Overview
The B.C. Health Care Costs Recovery Act was passed on May 29, 2008 and came into force on April 1, 2009. The Act effectively creates two new actionable heads of damage for victims of others’ negligence: the past and future costs of health care services that are ordinarily paid by the provincial government. Further, it requires plaintiffs who choose to sue to make a claim for these heads of damages in their lawsuit. Perhaps most significantly, it gives the provincial government the power to bring or assume a claim for these heads of damage in a new or ongoing lawsuit. It also places obligations on a wrongdoer before settling an existing or even potential lawsuit.
The Gentlemen’s Agreement
The Act is seen by most as a successor to a “Gentlemen’s Agreement” in place between insurance companies and the provincial government. In the 1950’s, the provincial government enacted legislation under the Hospital Insurance Act giving victims and the government rights to sue for hospital costs ordinarily paid for by the provincial government. However, the relevant sections were never declared in force. The agreement was essentially one by the government to never proclaim the sections in force provided insurance companies continued to reimburse the government for hospital costs occasioned by an insured’s negligence. Apparently due to declining recovery by the government in recent years, coupled with the questionable enforceability of the Agreement, the Act was put into place.
The Act
The Act begins by defining some important terms. A “beneficiary” is defined as a beneficiary under the Medicare Protection Act, and basically includes all beneficiaries of public health care in B.C. A “wrongdoer” is defined as follows:
a person whose negligent or wrongful act or omission causes or contributes to a beneficiary’s personal injury or death, and
a person who is responsible at law for the acts or omissions of a person referred to in paragraph (a),
but does not include the beneficiary.
This is an interesting definition for a couple of reasons. First, it appears to include not only the person who committed the wrongful act, but also a person who is legally responsible for the acts and omissions of that person. This would suggest that a person (or more likely a company) who has done nothing wrong but is simply vicariously liable for another’s acts is considered a “wrongdoer” for the purposes of the Act. A good example of this may be an employer being liable for the acts of a negligent employee. Secondly, the definition specifically excludes the beneficiary, meaning a person cannot be both a beneficiary and a wrongdoer for the purposes of the same claim. This makes sense in consideration of the mandate of the Medicare Protection Act.
The last significant definition is “health care services”, which is defined quite broadly and includes benefits and/or payments under the Hospital Insurance Act, Medicare Protection Act, Continuing Care Act, and Emergency and Health Services Act. The Act also differentiates between the past and future cost of health care services; the former includes costs up to and including the settlement/first day of trial, the latter is the “present value of the estimated total cost of all health care services that are provided” or expected to be provided following the settlement/first day of trial. Up until recently, the government has been limiting its recourse to recovery of past costs only. However, we are now starting to see some claims being advanced for future health care costs.
Section 2 of the Act gives the beneficiary a right of action against a wrongdoer for the past and future costs of “health care services” (“Health Care Costs”). The section contains an express provision stating Health Care Costs are recoverable by the beneficiary despite the fact it was the government, and not the beneficiary, who made the expenditures in the first place. This is significant as the case law previously held that a beneficiary who had no obligation to pay for medical expenses (and no obligation to reimburse the government) had no right to recover them from a liable defendant 1 . The section also contains a provision that allows the beneficiary to recover Health Care Costs from a wrongdoer whether the wrongdoer was partially or wholly liable for the beneficiary’s personal injury. This suggests the beneficiary (or government), could seek to recover the entirety of the Health Care Costs from one liable wrongdoer. This provision, coupled with the fact that a beneficiary cannot also be a wrongdoer, may be an attempt by the drafters to saddle wrongdoers with 100% of the Health Care Costs, even when the beneficiary has significantly contributed to his or her own injuries by way of contributory negligence.
Section 3 stipulates that if a beneficiary brings a legal proceeding, either individually or by class action, against a wrongdoer alleged to be liable for personal injury or death, the beneficiary must make a claim for Health Care Costs in the legal proceeding. In the event the beneficiary has not made such a claim, section 3(3) also requires the court to allow the beneficiary to amend their notice of claim accordingly, provided the amendment is made within six months of the beneficiary filing their claim. Further, provided the beneficiary has brought their claim within the relevant limitation period as defined by the Limitation Act, section 3(4) of the Act states that the Limitation Act is not a bar to the amendment envisaged by section 3(3). Note, however, that by virtue of section 24(2) which deals with transitional issues with the coming into force of the Act, the obligations in section 3 do not apply with respect to claims arising before April 1, 2009.
Section 4 is the first of a number of notice provisions in the Act. It requires a beneficiary who has commenced a legal proceeding under section 3 to give written notice to the government within 21 days. Like other notice provisions, the notice must be given in the form provided by the regulations, and must also include a copy of the originating documents from the legal proceeding (i.e. the notice of civil claim). This section is not applicable to claims arising before April 1, 2009 (section 24(2)).
Section 5 purports to limit the court’s ability to strike, set aside, or discontinue claims for Health Care Costs. Specifically, the section provides that a court cannot allow such a claim to be discontinued or dismissed by consent unless the minister has filed his or her consent with the courts. Further, a court cannot set aside, dismiss or strike such a claim unless the court is satisfied that the government has had an opportunity to appear and make submissions on the point. Finally, the court cannot make a final disposition in a legal proceeding involving a claim for health care costs unless the court is satisfied the government has been given the requisite notice under section 4, as well as notice of the application for the final disposition. This would appear to put the onus on the parties to advise the government of the dates set for trial or of any application for summary judgment or summary trial. This section is not applicable to claims arising before April 1, 2009 (section 24(2)).
Sections 6 through 9 of the Act deal with the government’s remedies with respect to pursuing a claim for Health Care Costs. Section 6 allows the government to intervene in or even assume conduct of a Health Care Costs claim. This presumes that the claim for Health Care Costs has already been pleaded, and therefore likely only applies to actions commenced after April 1, 2009. Section 7 gives the government a right of subrogation for Health Care Costs and allows the government to bring a subrogated action in its own name. Notwithstanding the right of the beneficiary to recover under section 2 and the government’s subrogation rights under section 7, section 8 gives the government an independent right to recover Health Care Costs that tracks the language of the beneficiary’s right set out in section 2. The primary difference between sections 7 and 8 would seem to be the special limitation period provided to the government under section 8 claim. In a subrogated action under section 7 the rights of the government would be limited to those of the beneficiary and thus subject to limitation periods that may have already expired.
Section 8(5) of the Act sets out the government’s limitation period with respect to bringing it’s won cause of action for Health Care Costs. Specifically, the government may not commence a Health Care Costs claim after the later of the following two dates:
(a) the date that is 6 months after the expiration of the limitation period that applies to the beneficiary’s right to commence a legal proceeding against the alleged wrongdoer for damages in respect of the personal injury referred to in section 2 [beneficiary’s right to recover];
(b) the earliest of the following dates:
Essentially, the government must bring its claim within six months of the expiry of the limitation period that applies to the beneficiary’s personal injury action, or within six months of first receiving notice of the potential Health Care Costs claim pursuant to the various notice provisions in the Act. However, section 8(7) states that the entirety of (b), above, is inapplicable if the limitation period in (a) had already lapsed when the Act came into force on April 1, 2009. Interestingly, this section is capable of two interpretations. Those defending the interests of wrongdoers (and their insurers) would argue that “the limitation period referred to in subsection (5) (a)” is “the limitation period that applies to the beneficiary’s right to commence a legal proceeding”, and in most cases is two years from the date of loss. On this interpretation, and assuming a standard two year limitation period for the beneficiary’s right of action, claims arising before April 1, 2007 would be shielded from the “extended” limitation period provided for in s. 8(5)(b) and would be subject to a 30 month limitation from the date the beneficiary’s right of action arose. However, the government has taken the position that “the limitation period referred to in subsection (5) (a)” is the 30 month limitation period. This gives claims arising between October 1, 2006 and March 31, 2007 the benefit of the “extended” limitation period in s. 8(5)(b). This was the assumed limitation period that was used in HMTQ v. Beacon Community Services Society, which is discussed later in this paper. On either interpretation, it would appear that claims arising prior to October 1, 2006 cannot be brought by the government under section 8.
Section 10 deals with the obligations of an insurer of an alleged wrongdoer. Within 60 days of learning of a possible claim an insurer is required to give notice to the government in a prescribed form. It is important to note this requirement is triggered upon the insurer being notified of a potential claim, not just a potential law suit. However, notice to the government is not required with respect to claims the insurer learned about prior to April 1, 2009. Upon request by the minister, the insurer may also be required to provide copies of relevant insurance policies, police reports, or pleadings related to a claim by a beneficiary. Section 10(5) expressly notes that provision of these documents by an insurer is not an admission of liability by an insurer in relation to an insured.
Sections 11 and 12 deal with a beneficiary’s duty to cooperate with the minister. The minster has broad powers under section 11, including requiring the beneficiary to produce documents, give evidence, and even attend an independent medical examination. Section 12 compels the beneficiary to give the minister 21 days notice before entering into any settlement with an alleged wrongdoer.
Section 13 imposes further restrictions on a proposed settlement between a beneficiary and an alleged wrongdoer. Specifically, before entering into such a settlement the person liable to make payments under the settlement (the “Payor”, and in most cases an insurer) must give notice of the proposed settlement to the minister (again, in the prescribed form). The notice should indicate what amount, if any, is being proposed for settlement of the Health Care Costs claim. It is only upon receiving written consent from the minister that any proposed settlement can be effected. The government is taking the position that the section 13 notice requirements apply to all settlements, including “nuisance value” settlements, and to all claims and actions settled after April 1, 2009 regardless of when the injury occurred or when the litigation was commenced.
Section 13 contains a strict penalty for non-compliance; if notice is not given in accordance with the section, the wording of subsection 8(5) is that the entire amount of the Health Care Costs claim is converted to a debt owed by the Payor to the government. This is significant because in the ordinary course, if the government wanted to proceed with a claim for Health Care Costs under sections 6-8, the onus would be on the government to prove both liability and quantum in its claim against the wrongdoer. However, it would appear that if the government can simply show non-compliance with section 13, liability is established and only quantum needs to be proved (subject to section 16, discussed below). It is noteworthy that the penalty in section 13 is for failing to give notice and not for failing to obtain the minister’s consent to the settlement. Section 13 also includes a provision voiding any release made in favour of a Payor who has not obtained the minister’s consent to the proposed settlement.
We are recently seeing a number of claims being brought by the government under section 13(5). The first one we are aware of going to trial is HMTQ v. B.C. Rapid Transit Company et al, which was heard last week in Vancouver Provincial Court. It was argued by the defendants that the further to the decision in Gosselin v. Shepherd, (discussed below) the Act does not apply retroactively to actions commenced prior April 1, 2009.
Sections 14 and 15 deal with the ability of the government to obtain relevant records and the privacy rights that attach to those records.
Section 16 simplifies the ministry’s requirement to furnish proof of the health care services received by a beneficiary as well as the related Health Care Costs. Quite simply, it states that a certificate issued by the minister setting out the health care services received and expected to be received by a beneficiary as a result of a wrongdoer’s wrongful act is proof of those services. Subsection 2 goes even further, stating that a certificate setting out the Health Care Costs attributable to a personal injury is “conclusive proof” of those Health Care Costs. The use of the term “conclusive proof” in the latter subsection suggests that while it may be open for an alleged wrongdoer to challenge whether or not a particular health care service was a result of his or her negligence, the quantum of Health Care Costs related to that service cannot be challenged 2 .
Section 17 states that when two or more wrongdoers are liable for Health Care Costs, they are jointly and severally liable for the percentage of Health Care Costs that is equal to the percentage of their combined total fault as determined by the court. This implicitly suggests that, at least in the case of multiple wrongdoers, a wrongdoer cannot be held responsible for any portion of fault not attributable themselves or to another wrongdoer. This would mean that a wrongdoer would not be liable for any portion of fault attributable to a beneficiary’s contributory negligence. It will be interesting to see whether this provision is considered in cases where fault is attributed between a single wrongdoer and a beneficiary.
Section 18 gives payments to a beneficiary priority over payments to the government. This would be applicable when there are potential policy limit issues. Section 19 gives the government a right of appeal with respect to a claim for Health Care Costs, even when the beneficiary has not appealed, and extends the deadline for doing so. Section 20 requires a court, when pronouncing judgment in a claim including a claim for Health Care Costs, to specify the amount of the judgment attributable to the Health Care Costs. Section 21 indemnifies the beneficiary for some costs and expenses that may be incurred by a beneficiary in complying with the Act. Section 22 provides how to effect service on the government for the purposes of sections 4 and 5.
Section 24 deals with the application of the Act. It explicitly states that the Act applies to all claims, regardless of when it arose. However, with respect to claims arising before April 1, 2009, sections 3 (obligation of the beneficiary to claim), 4 (requirement to notify government of claim) and 5 (final disposition of claim) are inapplicable. The important point to note is that section 13, the requirement to notify the minster and obtain consent prior to settlement, applies to all claims regardless of the date of loss. As such, it is always prudent to provide the government with notice under section 13, even if you believe the government has no available avenue of recovery. Section 24 also provides that the Act is not applicable to: (a) claims arising from motor vehicle accidents when the wrongdoer is insured by ICBC; (b) claims where the beneficiary receives compensation from the Worker’s Compensation Board under the Workers Compensation Act; or (c) claims arising from a “tobacco related wrong” as defined by the Tobacco Damages and Health Care Costs Recovery Act.
The Regulation
The Health Care Costs Recovery Regulation contains a few provisions worth noting. Sections 2 and 3 create more expansive definitions of “health care practitioner” and “health care services”. Section 4 creates a contingency fee arrangement for counsel who, while prosecuting a beneficiary’s claim, also prosecute the government’s Health Care Costs claim. Counsel in this scenario are entitled to 15% of the government’s recovery.
Section 5 creates various exemptions to the Act’s application. Specifically, proceedings in Small Claims Court are exempted from sections 3 to 7, 12, 13, 19 and 22 of the Act. This means that in Small Claims actions, while both the beneficiary and the government have the right to bring a claim for Health Care Costs, there is no obligation on the beneficiary to make the claim. Further, while an insurer is still required to give notice of a claim under section 10 of the Act, there is no requirement to give notice or obtain consent from the government before effecting settlement.
The regulation also provides the prescribed forms under sections 4, 10, 12 and 13 of the Act, and also indicates that service under section 4 and 5 can be effected by email. Interestingly, all the prescribed forms under the regulation indicate they can be served by email.
The Case Law
Likely due to the short amount of time it has been in force, there has been very little judicial consideration of the Act. One of the first cases to consider the Act was MacEachern v. Rennie 3 . The Act came into force in the middle of the trial and the plaintiff applied to amend her claim to include a claim for Health Care Costs estimated at some $875,000. The defendants argued they would be prejudiced by such an amendment as they had no opportunity to appropriately investigate the quantum of the Health Care Costs claim during oral and document discovery. The plaintiff argued that by virtue of section 16 of the Act, the defendants could not challenge the quantum of the Health Care Costs claim and thus discovery was unnecessary. As referenced in the discussion on section 16 earlier, Mr. Justice Ehrcke disagreed, finding the presumption in section 16(1) regarding the health care services received by the plaintiff was a rebuttable one, and the defendants would accordingly be prejudiced by such an amendment. This decision was followed in Etson v. Loblaw Companies Limited (Real Canadian Superstore) 4 .
The next two cases of Gosselin v. Shepherd 5 and Fong v. Deglan 6 raised similar issues and were thus heard on the same date by Mr. Justice Sewell. Both actions were commenced in early 2007 – well before the Act came into force. Both plaintiffs sought to amend their claims to include claims for Health Care Costs. Ultimately, the judge dismissed the application, finding that the Act was “not clearly and unambiguously intended to apply to actions commenced before the Act came into force”, and further, that such an amendment would be of no benefit to the personal plaintiffs (as any recovery would be owed to the government) and would be unfair to the defendants. Mr. Justice Sewell’s decisions were followed in Jack v. Tekavec 7 .
HMTQ v. Beacon Community Services Society 8 appears to be the first reported judgment with respect to a direct action commenced by the government pursuant to its rights in section 8 of the Act. The date of loss applicable to the beneficiary was November 4, 2006, but the government did not file their claim until October 27, 2009. The defendants argued that based on the limitation periods provided in section 8(5) of the Act, the government was out of time to commence the action. Mr. Justice Williamson found that none of the limitation postponement provisions in s. 8(5)(b) were applicable in the circumstances, and as such the limitation period in s. 8(5)(a) was the applicable one. As previously discussed, this gives the government a 30 month limitation period from the beneficiary’s date of loss, which in the circumstances of this case, expired on May 4, 2009. The government argued that, as they had no knowledge of the beneficiary’s action (and thus the government’s right of action), they should be permitted to postpone the commencement of the limitation period pursuant to the common law. However, the judge found the express postponement provisions in the Act prevailed and dismissed the government’s action. This decision is currently under appeal.
It will be interesting to see how the jurisprudence develops around the Act as the cases make their way through the system. We are currently aware of a pending trial on the subject of whether failure to give the government notice under s. 13 creates a right of action in favour of the government, even when the government’s recourse under other sections of the Act have been time-barred by virtue of the cases discussed above.
1 Committee of Gordon Semenoff v. Kokan, 1991 CanLII 532 (BCCA).
2 See MacEachern v. Rennie, 2009 BCSC 652, at paras. 25-31.
3 ibid.
4 2010 BCSC 1865
5 2010 BCSC 755
6 2010 BCSC 756
7 2010 BCSC 1773
8 2012 BCSC 144