The Superior Court Clarifies the Scope of Professional Fee-sharing
Several professional codes of ethics restrict members of professional orders from sharing their professional fees with non-members (e.g. Code of Professional Conduct of Lawyers, s. 107; Code of Ethics of Notaries, s. 32; Code of Ethics of Engineers, s. 3.05.05; Code of Ethics of Pharmacists, s. 49).
On December 29, 2016, the Quebec Superior Court (Monast, J.) rendered an important decision clarifying the scope of this restriction in the case of pharmacists (Quesnel c. Groupe Jean Coutu (PJC) inc., 2016 QCCS 6347 (“Quesnel”)). Section 49 of the Code of Ethics of Pharmacists prohibits pharmacists from sharing “the profits from the sale of medications or from their fees” with non-pharmacists. The Court was asked to render a declaratory judgment as to whether the royalty clauses in Groupe Jean Coutu (PJC) Inc.’s (“PJC”) franchise agreements, which require the franchisee to remit to the franchisor a percentage of all sales including of medications, contravened s. 49 of the Code of Ethics of Pharmacists.
The Order of Pharmacists had previously taken the position that the royalty payments were offside s. 49 (and its predecessor s. 4.01.01). In 2008, it took disciplinary proceedings against Quesnel, a pharmacist who at one point owned six PJC franchises. Quesnel pleaded guilty in exchange for a reduced penalty and instituted the declaratory proceedings as a mitigation measure.
In 2015, the Tribunal des Professions, the administrative appellate body for decisions of the Conseil de discipline, considered the scope of the prohibition in Cadrin c. Pharmaciens (Ordre professionnel des), 2015 QCTP 104 (“Cadrin”). It held that the Conseil’s approach to the prohibition on profit-sharing was unreasonable. As interpreted by the Conseil, a pharmacist would be prohibited from using his or her profits and fees in order to pay third parties for expenses incurred in running the pharmacy (i.e. rent, suppliers, etc.). The Tribunal held that the purpose of the provision was to ensure that pharmacists retained their independence, and to prevent, for example, non-pharmacists from becoming pharmacy owners or from exercising undue influence on pharmacists. In its view, there was nothing illegal about paying a percentage of profits and fees to a non-pharmacist, provided the payment corresponded to the fair value of the goods and services received.
Drawing on Cadrin and cases dealing with the analogous prohibition in the Code of Ethics of Engineers, the Superior Court in Quesnel likewise held that the prohibition on fee-sharing had to be interpreted in light of its purpose, i.e. to preserve the pharmacist’s independence and protect the public. Where the payment corresponds to the value for services, the prohibition is not triggered.
The Court accepted PJC’s uncontradicted expert evidence that the value of the services PJC provided and of the right to use PJC’s name and trademarks corresponded to, and at times exceeded, the royalties paid. The Superior Court therefore declared that the royalty clauses were valid and did not contravene s. 49 of the Code of Ethics of Pharmacists.