Elder Advocates of Alberta Society v Alberta, 2013 ABQB 649

Court of Queen ’ s Bench of Alberta Citation: Elder Advocates of Alberta Society v Alberta, 2013 ABQB 649 Date: 20131101 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 and Alberta Health Services (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

[ 1 ] The Plaintiffs, the Elder Advocates of Alberta Society (EASS) and James O. Darwish, in his capacity as the personal representative of the estate of Johanna H. Darwish (Darwish), commenced a class action law suit against Her Majesty the Queen in the Right of Alberta (Alberta) and several Regional Health Authorities (RHAs), now consolidated into Alberta Health Services (AHS). [ 2 ] This is an application by the Plaintiffs pursuant to Rule 7.1(1) (

a) of the Alberta Rules of Court , Alta. Reg. 124/2010 to have two questions determined in a preliminary fashion by the trial judge, yet to be assigned, for the purposes of the trial of this class action. Both Alberta and AHS oppose the application. II. Issues [ 3 ] The issue on this application is whether the Court should order a preliminary trial of these questions:

a) Does the Province have the statutory authority to include in the Accommodation Charge, referred to in s 8(2) of the Nursing Homes Act , RSA 2000, c N-7, paid by patients of nursing homes and auxiliary hospitals, all or any portion of the costs incurred by such a long term care facility which are in the nature of "facility services," including laundry, housekeeping, maintenance, utilities, administrative costs, management fees and operator profit?

b) Does the Province have the statutory authority to include in the Accommodation Charge required of patients who have been assessed as requiring chronic care and are more or less a permanent resident in an auxiliary hospital all or any portion of the costs incurred by the auxiliary hospital in providing "insured services," including services rendered by persons who receive remuneration for those services from the hospital? (Proposed Preliminary Questions) III. Background [ 4 ] The Plaintiffs brought a successful application for certification pursuant to the Class Proceedings Act , RSA 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 was operated by Capital Health, through its agent, the Capital Care Group, which was a wholly- owned subsidiary health corporation of Capital Health. [ 5 ] The Defendants, Her Majesty the Queen in Right of Alberta (the Government) and AHS (previously nine RHAs, including Aspen Regional Health Authority, Calgary Health Authority, Capital Health, Chinook Regional Health Authority, David Thompson 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 , RSA 2000, c A-20 ( AHCIA ), the Nursing Homes Act ( NHA ) and the Hospitals Act , RSA 2000, c H-12. [ 6 ] The Government funded health care services by providing global, population-based funding to RHAs, all of which were bodies corporate established pursuant to the Regional Health Authorities Act , RSA 2000, c R-10 ( RHAA ).

In turn, the RHAs were 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 delivered health care services directly or indirectly through either wholly-owned subsidiary health corporations or private operators who had entered into nursing home contracts with the RHAs pursuant to s 2 of the NHA . [ 7 ] One of the core services delivered by the RHAs to each region was residential long-term care in nursing homes and auxiliary hospitals.

The RHAs determined how much health care funding was to be directed to these LTCFs.

The LTCFs were 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 and 4. [ 8 ] The Plaintiffs led evidence establishing that the RHAs funded nursing homes and auxiliary hospitals in the same way, and that this funding essentially came from two different streams of income: one was the global health care funding provided from the Government; the other was money paid by residents as an 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. [ 9 ] The definition of “Accommodation Charge” is provided in the NHA , 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. [ 10 ] The Plaintiffs brought this action on behalf of a class which has now been certified, comprised 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 Assured Income for the Severely

Handicapped (AISH), Supports for Independence (SFI), the full Supplementary Accommodation Benefit, benefits to pay for the Accommodation Charge... or a waiver, in its entirety, of the Accommodation Charge increase... for reasons of financial hardship; or who were ineligible to receive insured services under s 38 of the Hospitals Act or “benefits” under s 9 of the Nursing Homes Act during the period of time they were charged the Accommodation Charge. (the Class) [ 11 ] 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 Class.

They contend AHS breached its duty of care owed to the members of the Class and the Accommodation Charge was a breach of contract between AHS or its agents and members of the Class. The Plaintiffs maintain that the Accommodation Charge which was imposed resulted in an unjust enrichment of the Defendants calling for restitution and was a violation of the rights of the members of the Class pursuant to s 15(1) of the Canadian Charter of Rights and Freedoms . IV. Judicial History [ 12 ] The certification hearing proceeded on January 28, 29 and 30, 2008.

The Plaintiffs’ application for certification was granted on August 13, 2008 ( Elder Advocates of Alberta Society v Alberta , 2008 ABQB 490 , 453 AR 1). In that decision (at para 549), I determined that the action could proceed based on “... breach of duty in terms of operational decisions/actions, breach of contract, ultra vires action, unjust enrichment, the administrative law claim (bad faith in the exercise of discretion), and on the Charter claims.” I held that the legislative scheme did not support a private law duty of care on the part of Alberta in setting a maximum Accommodation Charge.

Further, I struck the claim based on fiduciary duty and the claim that the Accommodation Charge was an ultra vires tax. [ 13 ] The Alberta Court of Appeal dismissed the appeal but allowed the cross-appeal in part by reinstating the claim based on breach of fiduciary duty ( Elder Advocates of Alberta Society v Alberta , 2009 ABCA 403 , 469 AR 270) [the 2009 Court of Appeal Decision]. [ 14 ] On further appeal by Alberta, the Supreme Court of Canada struck the pleas of breach of fiduciary duty, negligence, and bad faith in the exercise of discretion.

The court decided that the claim of unjust enrichment and the s 15(1) Charter claim could proceed to trial ( Alberta v Elder Advocates of Alberta Society , 2011 SCC 24 , [2011] 2 SCR 261). AHS was not a party to that appeal. [ 15 ] On November 4, 2011, AHS brought an application in case management to strike out the negligence and bad faith claims against it.

The AHS application was dismissed, as was its appeal ( Elder Advocates of Alberta Society v Alberta , 2011 ABQB 801 , 528 AR 172, aff’d 2012 ABCA 355 , 539 AR 251). [ 16 ] The Plaintiffs base their present application for a trial of the Proposed Preliminary Questions on the following remarks made in the 2009 Court of Appeal Decision at para 31: It is important to reiterate that a certification motion is not the appropriate place for deciding difficult questions of fact or law. The certification judge was only required to determine whether the respondents' contended legislative

interpretation was doomed to fail. The success of the respondents' claims depends on the

interpretation of the term "accommodation and meals" and whether this term encompasses the cost of services associated with the provision of accommodation and meals to LTCF residents (such as housekeeping, laundry, administration costs, building maintenance costs, etc.).

We conclude that the respondents have sufficiently pleaded that the legislative scheme at issue arguably distinguishes between "accommodation and meals" which are the financial responsibility of the residents of LTCFs and "services provided by persons who receive remuneration therefor from the hospital" or services such as "facilities services," "personal services" and "life enrichment services" which constitute a component of "insured services" which the appellants must provide and pay for.

Given that this statutory distinction arguably supports a narrow reading of the term "accommodation and meals," that related statutes may be interpreted in light of each other, and that other courts have relied on the Canada Health Act in interpreting provincial health regulations, we conclude that the certification judge committed no error in determining that the respondents' proposed legislative

interpretation was arguable. V. Legislation [ 17 ] The Plaintiffs rely on rules 1.2 and 7.1 of the Alberta Rules of Court , Alta Reg 124/2010, which read: 1.2(1) The purpose of these rules is to provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost-effective way.

(2) In particular, these rules are intended to be used (

a) to identify the real issues in dispute, (

b) to facilitate the quickest means of resolving a claim at the least expense, (

c) to encourage the parties to resolve the claim themselves, by agreement, with or without assistance, as early in the process as practicable, (

d) to oblige the parties to communicate honestly, openly and in a timely way, and (

e) to provide an effective, efficient and credible system of remedies and sanctions to enforce these rules and orders and judgments.

(3) To achieve the purpose and intention of these rules the parties must, jointly and individually during an action, (

a) identify or make an application to identify the real issues in dispute and facilitate the quickest means of resolving the claim at the least expense, (

b) periodically evaluate dispute resolution process alternatives to a full trial, with or without assistance from the Court, (

c) refrain from filing applications or taking proceedings that do not further the purpose and intention of these rules, and (

d) when using publicly funded Court resources, use them effectively.

(4) The intention of these rules is that the Court, when exercising a discretion to grant a remedy or impose a sanction, will grant or impose a remedy or sanction proportional to the reason for granting or imposing it. . . . 7.1(1) On application, the Court may (

a) order a question or an issue to be heard or tried before, at or after a trial for the purpose of (

i) disposing of all or part of a claim, (ii) substantially shortening a trial, or (iii) saving expense. VI. Arguments of the Parties A. Arguments of the Plaintiff [ 18 ] The Plaintiffs contend that determination of the Proposed Preliminary Questions would depend on

interpretation of the NHA , Hospitals Act and their regulations and the application of that legislation to the uncontested facts. They cite Gallant (Litigation Guardian) v Farries , 2012 ABCA 98 at para 16 , 522 AR 13 as authority for the proposition that a matter of statutory

interpretation is a discrete question of law which is suitable to be heard as a preliminary issue. They also refer to Tottrup v Clearwater (Municipal District No. 99) , 2006 ABCA 380 at para 12 , 401 AR 88, in which the Court of Appeal commented that trials are meant to determine questions of fact and generally are not held to answer questions of law. [ 19 ] The Plaintiffs emphasize that the focus of the Court should be on the expeditious and efficient resolution of the dispute between the parties.

They submit that the Proposed Preliminary Questions are readily severable from the action and the determination of those questions should expedite completion of the document production from the Defendants and allow for a streamlined trial or end of the lawsuit. B. Arguments of the Defendant 1. AHS [ 20 ] AHS takes the position that it is only in exceptional circumstances when a preliminary trial of an issue should be ordered and that such circumstances do not exist here.

It submits the splitting of the trial would be inappropriate as a determination on the proposed issues would not be dispositive of the claim or any part of it; it would not likely result in a savings of time or money; it would require a greater evidentiary context than suggested by the Plaintiffs; evidence would be duplicated in the two hearings; and the two questions are not independent of other issues in the litigation. [ 21 ] AHS notes that in LKD v JB , 2012 ABCA 72 , leave to appeal to SCC ref’d [2012] SCCA No 200, the Court of Appeal stated that: “[t]here is still a strong presumption that proceedings in Alberta are resolved all at once, and not piecemeal.

Savings of time and expense by severing issues have consistently proved to be elusive.” [ 22 ] AHS asserts that where the rationale for splitting the trial is to save time and money, there must be a “good possibility” the second trial will not be necessary and the first will be substantially shorter than the trial as a whole, citing Gallant at para 54 and Ross River Dena Council v Canada (Attorney General) , 2013 YKCA 6 at para 25 , 337 BCAC 299.

It submits that test is not met here. [ 23 ] AHS says that, contrary to what the Plaintiffs contend, it has not made an admission that the Accommodation Charge includes laundry, housekeeping, maintenance, utilities, administrative costs, management fees and operator profit.

It says there is a dispute as to whether certain costs and services are included in the Accommodation Charge. [ 24 ] AHS argues that the proposed preliminary issues are not pure questions of law and they cannot be heard in a factual vacuum. [ 25 ] AHS indicates there will necessarily be a duplication of evidence if the Plaintiffs’ application succeeds as it will have to introduce a substantial amount of evidence to put the issues in the proper perspective and to show the larger statutory and policy context out of which they arise.

Much of that evidence would again have to be introduced in the main proceeding to address other issues, such as the Charter claim.

[ 26 ] AHS submits that the Proposed Preliminary Questions are, at best, some element of the Plaintiffs’ theory of statutory

interpretation, which in turn is one of the building blocks in their theory of liability. However, an answer to those questions would not be determinative of any part of the claim. 2.

Alberta [ 27 ] Alberta argues that as the case raises complex claims of unjust enrichment and Charter breach, and fifty-eight common issues are to be tried, it is doubtful that resolution of the two Proposed Preliminary Questions will dispose of all or part of the claims, shorten the trial or result in any savings of time or expense. [ 28 ] Alberta agrees with AHS that the two Proposed Preliminary Questions are not pure questions of law.

It too disputes that it made the admission alleged by the Plaintiffs and says the Plaintiffs’ statement that certain costs and services were included in the Accommodation Charge imposed is a contested issue. [ 29 ] Alberta argues that discovery is not yet complete and, until it is, it will not be known what records or testimony will be required to allow the Court to properly answer the Proposed Preliminary Questions or other issues in the class action. [ 30 ] Alberta says that an answer to the questions will do nothing to resolve the Plaintiffs’ claims against AHS.

It points out that the Plaintiffs have made no commitment that a loss on those questions will lead them to end the litigation. It asserts that even if the Plaintiffs receive a favourable answer to those two questions, the litigation will not end as Alberta will argue that, in fact, there was no unjust enrichment. VII.

Analysis [ 31 ] The Plaintiffs’ application can be granted only if the Court is satisfied there is a real likelihood or good probability that trying the Proposed Preliminary Questions first will dispose of all or part of a claim, substantially shorten the total trial time, save expense or some combination of these ( Edmonton Flying Club v Edmonton Regional Airports Authority , 2013 ABCA 91 at paras 15 and 16 , 544 AR 6). [ 32 ] In Gallant at para 11 , Côté JA, for the Court of Appeal, disagreed with the implicit suggestion in Envision Edmonton Opportunities Society v Edmonton (City) , 2011 ABQB, 507 AR 275 that rule 1.2 of the Rules of Court has somehow effected a sea change to the approach to splitting trials and, therefore, binding Alberta case law on the issue is repealed.

He cautioned at paras 13 and 15 that traditional law warns “... that such splits are a dangerous but alluring siren, often ending by wasting everyone’s time and money, not saving it” and shows “... the dangers of hopeful theorizing” and “... that splits rarely achieve economy in practice; usually the result of the split (one way or the other) is to increase the time and money consumed” (emphasis in original).

At para 24, he noted that: “[i]t has always been the presumption in our civil practice that all the issues are decided at once, in one trial or proceeding.” A similar statement was made by Slatter JA for the Court of Appeal in LKD at para 6 . [ 33 ] Côté JA did acknowledge in Gallant at para 16 that occasionally there may be good reason to think that splitting off a simple, readily extricable preliminary issue, such as whether a clear limitation period has expired or there is standing to sue, will save time and money. [ 34 ] Côté JA emphasized that an overlap in evidence between the two trials can result in wasting time and money.

In Edmonton Flying Club at para 16 , the majority also recognized that it is presumptively fatal to an application to split a trial if it appears there will be a significant overlap in the evidence to be called at the two trials. The majority indicated that the theories of both parties must be considered in assessing whether there is likely to be an overlap in the evidence. [ 35 ] I note that the Plaintiffs do not assert that trying the Proposed Preliminary Questions is likely to dispose of all or part of any of the claims which they advance.

They merely contend that the answers “should expedite the completion of document production from the Defendants, and allow the matter to be set for a streamlined trial. A determination of these issues might end the lawsuit.” They do not indicate how the answers might end the lawsuit. They do not commit to end their litigation if the answers are that Alberta had the statutory authority referred to in the Proposed Preliminary Questions. It is unlikely they would do so given they also advance a s 15 Charter claim.

Alberta says that even if the answers are that it did not have that statutory authority, in fact, there was no unjust enrichment as the LTCFs were sustaining losses in trying to finance accommodation and meals from the charges paid by the residents alone and, as a result, they were using Alberta Health Care funds to subsidize resident costs. Further, the Proposed Preliminary Questions will not fully address the negligence claim against AHS. [ 36 ] This is a class action lawsuit. Over 50 common issues have been certified. The Proposed Preliminary Questions are not among those.

I agree with AHS that the Proposed Preliminary Questions address only a certain aspect of the Plaintiffs’ theories of liability with respect to some of its claims. [ 37 ] Will there be a total savings in time or expense if the Proposed Preliminary Questions are tried first? [ 38 ] Statutory

interpretation, particularly of a statutory and regulatory scheme as complex as the one at issue in this lawsuit, can rarely if ever be undertaken in a factual vacuum. [ 39 ] The Plaintiffs contend there are no material or factual issues to be determined for the purposes of deciding the Proposed Preliminary Questions. The Defendants take issue with that statement. They dispute they have made the admission asserted by the Plaintiffs. [ 40 ] The Plaintiffs suggest that whatever factual context is necessary can be found in the business records of the Defendants.

In support of their application, they have filed an affidavit by Mr. Darwish in which he says that his knowledge of the facts deposed to is

based on his review of the records produced by Alberta. Appended to the Darwish affidavit are documents in which various government sources appear to acknowledge that certain services are provided by virtue of the Accommodation Charge; that is, certain items are treated by Alberta as included within that legislative term.

For example, a News Release from Alberta dated June 17, 2003 attempts to explain the rationale for the long-term care accommodation rate change, stating: The $12 per day increase brings standard accommodation fees to about $40, closer to the true cost of room and board and still below the daily maximum in all provinces except Quebec. Alberta’s current rate for a standard bed is about $28. The charges for a semi-private room also go up $12 a day to $42, and charges may go up to $48 for a private room. The increase will give operators an additional $58 million a year to improve the living environment for residents.

With the exception of the January 2002 increase for inflation of between $3.47 and $4.00 per day, rates have not changed since 1994. As a result, rates have not kept pace with cost of providing room, board and housekeeping services. This has made it difficult for facility operators to maintain the required level of accommodation support. [ 41 ] In a June 2003 document, Alberta provides the RHAs with information as to what can and cannot be charged in the Accommodation Charge. Paragraph 6 provides: 6.

What products and services are to be provided with the funding from resident accommodation charges (i.e. the new rate of $42 per day)? The revenue from resident accommodation charges is intended to provide products and services related to “room and board”. There are no new products or services to be provided with the increased rates. However, it is expected that the quality and quantity of products and services will improve with this additional revenue.

Here are some examples (not an all-inclusive list) of products and services that are to be provided from accommodation charges: • Food • Nutritional Supplements • Meal preparation and meal service to residents • Housekeeping services — for resident rooms and common areas • Bed linens and towels, including laundering • Routine facility maintenance (e.g. preventative maintenance of heating, ventilation and air conditioning systems, and repairs as necessary) • Ongoing improvements to facility environment — minor capital upgrades (e.g. wall repairs, paint/wallpaper, window coverings, carpet/lino/tile replacement) and furnishings (e.g. common room chairs and tables, resident room furnishings including bed mattresses) • Minor equipment for resident care, such as commode/shower chairs, lifts • Access to shared leisure equipment such as TV, radio/music, telephone • Utilities (gas, power, water, waste management) • Facility management/administration What care services are provided with funding provided by Alberta Health and Wellness through the regional health authorities? • Professional nursing services • Personal care services • Life enrichment services, including recreation therapy • Specialized therapy services, including physical therapy and occupational therapy • Medications and medical-surgical supplies. [ 42 ] Alberta and the AHS dispute the Plaintiffs’ assertion that there are no material or factual issues to be determined in order to decide the Proposed Preliminary Questions.

They deny they have admitted that certain costs and services are “included” in the Accommodation Charge. [ 43 ] AHS says that the alleged “admission” as to what the Accommodation Charge includes is a “hotly contested question of fact that will fall to be determined on the evidence.” It refers to voluminous financial records that it says raise substantial questions on this point and which must be extensively analyzed to answer the factual question. [ 44 ] Alberta indicates that discovery is not yet complete. Therefore, the context presented by Mr.

Darwish may not be accurate. [ 45 ] Alberta argues that it has absolute discretion to determine the embrace of the term “Accommodation Charge” within the statutory context. It refuses to make submissions as to what services may or may not be included within that term, even on a theoretical basis should its first position not win the day. Alberta maintains the term could include anything it chooses in its unfettered discretion and there is no formula for deciding the question, nor has there ever been.

As to the documents appended to the Darwish affidavit that appear to suggest otherwise, Alberta says the authors would have to give evidence as to the intention behind the documents in order for the Court to assess the weight they should be given and the meaning they bear. [ 46 ] Alberta asserts that the Plaintiffs rely on evidence that is the subject of debate; that the evidentiary and legal issues overlap: that there inevitably will be another interlocutory appeal if this application succeeds; that a win for either side does not end the case; and that the issues proposed are complex, deserving of a full trial. [ 47 ] It is my view that if the parties were agreeable to the admission of a body of evidence concerning the historical treatment by Alberta and AHS of the “Accommodation Charge” for the purposes of answering the Proposed Preliminary Questions, those Questions could be answered in a

summary process by the trial judge, which would in turn likely lead to some efficiencies in answering the ultimate questions in the lawsuit. However, neither Alberta nor AHS appear disposed to an approach that would shorten or expedite this lawsuit. They are entitled to the opportunity to fully canvass every intricate detail to establish the factual matrix for determination of the legal issues and ultimate question as to liability.

[ 48 ] Absent the agreement of the parties, there remain contentious facts that must be determined within a complex matrix of legal issues. In my view, the law does not support a determination of the Proposed Preliminary Questions by referral to the trail judge for

summary decision. Further, whatever evidence is required to provide the necessary context in which to answer the Proposed Preliminary Questions will also be required to resolve some or all of the other common issues in the lawsuit. [ 49 ] Even if the Proposed Preliminary Questions are tried first, other issues in the lawsuit will remain to be tried, including the Charter issue. The Plaintiffs have not shown that the combined trial time would be less than if all issues were tried at once, as is required by the jurisprudence. VIII.

Conclusion [ 50 ] The Plaintiffs have not met their onus to establish there is a real likelihood or good probability that trying the Proposed Preliminary Questions first will dispose of all or part of a claim, substantially shorten the total trial time, save expense or some combination of these. Their application is denied. [ 51 ] Costs may be spoken to, failing which costs will be in the cause. Heard on the 3 rd day of September, 2013. Dated at the City of Edmonton, Alberta this 31 st day of October, 2013. S.J. Greckol J.C.Q.B.A. Appearances: K.F. Bailey, Q.C. J.K. McFadyen, Q.C.

Parlee McLaws LLP for the Plaintiffs Alan Meikle, Q.C. Ward Branch Peter Barber for Alberta Justice P. Jonathan Faulds, Q.C. Dino McLaughlin Field LLP for Alberta Health Services