Health providers procure a wide range of products and services, sometimes to support a new service delivery approach. But before proceeding to do so, it is important to ensure that all regulatory requirements have been met. To this point, a recent Ontario court decision offers a first judicial interpretation of the provisions relating to public consultation under the Local Health System Integration Act, 2006 (the "Act"). In Ontario Public Service Employees Union v. Central East Local Health Integration Network and Rouge Valley Health System, 206/08 (decided August 22, 2008), the Ontario Divisional Court held that where a Local Health Integration Network exercises its authority over funding decisions, there is no requirement to hold a public consultation. The same conclusion would not apply, the Court noted, where a LHIN exercises its more direct powers relating to the integration of health services within its jurisdiction.
Rouge Valley Health System is a public hospital ("RVHS") operating out of two sites. RVHS entered into a Hospital Accountability Agreement with the Ontario Ministry of Health and Long-Term Care (the "Minister") for the fiscal year 2007/2008, at a time when RVHS was operating a financial deficit. The Minister agreed to accept RVHS's deficit if RVHS agreed to conduct an external operational review to find ways to tackle its deficit.
The review, which was concluded in December 2007, lead to a recommendation that RVHS consider the consolidation and relocation of its in-patient mental health services. As a result, RVHS decided to consolidate the services it offered at its two locations into a single service to be offered at a single site. In January 2008, RVHS presented its proposal to the Central East LHIN (the "LHIN"), which approved RVHS's proposal. The annual savings expected from the consolidation of RVHS's in-patient mental health services was $600,000.
As was required under the Act, RVHS and the LHIN finalized a Service Accountability Agreement ("SAA") that was acceptable to both parties. The Boards of Directors of both RVHS and the LHIN subsequently approved the SAA.
The Ontario Public Service Employees Union ("OPSEU"), which represents the workers affected by the consolidation of the in-patient mental health services, filed an application challenging the LHIN's decision under the Act. Among other things, OPSEU argued the LHIN breached the Act by failing to provide an opportunity to the community to provide input on the proposed consolidation. OPSEU sought an order quashing or setting aside the LHIN's approval of the SAA and a declaration that a public consultation was required to be conducted under the Act before RVHS could proceed with its proposal.
ONTARIO'S DIVISIONAL COURT
The Divisional Court rejected OPSEU's challenge. The Court held that there is a requirement to conduct a public consultation where the LHIN makes an integration decision pursuant to section 26 of the Act, or where the LHIN objects to a voluntary integration between two entities under section 27 of the Act. With respect to RVHS's proposed consolidation of services, the LHIN did not make an integration decision under section 26 of the Act, so it was not obligated to conduct a public consultation. It was RVHS itself that made the decision to consolidate its in-patient mental health services. It was an internal decision of RVHS.
OPSEU also argued the LIHN was obligated to make an integration decision under section 25(2) of the Act, because the consolidation of the in-patient mental services at RVHS was negotiated by the LIHN, within the meaning of section 25(2)(a) of the Act. Section 25(2) of the Act directs the LIHN to make an integration decision where, among other reasons, the LHIN "facilitates or negotiates the integration of persons or entities..." (emphasis added). OPSEU argued that two entities were involved, because the mental health facilities at RVHS's two locations were separately listed as psychiatric facilities under the provincial Mental Health Act.
The Court rejected this argument and found that RVHS was a single "health service provider" operating from two sites, and could not be considered two separate entities for the purpose of the Act. As a result, the Court found that a consolidation decision made within RVHS – a single health service provider under the Act – did not come within the scope of section 25(2) of the Act. In other words, RVHS's internal decision was not the LIHN's decision.
Finally, OPSEU claimed that the LHIN was obligated to engage the community under section 16(6) of the Act. It is significant, however, that section 16(6) is not aimed at LHINs, as it requires "each health service provider [to] engage the community of diverse persons and entities in the area where it provides health services when developing plans and setting priorities for the delivery of health services." This was done by RVHS beginning in June 2007.
The Court contrasted the requirement of section 16(6) to the requirement of section 16(1) of the Act, which requires LHINs to engage the community about issues related to the healthcare "system." The decision by RVHS was not about the "system," and therefore did not fall within the scope of section 16. The LHIN's involvement, rather, was a budget negotiation which came within the scope of Part IV of the Act, entitled "Funding and Accountability." Importantly, Part IV does not set any requirement for public consultation or community engagement.
The case illustrates that not every consolidation of services requires a public consultation. The Court's decision makes clear that, where a LHIN exercises its funding powers, the LHIN will not be required to conduct a public consultation on the matter at hand, even if public policy considerations are involved. As the Court said, "The Act does not require public consultation with respect to contract or funding decisions."
Where, however, a LHIN chooses to become involved in any of the ways stated in section 25(2) of the Act, it will be required to issue an integration decision under section 26. This will trigger the requirement under section 26(3) of the Act to issue a copy of the LHIN's proposed decision to the public, at least 30 days in advance of issuing its decision.
Because the consolidation of healthcare services can be expected to take many forms, healthcare providers should proceed cautiously, making sure they fully appreciate the requirements of the Act.
*Denis Chamberland is a partner in the Corporate Commercial Group, and he works extensively with healthcare providers.
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