Canada: The Dos And Don'ts When Dealing With Provincial Health Insurers In National Class Actions – Post Perdikaris v. Purdue

Last Updated: April 2 2019
Article by Valerie Lord and Paul Miller

It's been one year since the release of Justice Barrington-Foote's decision in Pedikaris v. Purdue Pharma et al. (2018 SKQB 86). At that time, his message was loud and clear: "The Provincial Health Insurers are not members of the class. They must each approve the settlement of their subrogated claim. They, unlike individual litigations, are well able to protect their own interest".

This article will provide an overview of the health insurance legislation in each Province and Territory, which grants Provincial Health Insurers (PHI) their recovery rights in class actions. It will also offer practical tips on how to navigate PHI claims in the context of settlement approval to ensure that the rights and interests of both the Class Members and PHIs remain protected.

Best Practices

In order to minimize Court scrutiny and satisfy the legislative requirements of the PHIs, the following points should remain at the forefront of any negotiation:

  1. Courts will not approve a Settlement Agreement unless it has been approved by all PHIs in accordance with their subrogation legislation.

1.1 Class counsel should ensure they are familiar with the particular rights of each province/territory. For example, Saskatchewan requires that the PHI consent to the settlement of its subrogated claim as well as the claim of the injured plaintiff.

1.2 Class counsel should also ensure that any proposed draft release be reviewed and approved by the PHIs, in accordance with the requirements of their particular legislation.

2. Class counsel should make sure that PHIs are involved in a potential settlement prior to the conclusion of an agreement. Steps should be taken, by class counsel, with assistance from the PHIs, to ensure that past and potential future health care costs for PHIs are identified and adequately assessed.

3. In order to avoid a potential conflict of interest, class counsel should avoid negotiating a "global settlement", which does not specify the amount payable to PHIs. It has been suggested, although not explicitly ruled on in Perdikaris, that such a settlement could result in a competition between PHIs and class members as to who gets what share of the proceeds, potentially creating a conflict of interest for class counsel. A separate mandate approach would avoid class counsel having to "broker" the allocation of funds.

Independent Right vs. Subrogated Right?

When discussing a potential settlement with the PHIs, it's important to note that every province (except for Quebec, Nova Scotia and Saskatchewan) has been granted an independent right to sue, as opposed to a subrogated right (all territories operate on subrogated rights only). This has the potential of informing a PHI's decision with regards to a proposed settlement. Those with independent rights may be asking themselves, "Is the settlement fair enough? Should I release all of my claims or reserve my right to pursue independently?"

The below is a summary of the relevant sections by province and territory.

Independent Right

British Columbia

Health Care Costs Recovery Act, S.B.C. 2008, C. 27

Government has independent right to recover

8(1) Despite section 2 [...] and independent of its subrogated right under section 7 [...] (2) The government may commence a legal proceeding in its own name for the recovery of the past and future costs of health care services referred to in subsection (1)

Alberta

Crown's Right of Recovery Act, S.A. 2009, c.C-35

Crown's right to recover

2(1) If a recipient receives health services for personal injuries suffered as a result of a wrongful act or omission of a wrongdoer, the Crown has the right to recover from the wrongdoer the Crown's cost of health services

Subrogated rights

38(1) The recipient has a right of recovery against a wrongdoer in respect of the Crown's cost of health services provided to the recipient, or likely to be provided in the future for personal injuries suffered as a result of a wrongful act or omission of the wrongdoer as if the recipient had been required to pay for the Crown's cost of health services and the Crown is subrogated to the recipient's right of recovery.

(2) The Crown may pursue its right of recovery under subsection (1) or under Division 1, as the case may be.

Alberta

Crown's Right of Recovery Act, S.A. 2009, c.C-35

Crown's right to recover

2(1) If a recipient receives health services for personal injuries suffered as a result of a wrongful act or omission of a wrongdoer, the Crown has the right to recover from the wrongdoer the Crown's cost of health services

Subrogated rights

38(1) The recipient has a right of recovery against a wrongdoer in respect of the Crown's cost of health services provided to the recipient, or likely to be provided in the future for personal injuries suffered as a result of a wrongful act or omission of the wrongdoer as if the recipient had been required to pay for the Crown's cost of health services and the Crown is subrogated to the recipient's right of recovery.

(2) The Crown may pursue its right of recovery under subsection (1) or under Division 1, as the case may be.

Manitoba

The Health Services Insurance Act, C.C.S.M., c. H35

Action by insured person for cost of insured services

97(2) When, as a result of the negligence or other wrongful act or omission of another person, an insured person suffers bodily injuries [...], the person may, subject to section 101, bring an action against and recover from that other person (a) the past cost of the insured services [...]

Right of minister to bring action

106(1) Subject to sections 109 and 110, where a person who may claim and recover an amount under section 97, (a) does not bring an action; (b) brings an action that does not include or that, in the opinion of the minister, is insufficient to adequately recover the past cost of insured services and the future cost of insured services; or (c) does not effect a settlement of the claim in an amount and subject to terms and conditions that are acceptable to the minister; the minister may, upon notice to the insured person, bring an action in the name of Her Majesty in right of the province under section 97.

Ontario

Health Insurance Act, R.S.O. 1990, c. H.6

Subrogation

30 (1) Where, as the result of the negligence or other wrongful act or omission of another, an insured person suffers personal injuries [...] the Plan is subrogated to any right of the insured person to recover the cost incurred for past insured services [...], and the General Manager may bring action in the name of the Plan or in the name of that person for the recovery of such costs.

Direct cause of action

36.0.1 (1) If the Plan has paid for insured services as a result of the negligence or other wrongful act or omission of a person, the Plan has a right, independent of its subrogated right under subsections 30 (1) and 46 (5), to recover, directly against that person, the costs for insured services that have been incurred in the past and that will probably be incurred in the future as a result of the negligence or the wrongful act or omission.

New Brunswick

Hospital Services Act, R.S.N.B. 1973, c.H-9

10(1) Where, as a result of the negligence or wrongful act of another, a person suffers personal injuries for which he receives entitled services under this Act or the regulations, [...]

10(3) Where, as a result of the negligence or wrongful act of another, a person suffers personal injuries for which he receives entitled services under this Act or the regulations and he does not claim against the person who was negligent or who did the wrongful act, Her Majesty the Queen in right of the Province may maintain an action in her own name or in the name of the injured person for recovery of the cost of the entitled services.

Newfoundland

Medical Care and Hospital Insurance Act, S.N.L. 2016, c. M-5.01

42 (1) Where a beneficiary suffers an injury caused by, contributed to by, or resulting from the negligence, act or omission of a person [...]

(4) The minister shall be subrogated to the rights of a beneficiary under this section to recover any amount paid by the minister for insured services provided to that beneficiary and an action may be brought by the minister, either in his or her name or in the name of the beneficiary, for the recovery of that amount.

Prince Edward Island

Health Services Payment Act, R.S.P.E.I. 1988, c. H-2.

22 (4) The Minister is subrogated to the right of the injured person to claim against the other person pursuant to subsection (2).

(5) Where an injured person (a) recovers damages against the other person by court order or by settlement but does not pay to the Minister the amount attributable to a claim for the cost of basic health services; or (b) does not claim the cost of basic health services against the other person, the Minister may maintain an action against the injured person for the recovery of the cost of basic health services provided pursuant to this Act.

Subrogated Right Only

Quebec

Health Insurance Act, R.S.Q., c. A-29

18.(1) The Board shall be ipso facto subrogated in the right of recovery of any person who benefits from insured services, against any third person to the extent of the insured services furnished or to be furnished in respect of injury caused by the fault of such third person. The person must furnish to the Board any information required to establish the liability of the third person or the claim of the Board. Any claim by the Board must be notified to the third person by way of a notice stating the amount of the debt and the reasons for which the debt is due.

Saskatchewan

The Health Administration Act, R.S.S. 1978, c. H-0.0001

(2) Where, as a result of the negligence or other wrongful act of any other person, [...], the beneficiary has the same right to recover the cost of those services from the person guilty of the negligence or other wrongful act as the beneficiary would have had if he or she had been required to pay for the health service [...] (2), the minister shall be subrogated to all rights of recovery of the beneficiary from any person with respect to the cost of those health services and may bring an action in the name of the beneficiary to enforce those rights.
Northwest Territories

Hospital Insurance and Health and Social Services Administration Act, R.S.N.W.T. 1988, c. T-3

19. (1) Where insured services have been provided to an insured person in respect of an injury resulting from a wrongful act or omission of another, the Minister is subrogated to the rights of the insured person against any other person for the recovery of the cost of the insured services provided.

Nova Scotia

Health Services and Insurance Act, S.N.S 1989 c.197.

18(3) (3) Her Majesty in right of the Province shall be subrogated to the rights of a person under this Section to recover any sum paid by the Minister for insured hospital services, benefits under the Insured Prescription Drug Plan, ambulance services to which the Province has made payment or insured professional services provided to that person, and an action may be maintained by Her Majesty, either in Her own name or in the name of that person, for the recovery of such sum.

Yukon

Health Care Insurance Plan Act, R.S.Y. 2002, c. 107

9. On the provision of insured health services to an insured person in respect of an injury resulting from a wrongful act or omission of another person, the Government of the Yukon shall be subrogated to all rights of the insured person for the purpose of recovering the cost of the insured health services, and may bring an action either in its own name or in the name of the insured person for the recovery of the amount thereof and effect a settlement of the claim.
Nunavut

Hospital Insurance and Health and Social Services Administration Act, R.S.N.W.T. (Nu) 1988, c. T-3

19. (1) Where insured services have been provided to an insured person in respect of an injury resulting from a wrongful act or omission of another, the Minister is subrogated to the rights of the insured person against any other person for the recovery of the cost of the insured services provided.

Conclusion

Navigating the interests of both Class Members and the PHIs can be a challenging task for class counsel. However, with a firm understanding of the PHIs' legislative rights and interests, class counsel can successfully advocate for all parties involved.

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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