COURT FILE NO.: 206/08

DATE: 20080822

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

CHAPNIK, FERRIER and SWINTON JJ.

B E T W E E N:

ONTARIO PUBLIC SERVICE EMPLOYEES UNION

Applicant

• and -

CENTRAL EAST LOCAL HEALTH INTEGRATION NETWORK

Respondent

• and -

ROUGE VALLEY HEALTH SYSTEM

Interested Party

Elizabeth J. McIntyre and Amanda Pask, for the Applicant

Kim Twohig, for the Respondent

W.D.T. Carter and Heather K. Pessione, for the Interested Party

HEARD at Toronto: July 11, 2008

Swinton J.:

1The Ontario Public Service Employees Union (“OPSEU”) has brought an application for judicial review of a decision of the Central East Local Health Integration Network (the “LHIN”) dated March 28, 2008. The central issue in this application is the nature of the decision made by the LHIN and the degree to which the LHIN was required to engage in public consultation prior to making the decision.

Background

2OPSEU represents a bargaining unit of approximately 500 employees of the Interested Party, the Rouge Valley Health System (“RVHS”). RVHS is a public hospital operating in Ontario pursuant to the Public Hospitals Act, R.S.O. 1990, c. P.40. A non-share capital corporation incorporated on August 1, 1998 pursuant to the Corporations Act, R.S.O. 1990, c. C.38, it was established as a result of a 1998 directive of the Health Services Restructuring Commission to amalgamate Scarborough Centenary Health Centre and the Ajax and Pickering General Hospital. It currently operates a community hospital from two sites: Rouge Valley Centenary (“Centenary”) and Rouge Valley Ajax and Pickering (“Ajax and Pickering”).

3The respondent LHIN is one of 14 LHINs created under the Local Health System Integration Act, 2006, S.O. 2006, c. 4 (the “Act”). The role of the LHINs is to plan, fund and integrate the provision of health services in their regions.

4Prior to April 1, 2007, the Minister of Health and Long-Term Care provided funding directly to hospitals. Under the new Act, the Minister now provides funding to the LHINs on terms and conditions that the Minister considers appropriate, while the LHINs provide funding to health service providers on the terms and conditions that the LHINs consider appropriate (Act, ss. 17 and 19).

5The Minister and each LHIN are required to enter into an Accountability Agreement that includes specific goals and objectives (s. 18). The LHIN must also enter a Service Accountability Agreement (“SAA”) with each health service provider that it funds (ss. 19(2) and 20(1)).

6Each year, a hospital must prepare and submit its annual planning submission (“HAPS”) to the LHIN using HAPS Guidelines issued by the LHIN. The LHIN uses the information provided to negotiate and enter into the SAA with the hospital. The HAPS Guidelines stipulate that a hospital must be in a balanced operating position each year of the SAA.

7RVHS has been operating in a deficit position for many years. It entered into a Hospital Accountability Agreement with the Minister on May 25, 2007 covering the year April 1, 2007 to March 31, 2008. The delay in reaching agreement with the Minister was due to the inability of RVHS to propose a balanced operating budget. The Minister agreed to accept a proposed operating deficit in exchange for RVHS’s agreement to undergo an external operational review (the “Peer Review”). The Minister’s obligations under the agreement were assigned to the LHIN effective April 1, 2007.

8A Peer Review was conducted, and its report was presented to the boards of the LHIN and RVHS and accepted in December, 2007. It described mental health as one of four programs operating in excess of funding levels. Among its 28 recommendations was the recommendation to identify the potential to consolidate and relocate clinical services and leverage capacity at existing hospital sites.

9RVHS then engaged in a process to develop a deficit elimination plan, establishing a Transformation Management Office in December, 2007. One of the components ultimately included in the plan was the consolidation of inpatient mental health services by moving 20 inpatient mental health beds from Ajax and Pickering to the Centenary site. According to Rik Ganderton, President and Chief Executive Officer of RVHS, the goal was to pool resources, improve quality of care, increase inpatient nursing levels and reduce costs. Five of these beds would be used to create new Intensive Care mental health beds at Centenary, while 15 would be used to create new Medical Psychiatry beds there. Crisis nursing care in the emergency departments of both sites would be increased to 16 hours per day in order to reduce wait times.

10On January 15, 2008, a draft plan was presented to a meeting of the Ministry and LHIN staff. It included a number of components, designed to create annual savings of approximately $25 million over the next three years. The mental health component is expected to result in approximately $600,000 savings per year.

11Between January 15 and March 28, 2008, the LHIN worked with RVHS to reach an SAA acceptable to both parties. During this time, the deficit elimination plan was evolving.

12The LHIN board of directors considered the RVHS SAA, which incorporated the deficit elimination plan, on February 22 and March 14 at closed sessions. Reports on the closed sessions were made to the public during the March 28 board meeting and are reflected in the draft minutes of that meeting.

13A draft SAA and the Deficit Elimination Plan were approved by the RVHS board of directors on March 25, 2008. Subsequently, on March 28, 2008, the LHIN board passed a resolution authorizing the Chair to execute the re-negotiated RVHS SAA for 2007-2010 on March 31, 2008. As well, the board passed a resolution requiring RVHS to work with the LHIN prior to the implementation of the planned consolidation of mental health services by conducting a 30 day community consultation period with community stakeholders and the general public.

14Subsequently, three stakeholder meetings were held on April 9, 10 and 30, 2008.

The Issues

15OPSEU takes the position that the LHIN acted contrary to the Act because it did not provide an adequate opportunity for community input and consultation, whether under s. 16(6) or the integration decision provisions of the Act, or because it ignored a legitimate expectation that there would be procedural fairness when the LHIN approved the SAA. OPSEU also submits that the LHIN board improperly held in camera sessions.

16OPSEU seeks an order quashing or setting aside the decision of the LHIN to approve the draft SAA between the LHIN and RVHS, as well as declarations that the LHIN is required to engage in public consultation before making any determination as to whether the planned changes to the mental health services of RVHS should proceed. It also requests an order declaring that RVHS not take steps to implement the proposal pending a decision of the LHIN made following public consultation.

The Legislative Context

17Section 1 of the Act sets out its purpose:

… to provide for an integrated health system to improve the health of Ontarians through better access to high quality health services, co-ordinated health care in local health systems and across the province and effective and efficient management of the health system at the local level by local health integration networks.

18Section 2 defines “integrate” to include:

(a) to co-ordinate services and interactions between different persons and entities,

(b) to partner with another person or entity in providing services or in operating,

(c) to transfer, merge or amalgamate services, operations, persons or entities,

(d) to start or cease providing services,

(e) to cease to operate or to dissolve or wind up the operations of a person or entity…

19An “integration decision” is defined as a decision issued under s. 25(2).

20“Health service provider”, subject to subsection (3) (which is not applicable here), includes the following persons and entities:

1. A person or entity that operates a hospital within the meaning of the Public Hospitals Act or a private hospital within the meaning of the Private Hospitals Act.

2. A person or entity that operates a psychiatric facility within the meaning of the Mental Health Act except….

21Part II of the Act provides for the creation of LHINs. Their objects are set out in s. 5:

The objects of a local health integration network are to plan, fund and integrate the local health system to achieve the purpose of this Act, including

(a) to promote the integration of the local health system to provide appropriate, co-ordinated, effective and efficient health services;

(c) to engage the community of persons and entities involved with the local health system in planning and setting priorities for that system, including establishing formal channels for community input and consultation; …

22Part III of the Act deals with “Planning and Community Engagement”. It provides in s. 14 that the Minister shall develop a provincial strategic plan for the health system, while pursuant to s. 15, each LHIN must develop an integrated health service plan (“HSP”) for the local health system.

23Section 16 deals with community engagement. Subsection 16(1) requires the LHIN to “engage the community of diverse persons and entities involved with the local health system about that system on an ongoing basis, including about the integrated health service plan and while setting priorities”. Subsection 16(3) provides that the methods for community engagement may include holding community meetings or focus group meetings or establishing advisory committees. In addition, s. 16(6) 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”.

24Part IV of the Act deals with funding and accountability. It requires an accountability agreement between the Minister and each LHIN (s. 18). Section 19 permits a LHIN to provide funding to a health service provider, although the LHIN and health service provider must enter into an SAA. This Part contains no requirement for public consultation or engagement.

25Part V of the Act deals with “Integration and Devolution”. Section 24 requires each LHIN and health service provider, separately and in conjunction with each other, to identify opportunities for integration of the LHIN. Section 25 is important to this application for judicial review, as it deals with integration by a LHIN. It states:

25(1) A local health integration network may integrate the local health system by,

(a) providing or changing funding to a health service provider under subsection 19 (1);

(b) facilitating and negotiating the integration of persons or entities where at least one of the persons or entities is a health service provider or the integration of services between health service providers or between a health service provider and a person or entity that is not a health service provider;

(c) issuing a decision under section 26 that requires a health service provider to proceed with the integration described in the decision; or

(d) issuing a decision under section 27 that orders a health service provider not to proceed with the integration described in the decision.

26Subsection 25(2) requires that a LHIN issue an “integration decision” in three circumstances:

(2) A local health integration network shall issue an integration decision when the network,

(a) facilitates or negotiates the integration of persons or entities where at least one of the persons or entities is a health service provider or the integration of services between health service providers or between a health service provider and a person or entity that is not a health service provider and the parties reach an agreement with respect to that integration;

(b) requires a health service provider to proceed with an integration under section 26; or

(c) orders a health service provider not to proceed with an integration under section 27.

27There are statutory requirements for public consultation when a LHIN requires a health service provider to proceed with an integration under s. 26 and when it orders a health service provider not to proceed with an integration under s 27. Section 26 applies to the following required integrations:

26(1) Subject to subsections (2) to (6), a local health integration network that has made copies of an integrated health service plan available to the public may, if it considers it in the public interest to do so, make a decision that requires one or more health service providers to which it provides funding under subsection 19 (1) to do any one or more of the following on or after a date set out in the decision:

1. To provide all or part of a service or to cease to provide all or part of a service.

2. To provide a service to a certain level, quantity or extent.

3. To transfer all or part of a service from one location to another.

4. To transfer all or part of a service to or to receive all or part of a service from another person or entity.

5. To carry out another type of integration of services that is prescribed.

6. To do anything or refrain from doing anything necessary for the health service providers to achieve anything under any of paragraphs 1 to 5, including to transfer property to or to receive property from another person or entity in respect of the services affected by the decision.

At least 30 days before issuing such a decision, the LHIN must provide notice to the public and the health service provider and give an opportunity for written submissions to be made (s. 26(3) to (5)).

28Section 27 provides that a health service provider may integrate its services with another service or entity. However, notice must be given to the LHIN. If the LHIN proposes to issue a decision ordering the health service provider not to proceed with the integration, notice must be given and an opportunity provided for written submissions.

Issue No. 1: Did the LHIN act contrary to the Act by failing to provide an opportunity for public consultation?

29OPSEU argued that the LHIN had an obligation to issue an integration decision under s. 25(2) of the Act, because this was a health integration negotiated by LHIN within the meaning of s. 25(2)(a) of the Act. OPSEU also submits that pursuant to s. 26, when LHIN requires an integration, it must give notice and a period for submissions from interested parties.

30I disagree with this submission. Public consultation and an opportunity to make written submissions are required under ss. 26 or 27 of the Act only in the case of an integration required by the LHIN (s. 26), or where the LHIN wishes to prevent a voluntary integration between two entities (s. 27).

31LHIN did not issue an integration decision under s. 26 of the Act. The decision to consolidate inpatient mental health beds was made by RVHS, which had the authority to decide how best to eliminate its budget deficit. The LHIN did not require approval of the specific measures proposed by RVHS, as that was an internal hospital decision. What LHIN decided was to fund RVHS on the basis of its representations in respect of fiscal improvements aimed at eliminating the budget deficit.

32While s. 25(1)(a) of the Act provides that a LHIN may integrate the local health system by providing or changing funding to a health service provider under s. 19(1), a change in funding does not require an “integration decision” (see ss. 2(1) and 25(2)).

33Nor did s. 25(2) of the Act require the LHIN to issue an integration decision with respect to the consolidation of mental health services. That subsection only requires the LHIN to issue an integration decision where a voluntary integration is negotiated between two or more persons or entities, an integration is required by the LHIN, or the LHIN orders a health service provider not to proceed with an integration with another person or entity.

34OPSEU submitted that there are two entities here, in that the mental health facilities at Centenary and Ajax and Pickering are separately listed psychiatric facilities under the Mental Health Act, R.R.O. 1990, Regulation 741, Schedule 1, and therefore, s. 25(2)(a) applies. However, when one considers the wording of the Act and the nature of RVHS, it is apparent that there is only one health service provider here, which operates from two sites. In the definition section of the Act, a health service provider is defined as a person or entity that operates a hospital within the meaning of the Public Hospitals Act. The entity which operates the Ajax and Pickering and Centenary sites is RVHS. Therefore, a consolidation decision internal to RVHS, a health service provider under the Act, is not covered by s. 25(2)(a) of the Act.

35In the alternative, OPSEU argued that the LHIN was required to engage the community under s. 16(6) of the Act. However, s. 16(6) deals with the obligation of health service providers to engage the community when developing plans and setting priorities for the delivery of health services. There is evidence summarized in the RVHS factum of community engagement from June, 2007 and continuing to the present.

36In contrast, the LHIN is to engage the community about the “system”, including the HSP and while setting priorities (s. 16(1)). It has done so in the development of its Integrated Health Service Plan, a 64 page document filed as an exhibit to the affidavit of Deborah Hammons. That document, in its Forward, describes the Plan as a “community effort”. It also makes a distinction between the planning phase and the next phase of implementation and monitoring.

37Subsection 16(1) of the Act does not require public consultation during budget negotiations with individual health service providers. Indeed, it is telling that Part IV of the Act dealing with funding and accountability contains no requirement for consultation or “engagement” with the community.

38In summary, the LHIN did not act contrary to the legislation in approving the SAA with RVHS.

Issue 2: Did the LHIN deny procedural fairness to the affected community?

39A public authority which makes an administrative decision that affects the rights, privileges or interests of a person is subject to a duty of procedural fairness (Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] S.C.J. No. 9 at para. 79). The content of the duty depends on the context, requiring consideration of a number of factors:

1. the nature of the decision and the decision-making process employed by the public body

2. the nature of the statutory scheme and the precise statutory provisions pursuant to which the public body operates

3. the importance of the decision to the individuals affected

4. the legitimate expectations of the party challenging the decision, and

5. the nature of the deference to be accorded to the decision-making body.

(Congrégation des témoins de Jéhovah de St-Jérôme-Lafontaine v. Lafontaine (Village) (2004), 2004 SCC 48, 241 D.L.R. (4th) 83 (S.C.C.) at para. 4)

40The Act does not require public consultation with respect to contract or funding decisions. This is in contrast to the requirements for public consultation in certain integration decisions, as set out in ss. 26 and 27. Had the Legislature intended a similar process for contract or funding decisions, one would have expected similar provisions for notice and consultation in Part IV of the Act.

41OPSEU also invokes the doctrine of legitimate expectations, which in certain circumstances can give rise to requirements of procedural fairness. It affords a party affected by the decision of a public official an opportunity to make representations in circumstances in which there would otherwise be no right to do so. The doctrine of legitimate expectations confers such a right where, based on the conduct of a public official, a party has been led to believe that his or her rights would not be affected without consultation (Old St. Boniface Residents Association Inc. v. Winnipeg (City), 1990 31 (SCC), [1990] 3 S.C.R. 1170 at paras. 73-74).

42OPSEU has presented no evidence to suggest that it or other members of the public have been consulted about the terms of an SAA or hospital funding in the past, thus giving rise to an expectation of consultation in future funding decisions. Nor is there any evidence that the LHIN made any representations about consultation prior to funding decisions or the approval of an SAA that would give rise to an expectation of public consultation regarding such decisions. In my view, general statements about the importance of community engagement, particularly in the setting of priorities and development of an HSP, are not sufficient to give rise to an enforceable right to consultation about LHIN funding decisions.

Issue No. 3: Did the LHIN act contrary to the decision of its board of directors by failing to hold a consultation on the substance of the decision?

43The LHIN approved the SAA subject to the requirement that the RVHS work with the LHIN “prior to the implementation of the planned consolidation of MHA services in conducting a 30-day consultation period with community stakeholders and the general public”.

44I accept the submission of the respondent LHIN that the consultation was to be with respect to the implementation. This was clarified in the SAA with RVHS, where article 9.4(b) states that the wording “prior to implementation”, in the article dealing with consultation and reporting, “refers solely to the need to inform and educate stakeholders on the plan and to gain their input on improving the plan as it relates to access”.

45The decision to engage the community about the implementation of the RVHS consolidation was within the broad discretion of the LHIN and was a reasonable decision.

Issue No. 4: Did the LHIN act in violation of s. 9 of the Act by holding in camera meetings?

46While OPSEU submits that the LHIN acted improperly in holding in camera meetings, they have sought no relief as a result of the in camera meetings (which are permitted under s. 9(5) in specified circumstances). No decisions were made at the closed sessions that could be set aside. Therefore, there is no need for this Court to address this issue, as no claim for relief turns on it.

Conclusion

47The application for judicial review is dismissed. If the parties are unable to agree on costs, they may make brief written submissions, through the Divisional Court Office: by the respondent and the interested party within 21 days of the release of this decision and by the applicant within 15 days thereafter.

Swinton J.

Chapnik J.

Ferrier J.