‘Unprecedented period’ means big legal bills

As the provincial government continues to introduce a range of new health laws, records show hospitals are spending big money on legal services as they seek to understand the rules.

According to information gathered through a series of freedom of information requests, 15 of Ontario’s teaching hospitals collectively paid more than $50 million to lawyers from 2007-12, a period that saw a wave of new statutes introduced in the health sector.

The ability to seek information on hospitals’ legal spending is itself a result of a new statute that placed them under the Freedom of Information and Protection of Privacy Act last year. “The government has had a very ambitious legislative agenda for hospitals, so there have been a lot of new statutes affecting hospitals,” says Lynne Golding, chairwoman of the health law practice at Fasken Martineau DuMoulin LLP.

“The minister of health would herself tell you that it’s been an unprecedented period for legislative change for hospitals.”

In addition to applying the Freedom of Information and Protection of Privacy Act to hospitals, the government has also introduced the Excellent Care for All Act, the Broader Public Sector Accountability Act, and numerous changes to other regulations. “Of course, every time there is a new law that hospitals are subject to, they need advice and assistance in terms of implementing those regimes,” says Golding.

According to records obtained by Law Times on hospital legal spending, the highest-billing lawyers from 2007-12 were at major law firms with health law departments. Borden Ladner Gervais LLP, Faskens, Miller Thomson LLP, and Osler Hoskin & Harcourt LLP turn up multiple times on individual hospitals’ lists of the the top-three firms for legal billings.

While the largest law firms tended to have the highest billings, lawyer Mary Jane Dykeman of Dykeman Dewhirst O’Brien LLP received the top amount from Mount Sinai Hospital over that period. The University Health Network, which spent $13 million — the highest among the institutions’ legal billings during the period in question — paid BLG $3.1 million. BLG also took in almost half of the $7 million the Hospital for Sick Children spent on legal matters. SickKids had the second highest spending after the University Health Network, which includes multiple hospitals. Lawyers at Faskens made $1.6 million working for the London Health Sciences Centre.

Alan Belaiche, former general counsel for St. Michael’s Hospital, says the demand for lawyers comes from increased calls for accountability from Ontario’s hospitals. “There is no question that there are increased and increasing public expectations around accountability and transparency,” he says.

“With these pieces of legislation, which are fairly significant and broad, the demands on legal counsel became unprecedented,” he adds.

The Ontario Ministry of Health and Long-Term Care is also encouraging hospitals to integrate their back offices, a process that requires them to enter into contracts with the help of savvy lawyers. For academic hospitals such as the Hospital for Sick Children, construction of new research buildings was likely a major part of its legal needs, according to Belaiche.

With tight budgets, increased legal costs mean hospitals often have to dig deeper into their own pockets, says Golding, noting that added expenses without new funding put pressures on employee wages and, in turn, leads to more labour demands.

Some hospitals have responded to legal cost pressures with expanded in-house legal departments, a move Belaiche says is an effective cost-saving technique. But Golding says while general counsel may help save money on day-to-day legal needs, hospitals will continue to require help from experienced law firms for bigger matters.

For Belaiche, who now runs a private practice advising hospitals, there are much more cost-effective ways to deliver legal services at hospitals. He envisions something like a centralized legal service delivery system in which hospitals could share resources.

“The significant characteristic for Ontario hospitals is that they’re consistently siloed and segmented in nature,” says Belaiche, noting the model doesn’t make sense given that a legal issue that arises at one hospital has inevitably occurred elsewhere.

Ontario hospitals don’t normally spend money out of pocket for litigation related to negligence or other liability unless it falls outside their insurance coverage, according to Belaiche, who notes the numbers obtained by Law Times likely reflect spending on labour, intellectual property, privacy, and governance matters.

SickKids’ chief legal and risk officer Megan Evans says it’s important to consider the hospital’s legal tab in the context of its size and complexity since it treats the sickest children in the country, runs cutting-edge research, and employs more 10,000 employees. When it comes to legal matters, SickKids “really is a business just like an IBM or a major newspaper . . . but in fact maybe a little bit more risky because some of the stuff we’re dealing with is frankly life and death,” she says.

The 15 institutions analyzed by Law Times include most of Ontario’s teaching hospitals: Hamilton Health Sciences, St. Joseph’s Healthcare Hamilton, Kingston General Hospital, Hotel Dieu Hospital (Kingston, Ont.), London Health Sciences Centre, St. Joseph’s Health Care London, Children’s Hospital of Eastern Ontario, The Ottawa Hospital, Health Sciences North, Thunder Bay Regional Health Sciences Centre, Mount Sinai Hospital, University Health Network, SickKids, St. Michael's Hospital, and Women’s College Hospital.