SUPREME COURT OF NOVA SCOTIA Citation: Lymburner v. Nova Scotia (Health and Wellness) 2016 NSSC 23

SUPREME COURT OF NOVA SCOTIA Citation: Lymburner v. Nova Scotia (Health and Wellness) 2016 NSSC 23 Date: 20160118 Docket: Hfx No. 435272 Registry: Halifax Between: Dr. Dana Lymburner v. Applicant Her Majesty the Queen in Right of the Province of Nova Scotia, as represented by the Minister of Health and Wellness, Medavie Blue Cross, as agent for the Minister of Health and Wellness and Administrator of Medical Services Insurance, and the Attorney General of Nova Scotia Respondents LIBRARY HEADING Judge: Heard: The Honourable Justice John D. Murphy June 30, 2015, in Halifax, Nova Scotia Written Decision: January 18, 2016 Subject: Judicial Review: Standard of Review, Procedural Fairness Summary: The applicant physician seeks judicial review of the decision of the Minister of Health and Wellness (the Minister) made through Medical Services Insurance (MSI), preventing her from contesting an audit of her billings due to an alleged failure to meet a notice deadline. The schedule to an agreement between Doctors Nova Scotia and the Minister provided that a physician wishing to contest an audit was

required to contact MSI within three weeks of receipt of notice of audit result. The applicant, who made contact within three weeks of receiving actual notice, was advised by MSI that her response was not timely. She seeks an order quashing the decision, allowing her to access the appeal process, stopping MSI s recovery of funds, and compelling the return of funds already deducted. Issues: The issue should be reduced to the meaning of receipt in the Schedule. The Minister s effort to characterize the proceeding as an attack on ministerial power to administer and supervise the health funding system pursuant to the Health Services and Insurance Act was rejected. Result: The proper standard of review is correctness. The interpretation of receipt is a question of general procedural law; the term should be given its ordinary meaning actual receipt. The Minister s decision gave no reason for any other interpretation. Post-decision efforts by the Minister during judicial review to invoke a deemed receipt provision contained in policies and documentation neither communicated to the applicant nor referenced in the decision do not support the correctness of the decision. A decision maker s imposition of a deemed date of receipt without notice and without providing reasons is procedurally unfair, and a denial of natural justice. The Minister s decision that no response to audit findings was made before the applicable deadline, and that the applicant be precluded from contesting the audit, was quashed. Amounts MSI recovered by deduction from payments otherwise due to the applicant were ordered returned pending completion of the process to contest the audit. THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET.

Page 2 By the Court: INTRODUCTION [1] The applicant, a physician practicing in Dartmouth, NS, seeks judicial review of a decision of the Minister of Health and Wellness (the Minister), made through Medical Services Insurance (MSI), preventing her from contesting an audit of her billings due to an alleged failure to meet the notice deadline. She seeks an order quashing the decision, allowing her to appeal, stopping MSI s recovery of funds, and compelling the return of funds already deducted. [2] For the reasons which follow, I conclude that the proper standard of review is correctness; that the Minister s interpretation of the regulatory scheme is incorrect; and that in any event, there was a denial of natural justice in depriving the applicant of the ability to contest the audit. BACKGROUND AND LEGISLATIVE FRAMEWORK [3] The issue on this judicial review should be reduced to the meaning of receipt in Schedule Z to the Master Agreement between Doctors Nova Scotia (DNS) and the Minister. I reject the Minister s effort to characterize the application as an attack on the Ministerial power to administer and supervise the health funding system pursuant to the Health Services and Insurance Act, RSNS 1989, c 197 (the Act). [4] Pursuant to the Master Agreement, MSI acts as the Minister s delegate in auditing doctors claims for payment for services. The Master Agreement permits the Department of Health to audit physicians with respect to payments for Insured medical Services : Art 10(b)(i), and it also commits the parties to negotiate an agreement on appropriate processes for appeal by Physicians respecting such audits : Art 10(b)(iii). Under MSI, physicians compensation for providing insured medical services is administered by Medavie Blue Cross, as the Minister s agent. Physicians submit claims for insured services to MSI in accordance with billing codes in the MSI physicians manual. MSI audits claims submitted by physicians, and recovers funds that are found to have been paid for uninsured services, pursuant to the audit procedure described in Schedule Z to the Master Agreement.

Page 3 [5] Schedule Z provides, inter alia, for a process of compliance review, in other words, the audit. If the physician contests the audit results, a process of Compliance Negotiation is undertaken, triggered by the physician giving notice within three weeks of receiving notice of the results of the review: 5. Where a Physician disagrees with or finds the results of the Compliance Review unacceptable, the Physician shall, within three (3) weeks of receipt of Notice of the results of the Compliance Review, contact MSI to initiate the Compliance Negotiation process. If the Physician fails to contact MSI within three (3) weeks of receipt of Notice of the results of the Compliance Review, they are deemed to agree with the results of the Compliance Review and accept the results of the audit without further right of Negotiation or Appeal. [6] The interpretation of the three-week deadline is the issue here. Contrary to the suggestion in the Minister s submission, the applicant does not appear to challenge the Minister s power under the Act to recover overpayments. The issue is the process by which the decision was made. THE DECISION UNDER REVIEW [7] The applicant was informed by letter from an MSI auditor dated August 18, 2014 that an audit of certain billings would be done during the week of August 25 th. Dr Rhonda Church, MSI s Medical Consultant, notified the applicant of the results of the audit by letter dated October 21, 2014. She wrote that a total of $8,727.66 would be recovered by MSI by way of deductions from future payments. She also wrote: If you would like to discuss this audit further or will be sending additional documentation, my contact information is below. According to Schedule Z to the Physician Master Agreement, if a physician fails to contact MSI within three weeks, they are deemed to agree with MSI s results without further right of negotiation or appeal. [Emphasis added.] [8] Reference to the actual text of Schedule Z (paragraph 5) shows that Dr Church s description of the deadline is incomplete; in fact, a physician wishing to initiate compliance negotiation must contact MSI within three weeks of receipt of Notice of the results of the Compliance Review. [Underlining added.] [9] The applicant received Dr Church s letter on or about October 31, 2014. She then retained counsel to contest the results. On November 21 st, her counsel sent a fax to Dr Church, giving notice of the applicant s intention to contest the

Page 4 audit. In a letter dated December 4, 2014, Dr Church replied that her October 21 st letter was explicit, in that there is a three week deadline for you to respond to the audit findings, otherwise explaining you are deemed to agree with the audit and forfeit the right to appeal. As no response was received, the recovery for the amount owing to MSI for the audit was commenced. Should there be a clear and compelling reason why you were unable to meet the three week deadline, please advise me, in writing, within 10 business days of receipt of this letter. In the meantime, the recovery of these funds will continue. [10] Dr Church also wrote to the applicant s counsel, stating that she had advised the applicant that he [sic] did not respond to MSI s letter within the three weeks required by the Schedule Z. In neither letter did Dr Church explain how she had calculated the passage of three weeks. Stated differently, she provided no reasons for the decision. It is undisputed that if three weeks is calculated from October 31 st, the November 21 st communication from the applicant s counsel was within the deadline; counsel for the Minister so acknowledged during oral argument. INTERPRETATION OF THE TIME LIMIT Standard of Review. [11] The applicant says the decision should be reviewed on a standard of correctness. The Minister says the appropriate standard of review is reasonableness. The two standards are described in the leading case on judicial review, Dunsmuir v New Brunswick, 2008 SCC 9, and the cases that later refined its analysis. The majority in Dunsmuir set out a two-stage analysis at para.24: First, courts ascertain whether the jurisprudence has already determined in a satisfactory manner the degree of deference to be accorded with regard to a particular category of question. Second, where the first inquiry proves unfruitful, courts must proceed to an analysis of the factors making it possible to identify the proper standard of review. The majority summarized the factors to be considered at the second stage in the following terms:

Page 5 64 The analysis must be contextual. As mentioned above, it is dependent on the application of a number of relevant factors, including: (1) the presence or absence of a privative clause; (2) the purpose of the tribunal as determined by interpretation of enabling legislation; (3) the nature of the question at issue, and; (4) the expertise of the tribunal. In many cases, it will not be necessary to consider all of the factors, as some of them may be determinative in the application of the reasonableness standard in a specific case. [12] The Supreme Court of Canada discussed reasonableness in Canada (Citizenship and Immigration) v Khosa, 2009 SCC 12, [2009] SCJ No 12, remarking at para. 59 that: [t]here might be more than one reasonable outcome. However, as long as the process and the outcome fit comfortably with the principles of justification, transparency and intelligibility, it is not open to a reviewing court to substitute its own view of a preferable outcome. More recently, the majority of the Nova Scotia Court of Appeal said, in Egg Films Inc v Nova Scotia (Labour Board), 2014 NSCA 33, [2014] NSJ No 150: 26 Reasonableness is neither the mechanical acclamation of the tribunal's conclusion nor a euphemism for the reviewing court to impose its own view. The court respects the Legislature's choice of the decision maker by analysing that tribunal's reasons to determine whether the result, factually and legally, occupies the range of reasonable outcomes. The question for the court isn't -- What does the judge think is correct or preferable? The question is -- Was the tribunal's conclusion reasonable? If there are several reasonably permissible outcomes the tribunal, not the court, chooses among them. If there is only one and the tribunal's conclusion isn't it, the decision is set aside. The use of reasonableness, instead of correctness, generally has bite when the governing statute is ambiguous, authorizes the tribunal to exercise discretion, or invites the tribunal to weigh policy... [26] The majority in Dunsmuir commented at para. 49 that deference: requires respect for the legislative choices to leave some matters in the hands of administrative decision makers, for the processes and determinations that draw on particular expertise and experiences, and for the different roles of the courts and administrative bodies within the Canadian constitutional system. [27] The question for the court on a reasonableness review, then, is whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law. [Dunsmuir at para 47.] By contrast, on a correctness review, the court shows no deference to the decision-maker, but

Page 6 undertakes its own analysis of the question. The analysis will bring the court to decide whether it agrees with the determination of the decision maker; if not, the court will substitute its own view and provide the correct answer. From the outset, the court must ask whether the tribunal's decision was correct. [Dunsmuir at para 50.] [28] The applicant says a full Dunsmuir analysis is required, given the lack of prior decisions interpreting Schedule Z. The Minister denies that a full Dunsmuir analysis is required, relying on Smith v Alliance Pipeline Ltd, 2011 SCC 7, [2011] SCJ No 7, paras. 24-26: Even when resort to these factors is required, it may not be necessary to consider them all ([Dunsmuir at] para. 64). [25] Accordingly, reviewing judges can usefully begin their analysis by determining whether the subject matter of the decision before them for review falls within one of the non-exhaustive categories identified by Dunsmuir. Under that approach, the first step will suffice to ascertain the standard of review applicable in this case. [26] Under Dunsmuir, the identified categories are subject to review for either correctness or reasonableness. The standard of correctness governs: (1) a constitutional issue; (2) a question of "general law 'that is both of central importance to the legal system as a whole and outside the adjudicator's specialized area of expertise'" (Dunsmuir, at para. 60 citing Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 62); (3) the drawing of jurisdictional lines between two or more competing specialized tribunals; and (4) a "true question of jurisdiction or vires" (paras. 58-61). On the other hand, reasonableness is normally the governing standard where the question: (1) relates to the interpretation of the tribunal's enabling (or "home") statute or "statutes closely connected to its function, with which it will have particular familiarity" (para. 54); (2) raises issues of fact, discretion or policy; or (3) involves inextricably intertwined legal and factual issues (paras. 51 and 53-54). The Minister suggests that this decision is a matter of interpretation of the home statute, and therefore automatically subject to a reasonableness analysis. As discussed below, I do not agree that this correctly describes the question. Therefore, I will go on to consider the Dunsmuir factors. Privative Clause [29] There is no suggestion that the Act contains a privative clause. Counsel for the Minister emphasized the Minister s powers under the Act in respect of the

Page 7 administration and supervision of insured health services, but did not suggest that MSI s decision that a physician has failed to meet the deadline to reply to an audit was shielded by a privative clause. Statutory Purpose [30] The applicant says the statutory purpose reflected in Schedule Z is resolving disputed audits between physicians and MSI. It is not a polycentric policy role. In his brief, the Minister, after prefatory remarks about the First Principles of Judicial review, analyzes the overall statutory scheme under the Act as well as the Public Service Act, RSNS 1989, c 376 with emphasis on the power of the Minister and the Minister s delegates. The Minister observes that audits under Schedule Z are conducted post-payment, and that the physician receives prior notice of the audit. This is uncontroversial. More controversially, the Minister seems to misinterpret the applicant s position, claiming that she says the Minister has no authority to recovery [sic] any fees paid to physicians. [Minister s brief at 10.] The applicant, in fact, only argues that nothing in the Act gives the Minister separate authority to unilaterally claw back funds which are the subject of a contested audit. (Emphasis added.) [Applicant s brief at para 45.] The Minister compounds the misinterpretation by claiming that the applicant s position is an absurdity; the applicant, he claims, takes the position that the Minister may conduct post-payment audits but then has no authority to act on the audit results. [Minister s brief at 11.] I find no absence of logic in the applicant s submission that the Minister lacks authority to unilaterally initiate recovery from a physician who has taken steps to contest the result of an audit. [31] In my view, the statutory purpose in issue cannot be reduced to providing overarching regulatory power to the Minister. There is also an issue of authority delegated (partly through negotiation with DNS) to the level of the MSI auditor. The statutory purpose includes providing a system for doctors billings to be audited, and for those audits to be reviewed by way of compliance review. Subject-matter of the Decision [32] There is some dispute as to what the decision actually was. The applicant says MSI made a single decision in which it (1) deemed her to accept the audit results, (2) barred her from contesting the audit, and (3) initiated the garnishment of her MSI payments. She points to the phrasing in Dr Church s letter of December 4, 2014: [a]s no response was received, the recovery for the amount

Page 8 owing to MSI for the audit was commenced There was, she says, no separate decision to commence recovery. The applicant says the issue is one of mixed fact and law: the interpretation of the word receipt in section 5 of Schedule Z, essentially a question of contractual interpretation with a strong legal aspect. According to the applicant, the decision is one with relevance to the general law, and therefore attracting less deference, in accordance with Dunsmuir at para.60: 60 As mentioned earlier, courts must also continue to substitute their own view of the correct answer where the question at issue is one of general law "that is both of central importance to the legal system as a whole and outside the adjudicator's specialized area of expertise" (Toronto (City) v. C.U.P.E., at para. 62, per LeBel J.). Because of their impact on the administration of justice as a whole, such questions require uniform and consistent answers. Such was the case in Toronto (City) v. C.U.P.E., which dealt with complex common law rules and conflicting jurisprudence on the doctrines of res judicata and abuse of process issues that are at the heart of the administration of justice (see para. 15, per Arbour J.). [Emphasis added.] [33] The Minister, by contrast, says the subject-matter is not within the categories identified as being subject to the correctness standard. In particular, it is not within the general law category described in Dunsmuir. The Minister describes the decision as one of applying written Policy and contract language to facts, involving interpreting the enabling or home statute, closely connected to MSI s function and with which it has particular familiarity. Further, the Minister says, the decision raised issues of fact, discretion or policy, and it involved inextricably intertwined legal and factual issues. MSI was allegedly interpreting its enabling statute, the Procedures Manual a policy allegedly made under the authority of the Act and the Master Agreement. [34] The Minister asserts that the policy clearly deems the applicant to have received the decision five days after mailing. Although the MSI Procedures Manual does include such a provision at Art 3.3.3.6.3, there is no suggestion that the applicant was informed of the deeming provision. It is not referenced in Dr Church s letters. The Minister s position suggests that the applicant had no right to notice of the deadline that would be applied to her response to the audit. This is the inevitable conclusion if the Minister s statutory power, combined with an internal policy, could displace the notice provisions of Schedule Z. [35] I do not accept the Minister s position. The decision in question was that of MSI, through Dr Church, to deny the applicant access to the compliance review process on the basis of a missed reply deadline. The only apparent standard by

Page 9 which the decision can be judged is the interpretation of the word receipt in a time-limit provision of Schedule Z. This is a question of law, or possibly mixed law and fact. It is a question on which there is no convincing reason to accord deference to the decision-maker. Expertise [36] The Supreme Court of Canada said in Newfoundland and Labrador Nurses' Union v Newfoundland and Labrador (Treasury Board), 2011 SCC 62, [2011] SCJ No 62 ( Newfoundland Nurses Union ), at para. 13 that specialized decision-makers routinely render decisions in their respective spheres of expertise, using concepts and language often unique to their areas and rendering decisions that are often counter-intuitive to a generalist. In Dr Q v College of Physicians and Surgeons of British Columbia, 2003 SCC 19, [2003] SCJ No 18, the court said: 28 The second factor, relative expertise, recognizes that legislatures will sometimes remit an issue to a decision-making body that has particular topical expertise or is adept in the determination of particular issues. Where this is so, courts will seek to respect this legislative choice when conducting judicial review. Yet expertise is a relative concept, not an absolute one. Greater deference will be called for only where the decision-making body is, in some way, more expert than the courts and the question under consideration is one that falls within the scope of this greater expertise: see Moreau-Bérubé v. New Brunswick (Judicial Council), [2002] 1 S.C.R. 249, 2002 SCC 11, at para. 50. Thus, the analysis under this heading "has three dimensions: the court must characterize the expertise of the tribunal in question; it must consider its own expertise relative to that of the tribunal; and it must identify the nature of the specific issue before the administrative decision-maker relative to this expertise": Pushpanathan, supra, at para. 33. [Emphasis in original.] [37] According to the applicant, MSI has no more expertise in the interpretation of section 5 of Schedule Z and the word receipt than the court does. The Minister says the decision under review required appreciation of the operation of the MSI Program, audits, recoveries and prudent financial management of public monies. [Minister s brief at p. 17.] The Minister s authority over insured health services under the legislation is said to authorize the MSI Procedures Manual. In essence, the Minister says the Minister s balancing of the interests of physicians in commencing timely appeals, and the public in having timely financial disclosure has led to a determination that a five-day deemed delivery date will be used when calculating a deadline. [Minister s brief at p. 18.] Additionally, the

Minister says the determination is one of fact and discretion, calling for greater deference. Page 10 [38] Contrary to the Minister s claim to a universal expertise on anything arising under the Act, this issue raises a point of procedural law, of general relevance to the legal system. This was not, for instance, a determination of whether a particular physician s fee fell within a tariff, which would be a matter on which Dr Church s expertise would exceed that of the court. Conclusion Standard of Review [39] In my view, on a balancing of factors, there is little basis for deference on the point at issue. The interpretation of the word receipt is a question of general procedural law, on which MSI and its medical consultant have no particular expertise, and no expertise comparable to a court. The statutory scheme and the agreements and policies it authorizes creates areas where deference would be required, such as substantive decisions on the application of the tariffs for insured services. This is not one of them. I find that the standard of review is correctness. This standard applies to the Minister s interpretation of the governing scheme, and particularly of the meaning of receipt in Schedule Z. Meaning of receipt in section 5 of Schedule Z [40] The applicant argues that the MSI decision is fatally flawed and cannot withstand scrutiny (on either a reasonableness or corrections standard). Based on her counsel s fax of November 21, 2014, stating that the applicant received the audit results on or about October 31 st, she says, the only conclusion which MSI could fairly have reached on the basis of the Amended Record was that [the applicant] contacted MSI within three weeks of receiving the audit results [Applicant s brief at para. 76.] As noted earlier, the Minister does not dispute that 21 November would be within three weeks of 31 October. [41] Schedule Z does not qualify the plain and ordinary meaning of receipt. In particular, it does not provide for a deemed date of receipt. The Master Agreement does contain a 48-hour deeming provision, but this provision, by its plain language, applies only to notice as between the parties to the agreement, the Minister and DNS. Art 11(a) of the Master Agreement refers to [a]ll notices, requests, demands or other communications (collectively, Notices ) required or permitted to be given by one Party to the other Party pursuant to this

Page 11 Agreement Art 11(b) deems [a]ll Notices to be received, if mailed, Forty Eight (48) hours after 12:01 a.m. on the day following the day of mailing Interpreted in light of Art 11(a), Art 11(b) refers to notices between the parties to the Master Agreement. It has no bearing on a notice from MSI to a physician under section 5 of Schedule Z. The Minister s argument that Art 11 should be deemed to apply to Schedule Z because the Master Agreement deems there to be a single unified agreement overlooks the plain language of Art 11. [42] Additionally the Minister relies on the MSI Procedures Manual, which the applicant says is a non-binding policy document which cannot limit her rights under the Act, the Master Agreement, or Schedule Z. It is, she submits, irrelevant to determining the meaning of receipt under section 5 of Schedule Z. In Pezim v British Columbia (Superintendent of Brokers), [1994] 2 SCR 557, [1994] SCJ No 58, Iacobucci J said, for the court: 75 In the case at bar, the [Securities] Commission's primary role is to administer and apply the Act. It also plays a policy development role. Thus, this is an additional basis for deference. However, it is important to note that the Commission's policy-making role is limited. By that I mean that their policies cannot be elevated to the status of law; they are not to be treated as legal pronouncements absent legal authority mandating such treatment. [Emphasis added.] [43] The Minister advances no convincing reason to interpret receipt as anything other than actual receipt. He appears to take the position that, having been notified of a three-week deadline, the applicant had no right to notice of the deemed receipt policy which would start the clock running. The Minister goes so far as to argue that it would have been open to MSI to impose the 48-hour deadline found in the Master Agreement, even though, as already noted, there is no valid reason to apply it to the applicant. [44] The applicant says the meaning of receipt must be interpreted in the context of section 5 of Schedule Z and the Master Agreement. Her position is that receipt in this context means actual receipt. She cites London and Lancashire Fire Insurance Co v Veltre (1918), 56 SCR 588 ( Veltre ), where an insurance policy was subject to certain statutory notice provisions, and the insurer sent a cancellation notice that the insured did not receive until after a fire destroyed the insured property. Anglin J said, for the majority: It would be a strong thing to hold that the insurer could extinguish the contractual rights of the insured under his policy without any prior actual notice

being given to him. In the absence of an explicit statement that notice of cancellation should be deemed effectual from the time at which it would in the ordinary course of post have reached the insured, nothing short of an irresistible inference from the terms in which the condition providing for notice by post is couched that that was the purpose and intention of the legislature would suffice to justify a court in holding that the contractual rights could be thus extinguished There is no provision in the Ontario practice for the service of legal process or notice by registered post such as is found in the English O. XLVII., R. 2. It is noteworthy that in that rule, in order to make a notice so sent operative not from its actual receipt but from the time at which it would be delivered in the ordinary course of post, an explicit provision to that effect was apparently deemed necessary. A not unreasonable inference is that without it the service would be effectual only from the time of the actual receipt of the mailed document. A provision in the English Interpretation Act of 1889, ch. 63, sec. 26, creates the like presumption in regard to any document which a statute authorises or requires to be served, given or sent by post unless the contrary is proved. Here the contrary has been proved. It would, no doubt, have been much more satisfactory had the statute explicitly declared from what time the seven days should be computed in the case of notices by registered post but, in the absence of some such provision as is found in the English rule cited, the terms of condition 15, in my opinion, do not warrant a holding that by resorting to it an insurance company can deprive an insured of the benefit of the whole or any part of the seven days notice upon giving which condition 11 enables the company to terminate its risk. Notice, unless the contrary be clearly provided, must mean actual notice. The insured knows, or must be presumed to know, that he is entitled to seven days from the time at which he receives the notice. I therefore incline to the opinion that if the plaintiff had actually received the notice of cancellation seven days before the fire occurred she could not have recovered on the policy, which would have ceased to be in force, not upon the 22nd of December, but at the expiry of seven days after actual receipt of the notice. [Veltre at 599.] [Emphasis added.] Page 12 Based on this authority, the applicant submits that absent an express provision or a clear implication otherwise, a notice period under a contract runs from the date of actual receipt. It follows that the notice required by section 5 of Schedule Z means actual notice, so that the time only began to run when the applicant actually received the audit results.

Page 13 [45] The Minister points to Veltre as authority for the proposition that interpretation of a notice by mail provision must serve the interests of both parties, and at page 21 of his brief interprets the applicant s position as belief that she can select any date that suits her as the date of receipt. I disagree with that characterization; the applicant merely argues that, in the absence of any reason to think otherwise, receipt means the date of actual receipt. S & M Laboratories [46] The Minister relies on S & M Laboratories Ltd v The Queen in right of Ontario (1979), 99 DLR (3d) 160, [1979] OJ No 4245 (Ont CA), saying that in that case powers similar to those provided to the Minister under the Act were held to ground precisely such a recovery authority. [Minister s brief at 11.] The ratio of S&M Laboratories was, in essence, that an administrator s power to authorize payments to health-care service providers implicitly included the power to deduct overpayments. The review committee whose recommendation was the basis for the general manager s decision was in a position similar to the MSI medical consultant. The Ontario Court of Appeal determined that there was no right to be heard by the review committee before it made a recommendation to the general manager, who could commence recovery of overpayments. However, the applicant in the present case is not asserting a right to be heard by the medical consultant. She is only claiming access to a compliance review process specifically provided for in the agreement between the parties, and challenging MSI s authority to make deductions without allowing her access to the process. S&M Laboratories is of little relevance on the specific issue in the present case. Analogies to Civil Proceedings [47] The applicant argues that the effect of the MSI decision is akin to allowing recovery of a debt upon mere issuance of a statement of claim, without regard to whether a defence is filed, and without the need to obtain default judgment. Nothing in the Master Agreement generally, or in Schedule Z specifically, authorizes garnishing funds that are the subject of a disputed audit; the only basis for such a course of action appears to be in an internal policy manual originating with the Minister and binding on MSI, which, the applicant argues, cannot provide such authority. She denies that sections 8 or 13 of the Act give this manual the force of law, as the Minister suggests. Section 8 allows the Minister to enter into agreements implementing and carrying out the MSI Plan. Even if the policy manual were an agreement between the Minister and MSI which it is not it

could not bind a third party, such as DNS. It is no more than internal policy, without the force of law. Page 14 [48] The applicant points out that actual notice is fundamental to civil dispute resolution, making an analogy to the requirement for personal service of a statement of claim before a deadline for filing a defence starts to run under the Civil Procedure Rules. In effect, the applicant argues that MSI has obtained a form of default judgment which should be set aside. The classic analysis for setting aside default judgment requires the defendant to show a fairly arguable defence or serious issue to be tried, and to show a reasonable excuse for the failure to file a defence. [Temple v Riley (2001), 6 CPC (5 th ) 116, 2001 NSCA 36, 2001 CarswellNS 64, at para 27; Bank of Nova Scotia v Howes, 2012 NSSC 60, 2012 CarswellNS 96, at para 3.] Civil Procedure Rule 8.10 makes it an abuse of process to obtain default judgment without giving reasonable warning to a responding party who has advised in writing that she intends to defend the claim or that she has retained counsel in respect of the claim. [49] Applying the default judgment analysis, the applicant says, firstly, that there was no delay, since she actually responded within the proper time period. In any event, she had informed MSI of her intention to respond, but MSI proceeded to impose the penalty regardless. The applicant says this was akin to abuse of process as described in Rule 8.10. [Applicant s brief at paras 98-103.] [50] I do not find the analogy to default judgment is an argument that carries significant weight. This proceeding involves a specific issue arising in a specific statutory, regulatory, and contractual context, and references to the general law of civil procedure are not determinative. For similar reasons, the Minister s claim that the laws of Nova Scotia impose a deemed delivery date for contractual notices served by mail is unconvincing. Apparently this is a reference to deemed receipt provisions in the Civil Procedure Rules; the Minister does not point to any other authority. Neither of these arguments influences the outcome of this judicial review. [51] The analogy to Civil Procedure Rules does, however, warrant comment. Although not required to follow the process those rules prescribe, it would have been much more efficient for MSI and the Minister to have approached this matter in the accommodating manner commercial affairs are usually addressed in Nova Scotia, applying proportionality and notice principles recognized in the Civil Procedure Rules. The Minister's insistence that the dispute of a preliminary issue

Page 15 involves intricate policy issues requiring extensive analysis of ministerial power has resulted in a process which to date has generated a nine-inch thick court file, three court appearances for motions for directions, and a contested hearing concerning the content of the record for judicial review, resulting in a written decision by one of the motions judges. Then, after delivering 93 pages of written submissions, the parties presented oral argument during a full-day judicial review hearing. Invoking such an extensive process to insist that some deemed notice deadline should override actual time of receipt, prior to any consideration of the merits of the applicant's challenge to an audit involving less than $9,000 in dispute, is not productive, and is inconsistent with the approach to dispute resolution underlying Civil Procedure Rules and commercial practice generally. CONCLUSION INTERPRETATION OF THE TIME LIMIT: APPLICATION OF CORRECTNESS STANDARD AND MEANING OF RECEIPT [52] The five-day deemed receipt under MSI s policy cannot reasonably bind the applicant if she has no notice of it. The Minister s argument does not support the claim that Schedule Z can reasonably be read to incorporate a deadline provision of which the physician being audited does not have notice. Nor does the Minister provide a reasonable basis for reading the statute and the policy so as to deprive the applicant of the right to contest an audit under Schedule Z. [53] MSI s interpretation of the governing scheme, and particularly the meaning of "receipt" in Schedule Z, was incorrect, and I conclude that the decision should be quashed. Dr. Church provided no reasons for her determination that the applicant had missed the deadline. Post-decision efforts by the Minister during judicial review to invoke deeming provisions contained in policies and manuals, which were neither referenced by the decision maker nor provided to the applicant, do not support the correctness of the Minister s decision. Alternate Standard of Review [54] My conclusion that the Minister s decision ought to be quashed would not be different had I determined that the proper standard of review is reasonableness. The majority noted at para. 47 of Dunsmuir, that reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process. A unanimous Supreme Court of Canada elaborated on this concept in the following manner at para. 16 of Newfoundland Nurses Union (supra):

Page 16 In other words, if the reasons allow the reviewing court to understand why the tribunal made its decision and permit it to determine whether the conclusion is within the range of acceptable outcomes, the Dunsmuir criteria are met. [55] As the applicant points out in her reply brief, MSI s communications: (a) make no reference to the concept of receipt, or the date on which Dr. Lymburner received the audit results; (b) do not explain whether Dr. Church applied a deemed date of receipt in rendering her decision; (c) make no reference to a deemed date of receipt at all; (d) do not identify the date on which Dr. Church deemed Dr. Lymburner to have received the audit results, or how she calculated this date of receipt; (e) do not indicate whether Dr. Church considered or applied any of the rationales which were advanced by the Minister s counsel at judicial review, including the MSI Procedures Manual, Article 11(b) of the Master Agreement, the well established common law principles referred to at pages 21-22 of the Minister s brief, or some other mechanism of deemed delivery; (f) do not reference the MSI Procedures Manual at all; (g) do not explain whether Dr. Church considered applying more than one of these approaches, or how she ultimately chose to apply an unidentified approach. [56] Dr. Church did not give reasons to provide the necessary justification, transparency and intelligibility to indicate how MSI actually made its decision, or to determine whether the decision is reasonable. To borrow the Supreme Court s words in Newfoundland Nurses Union (supra), Dr. Church s communications do not allow this Honourable Court to understand why the Minister made the decision, or determine whether it falls within a range of acceptable outcomes. PROCEDURAL FAIRNESS [57] Because I have determined that the decision should be set aside as incorrect, it is unnecessary that I consider the second prong of the applicant s challenge to

Page 17 the decision that it should be quashed for procedural unfairness. I will address the issue, however, as the parties have provided extensive written and oral submissions concerning circumstances which I conclude constitute an alternate basis upon which the decision ought to be quashed. [58] Dr. Lymburner maintains that if MSI intended to apply a deemed date of receipt, procedural fairness required that she be notified of this and informed of the deemed deadline. [59] The Supreme Court of Canada has confirmed in a line of cases that there is: as a general common law principle, a duty of procedural fairness lying on every public authority making an administrative decision which is not of a legislative nature and which affects the rights, privileges or interests of an individual [Cardinal v Director of Kent Institution, [1985] 2 SCR 643; see also, generally, Baker v New Brunswick (Judicial Council), [2002] 1 SCR 249, 2002 SCC 11.] The applicant submits that, in acting as the Minister s delegate, and making a decision unfavourably affecting her rights, interests, and privileges, MSI was acting as an administrative decision-maker, thereby incurring a duty of procedural fairness. The issues, therefore, are the content of the duty, and whether it was satisfied in this case. The Court of Appeal described the process in Kelly v Nova Scotia Police Commission, 2006 NSCA 27: [21] The first step determining the content of the tribunal s duty of fairness must pay careful attention to the context of the particular proceeding and show appropriate deference to the tribunal s discretion to set its own procedures. The second step assessing whether the Board lived up to its duty -- assesses whether the tribunal met the standard of fairness defined at the first step. The court is to intervene if of the opinion the tribunal s procedures were unfair. In that sense, the court reviews for correctness. But this review must be conducted in light of the standard established at the first step and not simply by comparing the tribunal s procedure with the court s own views about what an appropriate procedure would have been. Fairness is often in the eye of the beholder and the tribunal s perspective and the whole context of the proceeding should be taken into account. Court procedures are not necessarily the gold standard for this review. [60] In his text Canadian Administrative Law, Regimbald comments on the importance of notice in the administrative decision-making process: Notice is a fundamental component of the administrative process and allows parties to possess sufficient information to allow them to make representations, submit evidence, or appear before the decision maker; essentially, notice provides

an opportunity to prepare the case adequately. Notice is therefore an essential component of the right to hear the other side, and a component of the rules of procedural fairness, as it is impossible to offer a fair hearing if the affected person has no notice of the decision-making process. The parties to the proceedings, which normally means the persons directly affected by the decision, must be given adequate notice. Many important decisions in administrative law have been nullified for failure to provide adequate notice Where the relevant legislation is silent with respect to notice requirements, the duty to act fairly will likely require that some notice be given. However, the scope of the notice required will vary with the nature of the interest to be protected and shaped by the circumstances of the particular case. Moreover, the gravity of the consequences of the proceedings for the individual, the issues to be canvassed, evidence and arguments involved, as well as the nature of the case and the extent of any common law requirement to give notice will be important considerations in determining the exact extent of the notice to be given. In any event, as held by the SCC in [Charkaoui v Canada (Citizenship and Immigration), [2007] 1 SCR 350], the right to know the case to be met is not absolute. Generally, the ultimate object of notice will be to enable the person who would be directly affected by an adverse decision to possess sufficient information on the matter to be in a position to: (1) make representations on his or her own behalf; (2) appear at a hearing or inquiry; and (3) effectively prepare his or her own case and answer the case to be met. [Guy Regimbald, Canadian Administrative Law, 2d edn (Markham, Ont: LexisNexis, 2015) at 305-306.] David Mullan suggests, in Administrative Law, that the requirements of notice will be more rigorous the nearer the nature of the decision-making process in question comes to approximating ordinary criminal or civil litigation [David J Mullan, Administrative Law (Toronto: Irwin Law, 2001) at 233.] Page 18 [61] In determining the content of the duty of fairness, the leading case is Baker v Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817 ( Baker ), where at paras. 23-28 L Heureux Dubé J, for the majority, identified five (non-exhaustive) considerations: (1) the nature of the decision being made and the process followed in making it ; (2) the nature of the statutory scheme and the terms of the statute pursuant to which the body operates ; (3) the importance of the decision to the individual or individuals affected : (4) the legitimate expectations of the person challenging the decision ; and (5) the choices of procedure made by the agency itself, particularly when the statute leaves to the decision-maker the ability to choose its own procedures, or when the agency has an expertise in determining what procedures are appropriate in the circumstances

Page 19 [62] The Minister correctly observes that the Baker factors are not meant to be applied formulaically. The process of determining whether there has been a denial of natural justice or procedural fairness is not one of measuring the procedures used by the decision-maker against those applicable in a court of law. The decision-maker is entitled to select procedures, and is entitled to a degree of deference in that selection. It does not follow from that deference, however, that the decision-maker is entitled to choose procedures with impunity. I will apply the Baker considerations to this case. Nature of the Scheme [63] Where the process followed by the decision-maker involves adjudicating disputes between parties in a manner akin to the judicial process rather than wider-ranging legislative or policy decisions it is more likely that procedural protections closer to the trial model will be required by the duty of fairness. [Baker at para 23.] The applicant says the MSI process is of the former kind, being concerned principally with the determination of the rights of the physician being audited. Additionally, she argues, the process prescribed by Schedule Z has features similar to those under the Civil Procedure Rules, such as the alleged similarity to the default judgment process noted earlier; the exchange of documents in the nature of pleadings if the physician disputes the audit; the application of arbitration procedures under the Commercial Arbitration Act; and the fact that the disputes to be resolved under Schedule Z are concerned with money. [64] As to the nature of the governing scheme, the applicant says Schedule Z and the Master Agreement form the governing statutory scheme. The presence of procedural requirements similar to the judicial process such as the three-week deadline for contesting an audit or risking the equivalent of default judgment indicate that greater procedural protections are required. [65] In my view, the scheme is essentially as described by the applicant. The Minister s insistence on focusing on a claim of expansive Ministerial power, at the expense of other considerations, overlooks the fact that a doctor in the position of the applicant is clearly intended by the parties to the Master Agreement and Schedule Z to have a right to be heard in response to an audit. Importance of the Decision

Page 20 [66] The applicant says the MSI decision has deprived her of a substantial sum of money and has prevented her from contesting the decision within the mandated process, forcing her to seek judicial review. It is of substantial importance to her, pointing to more demanding procedural protections, she argues. In addition to the monetary aspect, she is left unable to challenge the finding that she has made improper billings. Legitimate Expectations [67] As L Heureux Dubé J said in Baker at para. 26, [i]f the claimant has a legitimate expectation that a certain procedure will be followed, this procedure will be required by the duty of fairness The applicant says she had a legitimate expectation that her deadline for commencing the compliance negotiation process would run from the date she actually received notice, or that she would be informed of any deemed notice date MSI intended to rely on. She submits that she had no reason to believe that receipt meant anything else. The Minister points to authorities suggesting that legitimate expectations require a representation by the relevant officials. As the court said in Canada (Attorney General) v Mavi, 2011 SCC 30, [2011] SCJ No 30: 68 Where a government official makes representations within the scope of his or her authority to an individual about an administrative process that the government will follow, and the representations said to give rise to the legitimate expectation are clear, unambiguous and unqualified, the government may be held to its word, provided the representations are procedural in nature and do not conflict with the decision maker's statutory duty. Proof of reliance is not a requisite... It will be a breach of the duty of fairness for the decision maker to fail in a substantial way to live up to its undertaking [68] I find that the only legitimate expectation in this case was that MSI would act within its own legal boundaries. The applicant was entitled to expect that MSI would handle her case in accordance with the Master Agreement, Schedule Z, and the administrative law principles governing the procedure to be followed. None of these things required specific representations; a party is entitled to expect a decision-maker to act in accordance with the law. Moreover, the Minister had agreed to the terms of Schedule Z. This agreement in itself would support a legitimate expectation that the requirements of Schedule Z would be followed. Choice of Procedure