http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/119970/index.do
Great-West Life Assurance Company v. The Queen (September 21, 2015 – 2015 TCC 225, Owen J.).
Précis: This is a decision in two GST appeals dealing with whether certain services provided to the appellant were “financial services”. The appellant claimed that they were financial services and sought rebates for three reporting periods. The rebates at issue totalled roughly $4.2 million.
The services in question were rendered by Telus Health Solutions and Emergis Inc. Essentially they were services to administer the appellant’s prescription drug benefit plan:
[16] Under the 2007 Agreement, Great-West retained Emergis to perform services in relation to the determination and payment of benefits under the prescription drug and dental components of its group health benefits plans. Only the services relating to the prescription drug benefits are in issue in these appeals. The parties agreed that the services provided by Emergis to Great-West under the 2007 Agreement and under the 2012 Agreement constitute a single compound supply for the purposes of the ETA. The issue lies in how to characterize that single supply.
The Court found that the services at issue were administrative in nature and therefore excluded from the definition of “financial service”. As a result the appeal was dismissed with costs.
Decision: The decision is lengthy and well reasoned but at the end boils down to the three concluding paragraphs:
[107] The group of services making up the single supply by Emergis can be described as administrative services for two principal reasons.
[108] First, the services provided by Emergis to Great-West do not involve any independent decision making by Emergis. The basis for any decision regarding a claim is found in the plan communicated by Great-West to Emergis. Under sections 4.2 and 12.1 of the Agreements, Great-West is solely responsible for each Benefit Plan Design and for the accuracy of the Benefit Plan Design and Claimant Information it provides to Emergis. Under section 12.1, Emergis is responsible for the accuracy of the application of the Benefit Plan Design and data to the Identification Cards and the Assure Cards. In essence, Emergis provides a computer system that allows the decision regarding a drug benefit claim to be made in real time, but the decision itself stems from the terms of the group health benefits plan and not from Emergis.
[109] Second, the services provided by Emergis are quintessentially administrative in nature. Specifically, each drug benefit claim is electronically submitted by the pharmacist to Emergis, the dedicated computer system of Emergis adjudicates the claim in real time by applying the terms of the plan provided by Great-West, and that same system then communicates the result of the adjudication to the pharmacy, resulting in the constructive payment of any drug benefit available to the plan member. Emergis may also provide some additional information to Great-West (such as formularies) and to the pharmacies (such as the results of drug utilization reviews). However, the provision of this information is simply an aspect of Emergis’ role as administrator of the drug benefit payments. The Assure Card system employed by Emergis adds value for Great-West by simplifying and reducing the cost of the benefits payment procedure, but the system does not alter the substance of what is being done, which is established by the terms of the drug benefit plans provided by Great-West to Emergis. As stated by Mr. Roszak, Emergis is a pharmacy benefits manager and nothing more.
[110] For these reasons, I find that the services provided by Emergis to Great-West under the Agreements are prescribed services by virtue of paragraph 4(2)(b) of the Regulation and are therefore excluded from the definition of “financial service” by paragraph (t) of the definition of “financial service” in subsection 123(1) of the ETA. As the services constituting the single compound supply in issue are excluded from the definition of financial service by paragraph (t) of that definition, the supply itself is also excluded. Accordingly, the appeals of Great-West are dismissed with costs to the Respondent.
Comment: While one can only admire the appellant’s ingenuity in launching this rebate claim it does tend to bring to mind the concept of “faint hope” appeals in criminal matters.