Discipline penalty prohibiting ownership and control of professional businesses

With modern-day professional businesses becoming multi-clinic based, national, or international operations, professional regulators can find themselves challenged in ordering sanctions that result in real deterrence.  Some professional regulators, while having powers to limit the practice of registrants, may not have the power to prohibit the financial benefits that registrants obtain from their businesses, despite being prohibited from practicing.  However, where legislation permits a broad sanction power and the registrant have been found guilty of financial misconduct, a discipline committee may order that registrants be prohibited from having proprietary or management control of their businesses.  In the recent case of Khalil v. Ontario College of Pharmacists, [2019] O.J. No. 3161, the court upheld a discipline committee ‘s decision to order sanctions that included a three-year prohibition on the appellant having any proprietary interest in a pharmacy and from acting as a director of a corporation that owns a pharmacy.

The appellant was a pharmacist at a pharmacy (the Pharmacy”), but also the designated manager and sole shareholder of the Pharmacy.  That Pharmacy was sold in 2014. At the time of discipline committee’s penalty hearing, the appellant was still a director and a shareholder of five corporations, four of which owned pharmacies in Ontario. In 2013, the Pharmacy was selected for an audit by the Ministry of Health and Long-Term Care (the “Ministry”). The audit found that the Pharmacy had made a number of unsubstantiated claims under the publicly-funded Ontario Drug Benefit Program (“ODB”). As a consequence, the Executive Officer of the ODB terminated the Pharmacy’s ability to submit claims to the ODB.

The College commenced an investigation after a complaint by the Ministry. It concluded the Pharmacy had made unsubstantiated claims to the ODB in excess of $80,000. The submission of false claims to the ODB involved the creation of false records of what had been dispensed to patients, including false information added to patient profiles maintained by the Pharmacy and by the Ministry. At a hearing before the Discipline Committee, the appellant admitted the allegations, and the Discipline Committee concluded the appellant had engaged in professional misconduct.

The parties agreed on some terms of the penalty, but disagreed on the College’s submission that the appellant be prohibited from owning any interest in a pharmacy, or acting as a director in a corporation owning any pharmacies, for three years.  The Discipline Committee ordered sanctions including a prohibition of ownership or control of any pharmacies for three years.

Before the court, the appellant argued that the Discipline Committee was required to apply the Health Professions Procedural Code (the “Code”) and the Drug and Pharmacies Regulation Act, R.S.O. 1990, c. H.4 (the “DPRA”) and its regulations. Sections 142 to 144 of the DPRA defined who can own a pharmacy and set out what happens to the pharmacy in the event that a pharmacist’s certificate of registration is revoked or suspended. The appellant argued that these provisions of the DPRA limit the discretion conferred on the Discipline Committee by s. 51(2)3 of the Code, which empowered the Committee to direct the Registrar to impose specified terms, conditions and limitations on the member’s certificate of registration for a specified or indefinite period of time. The court found that nothing in that section expressly authorized the Committee to prohibit a member from having a proprietary interest in a pharmacy or from being a director of a corporation that operates a pharmacy. However, s. 51(2)3, the power to direct the Registrar to impose specified terms, conditions and limitations on the member’s certificate of registration, is “phrased broadly”. [para. 15]

The court ultimately found no conflict between the provisions of the DPRA and a broad power of the Discipline Committee under the Code; DRPA ss. 142 to 144 were not intended to limit the restrictions that a panel can impose. Furthermore, the Discipline Committee reasonably interpreted s. 51(2)3 of the Code as allowing it to impose a penalty that would adequately protect the public interest, [para. 32] and it also acted reasonably to impose restrictions on corporate ownership and directorships, given the gravity of the appellant knowingly filing false claims by the Pharmacy with a publicly-funded drug benefit program. [34] He was a director and shareholder of four corporations that owned and operated pharmacies; the committee was reasonably concerned about “the real risk of further false billing by those pharmacies should the appellant continue to be involved in the ownership or direction of those entities”. [34]

Section 51(2)3 of the Code stipulates that a panel may make an order “Directing the Registrar to impose specified terms, conditions and limitations on the member’s certificate of registration for a specified or indefinite period of time.” For comparison, in British Columbia, s. 39(2)(b) and (d) of the Health Professions Act empowers a discipline committee to both “impose limits or conditions on the respondent’s practice” and “impose limits or conditions on the management of the respondent’s practice during the suspension”.

Khalil v. Ontario College of Pharmacists, [2019] O.J. No. 3161

Lisa C. Fong and Michael Ng