Chaoulli - Implications for Health Care

By Liz McIntyre, Simon Archer and Fay Faraday

On June 9, 2005 the Supreme Court of Canada released its decision in Chaoulli & Zeliotis v. Quebec (Attorney General), 2005 SCC 35 (“Chaoulli”). This decision will have far-reaching implications for the provision of health insurance across Canada. This decision will be of interest to all health care professionals, health, welfare and pension plan providers and participants, health and insurance policy groups and equity-seeking groups.

Background

Dr. Chaoulli is a family physician in Montreal. Mr. Zeliotis was Dr. Chaoulli’s patient. In 1997, Mr. Zeliotis suffered pain while waiting almost one-year for hip replacement surgery. When he discovered he could not pay privately for his surgery in Canada, he travelled to the U.S. to have the operation. When Mr. Zeliotis returned to Canada, he was reimbursed the portion of his costs that would have been paid if the operation had taken place in Quebec.

Dr. Chaoulli and Mr. Zeliotis subsequently challenged Quebec’s Hospital Insurance Act and Health Insurance Act. This legislation prohibits private insurance paying for publicly-insured medical services. Similar laws exist in provinces across Canada.

Dr. Chaoulli and Mr. Zeliotis argued that the provincial laws prohibiting private insurance for publicly insured services are in violation of s. 7 of the Canadian Charter of Rights and Freedoms, and of Quebec human rights legislation that contains similar guarantees. Section 7 of the Charter guarantees to “life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.”
The Quebec Superior Court and the Court of Appeal found against Dr. Chaoulli and Mr. Zeliotis, finding that there was a violation of s. 7 of the Charter, but that it was “in accordance with the principles of fundamental justice”. On June 9, 2004 the Supreme Court heard their appeal.

The Supreme Court of Canada

At the Supreme Court, the appeal was heard by a 7-judge panel. The Supreme Court allowed Dr. Chaouilli’s appeal in a 4-3 decision. The four-judge majority was reached by combining the result reached by Chief Justice McLachlin and Major J. (writing for themselves and Bastarache J.) who ruled that the laws violated s. 7 of the Canadian Charter of Rights and Freedoms and the result reached by Deschamps J. who concluded that the laws violated s. 1 of the Quebec Charter but did not address s. 7 of the Canadian Charter. Binnie and LeBel JJ. wrote in dissent for themselves and Fish J.

Reasons of McLachlin C.J.C., Major and Bastarache JJ

McLachlin C.J.C. held that where lack of timely health care can result in death, the s. 7 protection of life is engaged; where it can result in serious psychological and physical suffering, the s. 7 protection of security of the person is triggered.

McLachlin C.J.C. held in addition that the Quebec Health Insurance Act and Hospital Insurance Act are arbitrary, and the consequent deprivation of the interests protected by s. 7 is therefore not in accordance with the principles of fundamental justice. The Court found that in order not to be arbitrary, a limit on life, liberty or security of the person requires not only a theoretical connection between the limit and the legislative goal, but a real connection on the facts, and determined that the evidence on the experience of other western democracies with public health care systems that permit access to private health care refutes the government’s theory that a prohibition on private health insurance is connected to maintaining quality public health care. It does not appear that private participation leads to the eventual demise of public health care.

Further, the breach of s. 7 is not justified under s. 1 of the Canadian Charter. The government undeniably has an interest in protecting the public health regime but, given that the evidence falls short of demonstrating that the prohibition on private health insurance protects the public health care system, a rational connection between the prohibition on private health insurance and the legislative objective is not made out.

Concurring Reasons of Deschamps J.

Deschamps J. only considered the Quebec Charter. She held that it is broader than that of the Canadian Charter, and this characteristic should not be disregarded. She held that patients on waiting lists are in pain and cannot fully enjoy any real quality of life. The right to life and to “personal inviolability” (the wording in the Quebec Charter) is therefore affected by the waiting times.

Deschamps J. held that the infringement of the rights protected by s. 1 is not justified under s. 9.1 of the Quebec Charter. The general objective of the health insurance scheme is to promote health care of the highest possible quality for all Quebeckers regardless of their ability to pay. She held that the preservation of the public plan is a pressing and substantial objective, but there is no proportionality between the measure adopted to attain the objective and the objective itself. While an absolute prohibition on private insurance does have a rational connection with the objective of preserving the public plan, it did not meet the minimal impairment test.

Dissenting Reasons of Binnie, LeBel and Fish JJ.

The dissenting reasons of Binnie, LeBel and Fish JJ. framed the question differently. They held that the question is whether the province of Quebec has the authority to discourage a second (private) tier health sector by prohibiting the purchase and sale of private health insurance. They held that this question cannot be resolved as a matter of constitutional law by judges. The Court found that the public policy objective of “health care to a reasonable standard within a reasonable time” is not a legal principle of fundamental justice. There reasoned that there is no “societal consensus” about what this non-legal standard of “reasonableness” means or how to achieve it.

They further held that the Quebec health plan shares the policy objectives of the Canada Health Act, and the means adopted by Quebec to implement these objectives are not arbitrary. In principle, Quebec wants a health system where access is governed by need rather than wealth or status. To accomplish this objective, Quebec seeks to discourage the growth of private sector delivery of “insured” services based on wealth and insurability. The prohibition is thus rationally connected to Quebec’s objective and is not inconsistent with it. In practical terms, Quebec bases the prohibition on the view that private insurance, and a consequent major expansion of private health services, would have a harmful effect on the public system. The Court reasoned that designing, financing and operating the public health system of a modern democratic society remains a challenging task and calls for difficult choices. Shifting the design of the health system to the courts is not a wise outcome.

Impact of the Decision

The immediate impact of this decision is that private health insurance is no longer prohibited in Quebec, effective immediately. Private insurance can be sold for listed health services in Quebec.

The longer-term impact of the decision is still uncertain. The federal and provincial governments have not substantially reacted to this decision yet.

There is still one technical difficulty with the decision. Although the Court examined the Quebec Health Insurance Act and Hospital Insurance Act, one judge found them in violation of the Quebec human rights legislation, three judges found them in violation of the Canadian Charter, and three judges in dissent found them to be justifiable violations of these guarantees. Technically, therefore, this decision would not apply outside Quebec. However, were similar litigation to be brought in other provinces, we believe that the substantive decision will be considered applicable outside Quebec, and will be viewed to apply to all provincial health care systems.

If private insurance is permitted in Canada, there are important questions of how that system will be designed. In particular, there are concerns about how it could be designed so as not to undermine the publicly funded system. One option the provinces could pursue is to directly tax the provision of private health insurance, and allocate those revenues to support the public health care system. This would make an effective link between the health of the public insurance system and the use of the private health insurance system, ensuring that resources are allocated to both systems at the same time.

If private insurance is permitted, and a parallel private system of insurance and service providers evolves, there are likely to be significant labour relations issues arising as a result. Private health service provision will likely expand, increasing the demand for health care professionals, and in some degree, attracting them away from the public system. Membership in health sector unions could be affected. While the majority of the Court suggested that a private system would not affect the public health care system, a drain of health care professionals away from the public system would obviously have serious implications for servicing and ensuring access to public health care.

The surprising ruling also opens a series of questions for human rights and equity-seeking groups in Canada. The decision states that the provision of health care in Canada is not a constitutional right. However, the ruling holds that denial of the opportunity to purchase private health insurance is unconstitutional. While the outcome of this decision privileges a formal/individualist rather than substantive/collective approach to social and economic rights, the implications of the decision for scrutinizing access to social and economic rights more broadly will need to be considered.

In addition, the Supreme Court of Canada’s decision in this case examined the complex issue of health care access solely from the perspective of whether denying individuals the option to seek private insurance as a counter to the physical and psychological stress of being on a waiting list violates the Charter. But private insurance is not the only remedy to the problem. The s. 7 impacts could be examined from a range of other perspectives which would themselves suggest a range of other remedies. For example, are the s. 7 impacts of waiting lists also caused by government failures to adequately fund the public system? To the extent the majority of the Court found current wait times unreasonable, what implications does the ruling have with respect to the requirement under s. 36 of the Charter that the federal and provincial governments are committed to “providing essential public services of reasonable quality to all Canadians”?

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Health Professions Regulatory Advisory Council - The Future of Health Professions Regulation

By Brian Hanulik

In February 2005, the Minister of Health and Long-Term Care, the Honourable George Smitherman, requested the advice and recommendations of the Health Professions Regulatory Advisory Council (HPRAC) on a number of issues.

In particular, the Minister has requested HPRAC’s advice on whether members of certain professions should be regulated under the Regulated Health Professions Act (RHPA). This would include recommendations regarding their scope of practice, what controlled acts, if any, they should be authorized to perform, and any protected titles that may be required. The Minister has also asked HPRAC to consider whether it is appropriate that these professions be regulated under an existing profession specific act (for example, in the case of pharmacy technicians/assistants, under the Pharmacy Act, 1991).

HPRAC has recently completed a consultation phase regarding the regulation of pharmacy technicians/assistants, homeopaths, and kinesiologists - the deadline for submissions was June 17, 2005. Should HPRAC recommend that any or all of these professions be regulated under the RHPA, it will undoubtedly have an enormous impact, not only on these particular professionals, but also on other professions and the existing Colleges should HPRAC also recommend that the regulation of these new professions occur under an existing profession specific act.

HPRAC will also consider whether psychotherapists and personal support workers should be regulated under the RHPA. Consultations with respect to these professions are expected to commence later this year.

HPRAC is currently reviewing a number of additional issues, including:

• Whether psychotherapy should be an additional controlled act under the RHPA, and if so, what regulated professions should have psychotherapy in their scopes of practice;
• Whether the determination of a need for a hearing aid or the specifications of a hearing aid should be controlled acts, and whether hearing testing and dispensing of hearing aids should be controlled by the RHPA;
• Whether dispensing eye wear is an activity that needs to controlled under the RHPA, and whether refractometry is within the scope of practice of opticianry;
Formal consultations will apparently also begin in August or September 2005 on a number of issues that the Minister has raised with respect to the legislative framework, including:
• The currency of, and any additions to, recommendations made by the Council as part of the “5 year review” of the RHPA, contained in its report Adjusting the Balance;
• The currency of, and any additions to, the Council’s recommendations in relation to the Colleges’ quality assurance programs and patient relations programs;
• The currency of, and any additions to, the Council’s recommendations in relation to the Colleges’ complaints and discipline procedures;
• Whether there are any impediments in the RHPA or the profession specific acts to a shared services business model for new professions for whom the financial demands of regulation are onerous, but where the public interest would be served by regulation.

The Minister has requested the HPRAC provide its Advice Memorandum, containing its recommendations on all of these issues, to him by March 31, 2006.
As this process obviously has implications on any number of regulated health professionals in Ontario, we will continue to monitor the ongoing consultation process and will continue to update our clients as developments at HPRAC unfold.

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Ontario Court of Appeal unanimously affirms Ontario Nurses’ Association position that the denial of severance pay to disabled employees under the Employment Standards Act is discriminatory and unconstitutional

By Liz McIntyre and Amanda Pask

This appeal considered the constitutionality of a section of Ontario’s Employment Standards Act that denied severance pay to employees whose contracts have been frustrated by illness or injury.

In January 2004 a panel of Ontario’s Divisional Court issued a unanimous decision that this provision was contrary to the equality provisions of the Charter of Rights and Freedoms, and ordered the payment of the severance benefit to a nurse who had been terminated for innocent absenteeism as a result of her health.

The Divisional Court had reviewed the legislative history of the ESA’s severance pay provisions to conclude that "severance pay.... is an earned benefit that compensates long-serving employees for their past services and for their investment in the employers’ business" and "is properly payable or any non-culpable cessation of employment". The Divisional Court concluded that "the denial of the benefit to a group already disadvantaged by their disability and the loss of their employment by reason of their disability is discriminatory and not demonstrably justifiable. As such subsection 58(5)(c) cannot withstand constitutional scrutiny."

The employer appealed this decision to the Ontario Court of Appeal, which, on May 4, 2005 issued a unanimous ruling upholding the decision of the Divisional Court.

At the Court of Appeal the Employer and the Attorney-General took the position that the dominant purpose of severance pay was not to compensate for past services, but rather to compensate for capital losses going forward into new employment, and argued that “since employees whose contracts have been frustrated due to illness or injury are unlikely to re-enter the workforce, denying them severance pay is not discriminatory”. The Court of Appeal rejected this argument, stating that, even assuming “for the sake of argument”, that the dominant purpose of severance pay was as suggested by the Employer and the Attorney-General, their defence of the legislation failed because of its reliance on treating employees whose contracts were frustrated due to illness or injury as employees who will not work again.

In the unanimous decision written by Justice Jurianz, the Court held that the approach of the Employer and Attorney-General was based on impermissible stereotyping of disabled persons as being unable to fully participate in the workforce. The Court further commented that this generalization was “not true”, because employees with severe and prolonged disabilities, while unable to be employed in one workplace, may yet be able to be employed elsewhere, and further, because disabilities, the skills of employees with permanent disabilities, and the ability of society to accommodate disabilities are all are subject to change.

The Court also held that the fact that the exclusion is inconsistent with other purposes of severance pay (such as compensation for past service) would have been sufficient to ground a s.15 breach, stating: “In my view, where a statute has several purposes, adverse differential treatment in light of one purpose is sufficient to establish a prima facie breach of s.15".
The Court went on to rule that the provision was not saved under section 1 as a reasonable limit in a free and democratic society, and therefore upheld the decision of the Divisional Court declaring the provision to be unconstitutional and of no force and effect.

While this decision concerns predecessor legislation to the current Employment Standards Act, 2000, the legislation has changed only in form and not in substance. The new provisions denying severance pay to employees whose contract of employment is frustrated by illness or disability are found in section 9 of Ontario Regulation 288/01 under the ESA, 2000.
This decision will be of considerable significance to those seeking to uphold the rights of ill and disabled employees to receive severance benefits. In addition, the Court’s finding that differential treatment in light of one of the purposes of a multiple purpose statute is sufficient to demonstrate a breach of s.15, is a significant development in equality rights jurisprudence.
The decisions may be read in full by clicking on the links below.

Court of Appeal Decision - Ontario Nurses’ Association v. Mount Sinai Hospital
Divisional Court Decision - Ontario Nurses’ Association v. Mount Sinai Hospital

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Update for Professionals Archives | Cavalluzzo website | Human Rights Update

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To find out more information about the firm and its lawyers and the scope of our practice generally, visit our web site at www.cavalluzzo.com. If you have specific questions regarding the regulated professions, you may contact Elizabeth McIntyre at 416.964.5501 or at emcintyre@cavalluzzo.com.

Providing this information does not constitute individualized legal advice, and does not establish any form of lawyer-client relationship with our firm or with any of our lawyers. Readers should not rely on or take any action based on this information; professional advice should be obtained. While we strive for accuracy, mistakes are possible and there may be errors and omissions. We disclaim any liability for such errors and omissions.