, Van den Eynden and Derrick, JJ.A. March 28, 2018, in Halifax, Nova Scotia Appeal dismissed with costs, per reasons of Derrick and Van den Eynden, JJ.A., Bryson, J.A. concurring. Brian Casey, Q.C. and Rilla Banks, for the appellants Peter McVey, Q.C., for the respondent
Page 2 Reasons for judgment: Introduction [1] This appeal concerns pre-payment assessments of the fees that a group of sixteen physicians submitted to MSI. The physicians, all surgeons, sought to appeal their pre-payment assessments and were denied. They took the matter to the Nova Scotia Supreme Court on judicial review and lost. They are appealing that decision to this Court. [2] Physicians in Nova Scotia are paid by MSI pursuant to Master Agreements that are negotiated between Doctors Nova Scotia (DNS), the bargaining agent for physicians, and the Department of Health and Wellness (DHW). As the appellants note, MSI is not a party to the Master Agreements, but administers them for the DHW. [3] Physicians claims to MSI may be subject to auditing after payment, or they may be reviewed before payment is made with adjustment to, or rejection of, the claim. Post-payment audits, as they are known in the most recent Agreement, are not the focus of this appeal. This appeal is about the process known as pre-payment assessments. [4] The most recent Master Agreement, the 2016 Master Agreement, introduced for the first time an appeal process for pre-payment assessments. This is the fulfillment of an undertaking by DNS and the DHW in the previous Master Agreement to negotiate an appeal mechanism. The appeal process is set out in Schedule E to the 2016 Agreement. [5] In September and October 2016, each of the appellant physicians responded to the new Master Agreement by writing to MSI to indicate he or she objected to its pre-payment decisions concerning their submitted claims and requesting to have those claims proceed to the next step in the claims monitoring process. The physicians relied on the fact that the definition in Schedule E for monitoring includes both pre-payment assessments of Claims and post-payment audit of Claims. Most of the doctors attached to their correspondence detailed lists of the historic pre-payment assessments MSI had determined, in their view, unsatisfactorily. MSI responded to the physicians by stating that only pre-payment
Page 3 assessments occurring after October 9, 2016, the implementation date of the 2016 Master Agreement, came within the Schedule E appeal process. [6] The appeal process in Schedule E includes Transition Provisions. The physicians say the Transition Provisions allow them to appeal historic pre-payment assessments, that is pre-payment assessments that pre-date the 2016 Master Agreement. The Minister of Health and Wellness does not agree: he says Schedule E is intended to deal with new pre-payment assessment appeals and cannot be employed to appeal retroactively. [7] On judicial review, Justice Ann Smith found in favour of the Minister of Health and Wellness. As we will explain, she concluded that DNS and DHW expressed no direct intent that Schedule E would have the retroactive effect proposed by the physicians. (Taylor v. Nova Scotia (Minister of Health and Wellness, 2017 NSSC 131, at 69) Issues [8] The physicians take issue with Justice Smith s determination that Schedule E only applies to pre-payment assessments made after the Master Agreement s implementation date of October 9, 2016. They say she erred in her interpretation of Schedule E and should not have disregarded the plain meaning of the language in it. They submit that she incorrectly relied on the DHW s subjective intentions to resolve the ambiguity she found in the language of the Schedule. [9] We find that Justice Smith s analysis of Schedule E and her determination that it does not operate retroactively to be correct. Furthermore, we agree with the respondent that, as evidenced by her many references to the mutual intentions of DNS and the DHW, Justice Smith s reasons do not disclose any reliance on the DHW s subjective intentions. We would dismiss the physicians appeal with costs. Schedule E [10] Schedule E is described as establishing a new appeal process that will guide future audit and pre-payment assessment appeals. Before the 2016 Master Agreement and Schedule E there had been no pre-payment assessment appeal process, only a process for post-payment audit appeals pursuant to Schedule Z to the previous Master Agreement.
Page 4 [11] Schedule E contains provisions dealing with Pre-Payment Assessments and Facilitated Resolution. (Articles 4 to 12) The pertinent provisions establish that: The physician will be notified electronically by MSI through the adjudication response where their claims are adjusted or rejected as a result of a Pre-Payment Assessment. This is known as the MSI Result. (Article 4) Although not limited to these reasons, the physician can dispute the assessment (which may be in the form of an adjustment or rejection) if the claim was assessed as part of the pre-payment assessment of multiple claims (same patient, same day, same provider) or if the claim was assessed as part of a random pre-payment assessment process. (Article 7) A physician wanting to dispute a Pre-Payment Assessment must, within 10 days of receiving the MSI Result, contact MSI in writing to initiate the Pre-Payment Assessment Review or be deemed to have agreed with the MSI Result. (Article 8) Once a Pre-Payment Assessment Review is initiated, the DHW Medical Consultant and the DNS Medical Consultant will consider it within 15 days of receipt. (Article 9) A dispute will move directly to Facilitated Resolution unless it is determined to be a dispute involving a policy decision which cannot be advanced by an individual physician. The mechanics of Facilitated Resolution are established by specific provisions in Schedule E. (Articles 10 and 11) [12] Schedule E has a section entitled Transition Provisions. It deals with outstanding and ongoing claims, terms that are not defined, and provides that: Schedule E shall govern any portion of the claims monitoring process as defined herein that remains outstanding as of October 9, 2016. (Article 52)
Page 5 Each physician for whom any portion of the claim monitoring process is ongoing will be notified 15 days in advance of October 9, 2016. (Article 53) Within 20 days of October 9, 2016, a physician wanting to proceed to the next step in the claims monitoring process must communicate that request. Failing to do so will result in the outstanding Pre-Payment Assessment being confirmed. (Article 54) [13] The requirement in Article 54 to communicate the request to proceed to the next step in the claims monitoring process is followed by three sub-sections that read as follows: a. For greater certainty: i. a physician who has received and disagrees with an Audit Result shall submit to MSI a Notice of Audit Review to initiate Audit Review as outlined herein; ii. iii. a physician who has received and disagrees with a Notice of Determination shall submit a Notice of Dispute in writing to MSI, and Facilitated Resolution shall proceed as outlined herein; a physician who has submitted a Notice of Dispute but has not yet had Arbitration scheduled shall proceed with Facilitated Resolution as outlined herein. [14] Notices of Determination and Dispute arise in the context of Audit Reviews only, the Audit Review section of Schedule E being found in Articles 24 to 30. Audits are conducted post-payment and do not figure in the pre-payment assessment process. [15] A further relevant Schedule E provision states that, Physicians are only permitted to challenge pre-payment assessment of claims and/or post-payment audit of claims through the processes outlined in this Schedule. (Article 57)
The Reviewing Judge s Finding that the Language of Schedule E was Ambiguous Page 6 [16] The reviewing judge identified language in the Transition Provisions of Schedule E that directly or impliedly referred to pre-payment assessments and language that could only refer to the post-payment audit regime. She noted the opening words of Articles 52 and 53, With the exception of any Arbitrations that are already scheduled as of the Implementation Date and the fact that none of the physicians had any pre-payment assessments scheduled for arbitration because arbitration was not an option for pre-payment assessments. She identified the use of the phrase claims monitoring process in Articles 52 and 53, monitoring having been defined as including pre-payment assessments. She observed that Article 54 refers to outstanding Audit(s) and Pre-payment assessments and contains the requirement that a physician must communicate a request to proceed to the next step in the claims monitoring process even though, prior to the new Agreement, there was no pre-existing pre-payment assessment appeals process, that is to say, no next steps. Schedule Z in the previous Agreement provided next steps only in the case of post-payment audits. Under the previous Master Agreement the appellant physicians pre-assessment claims were not eligible for any form of appeal or arbitration. [17] The reviewing judge found that the DHW and DNS had failed to express their intentions clearly in Articles 52, 53 and 54 of Schedule E. She held that a plain reading of the provisions in Schedule E provided her with little assistance in deciding whether historic pre-payment assessments are caught by the Transition Provisions since Articles 52, 53 and 54 are inherently ambiguous. She described DNS and DHW as having expressed no direct intent that Schedule E would have the retroactive effect the physicians were asserting. [18] The reviewing judge had to contend with the plain language of Schedule E and the submission by the physicians that the express references in Articles 52, 53 and 54 to the claims monitoring process included their historic pre-payment assessments. The physicians argued that Schedule E s definition for claims monitoring meant that under Articles 52 and 53 their pre-payment assessments remained outstanding and ongoing on October 9, 2016. But, as the reviewing judge noted, none of the physicians had received the notifications contemplated by Article 53 that they had an active claim. She referred to a Physician s Bulletin of September 14, 2016, which the parties accepted as a type of delegated instrument
Page 7 with legal significance and its statement that: MSI will be sending a notification to each physician for whom any portion of the claims monitoring process is ongoing. Instead, the physicians had taken it upon themselves to advise MSI - self-notified in the reviewing judge s words that they had unresolved prepayment assessment disputes. She rejected the argument, advanced again at this appeal, that MSI can fail to notify and thereby frustrate a physician s access to the appeal process. [19] It was the reviewing judge s conclusion that Article 53 established a clear intention by DNS and the DHW to give MSI the responsibility to identify, in advance of October 9, 2016, those doctors who had an outstanding claims monitoring dispute. [20] The reviewing judge found the plain language of the Transition Provisions in Schedule E, notably that contained in Articles 52, 53 and 54 referring to pre-payment assessments, did not reflect the actual intention of DNS and the DHW. She did a contextual analysis of Schedule E and concluded that DNS and the DHW intended the Transition Provisions of Schedule E to apply only to post-payment audits. She observed that the Provisions contain no process for disputing an historic prepayment assessment. Several of the physicians had been notified by MSI of outstanding audit disputes that would now proceed in accordance with Schedule E but none of the doctors received any notification that their pre-payment assessments were eligible for appeal. Standard of Review [21] The respondent says this appeal raises a unique question of the standard of appellate review to be applied and invites this Court to resolve the disagreement between the parties. The appellant physicians argue for a standard of correctness whereas the respondent says that a deferential standard of review applies. We would decline the respondent s invitation to wade into this issue because resolving it has no bearing on the outcome of this appeal. Some explanation is required. [22] In the court below, at issue was the interpretation of a Schedule to the Master Agreement. Relying on Lymburner v. Nova Scotia (Minister of Health and Wellness), 2016 NSSC 23 the parties agreed, as did the reviewing judge, that the standard of review was correctness not reasonableness. The reviewing judge had to determine the correct meaning of the disputed Schedule and the appellants assert she failed to do so.
Page 8 [23] On appeal from a judicial review proceeding this Court typically asks whether the court below identified the appropriate standard of review and applied it properly (see Nova Scotia (Agriculture) v. Rocky Top Farm, 2017 NSCA 2, 41 and Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, 46). In operation, the standard requires this Court to step into the shoes of the reviewing judge and focus on the administrative decision. Because this is essentially a contract dispute, the parties ask this Court to depart from this typical standard of review and focus on the reviewing judge s determinations; however, they disagree on the lens this Court should look through when analyzing her alleged errors. [24] One of the unique aspects of this case is that the reviewing judge, in effect, was interpreting the disputed contract terms in the first instance. The decision under appeal was only this one sentence conclusion: Only those pre-payment assessment results which take place after the Schedule E was implemented [on October 9, 2016] fall under the Schedule E process. There was no reasoning path for the reviewing judge to follow she felt obliged to undertake the interpretative analysis. [25] Although this is an appeal from a judicial review, the respondent argues that the reviewing judge s decision should be subject to the deferential standard of palpable and overriding error because the contractual interpretation she undertook involved questions of mixed fact and law. Specifically, the respondent says this standard should apply to the reviewing judge s determinations of ambiguity, her contextual analysis and the specific meaning attributed to the Schedule. Further, the respondent says the result will not resonate beyond the parties involved, thus appellate intervention should be more restrained. [26] On the other hand, the appellant physicians argue that questions of law can be extracted from the issues on appeal and these questions must be analyzed through a correctness lens. Both parties cite various paragraphs from Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 in support of their respective positions. It is not necessary to set these out. [27] The issue of whether to depart from the typical judicial review standard and, if so, whether in this case the review standard should be palpable and overriding error or correctness, need not be decided in this appeal. We say that because even on the less deferential standard of correctness, it is clear that the reviewing judge, like MSI, correctly interpreted the Transition Provisions of Schedule E. We now turn to explain why that is so.
Page 9 The Reviewing Judge was Correct in Her Analysis of Schedule E [28] A contextualized reading is required to obtain a true understanding of what DNS and the DHW intended for pre-payment assessments. The language used in Schedule E is ambiguous, that is, it is reasonably capable of more than one meaning (Canadian National Railway Company v. Halifax (Regional Municipality), 2013 NSSC 307, 21; appeal dismissed, 2014 NSCA 104). [29] Schedule E includes references to pre-payment assessments that, viewed in isolation, do not provide a clear differentiation between historic pre-payment assessments and new ones conducted since the implementation date of the 2016 Master Agreement. The Transition Provisions of Schedule E refer to the claims monitoring process which is defined in Schedule E as including pre-payment assessments. Article 52 of the Transition Provisions talks about any portion of the claims monitoring process that is outstanding as of October 9, 2016 is to be governed by Schedule E. But Article 53 provides that physicians with ongoing claims were to be notified in advance of October 9, 2016. And then, within 20 days of October 9, a physician wanting to proceed to the next step in the claims monitoring process must communicate that request or any outstanding Audit or Pre-payment assessment will be confirmed. [30] As the reviewing judge noted, the next step for pre-payment assessments is new to claims processing for physicians: pre-payment assessments can now proceed, under the new Master Agreement, to a review. This was never an option previously. [31] It was the reviewing judge s correct conclusion that the DHW and DNS knew fundamentally what they were contracting for or about, but did not express it clearly. (Canadian National Railway Company, at 21) While Transition Provisions may suggest that pre-assessment claims previously determined by MSI will be transitioned into the new appeals processes, a comprehensive examination of Schedule E leads to the inexorable conclusion that DNS and the DHW could not have intended to create for pre-payment assessments made before October 9, 2016 the retroactive process advocated by the physicians. As the reviewing judge found, it cannot have been the parties intention to open the door and permit dated assessments to inundate the new system. [32] The reviewing judge was correct not to confine herself to the plain language of the Articles in Schedule E that refer to pre-payment assessments. She recognized
Page 10 that doing so would require her to disregard significant provisions of Schedule E, including that: a. MSI was the party that would identify, in advance of October 9, 2016, the physicians with outstanding claims disputes. There is nothing in Schedule E that allows for physician-initiated notice of such disputes; b. The For greater certainty clause refers only to Audit reviews, which Schedule E makes quite clear are a post-payment procedure, and includes no provision for reviews of pre-payment assessments; c. There is a ten-day requirement for initiating a pre-payment assessment review and an emphasis in the Preamble to Schedule E on reducing claims payment wait time ; d. The Preamble states that a new appeal process has been established that will guide future audit and pre-payment assessment appeals. [33] As the reviewing judge noted, the interpretation urged by the physicians for the retroactive application of the Transition Provisions in Schedule E to historic prepayment assessments would necessarily require that the Provisions be applied retroactively to post-payment audits, notwithstanding the prior existence of Schedule Z. Post-payment audits could then be subject to parallel review processes under Schedule Z and under Schedule E. The reviewing judge was correct in her determination that DNS and the DHW cannot have intended this result. [34] And, while Article 54 allows for the communication by a physician of a request to proceed to the next step in the claims monitoring process, there is no next step for previously determined pre-payment assessments. Indeed, there is no appeals process at all. An appeals process for pre-payment assessments is created for the first time in Schedule E to the 2016 Master Agreement. [35] The reviewing judge correctly concluded that the DNS and the DHW did not intend Schedule E to apply to historic pre-payment assessments. She was confronted with superficially confusing language that she subjected to a careful, contextualized examination in order to divine the true intentions of the parties. It is new pre-payment assessments that are the subject of the appeal processes in Schedule E.
Page 11 The Reviewing Judge Did Not Resort to the Subjective Intentions of the DHW to Resolve the Ambiguity in Schedule E [36] The criticism by the appellants that the reviewing judge resolved the ambiguity in Schedule E by relying on the subjective intentions of the DHW is grounded in her statement that, [27] DNS is not a party to this dispute. Rather, there are 16 physicians with individual disputes with MSI. The fact that one of the two parties to the Agreement is not before the Court creates some difficulty. The Minister can advise of her interpretation of the provisions, but DNS cannot. [37] However this statement is nothing more than an observation. Nowhere in her reasons does the reviewing judge resort to a focus on what the DHW alone intended to achieve by Schedule E. To the contrary, she repeatedly referred to the shared intentions of the parties who negotiated the 2016 Master Agreement, using such language as: What this means is that DNS and DHW expressed some intent ; DNS and DHW expressed no direct intent that Schedule E would have the retroactive effect proposed by the Applicants. DNS and DHW intended and agreed that ; the parties could not have intended to ; This retroactive interpretation creates a construction that could overwhelm the system the parties agreed to for resolving billing disputes. the For Greater Certainty clause better captures the mutual intention of DHW and DNS ; That could not have been the mutual intention of the DNS and DHW. I find that the Applicants reading of the Transition Provisions does not reflect the actual intention of the parties ; The parties could not have intended that ;
Page 12 I must interpret the Transition Provisions in a manner which supports the intentions of the parties and their objectives in entering into the Agreement, including Schedule E. I find that that result is that the parties intended that only post-payment audits would be caught by the Transition Provisions. [38] There is no merit to the appellants submission that the reviewing judge organized her reasoning around the subjective intentions of the DHW. She clearly examined and relied upon the mutual intentions of the parties who negotiated the Agreement. Disposition [39] We would dismiss the appeal with costs to the respondent in the amount of $1,000 inclusive of disbursements. Derrick, J.A. Van den Eynden, J.A. Concurred in: Bryson, J.A.