July 17, 2024

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New Brunswick health authority blames Canadian Health Labs for $100 million deficit, committee hears

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Georges L Dumont public hospital in Moncton, N.B. is shown on Oct. 8, 2020.Marc Grandmaison/The Canadian Press

New Brunswick’s francophone health authority has sent auditors to the Toronto offices of its main supplier of temporary workers as part of a year-long attempt to recover costs from a company that it blames for causing its $100-million deficit, a legislative committee heard Thursday.

Officials from the Vitalité Health Network told legislators that they have been in a drawn-out legal dispute with the Toronto company Canadian Health Labs. The high rates and expense claims that CHL charged Vitalité for temporary staffing have been the object of an investigation by the province’s Auditor-General.

Daniel Surette, a lawyer for Vitalité, testified that they had gone through mediation and would head to arbitration next.

Vitalité chief executive officer France Desrosiers also disclosed that Vitalité entered into three contracts with CHL worth a maximum value of $158-million after receiving a “verbal green light” from Health Department deputy minister Eric Beaulieu. Vitalité and the province now disagree on whether that approval applied to all three contracts and whether it meant extra funding.

Details of the wrangling were disclosed before the public accounts committee as it reviewed this month’s report by Auditor-General Paul Martin, who has criticized Vitalité’s oversight of its CHL contracts.

The hearing ended with committee member Dorothy Shephard, a former health minister, calling for a public judicial inquiry, in light of the amounts of money involved. She said CHL and more officials should be called before the committee. “There’s cause for more investigation,” she said.

Mr. Martin’s audit found that between 2022 and this year the province’s health authorities paid $173-million to private agencies to supply temporary out-of-province orderlies and nurses, also known as travel nurses.

Vitalité has paid CHL more than $98-million for those services. This included not only labour costs but also transportation and accommodation expenses.

In documents filed with the committee, Vitalité released a letter from Mr. Surette stating that the health authority retained him in February, 2023, “in contemplation of litigation” involving the CHL contracts.

Government lawyers also counselled Vitalité, Dr. Desrosiers said.

Vitalité assistant CEO Patrick Parent testified that a key point of contention is that CHL can charge “market rates” for car rental and accommodation, but the contracts don’t stipulate what those sums should be.

Invoices obtained by The Globe and Mail show that CHL billed Vitalité the equivalent of $219 a night to lodge each nurse, although many were billeted in apartments owned by companies affiliated with CHL chief executive Bill Hennessey.

“That’s why we’ve been in a legal process for over a year now … to make sure that we either recover what wasn’t by-the-book in the contract or we can reduce financial burden to taxpayers,” Mr. Parent said.

The contracts allow Vitalité to audit CHL records. “We have a group of external auditors who are currently in CHL’s offices, to review their internal documents in preparation for our legal discussions,” Mr. Parent said.

Dr. Desrosiers told the committee that at one point Vitalité refused to reimburse CHL without proper receipts. She said the company then sent a lawyer’s letter complaining about late payments.

CHL didn’t respond to requests for comment sent Thursday. It previously said its contracts are “fair and transparent” and reflect “extraordinary logistical challenges” in deploying workers in rural regions

CHL’s practices have triggered reviews by auditors-general in New Brunswick and in Newfoundland after a Globe and Mail investigation was published in February.

Both CHL and Vitalité declined to comment when The Globe asked them in January about the legal dispute that started between them in 2023.

Dr. Desrosiers said Vitalité signed with CHL because it was the only company that could supply bilingual nurses on short notice. Her network was so severely short-staffed that emergency and dialysis services were threatened.

Furthermore, just before the first CHL contract was signed, in July, 2022, Premier Blaine Higgs had appointed a trustee to replace the Vitalité boards, as part of a shakeup in the regional health authorities.

Dr. Desrosiers said Vitalité officials were told by Mr. Beaulieu, the deputy health minister, that they had “the green light to solve the problem,” which they took to mean approval and funding for several contracts.

However, according to an affidavit submitted to the committee by the trustee, Gérald Richard, during a March, 2023, meeting between him, Dr. Desrosiers and Mr. Beaulieu, “the deputy minister told us that he was between a rock and a hard place and that our staffing agencies contracts weren’t going to be funded.”

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