Canada: Proposed Legislation Aims to Create Greater Public Accountability

On October 20, 2010, the Government of Ontario released proposed legislation entitled the Broader Public Sector Accountability Act, 2010 (BPSAA) in response to the concerns identified in the Auditor General's Special Report on "Consultant Use in Selected Health Organizations."1

The proposed legislation will establish new rules that:

  • prohibit hospitals from using public funds to retain external lobbyists in order to lobby government; however, the legislation appears to expressly permit hospitals to retain lobbyists with revenues generated by the hospital (e.g. parking, retail);
  • require hospitals to report on their use of consultants;
  • require hospitals to post expenses of designated executives online;
  • enable cabinet to issue mandatory directives in respect of procurement practices;
  • require hospitals to issue compliance reports; and
  • expand the Freedom of Information and Protection of Privacy Act to hospitals as of January 1, 2012.

This Osler Update provides highlights of the proposed new legislation. Affected organizations will have to review and update their existing policies in order to comply with the new expectations. We suggest that a comprehensive framework is required, beginning with a code of business conduct and ethics that includes at a high level the policy framework that will ensure the organization's compliance with the new requirements.

New Rules and Standards for Reporting and Accountability

The proposed BPSAA will create new rules and standards for reporting and accountability for hospitals, Local Health Integration Networks (LHINs), school boards, colleges, universities, and other broader public sector (BPS) organizations that receive more than $10 million in public funding annually.


Hospitals, LHINs and other BPS organizations will be prohibited from using "public funds" to engage external lobbyists to lobby on their behalf. Those hospitals wishing to retain lobbyists, or maintain existing retainers with lobbyists, should ensure payments are from revenues generated by the hospital's operations and that these payments can be clearly demonstrated in the event of an audit.

Public Reporting of Expense Claims

Expense claims submitted by designated individuals, such as board members and senior managers of hospitals and LHINs, will have to be posted on the publicly-accessible websites of these organizations. Cabinet is empowered to issue directives requiring hospitals and LHINs to establish rules regarding who may make expense claims, the types of expenses or the amounts that may be claimed, and the circumstances in which they may be claimed. The directives may also require specified information or documents to be supplied or retained in support of expense claims.

Reporting Use of Consultants

Hospitals and LHINs will be required to prepare reports that are approved by their respective Boards of Directors regarding the use of consultants by the organization. Consultants are defined as:

A person or entity that under an agreement, other than an employment agreement, provides expert or strategic advice and related services for consideration and decision-making.

Although we are of the view that legal counsel is not captured by this definition when providing legal advice, legal counsel is captured under the lobbying prohibition. The Minister of Health and Long-Term Care may issue directives with respect to the content of the reports and to whom these reports shall be submitted.

Procurement Standards

Cabinet is also empowered to issue directives requiring BPS organizations to comply with procurement standards regarding the purchase of goods and services. The proposed Act states that the directives may incorporate existing government policies or standards, but does not specify which. It is therefore unclear whether, once implemented, the Act would require hospitals to follow the existing Ontario Supply Chain Guideline,2 which came into force earlier this year, or would incorporate other standards such as the Management Board of Cabinet Procurement Directive (July 2009). Until the directives are issued, the government expects the hospitals to comply with the Supply Chain Guidelines.

Compliance Reports

Compliance Reports submitted by the CEO and approved by the Board of Directors of each hospital would be required, attesting to the fact that the organization had complied with its obligation to report on the use of consultants, refrained from retaining lobbyists with public funds and complied with the expense claim and procurement directives.

In order to further ensure compliance, the Act empowers the Board of Directors to reduce the compensation of their CEO or other senior managers, where the organization has failed to comply with its obligations under the Act. This extraordinary power, together with similar provisions in the Excellent Care for All Act, 2010, indicates that the government has escalated the issues addressed in this legislation as a top priority for the Board of Directors, together with the oversight of quality.

Freedom of Information Regime to Apply to Ontario Hospitals

The proposed BPSAA amends the Freedom of Information and Protection of Privacy Act (FIPPA), extending its application to Ontario's hospital sector as of January 1, 2012 and this application will only be retroactive to January 1, 2007. FIPPA's broad access rights will allow individuals to request access to any record of information, subject to certain exemptions, in the custody or control of public and private hospitals.

Highlights of the Amendments

While the definition of "record" under FIPPA is extremely broad, the Act contains a number of mandatory and discretionary exemptions. Specific mandatory exemptions apply to Cabinet records, confidential third party information and personal information about individuals other than the requester. Some examples of existing discretionary exemptions of general application that will also apply to hospital records include exemptions for:

  • personal information;
  • records prepared by or for counsel for use in giving legal advice or in contemplation of or for use in litigation;
  • information where its disclosure could reasonably be expected to prejudice the economic interests of the hospital; and
  • positions, plans, procedures, criteria or instructions to be applied to contract negotiations.

The BPSAA amendments to FIPPA also create certain exclusions for specific hospital records from the application of FIPPA, including records related to:

  • hospital foundations;
  • charitable donations made to hospitals;
  • personal practices of health professionals; and
  • meetings, consultations, discussions or communications about applications for hospital appointments, the appointments or privileges of persons who have hospital privileges, and material contained in the personnel file for those persons.

Hospitals Face Reputational Risks Under FIPPA

In recent years controversies involving public sector organizations have demonstrated the significant reputational risks they face when information about their business conduct is made public. Hospitals will therefore want to adopt best practices in not only responding to FIPPA requests but, equally importantly, in (a) organizing existing files by identifying records subject to FIPPA (records coming into the custody or under the control of hospitals on or after January 1, 2007) before December 31, 2011, and by applying record retention schedules, subject to legislative record-keeping requirements [1]; and (b) educating all staff including the Board of Directors, as to how they should conduct business under the FIPPA regime, particularly with respect to expenses, procurement and decision-making relating to hospital services, in order to avoid any reputational risks. For example, the appropriate level of care must be paid to all correspondence dealing with hospital business, especially email, as it considered to be a "record" under FIPPA and subject to the public right of access.

If you have any questions about the proposed legislation and the impact, please contact Michael Watts or Gillott for further information.



2. Supply Chain Guideline April 2009, Ministry of Finance
( )

[1] This clause of the article, originally published October 22, 2010, has been amended to clarify and reflect its original intent.

Michael Watts is general counsel to many of the firm's public and private health industry clients in respect of a wide spectrum of matters, including: governance and regulatory advice, P3 construction and e-health agreements, outsourcing, health care restructuring agreements, and purchase and sale of regulated health care institutions, programs and assets. Roger Gillott has significant expertise in construction litigation, arbitration and dispute resolution proceedings and extensive advocacy experience in trial, appellate and arbitration proceedings, including submissions to the Supreme Court of Canada.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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