Health Law: Stress Response

Navigating the political and bureaucratic minefield of health law is not for the faint of heart. But as demographic realities add pressure to an already stressed system, opportunities for innovators may emerge
Health Law: Stress Response

AS BABY BOOMER ENTER THEIR GOLDEN YEARS and their needs begin to rise, the stresses on our health-care system will bring it dangerously close to a breaking point, giving rise to a myriad of legal issues. The stakeholders here are diverse from injured patients seeking recourse, to service providers navigating onerous regulations, to the institutions themselves and their constantly changing governance mandates.

“Health care functions in many ways like a business, but is overlaid with a highly regulated environment,” says Penny Washington, who leads Bull, Housser & Tupper LLP’s health care group in Vancouver. “It requires deep knowledge of the industry and its approaches. Many pieces of legislation apply to the critical work being done. … In many ways, we act as problem-solvers for our clients. At the same time, we’re operating within a public system and we have to be held accountable so we all have enough money to take care of ourselves when we get old.”

Legal advisors in this area need a sophisticated understanding of not only the legislative framework of health-care law and the layers of regulation involved, but also the political culture of Canadian health-care providers. The tendency for risk aversion in the sector presents a near impenetrable barrier to innovation, while the nature of emerging business opportunities can be profoundly altered by an election, a shift in political climate or a change in policy.

Legal uncertainty in the health care industry is rife, in other words
and expressions of frustration all too common but for organizations that actively keep themselves apprised of looming issues, the mounting needs of patients will eventually present opportunities.


As baby boomers age, a major issue in Canadian health care involves sorting out the logistics of treating more patients at home or in clinics, rather than admitting them to hospitals. The reorganization of the home-care industry is becoming an urgent priority, especially in Ontario.

In early June, Ontario tabled proposed legislation, the Patients First Act, also known as Bill 210. The Act would disband the Community Care Access Centres
(CCACs) currently responsible for primary health and community care and transfer these responsibilities instead to the province’s 14 Local Health Integration Networks (LHINs) — bodies that have a much broader mandate to plan and fund health care within specific regions. If enacted, full implementation of these measures will likely come into effect next year.

“What they’re trying to do is to streamline the bureaucracy within the health system itself,” says Noam Goodman, a partner at
DLA Piper LLP in Toronto. “This Act basically reorganizes CCACs and has them taken over by LHINs it gets patients treated by teams from one organization, as opposed to shuffling them from the doctor to a home-care facility to a nurse administrator or care coordinator.”

The objective is to keep as many people as possible out of hospitals in order to cut down on the associated high costs. Goodman, however, suggests that, while government looks to cut hospital costs, it needs to remain cognizant of the urgent need for increased investment in home care and clinics. Having sat on the board of a
CCAC, Goodman questions whether the government’s move will have any tangible impact on patients.

“The government tried to find a bogeyman, and the auditor general found the
CCACs were not being run efficiently,” he says. “The government seized upon that to deflect attention away from the fact they haven’t been investing in the amount of home care that needs to be provided.

“In my opinion, regardless of the government’s attempts to restructure how care is delivered, if they don’t provide more funding and more hours of home care, patients will still find they’re not being treated properly.”

One potentially controversial change represented by the legislation is a grinding away of the position of physicians as leaders in the health-care delivery system, says Lynne Golding in Toronto, who leads the national health group at Fasken Martineau DuMoulin LLP. “It gives
LHINs a right to obtain a lot more information from physicians that are a deep dive into their practices — their comings and goings, when they’re going on holidays, for example. It’s showing a change in the hierarchy just another example of how doctors are not going to be the leaders anymore, but treated more like employees. This will lead to additional legal work as we analyze how this affects their relationships with patients and other organizations such as hospitals.”

When you suddenly move an entire operational apparatus into a different corporate entity, some growing pains are inevitable, says Shanon Grauer in Toronto, a partner in the business law group and past co-chair of the health law group at McCarthy Tétrault LLP.

“One of the concerns that has been voiced is that, until now, the
LHINs were supervisory. With the proposed movement of CCACs into LHINs, they will now be operational as well. That’s a big change to suddenly have thousands of employees moving over and being responsible for all the HR components, for example.

“How is the governance of the
LHINs changing to accommodate those asset transfers and ensure they have enough officers to discharge their operations?” Grauer asks. “We are also looking at issues like decision-making in terms of the accountability agreement that LHINs negotiate with other organizations.”

Many factors are at play to ensure that the process of moving an operation from one cooperative to another is as seamless as possible and that the patients don’t fall through the cracks. “I think there’s a lot to keep our eyes on in terms of exactly how home care will be supported through the change,” says Grauer.

As the health-care sector across the country moves towards centralization, or “integration”
from sharing of resources and staff to full-scale mergers and transfers/amalgamations of health-care entities governance is a key issue, says Karima Kanani, who leads the corporate/commercial practice in the health industry group at Miller Thomson LLP in Toronto. “The government of Saskatchewan issued a release appointing its special commissioner to have even fewer health regions, to make province-wide delivery of health services more efficient,” says Kanani.

“Ontario is also moving towards more integrated structures
this enables more consolidated governance and increased efficiencies in administration and procurement in all those aspects that support the running of a business.

“All of this drives us to focus on the bigger picture. We tend to think in very insular ways
what gets forgotten is that health care is one component of it.”

These new changes present a growth opportunity for organizations that show leadership, have built the necessary governance at the board level and invested in building the administrative infrastructure needed to embrace the service scope for which they are responsible. Organizations need to be discussing where they fit in the continuum and how they can engage and collaborate with their partners, says Kanani.

For smaller organizations, the health sector’s increasing focus on integration and efficiency can present an opportunity for discussion around sustainability. “How can a smaller social-services organization survive within a larger integration of services? They will need to determine how to step into those regional leadership roles or run the risk of being swallowed up as an entity,” says Kanani.

Governance is also an important consideration for research and innovation, Kanani adds. “When there’s a new idea, the first question that usually gets asked is, ‘Can we do this?’ Once the regulatory review is done, the second question is, ‘How?’ How can they structure these initiatives in the current legislative environment and under the funding restrictions to which they’re subject?”


A growing point of frustration is that some of those legal, legislative and funding restrictions are getting in the way of health-care innovation, says Michael Watts in Toronto, chair of the health industry group at Osler, Hoskin & Harcourt LLP.

“Investing in the health-care business is highly politically charged and highly regulated in Canada. There are so many layers of complexity from statutory, regulatory, policy and political perspectives. The Canada Health Act sets out the basic principles that apply to the health-care system and, in order to get funding for health care, you must comply with it.

“The other legislation you have licenses facilities, retirement homes, pharmacies, labs and independent health facilities,” he says. “In all these institutions, if you operate one that is licensed, you must be aware of the regulatory framework that governs these institutions. All of these, except for hospitals, can be privately operated and publicly funded.”

There are also layers upon layers of regulation to contend with, having to do with everything from drugs and medical devices to doctors and nurses. Then there are the policies that govern health-care providers and the institutions in which they work, including policies around how business is conducted with the public sector, and the overlay of procurement requirements.

“Clients looking to do business in Canada must understand how limited the Canada Health Act and related provincial legislation is,” says Watts. “There are many opportunities and complexities involved in the definition of what’s medically necessary but not insured. A change in regulation or policy can ruin the metrics of the business the client would be investing in.”

With only 14 major purchasers of health care in Canada – 10 provinces, three territories and the federal government – the climate makes it hard for innovators to be successful, says Golding. “There simply aren’t enough people who can be nimble enough to purchase their innovations. Those innovators are instead finding success in the US, England and other places that are nimble enough to take the risks to purchase.

“It’s a shame how many Canadians can’t find success here. But if you Google ‘Canadian health-care innovation’ you’ll come up with 399 million hits. Everybody is talking about it, but if we truly want to innovate there are a number of legal obstacles that need to be overcome.”

Other obstacles to innovation cited by Golding include the fact that most physicians have a single source of payment for the medically necessary services they perform, and that our hospitals and health systems receive nearly all of their operating revenue from increasingly constrained government resources of the government. “We need more innovation in terms of how we structure health-care delivery and the payment process,” says Golding. “There are labour and
HR issues that may have to be considered going back to a system of performance bonuses and other incentives to be successful and some innovation will require outsourcing, which unions may frown upon.

“Our procurement laws are mostly about getting the right price, which is good in the short term but may not be what we need to be truly innovative.”

A low risk tolerance, especially among government-funded organizations, is getting in the way of attempts to be innovative. “You can only innovate if you take risks, says Golding. “We have to start developing policies where we identify how much risk we’re willing to take and how we can monitor the process before too much is taken.”

Overregulation is another hindrance to innovation, says Golding, who says Canada should be doing more to eliminate the red tape: increasing regulatory harmonization, for instance, with the
US Food and Drug Administration and the European Medicines Agency; harmonizing privacy legislation among the federal government and the provinces; changing physician payment regimes; changing patent laws, procurement directives and health insurance laws to move away from the single-payer system; and eliminating trade barriers.

Perhaps most significantly, Canadian law prohibits doctors who are performing medically necessary procedures in the public system from performing those same procedures in the private market. That makes it exceedingly difficult for Canadians to purchase services that the province deems medically necessary. “So you would have to go to Buffalo, New York, for example, if you wanted to get an
MRI in less than three months,” says Golding.

Watts recently spent $5,000 at the vet to reattach his dog’s ligament. “But I can’t do that on myself,” he says, “because it’s anti-Canadian and wouldn’t be appropriate.

“A product called synthetic bone marrow, which eliminates the need to harvest bone marrow from your hip and the subsequent high risk of infection, is not insured in Ontario. Why can’t you pay for it? Because hospitals won’t allow you to do it
culturally it’s the Antichrist.

“There are many great opportunities,” says Watts, “for the private system to fill the void in health care.”


Added pressures on the health-care system lead to medical errors, and one of the biggest issues in Canada right now is the lack of transparency surrounding their disclosure, says John McKiggan, who represents victims of medical malpractice and patients who have been injured or killed by negligent health-care practitioners.

“In the past, the traditional reaction by health-care professionals to medical errors was to circle the wagons and to provide the patient or their family with as little information as possible, presumably because of a fear of possible litigation,” says McKiggan, a partner at Halifax-based McKiggan Hebert Lawyers.

Such fears are generally unfounded, he says. What drives most of the patients he sees to his office, rather, is frustration from perceived stonewalling when they have questions about what happened to them or their loved one. “Some
US studies showed that when hospitals instituted a policy of full disclosure of medical errors accompanied by an apology, litigation dropped significantly,” says McKiggan.

The province of Nova Scotia recently implemented the “Serious Reportable Event Interim Reporting Policy,” which mandates reporting and disclosure for all serious medical errors in provincially run facilities. But numerous issues remain. There are no sanctions for failing to report. Health-care staff associated with the registry are not trained to identify adverse events or how to report them. If errors aren’t reported to the hospital, this information can’t be passed on to the registry. Patients can’t report medical errors to the registry on their own.

“One of the biggest flaws is the fact that, if a hospital/doctor denies that they made a mistake, then they are not required to report the incident to the registry,” says McKiggan. “In just about every medical malpractice lawsuit, the doctor, nurses or hospital deny that a mistake was made.”

Find out the l
iable persons for medication malpractice here.

The medical registry doesn’t require reporting of certain adverse events, such as hospital-acquired infections — a common occurrence causing serious injury or death in many hospitals across Canada and in Nova Scotia in particular, says McKiggan and it doesn’t require reporting of a surgeon’s complication rates after surgery.

Neither does the registry provide any information about what steps were taken to address the adverse event or any errors that may have caused the problem. “There is a clear lack of national standards for reporting and resolving medical errors,” says McKiggan. “If we are all going to work together to try to reduce medical errors and improve patient safety, then open and transparent disclosure of medical errors is the first step.”

From a litigation perspective, whether representing the patient or the health-care provider, one of the most challenging areas in health-care law is the issue of consent, says Rose Carter, a partner at Bennett Jones LLP in Edmonton and an adjunct professor of the Faculty of Medicine and Dentistry at the University of Alberta: “Consent continues to be a major concern for all physicians. It has to do with the understanding between the patient and the nurse, dentist, physician, physiotherapist, etc., as to the exact problem the patient is facing and what their options are to ameliorate the problem.

“We all know the dangers of driving your vehicle between Edmonton and Calgary
people might get into car accidents where they’re killed or maimed, but we never believe it will happen to us. If we thought we were at real risk of being hurt, we’d never get into the car.

“The same goes for health care. We are by nature very optimistic. When we hear about a one-per-cent or two-per-cent chance of an adverse event, we don’t see ourselves falling into that category.”

Within the context of health care, a provider informs their patient they’re going to perform a procedure on them, but there might be risks associated with the care that is given. When that risk results in a negative outcome, the practitioner may not recall the discussion that occurred. “That’s why record-keeping is very important,” says Carter. “Documentation is huge, and so is having discussions with patients and being sure they’re doing the best they can.”


Under the impression their health-care system is the best in the world, Canadians are unlikely to budge any time soon on privatized health care, says Golding. “Canadians wear the Health Act on their sleeve. But our health outcomes fall within the middle to low range of Organisation for Economic Co-operation and Development member countries, even though we have the second-highest per capita costs.”

These outcomes could get worse as baby boomers place increasing pressure on the health-care system, which could be the catalyst needed for significant change. A growing focus on integration, efficiency and cutting costs within a system that is struggling to keep up will create a space for private investors and businesses to step in to fill the void.

A much greater emphasis on collaboration and transparency, along with better policies to manage risk, are needed to allow for more efficient problem-solving. “The reality is that, with such a high portion of our tax dollars going to health care, we cannot afford to continue the way we have been going,” says Golding. “Having competition and private health care will only make us more efficient.

“Once Canadians see we don’t have the world’s best health-care system, they will start demanding change.”

Barbara Balfour is a freelance business and lifestyle writer based in Ottawa.