Court of Queen’s Bench of Alberta Citation: Elder Advocates of Alberta Society v. Alberta, ABQB 490 Date: 20080814 Docket: 0503 13196 Registry: Edmonton Between: Elder Advocates of Alberta Society and James O. Darwish, Personal Representative of the Estate of Johanna H. Darwish, Deceased Plaintiffs - and - Her Majesty the Queen In Right of Alberta, Aspen Regional Health Authority, Calgary Health Region, Capital Health, Chinook Regional Health Authority, East Central Health, Northern Lights Health Region, Palliser Health Region, Peace Country Health Defendants _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice S.J. Greckol _______________________________________________________ I. Introduction. ....................................................... Page: 3 II. Legislation. ........................................................ Page: 5 A. Class Proceedings Legislation.................................... Page: 5 B. Legislative Scheme for the Provision of Health Care Services........... Page: 8 1. Federal Health Legislation................................. Page: 9 2. Alberta Legislation - Alberta Health Care Insurance Act and Subordinate Regulations. ........................................... Page: 9 3. Alberta Legislation - Nursing Homes Act and Subordinate Regulations ..................................................... Page: 12 Page: 2 4. Alberta Legislation - Hospitals Act and Subordinate Regulations ..................................................... Page: 17 5. Alberta Legislation - Regional Health Authorities Act and Subordinate Regulations. .......................................... Page: 26 6. Directive D-317........................................ Page: 28 III. Facts............................................................. Page: 28 A. Affidavits of Plaintiffs......................................... Page: 28 1. Elder Advocates of Alberta Society......................... Page: 28 (a) Ruth Maria Adria................................. Page: 28 (i) Affidavit Filed February 28, 2006 ......................................... Page: 28 (ii) Affidavit Filed June 5, 2006 ......................................... Page: 30 (b) James Darwish................................... Page: 30 (i) Affidavit Filed February 27, 2006.............. Page: 30 (ii) Affidavit Filed June 5, 2006................... Page: 33 (iii) Affidavit Filed November 30, 2006. ............ Page: 35 (iv) Affidavit Filed September 17, 2007............. Page: 36 (v) Affidavit Filed January 22, 2008............... Page: 37 (vi) Cross-examination on Affidavits. .............. Page: 37 B. Affidavits on behalf of the Defendants. ........................... Page: 38 1. Alberta Heath and Wellness............................... Page: 38 (a) Tom Mills. ..................................... Page: 38 (i) Affidavit Filed September 11, 2006............. Page: 38 (ii) Information on Alberta Seniors Benefit.......... Page: 42 (iii) Information on Assured income for the Severely Handicapped. ............................. Page: 43 (iv) Information on Supports for Independence /Alberta Works ......................................... Page: 43 (v) Cross-Examination on Affidavit................ Page: 43 2. Regional Health Authorities. ............................. Page: 45 (a) Brenda Huband - Calgary Health Region. ............. Page: 46 (b) Norm Petherbridge - East Central Health. ............. Page: 49 (c) Robert Stratychuk - Chinook Health Region............ Page: 52 (d) Linda Metz - Northern Lights Health Region. .......... Page: 55 (e) Seamas O’Fuarthain - Palliser Health Region........... Page: 57 (f) Lynne Mansell - Capital Health...................... Page: 58 (g) Shelly Pusch - Aspen Regional Health. ............... Page: 60 (h) Sean Chilton - Peace County Health. ................. Page: 62 (i) Denise McBain - David Thompson Regional Health Authority ............................................... Page: 64 IV. Issues. ........................................................... Page: 67 Page: 3 V. Analysis. ......................................................... Page: 68 A. Do the Pleadings Disclose a Cause of Action?. ..................... Page: 68 1. Breach of Fiduciary Duty................................. Page: 70 2. Breach of Duty of Care. ................................. Page: 77 3. Breach of Contract...................................... Page: 84 4. Unjust Enrichment with Remedy of Restitution ..................................................... Page: 85 (a) The Enrichment of the Defendants. .................. Page: 86 (b) Corresponding Deprivation of the Plaintiffs. ........... Page: 88 (c) Absence of Juristic Reason for Enrichment............. Page: 88 5. Ultra Vires Action...................................... Page: 89 6. Ultra Vires Tax. ....................................... Page: 94 7. Section 15(1) of the Charter. ............................. Page: 95 (a) Discrimination................................... Page: 96 (b) Human Dignity................................... Page: 96 (c) Disadvantage. ................................... Page: 97 (d) Proposed Comparator Groups. ...................... Page: 98 (e) Conclusion on Charter claim........................ Page: 99 B. Is there an Identifiable Class of Two or More Persons?. .............. Page: 99 C. Do the Claims of the Prospective Class Members Raise a Common Issue? .......................................................... Page: 102 D. Is a Class Proceeding the Preferable Procedure for the Fair and Efficient Resolution of the Common Issues?.............................. Page: 111 E. Are Either Mr. Darwish or the EAAS Appropriate Representative Plaintiffs? .......................................................... Page: 114 VI. Summary of Findings............................................... Page: 115 VII. Disposition....................................................... Page: 117 I. Introduction [1] The Plaintiffs, the Elder Advocates of Alberta Society (the EAAS) and James O. Darwish in his capacity as the personal representative of the estate of Johanna H. Darwish (Darwish), bring this application for certification pursuant to the Class Proceedings Act, R.S.A. 2000 c. C- 16.5 (CPA). The EAAS is a non-profit society. Darwish is the son of Johanna H. Darwish, who was a resident in the Lynwood Nursing Home from March 1994 until her death on February 22, 2006. Darwish was his mother’s guardian and trustee and is now the executor of her estate. The Lynwood Nursing Home is operated by the Defendant, Capital Health, through its agent, the Capital Care Group, which is a wholly-owned subsidiary health corporation of Capital Health. [2] The Defendants, Her Majesty the Queen in Right of Alberta (the Government) and the nine Regional Health Authorities (RHAs), including Aspen Regional Health Authority, Calgary Health Authority, Capital Health, Chinook Regional Health Authority, David Thompson Page: 4 Regional Health Authority, East Central Health, Northern Lights Health Region, Palliser Health Region, and Peace Country Health, administer and operate a regime for the provision of health care services to Alberta residents pursuant to the Alberta Health Care Insurance Act, R.S.A. 2000, c. A-20 (AHCIA), the Nursing Homes Act, R.S.A. 2000, c. N-7 and the Hospitals Act, R.S.A. 2000, c. H-12. [3] The Government funds health care services by providing global, population-based funding to the RHAs, all of which are bodies corporate and have been established pursuant to the Regional Health Authorities Act, R.S.A. 2000, c. R-10 (RHAA). In turn, the RHAs are responsible for the planning and delivery of health care services in hospitals, long-term care facilities (LTCFs), community health services and public health programs to the residents of each respective region. The RHAs deliver health care services directly or indirectly through either wholly-owned subsidiary health corporations or private operators who have entered into nursing home contracts with the RHAs pursuant to s. 2 of the Nursing Homes Act. [4] One of the core services delivered by the RHAs to each region is residential long-term care, in nursing homes and auxiliary hospitals. The RHAs determine how much health care funding is to be directed to these LTCFs. The LTCFs are required to provide nursing home care to eligible residents and to operate their facilities in accordance with the applicable legislation and regulations: see the Nursing Homes General Regulation, Alta. Reg. 232/85, ss. 2, 4. [5] The Plaintiffs led evidence establishing that the RHAs fund nursing homes and auxiliary hospitals in the same way, and that this funding essentially comes from two different streams of income: one is the global health care funding provided from the Government, the other is money paid by residents as an accommodation charge (Accommodation Charge). For the fiscal year ending March 1, 2005, approximately $577.7 million in funding for LTCFs came from the global health care funding stream and approximately $206.5 million from the Accommodation Charge stream. [6] The Plaintiffs bring this action on behalf of a proposed class of “all Residents of Long- Term Care Facilities and patients in general hospitals in Alberta who have been assessed as requiring auxiliary hospital or nursing home level care, and the estates of such persons who, since August 1, 2003, have been charged the Accommodation Charge, save and except for all such persons, who at any time since August 1, 2003, have received: (a) Assured Income for the Severely Handicapped (AISH); (b) Supports for Independence (SFI); (c) the full Supplementary Accommodation Benefit; (d) benefits to pay the Accommodation Charge from the Worker’s Compensation Board, the Department of Veteran Affairs (Canada), the Department of National Defence (Canada), the First Nations and Inuit Branch of Health Canada, and the Royal Canadian Mounted Police; Page: 5 (e) a waiver, in its entirety, of the Accommodation Charge increase which took effect August 1, 2003 pursuant to AR 260/2003, for reasons of financial hardship.” (the Proposed Class) [7] The definition of “accommodation charge” is provided in the Nursing Homes Act, while the maximum amount of the charge is set out in s. 3(1) of the Nursing Homes Operation Regulation, Alta. Reg. 258/85. On August 1, 2003, pursuant to Alta. Reg. 260/2003, the maximum Accommodation Charge was increased to the following rates: (a) $39.62 per day for residents of standard wards; (b) $42.00 per day for residents in semi-private rooms; and (c) $48.30 per day for residents in private rooms. [8] The Plaintiffs allege that the Accommodation Charge increases were not fair, reasonable or justified, and were not in the best interests of the members of the Proposed Class. The Plaintiffs contend the Defendants have breached their fiduciary duty and duty of care owed to the members of the Proposed Class. Finally, the Plaintiffs maintain that the Accommodation Charge charged constitutes a breach of contract, an unjust enrichment calling for restitution, an ultra vires action, an ultra vires tax, and a violation of the rights of the members of the Proposed Class pursuant to s. 15(1) of the Canadian Charter of Rights and Freedoms. [9] The EAAS commenced this action. The Defendants have agreed that adding Darwish as a Plaintiff has cured, nunc pro tunc, the alleged defect that the EAAS was not a member of the class when it did so. The Plaintiffs have reserved the right to apply to add a new Plaintiff should that be necessary to assert a s. 15 Charter right. II. Legislation A. Class Proceedings Legislation [10] The requirements for certification are set out in s. 5(1) of the CPA, which provides as follows: 5(1) In order for a proceeding to be certified as a class proceeding on an application made under section 2 or 3, the Court must be satisfied as to each of the following: (a) the pleadings disclose a cause of action; (b) there is an identifiable class of 2 or more persons; Page: 6 (c) the claims of the prospective class members raise a common issue, whether or not the common issue predominates over issues affecting only individual prospective class members; (d) a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues; (e) there is a person eligible to be appointed as a representative plaintiff who, in the opinion of the Court, (i) will fairly and adequately represent the interests of the class, (ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and (iii) does not have, in respect of the common issues, an interest that is in conflict with the interests of other prospective class members. [11] The Plaintiffs must establish each of these requirements before the action can be certified. Once the Court is satisfied that each of the requirements has been met, certification is mandatory: CPA, s. 5(3). [12] Section 8 of the CPA refers to specific circumstances which are not, in themselves, a bar to certification: 8. In determining whether a proceeding is to be certified as a class proceeding, the Court is not to refuse certification by reason only of one or more of the following: (a) the relief claimed includes a claim for damages that would require individual assessment after determination of the common issues; (b) the relief claimed relates to separate contracts involving different prospective class members; (c) different remedies are sought for different prospective class members; (d) the number of prospective class members or the identity of each prospective class member has not been ascertained or may not be ascertainable; Page: 7 (e) the class includes a subclass where the prospective subclass members have claims that raise common issues not shared by all the prospective class members. [13] In determining whether an action should be certified as a class proceeding, the Court must strike a balance between efficiency and fairness: Western Canadian Shopping Centres Inc. v. Bennett Jones Verchere, 2001 SCC 46, [2001] 2 S.C.R. 534 at para. 44. [14] As stated in Ayrton v. PRL Financial (Alta.) Ltd., 2006 ABCA 88 at para. 14, 384 A.R. 1, the CPA “supports a purposive approach and provides for extensive flexibility in terms of procedures available to certification judges to deal with class actions as they unfold.” [15] The certification stage is not meant as a test of the merits of the action. The issue is not whether the claim is likely to succeed, but whether it is appropriately prosecuted as a class action: Hollick v. Toronto (City), 2001 SCC 68 at para. 16, [2001] 3 S.C.R. 158. [16] Nevertheless, the Court must assess, although not determine, the merits of the action in order to identify the common issues, define the class and address the criteria in s. 5(1) of the CPA: Windsor v. Canadian Pacific Railway Ltd., 2006 ABQB 348 at para. 48, 402 A.R. 162, var’d slightly 2007 ABCA 417, A.R. 200. The merits of the action also are relevant in determining whether a class proceeding is the preferable procedure for the fair and efficient resolution of the common issues: T.L. v. Alberta (Director of Child Welfare), 2006 ABQB 104 at para. 36, 395 A.R. 327. [17] A certification motion is not the appropriate place for deciding difficult questions of fact or law, but there is little point in certifying the class proceeding if the action appears doomed to fail: T.L. at para. 36. [18] The proposed class representative must show some basis in fact to support the certification order. This is not to say there must be affidavits from members of the class or there should be any assessment of the merits of the claims of other class members. However, the class representative must show some basis in fact for each of the certification requirements set out in s. 5(1) of the CPA, but need not establish that the pleadings disclose a cause of action, as that requirement is governed by the rule that a pleading should not be struck for failure to disclose a cause of action unless it is “plain and obvious” that no claim exists: Hollick at para. 25. [19] This minimum evidentiary requirement does not involve the weighing of evidence, but instead calls for some factual basis to be shown for each of the requirements in s. 5(1) other than the need for the pleadings to disclose a cause of action: Windsor , 2006 ABQB 348 at paras. 42 and 50. [20] The affidavit evidence presented in support of certification must provide sufficient information, particulars and specificity with respect to the requirements for certification. Those who oppose certification must put forward their supporting evidence: Condominium Plan No. 0020701 v. Investplan Properties Inc., 2006 ABQB 224 at para. 53, 57 Alta. L.R. (4th) 310. Page: 8 B. Legislative Scheme for the Provision of Health Care Services [21] In general, provincial legislation governs the scheme by which health care is funded and administered, although federal legislation sets certain prerequisites for federal health care transfer payments. In Alberta, public health care funding is largely provided via the provincial public insurance apparatus in the Alberta Health Care Insurance Act. [22] The Plaintiffs wish to represent persons they describe as being residents of LTCFs; that is, residents of nursing homes and auxiliary hospitals, as well as some residents of hospitals who are chronically ill. These institutions are governed by the Nursing Homes Act, the Hospitals Act, and their regulations. [23] The Plaintiffs advance two primary arguments in relation to the legislative scheme addressing the provision of long-term care. First, they submit that the Accommodation Charge prescribed by s. 3(1) of the Nursing Homes Operation Regulation is permissive and discretionary, and not fixed and mandatory. Section 3(1) of the Regulation provides that an operator “may” charge an accommodation charge and that the accommodation charge “shall not exceed the specified amounts.” The Plaintiffs contend the permissive and discretionary nature of the Accommodation Charge is confirmed by s. 3(5) of the Nursing Homes Operation Regulation, which states: “The amounts prescribed under subsection (1) are the maximum amounts that an operator may charge an eligible resident...” (emphasis added). The Plaintiffs allege that the Defendants informed the public the charges were mandatory and implemented them as mandatory rather than as discretionary. [24] Second, the Plaintiffs note the LTCFs are required to provide the “basic care” services listed in s. 2 of the Nursing Homes General Regulation, but are permitted to charge the Accommodation Charge for accommodation and meals. The Plaintiffs take the position that the exemption for “accommodation and meals” means the cost of rent for personal space and the cost of food (but not of meal preparation). They maintain the LTCFs are responsible for paying for all other items listed in s. 2 of the Nursing Homes General Regulation. The Plaintiffs allege the members of the Proposed Class are being charged for services that the Government should be providing free of charge. [25] In response, the RHAs submit that there is no requirement under the Nursing Homes Act that an operator of a nursing home must charge less than the maximum allowable rates. The RHAs submit the phrase “in respect of,” as used in the definition of “accommodation charge” in the Nursing Homes Act, should be give the broadest possible interpretation. They point out there are no definitions of the terms “accommodation” and “meals” found in any of the statutes or regulations pled, nor is there any regulatory or administrative scheme that would suggest the term “accommodation” should be narrowly construed to mean the square footage occupied “for personal space” or that the word “meals” should be defined as “food” but not its preparation. Page: 9 1. Federal Health Legislation [26] The Canada Health Act, R.S.C. 1985, c. C-6 requires that the provinces operate health care insurance plans that meet its program criteria in order to qualify for funding (s. 7). [27] To satisfy the “comprehensiveness” criterion, the insurance plan must insure all “health services” provided by “hospitals” (s. 9). [28] A “hospital” is defined in s. 2 of the Act as including any facility that provides hospital care, including acute, rehabilitative or chronic care, but not including “a facility... that provides nursing home intermediate care service or adult residential care services...” (s. 2). [29] “Hospital services” means medically necessary services provided to patients at a hospital, including “accommodation and meals at the standard or public ward level ...;” and services provided by “persons who receive remuneration therefor from the hospital...” (s. 2). [30] For a province to qualify for a full cash contribution by Canada, user charges must not be permitted under the provincial health care insurance plan. However, user charges are permitted “for accommodation or meals provided to an in-patient who... requires chronic care and is more or less permanently resident in a hospital or other institution” (s. 19). [31] Accommodation and meals to a standard or public ward level must be provided to patients who are in hospitals. People in LTCFs are excluded from the Act and are not affected by the prohibition against user charges for accommodation and meals. People who are chronic patients resident in hospitals or other institutions may be subject to user charges for accommodation or meals. In Alberta, these two categories of people fall under separate legislative schemes. 2. Alberta Legislation - Alberta Health Care Insurance Act and Subordinate Regulations [32] In Alberta, the AHCIA authorizes the provincial health insurance plan required by the Canada Health Act. Pursuant to s. 16(a) of the Act, the Lieutenant Governor in Council may make regulations authorizing or requiring the Minister, or any other person, to do anything for the purpose of having the Plan meet the criteria prescribed under the Canada Health Act. [33] The general purpose of the legislation and the required benefits under the health insurance system are set out in s. 3, which states: 3(1) The Minister shall, in accordance with this Act and the regulations, administer and operate on a non-profit basis a plan to provide benefits for basic health services to all residents of Alberta. (2) The Minister shall, in accordance with the regulations, provide extended health services to a resident and the resident's dependants if Page: 10 (a) the resident or the resident's spouse or adult interdependent partner is 65 years of age or older, or (b) the resident is receiving a widow's pension. [Emphasis added.] [34] Thus, the province must provide "basic health services" for all residents, with those over 65 receiving an additional set of "extended health services." Basic health services are defined in the AHCIA and regulations, while extended health services are set out in the regulations. [35] The province must pay “benefits in respect of health services provided to residents,” unless exempted by the Act or regulations (AHCIA, s. 4(1)). [36] Section 43 of the AHCIA allows the province the option of providing financial assistance in special circumstances: 43(1) The Lieutenant Governor in Council may establish a program to provide financial assistance in cases where, because of the sickness or disability of a resident or dependant, the resident is faced with expenses that could not reasonably be foreseen and guarded against and that place an undue burden on the financial resources of the resident. (2) The program may specify the types of expenses in respect of which assistance may be given and the portion of the expense that is to be borne by the resident. [37] The AHCIA provides a very broad and discretionary authority for the Lieutenant Governor in Council and the Minister to make regulations that affect the provision of health services: 16. The Lieutenant Governor in Council may make regulations ... (c) prescribing classes of goods and services as basic health services or extended health services; ... (f) subject to section 4(2), providing for procedures for the review of any decision or the settlement of any question pertaining to the determination of (i) the amount of benefits payable for a particular service,