The Sixth Estate

Canadian nationalists can allow themselves a brief moment of unabashed exhilaration at the news that the British Columbia government is, finally, after many long and patient years, going after private surgeon Brian Day’s Cambie Surgery operation in Vancouver, B.C., for illegal billing of patients. It’s about damned time. The victory is not complete. The Medical Services Commission apparently will not be attempting to secure refunds for all the patients who paid illegally (which they presumably won’t mind too much), nor it will be attempting to fine Cambie Surgery to recoup the funding lost. But at least, apparently, public money will no longer flow to operations at clinics engaged in illegal double-billing.

And now for the heavier and more depressing part of this story. It’s an opportunity to go back into how “universal healthcare” works in this country, and I hope it will be useful to many Canadians (like me) who are passionately proud of our increasingly strained universal healthcare system, but not totally sure how it works on the ground level. (Aside, of course, from the fact that unlike Americans we don’t have to swipe a credit card on our way out of the hospital.)

This story begins with the major cuts to medicare that governments across the country put into place 20 years ago, during the early 1990s. One of the “victims” was Dr. Brian Day, a Vancouver surgeon. In 1996, apparently after his hours in a public operating room were cut, Day headed off into the private sector, creating the Cambie Surgery Centre where he offered patients a chance to queue-jump off the public sector waiting list — provided, of course, that they were willing to pay him a substantial amount of money.

Actually, under B.C. and federal law, none of this is illegal. All that talk about preventing “two-tier healthcare” a few years ago was a red herring: in Canada, we already have two-tier healthcare. There’s one tier called the universal public system, which all Canadians can access, and then there’s another tier called the private system, which only Canadians with sufficient cash can access. The private system is quite small in Canada, because until recently the public system tended to serve most people’s basic needs well enough, and there just wasn’t much of a market for buying medical services privately.

Exactly where the boundary between public and private lies in our system is always a point of contention. In fact, most of our healthcare — including the leading cost drivers, like doctors and prescription drugs — are already delivered by the private sector. Doctors’ clinics and drug companies are private businesses. They’re just paid for out of the public purse, so in practice, most healthcare you get outside of the hospital (plus all drugs you get inside the hospital) are actually delivered by the private sector, and paid for by a government insurance policy.

There are two caveats in place which try to maintain the borders between the public healthcare system (where you pay nothing, and get whatever healthcare the government can afford to give you) and the private healthcare system (where you pay cash for whatever you want). The first is a law banning private health insurance from covering services that are already offered in the public sector. That is, extended health can cover drug prescriptions, but not, say, a visit to the ER, because that’s already covered by medicare. Those laws were thrown into doubt by the Supreme Court’s 2005 ruling in Chaoulli v. Quebec, but they remain on the books in some provinces, including B.C., where the Fraser Institute, which appears to be funded by various private healthcare companies, is currently mounting a vigorous assault on limits to private healthcare insurance.

The second set of limitations, which is more relevant to the current case, basically requires doctors to choose whether they want to work in the public system or the private system. Again, it doesn’t require them to do either one — but it does say that they can’t pick both. The way it works in B.C. is this. Any doctor can enrol with the government’s medicare program, called the Medical Services Plan (MSP), and bill the government according to its official fee schedule whenever you visit her clinic.

However, if she enrols with MSP and bills the government for some patients, she has to do so for all of them, and she can’t bill both the government and the patient for the same service. The MSP administration refers to any of these situations as “extra billing,” but it’s the second scenario that’s attracted the most public attention, and it’s often known simply as “double billing.” Under current B.C. law, double billing could be charging a resident of B.C. for a clinic visit and then billing the government for the same visit, or it could be billing the government for each visit while charging residents an annual membership fee or facility fee for the right to visit the clinic, etc., etc.

The principle behind this technicality was actually a compromise between the universal healthcare advocates of the 1960s and the doctors and other health professionals who were, at the time, private businessmen. Rather than outlaw private healthcare, or nationalize the doctors’ clinics and run a more public outfit like the National Health Service in Britain, the medicare model adopted from the NDP government in Saskatchewan allowed doctors’ private businesses to remain in the healthcare sector, and even charge cash if they wanted to.

But they could also participate in the public insurance scheme, and if they did so, they had to agree not to charge privately for any Canadian citizen who was entitled to medical treatment under the medicare scheme. The NDP gambled, correctly as it turned out, that so many doctors would be attracted by the guaranteed payment scheme, and so many Canadians would be unwilling to pay privately, that in effect this would nationalize healthcare without the messy business of banning private business.

Which brings us back to Dr. Day and Cambie Surgery. The fact that Day’s surgery centre is essentially a private hospital would probably be enough to ensure some controversy, although in that respect it’s not exceptional. Canada has its fair share of cash-only “executive clinics,” private MRI and diagnostic scanning offices, private surgery outfits, etc., etc. Day has just become a high-profile representative of the sector because of his outspoken advocacy of healthcare reform.

But did Day, or rather some of the doctors who work in the same clinics as Day, cross the line by engaging in illegal “extra billing”? I have no personal experience with Cambie Surgery and honestly couldn’t say one way or the other. But that’s been the speculation for years. And the Medical Services Commission thought so too. MSC runs the medicare insurance scheme in B.C. It’s also drastically understaffed, so that in practice, as the MSC admitted in court in 2009, its compensation to private doctors is basically run on the honour system: when doctors submit a claim, MSC assumes they are entitled to it. A computer flags problematic cases, but something in excess of 98% of all submitted claims get paid out in full without question or comment.

Still, after the B.C. Nurses Union backed some private complaints about the clinics in 2007, the MSC decided to investigate Cambie Surgery and sent a letter asking to review its files to search for evidence of illegal extra-billing. Day refused point-blank, saying “we will not allow any agent of your Commission to access our Centre or its data base.” The flare-up dragged on for a while without resolution, until the MSC went to the B.C. Supreme Court asking for a court order allowing the audit to go ahead. It filed an affidavit detailing numerous instances of what it alleged to be illegal double-billing and extra-billing by the private clinic.

It’s worth noting that at this point the legal brouhaha was simply about whether the B.C. government would be allowed to audit a private clinic which it believed was illegally billing the provincial government, and individual British Columbians, for private healthcare services. Of course that doesn’t mean anyone’s guilty of anything. But a cynical mind might at this point begin to wonder what Cambie Surgery’s files contain, if it’s willing to fight a lengthy court battle to prevent the government from getting a look at them.

In any case, it didn’t end there. Cambie Surgey and a related private medical outfit, Specialist Referral, appealed to the B.C. Court of Appeal, which issued a ruling the following year. In the submissions that court reviewed, it seemed that the private clinics “admit that they have engaged in practices that would violate the statutory prohibitions against direct and extra billing,” but insisted that the ban in question was unconstitutional, arguing that the court should extend the Supreme Court’s precendent-setting Chaoulli v. Quebec ruling on private insurance to coverprivate billing, as well. In a unanimous verdict written by Harvey Groberman, appointed by the Harper government in 2008, the appeals court threw out the injunction against Cambie Surgery on procedural grounds but left open the possibility that the Commission could re-apply for a new warrant “in properly constituted proceedings.”

This might appear to be a victory for Cambie Surgery, but as the excellent legal blog The Court explains, it was a decidedly pyrrhic victory. The private clinics argued that a court order allowing an audit of their files to search for illegal activity could not be granted until after the court ruled on whether medicare laws were unconstitutional (which they claim they are, and which Day has now started a separate lawsuit on with the assistance of the right-wing Canadian Constitution Foundation). The appeals court disagreed. It found that the government did have the power to audit the private clinics: it just hadn’t gone about exercising that power in the right way.

It didn’t take long for the MSC to try and correct its errors. In late 2010, MSC began arranging for a warrant to search Cambie Surgery’s files. Strangely, when this made the press, Day claimed that he was already “negotiating a voluntary order to show we’re not afraid of the audit.” If he wasn’t afraid of the audit, why did they go through two courts trying to fight it? I’m not sure. Anyhow, in January 2011, Cambie Surgery submitted to the audit. In response, a brazen Day freely and proudly confessed that he was “breaking the law” and declared the investigation to be “a waste of taxpayers’ dollars.”

Which brings us to today. The results of the long-awaited audit have finally been released, and they show evidence of illegal extra-billing on a vast scale. In response, the MSC has ordered the private clinics to stop breaking the law — which means, in effect, that they’ll have to go either fully public or fully private. We shouldn’t assume it’s over. The clinics will presumably appeal the ruling again on constitutional grounds. We’re a long way from resolution on this, and it’s unclear who will win the legal battle.

It would be interesting to know how an NDP government will respond. In theory, even if Day wins, the government could override a court verdict in order to protect the universal healthcare system, using the notwithstanding clause. But it seems unlikely the current Liberal government — a close ally of the federal Conservatives — would do so. I kind of doubt the NDP would be willing to take that step either. So really we’re back to wondering how the long-delayed court argument over constitutionality will turn out.