College of Physicians & Surgeons (Ontario) v. Casullo, [1977] 2 SCR 2

Supreme Court of Canada

College of Physicians & Surgeons (Ontario) v. Casullo, [1977] 2 S.C.R. 2

Date: 1976-05-05

The College of Physicians and Surgeons of Ontario (Plaintiff) Appellant;

and

Dr. Olindo Casullo (Defendent) Respondent.

1976: March 25; 1976: May 5.

Present: Laskin C.J. and Martland, Judson, Ritchie, Spence, Pigeon, Dickson, Beetz and de Grandpré JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Physicians and surgeons—Discipline Committee—Professional misconduct—Impartiality of Discipline Committee.

Respondent was found guilty of professional misconduct by the Discipline Committee of the College of Physicians and Surgeons in that, having a financial interest in a laboratory, he directed to that laboratory unreasonable and excessive orders and requisitions for tests for certain of his patients.

At the hearing members of the committee questioned respondent closely and showed annoyance with his evasiveness on whether he had a financial interest in the laboratory. An appeal from the Committee’s decision was dismissed by Donnelly J. sitting in Weekly Court on the basis that there was sufficient evidence to support the findings of the Committee and that respondent was given a fair hearing and afforded reasonable opportunity of presenting his answer to the charges.

Before the Court of Appeal where it was again urged that the Committee had failed to act impartially, that Court allowed respondent’s appeal and remitted the matter for rehearing, by a Discipline Committee differently constituted.

Held: The appeal should be allowed and the cross-appeal should be dismissed.

Professional discipline committees are under a duty to act judicially. Members of the Committee acknowledged that they were perhaps taking too active a role in the examination of witnesses. They questioned respondent particularly closely. However this questioning pertained only to the question of financial interest and there was no indication that the Committee’s understandable annoyance with respondent’s evasiveness affected its judgment on the issue of the unreasonably and excessive tests particularly in light of the Committee’s awareness that it might appear to be prosecuting rather than judging.

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APPEAL and CROSS-APPEAL from a judgment of the Court of Appeal for Ontario[1] allowing an appeal from a judgment of Donnelly J. at Weekly Court, dismissing an appeal from a finding by the Discipline Committee of the College of Physicians and Surgeons of Ontario that respondent was guilty of professional misconduct. Appeal allowed, cross-appeal dismissed.

Robert Armstrong, for the appellant.

Claude Thomson and M. Woogh, for the respondent.

The judgment of the Court was delivered by

JUDSON J.—After a hearing held pursuant to what is now s. 34 of The Medical Act, R.S.O. 1970, c. 268, the Discipline Committee of the College of Physicians and Surgeons of Ontario found, on October 23, 1970, that Dr. Olindo Casullo was guilty of professional misconduct. An appeal to a judge of the Supreme Court pursuant to s. 43 of The Medical Act, supra, was dismissed by Donnelly J. on October 11, 1972. On December 21, 1973, the Court of Appeal for Ontario, in a judgment reported at (1973), 2 O.R. (2d) 61, allowed an appeal from this order of dismissal and remitted the matter for rehearing by a Discipline Committee differently constituted. On application of the College of Physicians and Surgeons, the Court of Appeal by order dated April 16, 1974, granted leave to appeal to this Court.

The charge of professional misconduct against Dr. Casullo was based on the following allegations:

1. Within the period from September 1968 to December 1968, having a financial interest in St. Anna Medical Laboratory Ltd. and/or St. Anna Medical Centre, you obtained or sought to obtain an excessive financial benefit, by directing to that laboratory, orders and/or requisitions for tests which were billed to Ontario Medical Services Insurance Plan, in respect of some or all of the following patients, which orders and/or requisitions, in the circumstances in which they were ordered and/or requisitioned were, in whole or in part, unreasonable and/or grossly excessive: (six patients named).

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2. Within the period from October 1968 to April 1969, having a financial interest in St. Anna Medical Laboratory Ltd. and/or St. Anna Medical Centre, you obtained or sought to obtain an excessive financial benefit, by directing to that, laboratory, orders and/or requisitions for tests which were billed to Associated Medical Services, in respect of some or all of the following patients, which orders and/or requisitions, in the circumstances in which they were ordered and/or requisitioned were, in whole or in part, unreasonable and/or grossly excessive: (eight patients named).

It will be noted that the two paragraphs allege the same type of misconduct but in relation to different time periods, paying agencies and patients. As indicated in the reasons for judgment of the courts below, the essential elements of the charges are that (1) Dr. Casullo had a financial interest in St. Anna Medical Laboratory Limited; (2) he obtained, or sought to obtain, an excessive financial benefit by directing to that laboratory orders and requisitions for tests which were billed to Ontario Medical Services Insurance Plan or Associated Medical Services; and (3) in the circumstances which existed, the orders and requisitions were in whole or in part unreasonable and grossly excessive.

The laboratory accounts for Dr. Casullo’s patients were in some cases four or five times the fees for his professional services. Dr. K. J. R. Wightman, a Senior Physician at the Toronto General Hospital and Professor of Medicine at the University of Toronto, testified on behalf of the College that many of the tests ordered by Dr. Casullo were either unnecessary or duplicated by other tests. He acknowledged that some members of the medical profession believe that a thorough physical examination should include a complete set of laboratory tests and indicated that the multi-basic-screening approach is being researched by some larger hospitals and pathology groups. In his opinion, however, extensive laboratory screening is not economically sound and is not always in the best interests of the patient. He stated that “it is more sensible to have a very small sort of screen and then expand that according to what you find on examination or enquiry with the patient, and what you find in the initial laboratory test.” On

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the basis of the clinical notes submitted by Dr. Casullo, Dr. Wightman testified that in his opinion many of the tests ordered by Dr. Casullo were either not warranted by clinical findings or not necessary in view of other tests ordered.

Dr. Wightman indicated that where automated laboratory machines are used, a large number of tests can often be done on one sample of blood simultaneously. No evidence was called to establish whether St. Anna Medical Laboratory Limited used automated procedures. The medical director of the laboratory, Dr. M. A. Moscarello, was called by Dr. Casullo’s counsel on the express understanding that he would be asked only about Dr. Casullo’s financial relationship with the laboratory and not about laboratory procedures. Dr. Casullo called no evidence with respect to the reasonableness of the tests he had ordered, but in a letter written to the College before the charges were laid, he asserted that he had acted exclusively in the interests of his patients.

The evidence tending to establish that Dr. Casullo had a financial interest in St. Anna Medical Centre Limited and St. Anna Medical Laboratory Limited was contained in corporate returns for 1968 and 1969 indicating that Dr. Casullo was a director and president of both companies. On June 23 and 24, 1970, when the Discipline Committee first met to consider the charges against Dr. Casullo, the corporate returns had not been filed. Counsel for the College called the solicitor who had incorporated the companies and subsequently served as one of their directors to give evidence with respect to Dr. Casullo’s financial relationship with the companies. On the instructions of Dr. Casullo’s counsel, the solicitor claimed solicitor-client privilege and refused to answer questions. The Discipline Committee adjourned so that the College’s counsel could consider whether to seek an order forcing the solicitor to testify. During the adjournment, the 1968 and 1969 corporate returns

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for St. Anna Medical Centre Limited and St. Anna Medical Laboratory Limited were filed.

When the hearing resumed on October 22, 1970, the corporate returns were entered in evidence to establish that as a director and president of the companies Dr. Casullo had a financial interest in them. Dr. Casullo’s counsel considered that there was a case to meet and thus placed Dr. Casullo on the stand. Dr. Casullo testified that he held only one share of each company in trust and denied that he had a financial interest in either St. Anna Medical Centre Limited or St. Anna Medical Laboratory Limited. He explained that in 1965 he had decided to construct a medical building and that Romilda DePaulis, a woman in Italy, had agreed to assist him to obtain financing by investing in two companies which would lease space in the building. St. Anna Medical Centre Limited was incorporated in 1965 on application of Dr. Casullo, his then solicitor and his accountant. Its objects were “to own and manage a professional building or buildings and to lease space therein”. In 1970, the company leased approximately 1,000 square feet of space in the building, paying rent of $800 each month. The role of the company is not clear since Dr. Casullo testified that he personally owned the building and acted as its landlord. St. Anna Medical Laboratory Limited was incorporated in 1968 after the building was completed. Dr. Casullo and two of his solicitors served as directors, with Dr. Casullo acting as president. The medical laboratory occupied 1,200 square feet of space on two floors of the building and paid a monthly rent of $1,800.

Dr. Casullo testified that he managed both companies on behalf of Mrs. DePaulis, but claimed he knew nothing about their financial affairs. He claimed he did not know how much capital or how many issued shares the companies had, or how much money Mrs. DePaulis had invested in them.

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He further denied that Mrs. DePaulis had received any return on her investment. Later, under close questioning by members of the Discipline Committee, Dr. Casullo stated that Mrs. DePaulis had invested $15,000-$20,000 in St. Anna Medical Laboratory Limited and that he had sent her $150,000-5200,000 although he was under no obligation to do so.

Dr. Casullo claimed to hold only one share in trust in St. Anna Medical Laboratory Limited, but the evidence showed that 300 shares were issued and outstanding. The only evidence that Dr. Casullo held these shares and those of St. Anna Medical Centre Limited as trustee for Mrs. DePaulis was contained in two trust agreements. The documents were dated May 19, 1965 and January 22, 1968, the dates of incorporation of the companies to which they related, but admittedly neither document was prepared until 1970. A solicitor for Dr. Casullo explained that the legal affairs of several corporate clients had been neglected and that his responsibility after joining the firm was to bring them up to date. He had thus filed the corporate returns and drafted the trust agreements on the basis of information supplied by Dr. Casullo. The trust agreements were purportedly signed by Romilda DePaulis as well as Dr. Casullo, but neither signature was witnessed, and there was no other proof of Mrs. DePaulis’ signature or, in fact, of her existence. The solicitor who drafted the trust agreements admittedly had no independent knowledge of the facts embodied therein.

After the hearings of the Discipline Committee were adjourned on June 24, 1970, the shares of St. Anna Medical Laboratory Limited were sold to Immolika Anstalt, a Liechtenstein company. A representative of the company verified by letter that Dr. Casullo was not a shareholder directly or indirectly in the Liechtenstein company. At the time of the final hearing of the Discipline Committee on October 22, 1970, the shares of St. Anna Medical Laboratory Limited were being held in

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escrow by a trust company pending payment by Immolika Anstalt.

The Discipline Committee found Dr. Casullo guilty of professional misconduct and ordered that he be suspended for twelve months and pay costs of the hearing not exceeding $4,000. The Committee found that the laboratory tests requisitioned by Dr. Casullo were unreasonable and grossly excessive. Wherever there was conflict between the evidence of Dr. Wightman and Dr. Casullo, the Committee was unable to accept the opinion of Dr. Casullo. The Discipline Committee also found on the balance of probability that Dr. Casullo had a financial interest in St. Anna Medical Laboratory Limited. It attached little weight to the trust agreements since there was no credible evidence that they existed in 1968 or 1969. The signature of Romilda DePaulis was not proved and none of the signatures was witnessed. The Committee also attached significance to the fact that shortly after the first hearing of the Committee, changes were made in the structure of the company to transfer its assets to the Liechtenstein corporation.

An appeal from the Committee’s decision was dismissed by Donnelly J. sitting in Weekly Court. He held that there was sufficient evidence to support the findings of the Committee. He did not accept Dr. Casullo’s explanation of the trust arrangement. In the first place, he rejected Dr. Casullo’s contention that St. Anna Medical Centre Limited and St. Anna Medical Laboratory Limited were incorporated in order to assist in financing the construction of the building. Donnelly J. pointed out that it was improbable that a person approached to advance money would be influenced by a lease with St. Anna Medical Centre Limited which was newly incorporated to own and manage professional buildings. In addition, since St. Anna Medical Laboratory Limited was not incorporated until after the building was completed, it is unlikely that it would have assisted in obtaining financing to construct the building. Secondly, Donnelly J. emphasized that even though Dr. Casullo was the president of St. Anna Medical Laboratory Limited and active in its management,

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none of its books or records was produced to substantiate his claim that he acted only as trustee.

Donnelly J. dismissed an allegation that the Discipline Committee had failed to give Dr. Casullo a fair and impartial hearing. He acknowledged that it would have been preferable had certain questions put to Dr. Casullo by members of the Committee not been asked, but pointed out that the impugned questions may have resulted from impatience or annoyance at the manner in which Dr. Casullo testified. On the basis of the whole record, Donnelly J. considered that Dr. Casullo was given a fair hearing and afforded a reasonable opportunity of presenting his answer to the charges.

Before the Court of Appeal, it was again urged that the Discipline Committee had failed to act impartially. On behalf of the Court, Kelly J.A. stated:

In the course of the member’s testimony, particularly with regard to his possible financial interest in the laboratory, the member was far from frank and less than cooperative. Unquestionably and understandably the members of the Discipline Committee became impatient with the member’s evasiveness and showed annoyance with him by the manner in which the member was questioned. The Chairman conceded that there was difficulty in maintaining the role of the Discipline Committee as judges and not as prosecutors.

While we do not suggest that the text of the record necessarily demonstrates that the Discipline Committee failed to act in good faith, fairly and impartially, in view of the necessity that the evidence as to unreasonableness or excessiveness of the tests should be weighed with apparent objectivity, the record may well fail to pass the test that from it justice must appear to have been done.

The Court of Appeal thus allowed Dr. Casullo’s appeal and remitted the matter for rehearing by a Discipline Committee differently constituted. Since the unbefitting conduct of Dr. Casullo was a contributing factor in making necessary the intervention of the Court of Appeal, no order was made as to costs of the appeal. Subsequently, the Court of Appeal granted leave to the College of Physicians and Surgeons to appeal to this Court.

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Although professional discipline committees are not expected to conduct themselves in every respect like courts of law, they are under a duty to act judicially. Since courts are reluctant to review a discipline committee’s decision as to what constitutes professional misconduct, the committee’s duty to act judicially takes on added significance. The record in this case shows that members of the Discipline Committee played an active role in examining witnesses throughout the hearing.

Members of the Committee acknowledged that they were perhaps taking too active a role in the examination of witnesses. They questioned Dr. Casullo particularly closely, thereby giving rise to the allegation that they did not conduct themselves impartially. Dr. Casullo’s testimony on cross-examination by counsel for the College was evasive and confusing. Even to me, sitting on the third Court of Appeal, it is totally lacking in credibility. Members of the Discipline Committee questioned him in an effort to clarify their understanding of the corporations, their share structures, and Dr. Casullo’s involvement with them. At the suggestion of his counsel, Dr. Casullo’s testimony was interrupted and the solicitor who had drafted the ante-dated trust agreements was called to clarify these matters. The solicitor produced the trust agreements to the Committee, but since he had no information other than what Dr. Casullo had told him, his evidence was inconclusive.

Counsel for Dr. Casullo, supported by counsel for the College, then recommended that the Committee appoint an independent accountant to investigate the relationship between Dr. Casullo and the companies. He also suggested that the accountant might be sent to Italy to question Mrs. DePaulis. The Committee did not accept these recommendations and proceeded instead to examine Dr. Casullo. Under the Committee’s close questioning, he revealed information about matters of which he had previously disclaimed any knowledge. Members of the Committee indicated their concern that they were acting as prosecutors rather than judges, but since they had rejected their counsel’s advice

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to appoint an investigator, it appears that they felt obliged to conduct the subsequent examination of Dr. Casullo.

The Court of Appeal was concerned that the Committee’s obvious annoyance with Dr. Casullo’s evasiveness on the question of his financial interest in St. Anna Medical Laboratory Limited might appear to have colored its judgment on the question of whether he had ordered an excessive number of tests. The record shows that the Committee was clearly instructed by both counsel and on more than one occasion that the question of the appropriateness of the tests ordered was separate and distinct from the issue of financial intereSt. The Committee’s close questioning of Dr. Casullo pertained only to his financial interest in the companies. The Committee’s decision included separate findings, first, that Dr. Casullo had ordered an unreasonable or excessive number of tests and, second, that he had a financial interest in St. Anna Medical Laboratory Limited. In my opinion, there is no indication that the Committee’s understandable annoyance with Dr. Casullo’s evasiveness on the second issue affected its judgment on the first, particularly in light of the Committee’s awareness that it might appear to be prosecuting rather than judging. I would agree with Donnelly J. that the decision of the Committee on both issues was supported by the evidence.

I would allow the appeal with costs throughout.

In this Court Dr. Casullo filed a cross-appeal asking that we set aside that portion of the decision of the Court of Appeal directing a rehearing of this matter by a Discipline Committee differently constituted, and further, that the decision of the Discipline Committee be set aside and a finding of “not guilty of professional misconduct” in respect of each of the two charges be substituted therefor. I would dismiss this cross-appeal with costs.

Appeal allowed with costs; cross-appeal dismissed with costs.

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Solicitors for the appellant: Harris, Keachie, Garrow, Davies & Hunter, Toronto.

Solicitors for the respondent: Campbell, Godfrey & Lewtas, Toronto.