BACKGROUNDER: B.C. Private Clinics Challenge to Single-Tier Health Care

Posted: January 1, 2011

(January 1, 2011)

For-profit health care has mushroomed in British Columbia. In our 2008 report Eroding Public Medicare: Lessons and Consequences of For-Profit Health Care Across Canada we found that B.C. and Quebec were ground zero for private clinics. In B.C. alone,  there were 25 private surgical hospitals and 12 for-profit MRI/CT clinics in the province. At the time, this was the highest number of private surgical centres and the second highest number of for-profit MRI/CT centres of any province or territory in the country. Today, the trend has held. B.C. and Quebec still have the most private clinics and the most privatization of public hospital care in the country.

With their decade-long experience in the growth of private clinics, B.C. provides clear evidence about the implications of private for-profit delivery on single-tier medicare. Our research reveals that of B.C.’s 25 private surgery centres, 16 sell medically-necessary procedures for direct charges to patients and all of the private MRI/CT clinics sell medically-necessary scans, in violation of the Canada Health Act’s prohibitions on two-tiering and user fees. We found that many of the clinics cloak these charges in what they call “facility fees” for such things as keeping patient records and nursing, though these are unlawful under the Canada Health Act.  In a subsequent investigation, the B.C. Health Coalition found that a “boutique” physician clinic owned by Don Copeman refused three volunteers access to physicians unless they paid exorbitant membership fees to the clinic. The evidence shows that the private clinics maximize their revenues (and profits) through billing all available sources, regardless of Canadian and B.C. law, including levying direct charges to individual patients, contracting to WCB and third party insurers, and billing the public system. In addition, these clinics are double-dipping: billing both the public system and levying direct charges to patients for the same procedures.

B.C. poses a sad example of neoliberal governments creating a crisis in the public system to facilitate privatization. Prior to 2000, privatization had made relatively few inroads in British Columbia compared to Alberta and Ontario.[1]  However, in 2002, B.C.’s Gordon Campbell government announced among the deepest cuts to public services in Canada’s history. It then passed Bill 29, allowing privatization of hospitals, including emergency rooms. This led to a proliferation of for-profit surgical and diagnostic centres. In 2002, B.C. became home to the country’s first for-profit CT clinic, opened by Canadian Diagnostic Centres Inc., selling medically-unnecessary “yuppie scans” for $1,200 each. In 2003, the basis for the provinces’ aggressive for-profit hospital industry was formed. Private MRI clinics were announced in Abbotsford, St. Mary’s Hospital announced plans to begin selling surgeries and lease non-profit facilities to for-profit companies, the B.C. government began negotiations with US-based multinational Baxter International Ltd. to sell kidney disease treatments and dialysis in the Fraser Valley Health Region, and the Vancouver Coastal Health Authority announced plans to contract out thousands of surgeries to private clinics, among others.

In 2003, the federal government charged B.C. for allowing the False Creek Surgical Centre to levy direct fees against patients for medically-necessary services in violation of the Canada Health Act. The fine was minimal. Nominal fines and intergovernmental correspondence have continued since. Until the recent court challenge, no concrete action was taken to uphold the principles of universal Medicare.  But in 2003, the nurses in British Columbia started legal action that, by 2009, had precipitated two major court cases that forced the B.C. government to act and could change the face of Medicare in Canada.

In January 2003, the B.C. Nurses’ Union wrote to the B.C. Health Minister regarding breaches of the B.C. Medicare Protection Act (and the Canada Health Act) by the False

Creek Surgery Centre and Brian Day’s Cambie Surgical Centre. The BCNU asked the government to investigate reports of extra billing and user fees charged by physicians at these private hospitals. In 2004, evidence was found showing that the False Creek Surgical Centre and other clinics were requiring their patients to sign waivers giving up their rights under the B.C. Medical Service Plan to publicly-funded medically-necessary services. Dr. Brian Day, owner of the Cambie Surgical Centre, publicly admitted to charging patients for these services. After attempting to get the B.C. government to enforce its own legislation and the Canada Health Act’s prohibitions against two-tier health care and user fees, the BCNU petitioned the provincial court to intervene.

In 2007, the B.C. Supreme Court ruled that the nurses had brought a serious case and it would be best presented in a court case filed by individual patients. Accordingly, in December 2008, several patients that had been charged by private hospitals for medically-necessary services brought a court challenge against the clinics and the British Columbia government for failure to apply its own legislation protecting patients against user fees and extra billing. The B.C. Medical Services Commission subsequently revealed that it had received 30 complaints from patients that had been charged for services in private clinics.

The court documents filed by the patients in their petition described their experiences as  follows:

• Mariel Schooff, one of the plaintiffs, was required to pay more than $6,000 for sinus surgery at the for-profit False Creek Surgery Centre. Court documents state that her physician also billed the public health system for the procedure. For five years, Ms. Schoof tried to get the private clinic to reimburse her and the government to take action against the clinic without success.
• Daphne Lang was charged for a medically necessary procedure at the Pezim Clinic. The B.C. Medical Services Commission admitted that she should not have been charged for the procedure. Ms. Lang tried to get redress from the clinic and the B.C. Medical Services Commission for three years without success.
• Joyce Hamer was charged $3,000 by McCallum Surgical Centre for a procedure that is supposed to be covered by the public health plan in B.C. Court documents show that her physicians had also billed the public plan for the procedure. Ms. Hamer was reimbursed by the B.C. Medical Services Commission, but no action was taken to further investigate or seek action against the physicians and the clinic.
• Myrna Allison was referred to Dr. Russell Naito for a medically-necessary biopsy. She was informed she would have to pay for the biopsy and the consultation. She refused and obtained an appointment with another physician who performed the consultation and biopsy. Ms. Allison received her care quickly and without unlawful user fees in the public health care system. Ms. Allison made a complaint to the B.C. Medical Services Commission. The Commission did not take action against Dr. Naito.
• Carol Welch was referred to a neurosurgeon at the False Creek Surgical Centre as a result of bursitis. She was told that she would have to wait seven months for an appointment, but was given an appointment within one week with the same physician after agreeing to pay $450 for the consultation. At her appointment, she was told that she required surgery and would have to wait 4-6 months to get it covered under the public plan. Her physician then told her she could have the surgery right away if she paid $5,000. She was unable to pay and waited for her surgery in the public system. Her complaint to the B.C. Medical Services Commission was never answered.

As a result of the court case brought by the patients, the B.C. Medical Services Commission tried to audit several clinics. In January 2009, the for-profit hospitals’ umbrella group, the Canadian Independent Medical Clinics’ Association and several private clinics launched a Charter Challenge, in part to avoid the audits. The private clinics’ group, including Brian Day’s Cambie Surgical Centre, has charged that the law protecting single-tier public medicare is unconstitutional, citing the Chaoulli case. The private clinics also applied to the court to stop the B.C. government from auditing the Cambie Surgical Centre and the Specialist Referral Clinic, both partly owned by Brian Day.

At that time, the plaintiffs in the Charter Challenge against Medicare were the Canadian Independent Medical Clinics Association (CIMCA), Cambie Surgeries Corporation, Delbrook Surgical Centre Inc., False Creek Surgical Centre Inc., Okanagan Health Surgical Centre Inc. and Ultima Medical Services Inc. Subsequently, each of these plaintiffs have withdrawn from the case except Cambie Surgery Corporation and the Specialists Referral Clinic. They argue that any restriction of access to health care in the private or public system is a violation of patient’s Charter rights. They contend that they should be free to charge for services that are insured under the province’s public insurance plan (MSP). They call for the B.C. Medicare Protection Act provisions prohibiting the sale of private insurance for publicly insured services to be struck down. They further claim that the government does not have the statutory power to audit or investigate for-profit facilities.

In its counterclaim, the B.C. government argues that the Cambie Surgical Centre and the Specialist Referral Centre are charging patients illegal fees for needed care and are requiring patients to sign forms guaranteeing that the patients will not notify the B.C. Medical Services Plan to seek reimbursement. They asked the court to issue a warrant to enable the government access to audit the clinics and requested a restraining order prohibiting the clinics from charging patients illegal fees and requiring the unlawful waivers of their Medicare rights.

In November 2009, the trial judge ruled that the B.C. Health Coalition, the Canadian Doctors for Medicare, an individual physician and two patients be allowed intervenor standing in the court challenge. The judge also gave the provincial government the warrant it requested to audit the private clinics. Intervenor status is important as it may allow the intervenors to obtain information through the discovery process, to test the evidence of other parties, and, crucially, to ensure that the strongest possible evidence supporting single-tier Medicare is introduced at the trial stage where possible.  The for-profit group has appealed the judge’s warrant allowing the provincial government to audit the clinics and other private interests have applied for intervenor status.

While ostensibly defending Medicare against the clinics, the B.C. government has continued with its privatization agenda. In 2009, the B.C. government appointed Kip Westwood, a former board member and an investor in the for-profit Cambie Surgical

Centre, as the chair of Vancouver’s Coastal Health Authority. In 2010, the Vancouver Island Health Authority issued a Request for Proposals for private companies to provide

6,000 MRI scans over the next two years. In a 2009 media interview, the B.C. Health Minister was quoted as saying:

“I don’t have any objection to people using their own money to buy private services just as they do with dentists, just as they do with other decisions they make – you know, sending their kids to private school or what have you.  I think choice is a good thing, actually – reducing choice I don’t think is a good thing.”

According to the B.C. Health Coalition, it is possible that the clinics’ court challenge will end up in the Supreme Court of Canada and may result in a defining Charter interpretation that would apply across Canada regarding the issues raised in the Chaoulli case. But, lawyer Steven Shrybman warns that even if the clinics win at any level (ie. prior to a Supreme Court appeal) their substantial communications network will go into overdrive. A victory by the private clinics in the lower courts could spawn legal challenges across the country. He notes that the clinics are unlikely to wait for an appeal to aggressively push forward in B.C. and in other provinces with new clinics, two-tiering, user charges and legislative or policy changes. Furthermore, even if the case is not appealed to the Supreme Court level, a deal struck between the B.C. government and the clinics could have far-reaching implications. The sections of B.C. law that the private clinics are attempting to strike down are those that protect patients from two-tier Medicare based on the ability to pay rather than need. A deal that compromises Medicare in B.C. could lead to similar actions by the private clinics in Alberta and Ontario. It is not an overstatement to conclude that this case could bring down single-tier Medicare in Canada. Importantly, the case also provides the opportunity for the courts to reaffirm the constitutionality and legitimacy of our single-payer public system. It can provide an opportunity to get out the arguments in favour of single-tier Medicare. It can also provide an opportunity for patients to expose the greed, double-dipping and high costs of the private clinics.

[1] Both Ontario and Alberta have rolled back privatization of hospital clinical services since.