The Enforcement of the Canada Health Act

The Enforcement of the Canada Health Act

Sujit Choudhry”

The commitment to comprehensive and universal
health care, as reflected in the Canada Health Act, is of-
ten regarded as a defining characteristic of our country.
Today, Medicare in Canada faces a number of challenges
which pose a serious threat to its survival. The increasing
financial pressure placed on heath-care budgets has led
to cost-cutting measures which may contravene the fun-
damental principles of Medicare, as spelled out by the
Act.

Overlooked in the political debate about the future
of Medicare has been the potential to achieve social jus-
tice through the existing statutory framework of the Act.
The author examines whether the basic criteria laid down
in the C.H.A. are capable of giving rise to legal liability
and proposes a legal strategy for enforcing the terms of
the Act. To this end, the feasibility of a legal claim
against both federal and provincial governments is exam-
ined in turn. The author discusses the many hurdles that
must be overcome in order for an individual to success-
fully bring a claim against the government.

The author concludes that the C.H.A. can function as
both a political and a legal document. In terms of legally en-
forcing the C.H.A.’s criteria, liability is likely to be restricted
to the federal government, since the Act is probably not en-
forceable against the provinces. A successful claim would
have the effect of inducing greater vigilance with respect to
meeting the criteria of the C.H.A. Ultimately, however, it is
argued that regardless of whether an individual legal claim is
successful, it is the political value of litigation that could
make a challenge worthwhile. The result of such litigation
would be to raise public awareness of the challenges facing
Medicare and, thus, lead to political change. In this way, the
C.H.A. can serve a dual purpose and prove to be an effective
tool for ensuring the integrity of the Medicare system.

L’engagement d’offdr des soins m&licaux complets et
universels, tel que refldt6 dans la Loi canadienne sur la san-
ti, est souvent perqu comme une caracteristique de notre
pays. De nos jours, le programme canadien d’assurance-
maladie fait face h de nombreux defis qui menacent sdrieu-
sement son existence. Les contraintes budgetaires touchant
les programmes de sant6 ont men6 b l’adoption de mesures
de r&luction de cofits qui pourraient contrevenir aux princi-
pes fondamentaux du programme d’assurance-maladie, tels
qu’6noncds dans la loi.

ignore

longtemps

Le d6bat politique sur l’avenir du programme
d’assurance-maladie a
la possibilit6
d’aboutir h une justice sociale par l’intermediaire du cadre
offert par la loi. L’auteur cherche k determiner si les criteres
fondamentaux formuls dans la loi peuvent servir de base t
une responsabilit6 legale et il propose une strategie legale
permettant d’appliquer les dispositions de la loi. A cette fin,
il examine la faisabilitd d’une revendication l6gale contre les
gouvernements federal et provinciaux. L’auteur traite des
nombreuses etapes qu’un individu devra franchir afin que sa
revendication aupr~s du gouvemement soit fructueuse.

En definitive, la loi peut fonctionner comme un do-

cument l la fois politique et 16gal. En ce qui a trait
r’application l6gale des criteres de la loi, l’auteur conclut que
la responsabilit6 ser vraisemblablement restreinte au gou-
vemement fed6ral, puisque la loi n’est probablement pas
applicable a l’6gard des provinces. Une revendication fruc-
tueuse entrainerait plus de vigilance en ce qui concerne le
respect des criteres pr6vus dans la loi. Nonobstant le succ~s
d’une revendication legale individuelle, r’auteur estime que
ce serait ‘aspect politique du litige qui lui donnerait sa va-
leur. Le resultat d’un debat serait d’informer le public des
defis auxquels fait face le programme d’assurance-maladie
et, ainsi, mener h un changement politique. De cette fagon,
la loi peut servir deux buts t la fois et etre un instrument ef-
ficace pour assurer l’integrite du syst~me d’assurance-
maladie.

. B.Sc (McGill); B.A. (Juris.) (Oxon.); Third-Year Law (Toronto). Associate Member, Centre for
Bioethics, University of Toronto; Commencing September 1996, Law Clerk to Chief Justice Antonio
Lamer, Supreme Court of Canada. I would like to thank: Bernard Dickens for suggesting this topic
and for his supervision, guidance, and support; Niteesh Choudhry, for patiently explaining the com-
plexities of resource allocation; Patrick Macklem and David Stewart for helpful and perceptive com-
ments on an earlier draft; and Jacqui Code, Hudson Janisch, Ira Parghi, Kent Roach, and Katherine
Swinton for helpful advice. All remaining errors are mine.

McGill Law Journal 1996
Revue de droit de McGill
To be cited as: (1996) 41 McGill L.J. 461
Mode de rrf6rence : (1996) 41 R.D. McGill 461

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[Vol. 41

Synopsis

Introduction

I. Background

A. A Brief History of Medicare in Canada
B. The C.H.A.

II. Reasons for Renewed Legal Interest in the C.H.A.

A. Resource Allocation
B. The Failure of Public Enforcement by the Federal Government

M. Enforcing the C.H.A. Against the Federal Government

Introduction

A.
B. Standing

1. The Law on Public-Interest Standing
2. Applying Finlay (no. 2)

C. Merits

1. Statutory Interpretation

a.
b.

Lessons from Finlay (no. 3)
Assessing Compliance
i.
ii.

Accessibility
Comprehensiveness

2. Reviewing Cabinet Discretion

D. Remedies

IV. Enforcing the C.H.A. Against Provincial Governments

Introduction

A.
B. Identifying an Undertaking
C. Legal Status of Inter-governmental Agreements
D. Third Parties
E. Conclusions

Conclusion: The Politics of Medicare

1996]

S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

Introduction

Medicare is a remarkable achievement. Through a process
of evolution, with minimum dislocation and .disruption, a
cost-effective universal health insurance plan has been
made possible for virtually all residents of this vast country.
Yet this achievement now appears endangered.’

Health and Welfare Canada

These words were written in the early 1980s, when Medicare was coming un-
der threat from extra-billing by physicians and user fees imposed by provincial
health plans. To many, the adoption of the Canada Health Act’ was meant to solve
these problems, guaranteeing Canadians access to comprehensive and universal
health care. Today, unfortunately, Medicare faces new challenges. Provincial health
budgets have come under increased financial pressure over the last decade, due to
decreased federal transfer payments and the increasing supply of physicians. In re-
sponse, many provincial governments are contemplating de-listing certain medical
procedures from provincial health plans and adopting other measures to reduce
costs.’ These cost-cutting measures and the prospect of declining federal financing
for Medicare are generating a storm of political protest.

health-care providers, hospitals, and various levels of government –

The C.H.A. has often been invoked by the various actors in the health-policy
arena –
as
defining an ideal Canadian medical system. It is interesting to contrast this politi-
cal role for the C.H.A. with the proposals put forth during the last round of consti-
tutional reform for justiciable social and economic rights, including a right to health
care,’ and with the attempt to interpret section 7 of the Canadian Charter of Rights
and Freedoms’ as guaranteeing welfare rights (including a right to medical serv-
ices).’ Overlooked, however, has been the potential to achieve social justice through

‘ Health and Welfare Canada, Preserving Universal Medicare (Ottawa: Supply and Services Can-

ada, 1982) at 16.

2 R.S.C. 1985, c. C-6 [hereinafter C.H.A.].
3Examples of such measures include: hospital closures; emergency ward closings; reductions in the
number of hospital beds; reductions in the number of hours of elective surgery; reductions in the
number of emergency operating rooms; and requiring patient to pay for non-medical costs associated
with hospital stays.

‘ See generally: J. Bakan & D. Schneiderman, eds., Social Justice and the Constitution: Perspec-
tives on a Social Union for Canada (Ottawa: Carleton University Press, 1992); C. Scott, “Social Val-
ues Projected and Protected: A Brief Appraisal of the Federal and Ontario Government Proposals” in
D. Brown, R. Young & D. Herperger, eds., Constitutional Commentaries: An Assessment of the 1991
Federal Proposals (Kingston: Queen’s University Institute of Intergovernmental Relations, 1992) 81.

‘Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11

[hereinafter Charter].

‘See: M. Jackman, “The Protection of Welfare Rights Under the Charter” (1988) 20 Ottawa L. Rev.
257; I. Johnstone, “Section 7 of the Charter and Constitutionally Protected Welfare” (1988) 46 U.T.
Fac. L. Rev. 1; R. Howse, “Another Rights Revolution? The Charter and the Reform of Social
Regulation in Canada” in P. Grady, R. Howse & J. Maxwell, eds., Redefining Social Security

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[Vol. 41

the existing statutory framework: by recognizing the C.H.A. as not merely a politi-
cal, but a legal instrument.

To date there has been little scholarship on the legal consequences under the
C.H.A. of provincial cost-cutting measures and on avenues open to individuals –
the intended beneficiaries of the C.H.A. –
to protect their interests through the
courts.7 Can the C.H.A.’s five criteria –
universality, comprehensiveness, public
administration, portability, and accessibility –
engender legal liability? This paper
explores this possibility. Part I provides a brief history of Medicare in Canada and a
description of the provisions of the C.H.A. Part II provides two reasons for re-
newed legal interest in the C.H.A.: the current importance and awareness of deci-
sions regarding resource allocation and the federal government’s failure to enforce
the C.H.A.’s terms. Part III examines the prospects for and efficacy of an enforce-
ment claim against the federal government through a consideration of standing, the
argument’s merits, and the available remedies under federal administrative law. Part
IV considers the possibility of obtaining a suitable remedy directly against provin-
cial governments. The Conclusion assesses the merits of enforcing the C.H.A.
through citizen-initiated litigation. It may be that taking up the proposed legal strat-
egy would have a greater impact in the legislatures than it does in the courts.

I. Background

A. A Brief History of Medicare in Canada’

Medicare grew out of a set of federal proposals tabled at the Dominion-
Provincial Conference on Reconstruction’ at the conclusion of the Second World
War. Although the “Green Book Proposals” were never adopted, they signalled a
radical, new approach in the provision of health care in Canada. Until then, medical
treatment had been available, like any other consumer service, on the market and
subject to the laws of supply and demand. As a result, the amount and quality of

(Kingston: School of Policy Studies, Queen’s University, 1995) 102 at 108-110; M. Jackman, “Poor
Rights: Using the Charter to Support Social Welfare Claims” (1993) 19 Queen’s L.J. 65 at 67-79.

7Two exceptions are: Canadian Bar Association, What’s Law Got to Do With It? Health Care Re-
form in Canada (Ottawa: Canadian Bar Association, 1994) at 77-79 [hereinafter C.B.A.]; S.L. Mar-
tin, Women’s Reproductive Health, the Canadian Charter of Rights and Freedoms, and the Canada
Health Act (Ottawa: Canadian Advisory Council on the Status of Women, 1989) at 18-22. On the
other hand, some commentators have examined the question of whether the Charter may impose
some restrictions on resource allocation in health care. The role of the Charter is beyond the scope of
this paper. For a recent discussion, however, see R.Z. Shaul, The Implications of sections 1, 15, and
24 of the Canadian Charter of Rights and Freedoms on Health Care Allocation Decisions (LL.M.
Thesis, University of Toronto, 1993) [unpublished].

‘The most comprehensive history of Canadian Medicare is provided by M.G. Taylor, Health Insur-

ance and Canadian Public Policy, 2d ed. (Montreal: McGill-Queen’s University Press, 1987).

See Dominion-Provincial Conference on Reconstruction: Dominion-Provincial Submissions and
Plenary Conference Discussions (Ottawa, August 1945) at 31-33 [hereinafter Conference on Recon-
struction].

1996]

S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

available care depended on a person’s ability to pay. The federal proposals, inter
alia, sought to replace this private market with a system of public health insurance,
partially funded by federal grants, which would cover a wide range of services.'”
These proposals were never adopted, however, because they were part of a complex
package that included a redistribution of taxation power that was unacceptable to
the provinces.” Nevertheless, as Taylor notes, they served to focus public attention
on the economic barriers to health care.'”

Despite the failure of the Conference on Reconstruction, in 1947 the Sas-
katchewan government ultimately implemented a provincial health-insurance plan
funded without federal support.” The plan was universal (covering all residents)
and compulsory, in that it was funded through a special tax. Moreover, the plan
“provided for an almost complete range of hospital services as benefits”.” Sas-
katchewan’s plan served as a model for other provinces and played an instrumental
role in prompting the federal government to introduce a national health-insurance
program in 1957,'” the Hospital Insurance and Diagnostic Services Act.” The Act
authorized the federal government to provide financial support to provincial health-
insurance schemes that covered both in-patient and out-patient hospital services.’7
These payments were calculated according to a cost-sharing formula, whereby the
provincial and federal governments each contributed fifty percent of the cost of
hospital services.'” In exchange, the provinces had to covenant “to make insured
services available to all residents of the province upon uniform terms and condi-
tions”,” which is generally thought to be a guarantee of universal coverage. In sec-
tion 1, the Act listed precisely which services were mandatory under the provincial
plans.

0 The proposals also offered federal financial assistance to the provinces in the forms of (1) grants
for the planning and administration of public health-insurance systems and (2) loans for the construc-
tion of hospitals (see Conference on Reconstruction, ibid. at 31, 36).

” The federal government proposed that provincial governments “forego the imposition of personal
income taxes, corporation taxes, and succession duties, leaving to the Dominion government the full
and exclusive access to these revenue sources”. In exchange, the federal government proposed to
“substantially expand its present payments to the provincial governments under an arrangement
which would ensure stable revenues and provide for their growth in proportion to increases in popu-
lation and per capita national production” (Conference on Reconstruction, ibid. at 48).

2 See ibid at 67.
,” See Health Services Act, S.S. 1944, c. 51. Although the Act was passed in 1944, the program did

not come into effect until January 1, 1947.

“Taylor, supra note 8 at 102.
,5 See S.J. Kunitz, “Socialism and Social Insurance in the United States and Canada” in C.D. Nay-
lor, ed., Canadian Health Care and the State: A Century of Evolution (Kingston and Montreal:
McGill-Queen’s University Press, 1992) 104 at 115.

“S.C. 1957, c. 28 [hereinafter Hospital Insurance Act].
‘7 See ibid. at s. 3.
‘” See ibid, at s. 4.
‘9 Ibid. at s. 5(2)(a).

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The Act laid the basis for future federal-provincial co-operation on health in-
surance by allowing the federal government to use its superior taxation power to
fund provincial programs. Its most significant shortcoming, however, was its failure
to cover non-hospital services. The first province to go beyond the requirements of
the federal Act was Saskatchewan. The Saskatchewan government had always in-
tended to extend its original plan to cover all medical treatments. The new federal
financial support, therefore, afforded it the opportunity to create a truly compre-
hensive provincial medical-insurance program. In 1959, it proposed its new plan,
which came into force in 1962.2

In an attempt to prevent the application of Saskatchewan’s model of compre-
hensive medical insurance to the rest of Canada, the Canadian Medical Association
(“C.M.A.”) requested that the federal government study the problem of health in-
surance in 1960.” Prime Minister Diefenbaker responded in 1961 by creating the
Royal Commission on Health Services, chaired by Mr. Justice Emmett Hall, Chief
Justice of Saskatchewan. The Commission reported back on June 19, 1964 and, to
the dismay of the C.M.A., recommended the implementation of comprehensive,
universal health insurance across Canada. In 1966, this recommendation was en-
acted as the Medical Care Act.’ Unlike the 1957 Hospital Insurance Act, which
covered hospital-based treatment, the new legislation ‘covered non-hospital care.
Moreover, in contrast to the 1957 legislation, the Medical Care Act laid down spe-
cific eligibility criteria for provincial plans: operation on a non-profit basis by a
public authority; reasonable access to persons across the province on uniform terms
and conditions; coverage of no less than ninety-five percent of a province’s resi-
dents; and portability of coverage between the provincesY All of these criteria were
eventually incorporated into the C.H.A. and are discussed below. Like the Hospital
Insurance Act, the Medical Care Act provided for half of the expenditures under a
provincial medical-insurance plan.”

Not surprisingly, the equal cost-sharing formula contained in the 1957 and
1966 legislation became a large financial burden for the federal government. The
federal government’s primary concern was its inability to control the level of trans-
fer payments, since it was under a legal obligation to match funds to expenditures
made under provincial plansY The incentives for the provinces to economize were

20See Medical Care Insurance Act, S.S. 1962, c. I
2! See C.B.A., supra note 7 at 7.

22S.C. 1966, c. 64.
See ibid at s.4.
SSee ibid at s. 5.
2 2Monique B6gin also argues that the program was

biased in favour of building and physical expansion, which are always expensive … A
new hospital here, a clinic there, a new wing on an existing institution, a new maternity
ward, new laboratories –
it all made for excellent local politics and good economic
sense, since a province would then receive large sums of money from Ottawa (M. B-
gin, Medicare: Canada’s Right to Health (Ottawa: Optimum, 1988) at 55).

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S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

not as strong as they would have been had they been wholly responsible for their
health-care budgets. In the wake of annual cost increases of twenty and one-half
percent in 1975 and twenty percent in 1976,” the federal government proposed a
system of block funding to the provinces. After extensive negotiations, the prov-
inces accepted this approach which was enacted by Parliament as the Federal-
Provincial Fiscal Arrangements and Established Programs Financing Act in
1977V6 The Act provided federal funding indexed to changes in the Gross National
Product and population growth.’

Toward the end of the 1970s, Canada witnessed an alarming rise in two sorts of
direct charges to patients: extra-billing7 and user charges.” Public outcry over those
direct charges led to the appointment in 1979 of the Honourable Emmett Hall to the
head of a special commission to review the state of Medicare and, in particular,
whether the conditions of portability, reasonable access, universal coverage, and
comprehensiveness were being met.’ In his 1980 report, Hall concluded that direct
charges were undermining reasonable access to medical care.” This assessment be-
came integral to federal government policy3 and was echoed by an all-party House
of Commons task force?’ An epic political battle ensued, pitting the federal gov-

26See Taylor, supra note 8 at 421.
27 S.C. 1977, c. 10 [hereinafter E.P.E Act]. The E.RF Act actually covered three programs: post-

secondary education; medical care; and hospital insurance.

21 See ibid. at ss. 18-22.
2 The Department of National Health and Welfare has defined extra-billing as “the direct billing of
an insured person for an insured health service provided by a medical practitioner in an amount in ex-
cess of the amount payable for the service under a provincial health care insurance plan” (Health and
Welfare Canada, supra note 1 at note 1, p. 5).

3 A user charge is defined as “any charge that is authorized under a provincial health care insurance
plan for any insured health service and that is payable directly by an insured person” (Health and
Welfare Canada, ibid. at note 2, p. 5). Monique B6gin, the federal minister responsible for the adop-
tion of the C.H.A., has argued that the federal government itself contributed to the increase in user
fees. Under the 1957 and 1966 legislation, Ottawa engaged in minute supervision of each province’s
health-insurance scheme, reviewing and approving each expense. In 1977, with the adoption of the
E.R. Act, the Federal government ceased its billing supervision. The impact on user fees was pro-
found. Prior to 1977, the federal government deducted the amount of user fees charged by a province
from the federal transfer payment. After 1977, this practice ceased. Bdgin states: “[I]ser fees were no
longer prohibited –
therefore they were allowed” (Bdgin, su-
pra note 25 at 66).

since they were no longer penalized –

See Taylor, supra note 8 at 429.
See E.M. Hall, Canada’s National-Provincial Health Program for the 1980’s (Ottawa: Depart-

ment of Health & Welfare, 1980) at 27 (extra-billing), 42 (user charges).

33 Medicare is threatened. The small direct charges of the past are now growing and
spreading. Medicare as we knew it is gradually eroding. Through a cumulation of di-
rect charges on the sick –
the goal of
complete insurance, fully prepaid, is being abandoned (Health and Welfare Canada,
supra note 1 at 3).

each one possibly not a big increase in itself –

See Parliamentary Task Force on Federal-Provincial Relations, Fiscal Federalism in Canada

(Ottawa: Department of Supply & Services, 1981).

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emiment against the medical profession (represented by the C.M.A.) and the prov-
inces. The provinces resented what they saw as an incursion into provincial juris-
diction; the medical profession considered Hall’s recommendations a direct assault
on its freedom. Over these objections, however, Parliament adopted the C.H.A. in
1984.

B. The C.H.A. 5

Section 7 of the C.H.A. provides that provincial health-care insurance plans
must satisfy five basic criteria – public administration, comprehensiveness, univer-
sality, portability, and accessibility –
throughout the fiscal year to qualify for fed-
eral funding. Although these terms are defined in the C.H.A., their precise mean-
ings are unclear and will become a matter for judicial interpretation. 6

The least controversial of the C.H.A.’s criteria is its requirement in section 8
that provincial health-insurance plans be “administered and operated on a non-
profit basis” by a public authority who is accountable to the provincial government.

Section 9 defines a comprehensive health-insurance plan as one which covers
“all insured health services” provided by hospitals, physicians, or dentists. Insured
services are defined in section 2 as “hospital services, physician services, and sur-
gical-dental services provided to insured persons”, who are defined as residents of
the province. Hospital services, in turn, are defined as those which are “medically
necessary for the purpose of maintaining health, preventing disease or diagnosing
or treating an injury, illness or disability”. Physician services which are “medically
required services rendered by medical practitioners” are covered. Provinces must
therefore insure all medically necessary services to qualify for funding under the

33 The legality of the C.H.A. was upheld by the Alberta Court of Appeal in Winterhaven Stables Ltd.
v. Canada (A.G.) (1988), 62 Alta. L. R. (2d) 266, 53 D.L.R. (4th) 413 (C.A.), as an exercise of the
federal government’s spending power. Under the power, Parliament may expend monies in areas of
provincial jurisdiction, thereby achieving through economic pressure what it could not do directly.
The power is not express but is inferred by reading together three of Parliament’s enumerated powers
under the British North America Act (Constitution Act, 1867 (U.K.), 30 & 31 Vict., c. 3) [hereinafter
B.N.A. Act]: the powers to levy taxes (ibid. at s. 91(3)), to regulate public property (ibid at s.
91(lA)), and to appropriate federal funds (ibid at s. 106) (see P.W. Hogg, Constitutional Law of Can-
ada, 3d ed. (Toronto: Carswell, 1992) at 150).

In the late 1980s, The Ontario Medical Association (“O.M.A.”) launched, and then dropped, a
legal challenge against the constitutionality of the C.H.A. (see: M. Mason, “The Canada Health Act
and the Health Care Accessibility Act: the legal challenge” (1989) 56:6 Ont. Med. Rev. 20; R.D.
Fletcher, “Perspectives on Deferring the Canada Health Act Challenge” (1990) 57:5 Ont. Med. Rev.
25; R.D. Fletcher, “Council Debates OMA Position Statement Toward a Partnership for the 1990s”
(1990) 57:6 Ont. Med. Rev. 9).

36 By far the most detailed and helpful analysis of these provisions has been done by Martin, supra

note7 at 12-18.

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S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

C.H.AY The meaning of “medical necessity”, left undefined in the Act, will be dis-
cussed later.

Universality, a hallmark of Medicare, is defined in section 10. The C.H.A. re-
quires provincial plans to cover one hundred percent of provincial residents on uni-
form terms and conditions. Presumably, this excludes plans that categorize resi-
dents according to medically irrelevant criteria, such as income level.

Portability is defined in section 11 and requires plans to “not impose any mini-
mum waiting period of residence in the province, or waiting period, in excess of
three months before residents of the province” are entitled to be covered by the
provincial plan. Moreover, plans must cover expenses for treatment received out-
side a province, both within Canada and abroad, up to the cost of the service within
the province. An exception to the portability principle is allowed for “elective in-
sured health services”, defined as “services other than services that are provided in
an emergency” or when “medical care is required without delay”.

Section 12 defines accessibility, requiring that provincial plans “provide for in-
sured health services on uniform terms and conditions and on a basis that does not
impede or preclude, either directly or indirectly whether by charges made to insured
persons or otherwise, reasonable access to those services by insured persons.”” By
relying on “reasonable access”, the C.H.A. has adopted a definition of accessibility
which is “not one of free access or easy access”, but is relative and circumstantial.’
The reference to “insured health services” incorporates “medical necessity” into the
definition of accessibility, as it did for comprehensiveness. However, the two terms
should not be confused. The latter refers to what is covered, whereas the former re-
fers to how people may obtain those insured services.

In its background paper, Health and Welfare Canada identified two problems
with the legislation that preceded the C.H.A.*’ First, the enforcement mechanism
(established under the regulations) was considered too blunt because it required the
federal government to withhold all cash contributions to a province if the program
criteria were not met. Second, the criteria established for federal funding did not
seem to be specific enough to exclude direct charges to patients, both in the forms
of extra-billing and user fees. Given those charges’ impact on accessibility, this was
a source of major concern for the federal government.

Both of these concerns are addressed in the new legislation. A detailed en-
forcement mechanism is spelled out in sections 14 to 17. If the Minister of National

” Since the French version of the Act uses the term “nidicalement ncessaires” exclusively, it will
be assumed that “medically necessary” and “medically required” are identical (see C.B.A., supra note
7 at note 89, p. 30).

” C.H.A., supra note 2 at s. 12(l)(a).
” Martin, supra note 7 at 16.
4See Health and Welfare Canada, supra note 1 at 30.

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Health and Welfare believes that a province is in breach of the criteria described
above, he or she must refer the matter to the Governor in Council.” However, be-
fore this stage is reached, the Minister must attempt to consult the province in-
volved to clarify the matter, report on his or her findings, and if requested, meet to
discuss the matter.’2 Under section 15, if the Governor in Council is of the opinion
that the criteria are not being met, federal contributions may be withheld either, (1)
in respect of each default by “an amount that the Governor in Council considers to
be appropriate” or (2) in their entirety, depending on the circumstances.”

As regards direct fees, sections 18 and 19 explicitly condition the receipt of
federal contributions on the absence of extra-billing and user charges, respectively.
Unlike the discretion granted under section 15, section 20 makes deductions for
extra-billing and user fees mandatory. The amount is to be equal to the direct fees
charged through extra-billing” and user charges. ‘

II. Reasons for Renewed Legal Interest in the C.H.A.

A. Resource Allocation

The C.H.A. reflects Canada’s commitment to high-quality health care accessi-
ble to all. Indeed, access to health care based on need, not the ability to pay, is re-
garded by many to be a defining characteristic of our country and an important
element of social citizenship. Noted health economist, Robert Evans, has suggested
that equality before the health-care system is as important to Canadians as is equal-
ity before the law.”

Unfortunately, the Canadian health-care system is coming under increasing fi-
nancial pressures, making it more and more difficult to meet these goals. The
growing national debt” has motivated successive federal governments to reduce

” See C.H.A., supra note 2 at s. 14(l).
42 See ibid at s. 14(2).
‘ Claude Forget has suggested that section 36 of the Constitution Act, 1982 (Constitution Act, 1982,
being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11), may prohibit a complete withholding
of federal payments, if so doing would imperil “the delinquent province’s ability to provide its resi-
dents with public services of reasonable quality” (C.E, Forget, “The Harmonization of Social Policy”
in M. Krasnick, ed., Fiscal Federalism (Toronto: University of Toronto Press, 1986) 97 at 11). Sec-
tion 36 provides that Parliament, the provincial legislatures, and the federal and provincial govern-
ments “are committed to … (c) providing essential public services.of reasonable quality to all Canadi-
ans.”

“See C.H.A., supranote 2 at s. 20(1).
“See ibid at s. 20(2).
” See R.G. Evans, “‘We’ll Take Care of It for You’: Health Care in the Canadian Community”

(1988) 117:4 Daedalus 155 at 165.
“‘Between 1985 and 1991, the Net Federal Debt increased from 202.4 billion dollars to 385 billion
dollars (see Statistics Canada, Canada Year Book (Altona: D.W. Friesen & Sons, 1994) at Table 9.8).

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S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

their health-care contributions to the provinces.” To some extent, this trend began
in 1977, with the replacement of fifty-fifty cost-sharing with the block grants dis-
cussed above. In 1986, however, the funding formula was altered again,” and in
1991 federal transfer payments were frozen for two years. 0 The impact of the
changes in the federal formula can be seen in the declining levels of relative federal
contributions to provincial health-insurance plans. In 1977, provincial health plans
expended 11.1 billion dollars, of which federal transfers accounted for 41.8 percent
(4.6 billion dollars). By 1986, this figure had dropped to thirty-nine percent (twelve
billion dollars of 30.9 billion dollars), and by 1993 (the latest year for which data
has been published), to 31.8 percent (15.6 billion dollars of 49.1 billion dollars).’

The federal funding formula for health care is about to change again. Under the
Budget Implementation Act,2 block grants made under the E.P.F. Act will be re-
placed with a new block grant, the Canada Health and Social Transfer (“C.H.S.T.”).
This block grant will cover not only health care, but federal transfer payments for
social assistance, post-secondary education, and other social services. The Act re-
tains the enforcement mechanism under the C.H.A., but provides that deductions be
made from the C.H.S.T., not payments made pursuant to the E.P.E Act5 It has been
suggested that in the wake of the new funding arrangements “it is not hard to
imagine how poverty –
and thus the poor – will get lost in the shuffle in favour of
health and education”,’ yet it is no harder to imagine how health-care’ budgets,
which have become a political target, will be affected by the adoption of these new
funding arrangements, because of a reduction in the total amount of federal transfer
payments to the provinces.”

Another source of financial pressure on the system is the growth in physician
supply,” a common problem for most western industrialized nations. In 1992, Can-
ada had nearly 60,000 active physicians, providing for an approximate ratio of one

4′ See J.K. Iglehart, “Canada’s Health Care System Faces its Problems” 322 New Eng. J. of Med.

562 at 564.

“9 See An Act to Amend the Federal-Provincial Fiscal Arrangements Act, 1977, S.C. 1986, c. 34
[hereinafter Act to Amet . Section 2 of that Act reduced the escalator for federal transfer payments
laid down in the E.P Act by two percentage points. Nevertheless, transfer payments were still a
function of population growth and growth in gross national product.

See Government Expenditures Restraint Act, S.C. 1991, c. 9.

5, See Health and Welfare Canada, National Health Expenditures in Canada, 1975-1993 (Ottawa:

Supply and Services Canada, 1994) at Table.3A.
51 S.C. 1995, c. 17 (assented to 22 June 1995).
53 See ibiL at s. 38.
“4C.M. Scott, “Covenant Constitutionalism and the Canada Assistance Plan” (1995) 6 Const. Fo-

mm 79 at 80.
.5 The Budget hnplementation Act sets the total federal contribution to the provinces at 26.9 billion
dollars for social assistance, health care, and post-secondary education (see supra note 52 at s. 48). At
the time of writing, the funding arrangements for shared-cost programs remain in a state of flux. The
federal funding formula might change again, reserving the C.H.S.T. for health transfers only.

“‘ See Iglehart, supra note 48 at 567.

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[Vol. 41

physician to 450 residents.” Since the mid-1970s, the growth in the supply of phy-
sicians has outpaced population growth by 2.3 percent per year, amounting to an
increase in total physician supply of almost seventy percent.” The link between
physician supply and health-care costs is referred to as “supplier-induced demand”
and is relatively controversial. 9 The argument is that the physician-patient relation-
ship is different from a normal consumer-supplier relationship because of asymme-
tries in information and the vulnerability of the patient. The imbalance in this rela-
tionship allows physicians who supply services, not the patients who receive them,
to create the demand for their own services. Given that most Canadian doctors are
remunerated on a fee-for-service basis, the result is a system which encourages high
rates of utilization. The data seem to bear out this hypothesis: the growth rate of
physician supply nearly matches increased per capita utilization of health-care
services.’

Provincial governments have adopted a number of responses to deal with these
growing financial concerns. One set of responses seeks to rationalize the use of
existing health-care services, in order that “all citizens … receive all necessary
services at an overall cost that most societies can shoulder.”‘ Chandrakant Shah has
provided a more precise definition:

Rationalization of health services may involve re-structuring, re-alignment, de-
centralization and some institutional closures. These changes are undertaken to
minimize duplication of services, provide appropriate levels and type of care,
consolidate strengths, shift toward innovative structures and functional ar-
rangements which may make more effective use of resources and contain
costs.”2

For example, the “outcomes movement” in clinical medicine has encouraged pro-
vincial health ministries to ask physicians that they provide treatments that have
demonstrated benefit for the patient.” As well, existing health-care resources can be

‘7 See R.G. Evans, “Canada: The Real Issues” (1992) 17 J. Health Pol., Pol. & L. 739 at 755.
“‘ See T.R. Marmor, “Lessons from the Frozen North” (1993) 18 J. Health Pol., Pol. & L. 763 at

” R.G. Evans, Strained Mercy: The Economics of Canadian Health Care (Toronto: Butterworths,

767.

1984) at 83.
‘ See Marmor, supra note 58 at 767. In response, provincial governments have used their enormous
bargaining power to negotiate tougher fee schedules with physicians (see R.B. Deber, “Canadian
Medicare: Can it Work in the United States? Will it Survive in Canada?” (1993) 19 Am. J. of L. &
Med. 75 at 90).

“C.D. Naylor, “A Different View of Queues in Ontario” (1991) 10:3 Health Aff. 110 at 124.
aC.P Shah, Public Health and Preventive Medicine in Canada, 3d ed. (Toronto: University of To-

ronto Press, 1994) at 360.

‘ N.K. Choudhry, J.G. Wright & PA. Singer, “Outcome Rates for Individual Surgeons: Concerns
about Accuracy, Completeness, and Consequences of Disclosure” (1994) 115 Surgery 406. The out-
comes movement arose in response to large variations in the rates of medical procedures among
otherwise identical populations (see e.g. R.E. Hall & M.M. Cohen, “Variations in Hysterectomy Rates
in Ontario: Does the Indication Matter?” (1994) 151 Can. Med. Assoc. J. 1713).

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S. CHOUDHRY- ENFORCEMENT OF THE CANADA HEALTH ACT

better utilized through more efficient management. Thus, in a highly-publicized
episode, long waiting lists for open-heart surgery in Ontario were alleviated by
changing booking procedures by individual physicians through the establishment of
a central patient registry for the entire province, which facilitated the use of unutil-
ized physician resources.’

Rationalizing attempts to contain costs in a way that ensures accessibility and
comprehensiveness. However, as Naylor has written, this approach has limits: “In
an ideal world, appropriate health services would be available without charge or
delay. The reality, however, is that allocative decisions must be made.”‘
In other
words, rationing scarce health-care resources is unavoidable. Implicit rationing has
been part of Canadian Medicare for some time. With health budgets tightly con-
trolled, both physicians and administrators “will eliminate waste and accept the
burden of making more difficult decisions about allocation of funds to individual
units, particular services and, ultimately, individual patients”.” Increasingly, how-
ever, the idea of explicit rationing is gaining currency in policy circles. This would
generally entail the de-listing of certain medical procedures ‘ but could include any
explicit measures which would limit coverage for non-medical reasons.

The concern is that some of these restrictive measures could contravene the
C.H.A. An initiative of the former N.D.P. government in Ontario is a case in point.
Increasing numbers of elderly Canadians are spending their winters in the United
States, sometimes requiring medical treatment while they are there. Until recently,
the Ontario Hospital Insurance Plan (“O.H.I.P.”) paid up to four hundred dollars per
day for hospital coverage. Faced with shrinking hospital budgets at home, the pro-
vincial government decided to reduce hospital coverage to one hundred dollars per
day.” It is estimated that this move would have produced a savings of twenty mil-
lion dollars annually, which the government planned to apply to health-care deliv-
ery in Ontario.”

The province’s decision, however, may have been in breach of section 11 of the
C.H.A., which requires that provincial health plans be portable. Section 11(l)(b)
requires that a provincial plan cover the medical costs for insured services of in-
sured persons who are “temporarily absent from the province”. In section
ll(1)(b)(ii), the Act states that this coverage extends to services which “are pro-
vided out of Canada”. Payment must be “made on the basis of the amount that
would have been paid by the province for similar services rendered in the prov-

“See Naylor, supra note 61 at 116.
‘Ibid. at 123-24.
“D. Naylor & A.L. Linton, “Allocation of Health Care Resources: A Challenge for the Medical

“Down the Oregon trail- The way for Canada?” (1991) 145 Can. Med. Assoc. J. 1441).

“See 0. R:g. 489/94.
69See P. Todd, “When the Gray Panthers come calling” Law Times (22-28 August 1994) 4.

Profession” (1986) 134 Can. Med. Assoc. J. 333 at 335.

‘ Perhaps the most famous example of explicit rationing has occurred in Oregon (see H.E. Emson,

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[Vol. 41

ince”. On the face of it, setting a ceiling that is unrelated to the cost of the same
medical procedures in Ontario would seem to violate this provision. Of course, this
hinges on the meaning of “temporarily absent”. Would a person who has dual resi-
dency and who spends six months in each country be temporarily absent? The
scope of this term awaits definition by the courts.’

B. The Failure of Public Enforcement by the Federal Government

According to section 15 of the C.H.A., the Governor in Council can withhold
federal transfer payments to provinces that fail to comply with the Act’s terms. This
decision, however, may only take place after a referral by the Minister of National
Health and Welfare. The actual task of monitoring provincial compliance rests with
the Health Insurance Directorate, which advises the Minister.’

A review of the Directorate’s monitoring procedure was conducted by the Of-
fice of the Auditor General of Canada in 1987. The report found that while pro-
vincial legislation was regularly being monitored for compliance with the terms of
the C.H.A., the actual operation of provincial health plans was not, making the
monitoring scheme woefully inadequate:

[T]he Department has no formal procedures to satisfy itself that health plans
are being operated in accordance with provincial and territorial legislation, and
thus that federal requirements are being met in practice. Its sources of informa-
tion, in this regard are discussions and correspondence with the provinces, re-
view of provincial publications and news reports. The Department does not
obtain explicit assurance, written or otherwise, from provinces and territories
that their health systems are operating within their legislative framework.
Without such assurance, the Department cannot adequately assess the extent of
compliance with the Canada Health Act. 3

Moreover, the Department did not document its monitoring procedures, nor did it
periodically document its overall assessment of provincial compliance.” Further-
more, there was no documentation of departmental action taken in response to non-
compliance. 5

70 Before its repeal, this regulation was upheld on an application for judicial review in Collett v.
Ontario (A.G.) (1995), 124 D.L.R. (4th) 426, O.J. No. 776 (Gen. Div.) [hereinafter Collett cited to
D.L.R.].

“‘ See Health Canada, Canada Health Act Anmual Report 1992-93 (Ottawa: Supply & Services

Canada, 1993) at 13 [hereinafterAnnual Report 1992-93].

‘ See Office of the Auditor General, Report of the Auditor General of Canada to the House of
Commons (Ottawa: Auditor General’s Office, 1987) atparas. 12.90-12.111 [hereinafter Report, 1987].
73Ibid. at paras. 12.98-12.99.
7” See ibid at para. 12.100.
75See ibid. at para. 12.103.

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S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

These inadequacies were compounded by the ineffectiveness of parliamentary
supervision. Under the C.H.A., the Minister must make an annual report to Parlia-
ment, “including all relevant information on the extent to which provincial health
care insurance plans have satisfied the criteria” of the Act.’ This report does not,
however, contain any assessments of provincial compliance conducted by the De-
partment. Rather, it simply relates information provided by the provinces. The re-
port stated that it found “no evidence to indicate that the Department assesses the
completeness of the information that it receives”.7′ The report concluded:

By not assessing and reporting to Parliament on the extent of provincial com-
pliance, the Minister is not discharging fully his responsibilities under the Can-
ada Health Act. As a result, it is difficult for Parliament to determine whether
billions of dollars in annual transfer payments are being made in accordance
with the conditions it set in authorizing the transfers.”

Two recommendations were made: (1) to monitor the actual operation of provincial
health-care systems for compliance with the criteria of the C.H.A., and (2) to in-
In 1990, the
clude this information in the annual report provided to Parliament.’
Auditor General reported that neither of these recommendations had been adopted.”

Two factors suggest that private enforcement of the C.H.A. –

citizens acting
through the courts – would operate more effectively than the current regime of
public enforcement. The first is the availability of accurate information. Given the
meagre information obtained by the Department on provincial compliance, it is un-
surprising that federal payments have never been withheld under section 15(1).”
Individuals who use provincial health plans, on the other hand, possess the very in-
formation needed to assess compliance with the C.H.A. For example, the de-listing
of a medical procedure, which might be in violation of the principle of comprehen-
siveness, would come to the attention of patients who desired that procedure. Al-
though federal supervision would be more effective if the Department obtained in-
formation on specific policies adopted by provincial plans, this information would
still be inadequate, because the actual impact of particular policies on accessibility
and comprehensiveness might only be understood when they operate in practice.
Given the size and complexity of the health-care system, it may be beyond the abil-
ity of the federal government to obtain all the necessary information.

71 C.H.A., supra note 2 at s. 23.
“Report, 1987, supra note 72 at para. 12.107.
71Ibid. at para. 12.108.
“See ibid at paras. 12.110-12.111.
‘o See Office of the Auditor General, Report of the Auditor General of Canada to the House of
Commons (Ottawa: Auditor General’s Office, 1990) at paras. 4.175-4.177. Indeed, the 1992-93
C.H.A. report contains the following cryptic phrase: “[D]uring the year under review, a number of is-
sues related to possible non-compliance were identified and subsequently resolved, while some cases
are currently under review” (Annual Report 1992-93, supra note 71 at 13).

” However, the mandatory enforcement mechanism for extra-billing and user fees has been used

with considerable success.

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[Vol. 41

The second factor favouring private enforcement is the political climate sur-
rounding the C.H.A. Notwithstanding their willingness to accept federal transfer
payments, provinces are fiercely opposed to federal activity in the realm of health
care. The federal government is unlikely to risk political confrontation by acting
under section 15(1) even if it were to have sufficient information about non-
compliance.” Put another way, enforcement of the C.H.A. is currently conditioned
not by the needs of the health-care system’s clients, but by the political needs of the
federal government. It is, therefore, in the interest of affected individuals to launch
legal challenges in order to effect changes from provincial governments that will
provide them with better medical care. Thus, it may be left to individuals, acting as
“private attorneys-general”, to enforce the terms of the C.H.A. through the courts.

m. Enforcing the C.H.A. Against the Federal Government

A. Introduction

The C.H.A. is commonly described as imposing obligations on provincial gov-
ernments who wish to receive federal monies for Medicare. Although this may rep-
resent a current political reality, the legal situation is the opposite. Federal statutes
in areas of provincial jurisdiction (such as health insurance) cannot, by themselves,
impose legal obligations on provincial governments. As a matter of law, the C.H.A.
imposes obligations on the federal government. It defines the conditions that must
be met by the provinces for federal payments to be legal. If a provincial plan falls
short of these conditions, the federal government is obliged to take certain en-
forcement measures, which, in the extreme, can include withholding all contribu-
tions to the offending province.” In this way, decisions made by provincial gov-
ernments affect the legality of federal funding.

As discussed above, the federal government may lack either the information or
the political will to enforce the C.H.A. In those cases, the legality of federal contri-
butions can be challenged by an individual citizen through judicial review. In order
to succeed, however, a plaintiff would have to clear a number of hurdles. First,
without standing, judicial review could not advance, since a court cannot proceed
on its own motion to examine the legality of executive action. It will be argued that
an aggrieved citizen, however, could probably obtain public-interest standing to
launch judicial review of federal payments. Second, the plaintiff would have to es-
tablish that cabinet’s failure to exercise its discretion to withhold payments under

82 The present dispute between the federal government and Alberta over the operation of private
clinics in that province is a vivid but isolated counter-example (see: E. Greenspon, “Ottawa tallies
clinics’ fees” The [Toronto] Globe and Mail (16 October 1995) A5; A. Coyne, “Health Minister’s
strong stance calls premiers’ bluff’ The [Toronto] Globe andMail (16 October 1995) A14).

See C.H.A., supra note 2 at s. 7.

“See ibid at ss. 14, 15.

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section 15(1) was ultra vires the C.H.A. This would require the courts to examine
the reasonableness of cabinet’s actions, which, in turn, would require an assessment
of the factual background against which cabinet decided or failed to decide not to
withhold payments. An applicant would, therefore, have to demonstrate non-
compliance of the provincial plan with the C.H.A.’s criteria, overcoming the atten-
dant evidentiary difficulties.

B. Standing

1.

The Law on Public-Interest Standing

Would an individual have standing to bring a legal challenge to federal transfer
payments for health care? A similar set of circumstances faced the Supreme Court
in Canada (Minister of Finance) v. Finlay.” The applicant, Finlay, was a welfare
recipient under Manitoba’s social-assistance scheme. Due to an earlier overpay-
ment, the province deducted a percentage of his allowance over a period of time.
The province operated its welfare program with substantial financial support from
the federal government, under the Canada Assistance Plan.’ That spending statute
authorizes the federal government to encourage provinces, through conditional
grants, to develop welfare and social-assistance programs. Its conditions are statu-
torily imposed. Finlay contended that the federal payments were illegal, since the
provincial plan, inter alia, breached section 6(2)(a) of the C.A.P., which sets as a
condition that a province agree to “provide financial aid or assistance to … any per-
son in the province who is a person in need … in an amount or manner that takes
into account the basic requirements of that person”.

The Court had to decide whether Finlay had the requisite standing to bring an
action against the federal government. Le Dain J., speaking for a unanimous Court,
held that he did.” The decision proceeded in two parts. First, the Court held that
Finlay did not have standing as a matter of right (private standing). Although the

[1986] 2 S.C.R. 607, 33 D.L.R. (4th) 321 [hereinafter Finlay (no. 2) cited to S.C.R.].
R.S.C. 1985, c. C-1 [hereinafter C.A.R].
The C.A.P. will be repealed by the Budget Implementation Act (see supra note 52 at s. 32), which
alters the terms of federal assistance for social assistance in a number of respects. Instead of shared-
cost funding, federal transfer payments for social assistance will now become a part of the C.H.S.T.
Furthermore, the terms of that federal assistance will change. The C.A.R requires that: provinces who
wish to receive federal funding ensure that their plans provide financial assistance to persons in need;
the level of financial assistance takes into account each individual’s budgetary requirements; persons
have recourse to procedures whereby they may challenge the denial of financial assistance; and per-
sons not be forced to work in exchange for receiving social assistance. These conditions will no
longer be attached to federal transfer payments.

Nevertheless, the caselaw on the C.A.P., both in relation to obtaining standing and the merits of
an action, is still relevant. This body of law illustrates how federal-provincial shared-cost programs
have legal implications which could prove useful to individuals seeking to protect their entitlements
through the courts.

See Finlay (no. 2), supra note 85 at 634.

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purpose of the C.A.P. was to benefit individuals in need, there was no “nexus” or
“causative relationship”” between the alleged provincial non-compliance and the
alleged illegality of the federal payments, because it was not clear that Manitoba
would amend its plan to comply with the federal conditions if an illegality were
found.” The Court held, however, that it had discretion to grant public-interest
standing to Finlay to bring an administrative law action. Le Dain i. extended the
Court’s previous caselaw, which had only granted public-interest standing for
constitutional challenges.’ This promoted the policy underlying the conferral of
public-interest standing –
to avoid immunizing legislation or the exercise of ad-
ministrative authority from judicial review by denying standing to anyone other
than the Attorney-General. Finlay (no. 2), therefore, serves the public interest in
ensuring that governments only act within their granted legal authority, a basic tenet
of the rule of law.

The decision establishes a four-part test for standing. First, the issue must be
justiciable; it must involve a question of law. The federal government argued that
provincial compliance with the conditions laid down by the C.A.P. were inappro-
priate for judicial resolution and should be left to government review and inter-
governmental negotiations. The Court held, however, that the issue of statutory
authority to make payments was justiciable. The courts should not “decline to de-
termine it on the ground that because of its policy context or implications it is better
left for review and determination by the legislative or executive branches of gov-
ernment”.’ Second, the issue must be “serious”. This term is unclear and suggests
that the courts would consider the merits of the decision. In Finlay (no. 2), the
Court decided that the allegation was “far from frivolous”.” Third, and also unclear,
is the requirement that the applicant have a “genuine interest” in the issue: “[A]
person in need within the contemplation of the [Canada Assistance] Plan who
complains of having been prejudiced by the alleged provincial non-compliance …
is a person with a genuine interest”‘.” Finally, there must be “no other reasonable
and effective manner in which the issue may be brought before a court”.” This
means that there, is no one with a more direct interest to bring a challenge, and that

Ibid. at 622.
This part of the decision has been criticized by J.M. Evans, “Developments in Administrative

Law: The 1986-87 Term” (1988) 10 Supreme Court L.R. I at 17-18.

“See T.A. Cromwell, “From Trilogy to Quartet: Minister of Finance of Canada v. Finlay” (1987) 7
Windsor YB. Access Just. 103 at 110. The trilogy refers to: Thorson v. Canada (A.G.) (1974), [1975]
1 S.C.R. 138, 43 D.L.R. (3d) 1 [hereinafter Thorson]; Nova Scotia (Board of Censors) v. McNeil,
[1976] 2 S.C.R. 265, 55 D.L.R. (3d) 632; Canada (Minister of Justice) v. Borowski, [1981] 2 S.C.R.
575, 130 D.L.R. (3d) 588 [hereinafter Borowski]. Borowski itself was not a constitutional question in
the strict sense, in that it involved a conflict between the abortion provision of the Criminal Code,
R.S.C. 1985, c. C-46, and the Canadian Bill of Rights, S.C. 1960, c. 44, reprinted in R.S.C. 1985,
App. III.

2Ffiay (no. 2), supra note 85 at 632.
” Ibid. at 633.
9″ Ibid.
9″Ibid

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S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

the Attorney-General, in all reasonable probability, would not have exercised his or
her discretion to grant public-interest standing.” This requirement was met as well.

The decision in Finlay (no. 2) is notable not only for extending public-interest
standing to judicial review of administrative action, but also for articulating the
functional concerns underlying the rules of public-interest standing generally. The
Court addressed these directly and related them to the various elements of the test.
It is important to outline these concerns, because they provide a useful guide to
whether public-interest standing will be granted in other situations.

The first concern is the proper constitutional relationship between the courts
and other branches of government. Although courts adjudicate upon a wide range
of matters, it is more appropriate to allow the other branches to make decisions of
socio-economic policy, for which they ultimately can be held accountable to the
electorate. The test in Finlay (no. 2) meets this concern by requiring that a justici-
able question exist. Since the “policy context”9 of an executive decision will not
factor into the question of justiciability, the logic of Finlay (no. 2) might apply to
other federal-provincial programs operating under similar legal frameworks, such
as the C.H.A. Furthermore, the Court once again rejected the adoption of the
“political questions doctrine” from U.S. constitutional law.9 Thus, a court should
not be deterred from intervening merely because a legal dispute mirrors a dispute
which is occurring simultaneously in the political realm. However, the Court did
state that “[t]here will no doubt be cases in which the question of provincial com-
pliance with the conditions of federal cost-sharing will raise issues that are not ap-
propriate for judicial determination.”” It did not, however, say what those circum-
stances would be.

The second concern is the need to conserve scarce judicial resources by
screening out claims from busybodies –
individuals or groups whose apparent
purpose is to harass governments. This concern is met by ensuring that a serious is-
sue is raised, and that the applicant has a genuine interest in the issue. The final
concern is that, in deciding these questions, the courts benefit from hearing from
those who are most directly affected. Granting public-interest standing has the po-
tential to displace others who have a more direct interest in the complaint.” This

96 As Le Dain 1. explains, no prior request to the Attomey-General need be made. That the Attor-
ney-General would not intervene in favour of Finlay was evident from his position in the proceedings
(see Finlay (no. 2), ibid. at 634).

‘Ibid. at 632.
91The Court also rejected the political-questions doctrine for the purposes of Charter adjudication
in Operation Dismantle v. R., [1985] 1 S.C.R. 441 at 472, 18 D.L.R. (4th) 481. For a discussion of
that doctrine, see generally L.H. Tribe, American Constitutional Law, 2d ed. (Minneola: Foundation
Press, 1988) at 96-107.

” Finlay (no. 2), supra note 85 at 632.
” Thus, in a recent case, the Canadian Council of Churches was denied public-interest standing to
challenge certain provisions of the refugee hearing process, out of a fear that claimants themselves

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[Vol. 41

concern is reflected in the requirement that there be no other reasonable and effec-
tive manner in which the issue could be brought before a court.

2.

Applying Finlay (no. 2)

The potential to adapt Finlay (no. 2) to an action against the Department of
National Health and Welfare for payments made under the C.H.A. is promising. ‘
Like the C.A.P., the C.H.A. is enacted under Parliament’s spending power, which
provides payments to provinces who must conform to a set of federal conditions.
To illustrate how an argument for public-interest standing might be made, reliance
will be placed on the facts of Hughes v. Canada (A.G.).”‘

The plaintiff alleged that Prince Edward Island (“P.E.I.”) failed to meet the
conditions of comprehensiveness, universality, and accessibility, as required by
sections 9, 10, and 12(1), respectively, of the C.H.A. by demanding that an individ-
ual have a social-insurance number to receive coverage. She sought a number of
remedies, including a declaration that the federal payments to P.E.I. were illegal and
an injunction prohibiting payments to the province until it changed its policy.

The federal government brought a motion to strike, arguing that the plaintiff’s
claim disclosed no reasonable cause of action. This argument was rejected by
Reed J., who held, by analogy with Finlay (no. 2), that a justiciable issue existed,
although she did not state why.”‘ However, it may be inferred that the court seemed
willing to determine whether P.E.I. had met the conditions laid out in the C.H.A.,
despite the political controversy surrounding the Act. The decision shows that al-
though the criteria of the C.H.A. raise difficult questions of justiciability, the courts
are willing to review them to ensure the legality of federal government funding.

The issue in Hughes was whether a justiciable issue existed. The court was not
asked to decide whether the plaintiff had standing and, therefore, did not consider
the other parts of Le Dain J.’s test. It is likely, however, that these criteria would
have been met as well. In Finlay (no. 2), the Supreme Court considered “provincial
non-compliance with the conditions and undertakings to which the federal cost-
sharing payments are made subject by the [Canada Assistance] Plan and … statu-
tory authority for such payments””‘ to be a serious issue. The same reasoning ap-
plies to the C.H.A. The requirement of genuine interest is also met: a patient denied
medical coverage would certainly have a genuine interest at stake as a person
within the contemplation of the plan. 5 Furthermore, granting public-interest

would not be heard (see Canadian Council of Chunches v. Canada, [1992] 1 S.C.R. 236, 88 D.L.R.
(4th) 193 [hereinafter Canadian Council of Churches]).

‘0’ See Martin, supra note 7 at 22.
” (1994), 80 F.T.R. 300, EC.J. No. 964 (Q.L.) (T.D.) [hereinafter Hughes cited to FT.R.].
“‘See ibid at 304.
‘o4Finlay (no. 2), supra note 85 at 633.
‘In Hughes, however, it was the plaintiff’s daughter who was affected by the provincial policy.
Nevertheless, since the plaintiff was required to pay the bills for her daughter’s treatment, it could be

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S. CHOUDHRY- ENFORCEMENT OF THE CANADA HEALTH ACT

standing would not thwart the policy behind these two parts of the test; Mrs.
Hughes, or for that matter any person covered by public health insurance, is not a
busybody. Given the cost of private medical insurance, not receiving coverage
poses a potentially insurmountable barrier to access, especially for those with in-
sufficient financial means. Finally, there was no other reasonable and effective
manner to bring the issue before the courts. The Government of Canada attempted
to strike Mrs. Hughes’s claim; it is, therefore, difficult to imagine the Attorney-
General exercising discretion to grant public-interest standing. Furthermore, there
appears to be nobody more directly affected by the provincial policy, although oth-
ers may have been equally affected.”‘

The focus of this paper is on the ability of individuals to enforce the C.H.A.
through the courts. However, it is likely that public-interest groups, for example
those representing women (the Women’s Legal Education and Action Fund) or the
disabled (the Canadian Disability Rights Council), would wish to launch legal
challenges as well. The test in Finlay (no. 2) could make it difficult for these groups
to obtain standing. The “genuine interest” requirement is designed to screen out
busybodies whose only desire is to harass governments. Courts might view these
public-interest groups as professional busybodies and deny them standing. How-
ever, groups who advocate on behalf of persons who themselves have a genuine
interest in the issue are not motivated by malice. Rather, they are using the courts to
ensure that governments are responsive to the concerns of their constituents.

The final branch of the test in Finlay (no. 2) could also pose problems for pub-
lic-interest groups. Canadian Council of Churches suggests that the courts may be
unwilling to grant groups standing, for fear of not hearing from those most affected.
This line of reasoning should not apply to challenges based on the C.H.A. for two
reasons. First, while the bar to standing for groups seems more appropriate where
governments have acted unfairly toward isolated individuals who choose not to
challenge those acts, excluding groups makes little sense when what is being chal-
lenged is a government policy which affects many persons. This bias represents a
residuum of private-law theory which ignores the public interest served by judicial
review. Indeed, it is wrong to think of public-interest groups as displacing those di-
rectly affected, because these groups may represent those who cannot afford to
bring legal challenges themselves. Second, the complex nature of litigation sug-
gests that groups, not individuals, are best situated to bring such claims under the
C.H.A. Individual claimants may have neither the time nor the resources to mar-
shall medical studies and expert testimony in preparation for trials about the provi-
sion of health-care services and the efficacy of certain medical treatments. Since the

argued that she did have a genuine interest in that she was a person within the contemplation of the
C.H.A.

‘ This issue was not a bar in Thorson, supra note 91.

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[Vol. 41

burden of proof rests with claimants, these difficult problems of proof would make
litigation difficult for all but the most sophisticated plaintiffs.'”‘

C. Merits

1.

Statutory Interpretation

a.

Lessons from Finlay (no. 3)

In Canada (Minister of Finance) v. Finlay (no. 3),”‘ a majority of the Supreme
Court (per Sopinka J., Lamer C.J., Gonthier, Iacobucci, and Major JJ. concurring)
found that Manitoba’s welfare deductions did not violate the C.A.P. The provincial
program provided an allowance for “basic necessities”, which included food,
clothing, shelter, utilities, fuel, personal needs, a housekeeper during illness, funer-
als, and the care of children in special circumstances. This list corresponded closely
to the “basic requirements” of section 6(2)(a) of the C.A.P. and set out in section
2(a) of the C.A.P.” By definition, an overpayment provided Finlay with more than
his “basic requirements”. The deduction, therefore, allowed “for the gradual recov-
ery of an amount that should not have been paid out in the first place”.'”‘

‘w The restrictive approach taken by the Supreme Court in Canadian Council of Churches, supra
note 100, with respect to the requirement that there be no other reasonable and effective manner to
bring the issue to court was subsequently followed in Hy and Zel’s Inc. v. Ontario (A.G.), [1993] 3
S.C.R. 675, 107 D.L.R. (4th) 634 [hereinafter Hy and Zel’s cited to S.C.R.]. In that case, the Court
denied public-interest standing to retailers, who had brought a civil action to challenge the constitu-
tionality of provincial legislation which required them to close their stores on certain specified days,
because they had failed to demonstrate that there was no other reasonable and effective manner to
bring the issue to court.

The basis of the Court’s conclusion on this point is unclear but may be that the provisions at is-
sue did “not discourage challenge” (Hy and Zel’s, ibid. at 693). On this interpretation, Hy and Zel’s
seems to preclude the possibility of public-interest standing whenever there is someone who is di-
rectly affected by the impugned decision or legislative provisions. If so, the Court may have narrowed
the circumstances in which public-interest standing will be granted to groups because it did not dis-
cuss the reasonableness of relying on individual litigants to bring the issue to court; rather, the Court
may have been satisfied by the mere possibility that there was an’individual litigant who could raise
the matter in court. For commentary, see P. Bowal, “Speaking up for Others: Locus Standi and Repre-
sentative Bodies” (1994) 35 C. de D. 905 at 933-35.

‘.. [1993] 1 S.C.R. 1080, 101 D.L.R. (4th) 567 [hereinafter Finlay (no. 3) cited to S.C.R.]. For
commentary, see M.E. Young, “Starving in the Shadow of Law: A Comment on Finlay v. Canada
(Minister of Finance)” (1994) 5 Const. Forum 31.

10

2. In this Act,
“assistance” means aid in any form to or in respect of persons in need for the purpose
of providing or providing for all or any of the following:

(a) food, shelter, clothing, fuel, utilities, household supplies, and personal re-
quirements (hereinafter referred to as “basic requirements”) (C.A.P., supra note
86ats. 2).

“‘Finlay (no. 3), supra note 108 at 1127.

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S. CHOUDHRY- ENFORCEMENT OF THE CANADA HEALTH ACT

The majority believed that the C.A.P. should not dictate the exact terms of pro-
vincial legislation. Rather, its purpose was to encourage provinces to develop so-
cial-assistance programs that met broadly-stated national objectives. This follows
from the preamble of the C.A.P.: “[T]he Parliament of Canada … is desirous of en-
couraging further development and extension of assistance and welfare services
programs throughout Canada by sharing more fully with the provinces in the cost
thereof.””‘ Thus, there ought to be some flexibility in the interpretation of the Act.
Since the preamble to the C.H.A. contains nearly identical language,”2 it may be
that the courts will give its terms a flexible interpretation generous to the provinces.
This would be consistent with the spirit of co-operative federalism that underlies
these financial arrangements. Indeed, the majority urged that in interpreting the
terms of the C.A.P., regard should be had for regional differences: “Moreover, some
flexibility in the standard imposed upon the provinces is to be expected having re-
gard for the context of C.A.P. It is, after all, a spending statute designed to encour-
age provinces to develop programs consistent with national objectives.”‘ ‘

However, the Court clearly stated that the Statute did set a national minimum
standard. It was argued that section 6(2)(a) of the C.A.P. allowed the provinces to
provide assistance as they saw fit, because it only required an amount that “takes
into account the basic requirements of that person”. Sopinka J. firmly rejected this
position:

In my view, s. 6(2)(a) requires assistance to be provided in an amount that is
compatible, or consistent, with an individual’s basic requirements. It thus re-
quires something more than mere “consideration” of an individual’s basic re-
quirements. If that were all that were required, a province could provide almost
any amount of assistance, including an amount far less than that which would
be compatible with basic requirements, as long as it had turned its mind to such
requirements. Such an interpretation would not even permit the federal gov-
emment to limit its contributions to schemes that were of the general nature it
wished to support. I cannot accept this as Parliament’s intention.”4

this point. McLachlin J.,

in her dissent
The Court was unanimous on
(L’Heureux-Dub6 and Cory JJ. concurring, and La Forest J. concurring on this
point), stated: “[Section] 6(2)(a) sets out the minimum standards to which the
provinces must agree if they are to obtain a contribution from the federal govern-
ment.”…. The Supreme Court decision demonstrates a willingness to examine open-
textured terms like “basic requirements” in order to ensure that federal purposes are
not frustrated by non-compliant provinces. But, however encouraging, Finlay (no.
3) is a rather weak basis upon which to stake future litigation. The Court’s interpre-

‘ C.A.P., supra note 86 at “Preamble”, cited ibid at 1123.
‘ “[T]he Parliament of Canada wishes to encourage the development of health services throughout
Canada by assisting the provinces in meeting the costs thereof” (C.H.A., supra note 2 at “Preamble”).

… Finlay (no. 3), supra note 108 at 1126.

Ibid. at 1125-26.

” Ibid- at 1107.

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tation of the C.A.P. displays no concern for the adequacy of provincial programs.
Rather, its desire was to police the operation of programs which it viewed as in-
struments of fiscal federalism.

However, to consider the C.A.P. and the C.H.A. as merely federal-provincial fi-
nancial schemes would be a serious mistake. To understand why, we need turn no
further than the preamble to the C.A.P. itself. The majority in Finlay (no. 3) em-
phasized the C.A.P. preamble’s reference to federal-provincial co-operation. How-
ever, the preamble also states that the purpose of the C.A.P. is “the provision of
adequate assistance to and in respect of persons in need and the prevention and re-
moval of the causes of poverty and dependence on public assistance … “.”‘ This
part of the preamble points to a very different interpretation of the C.A.P. It sug-
gests that the Act is far more than a matter of fiscal convenience between two gov-
ernments. Parliament’s purpose in enacting the C.A.P. was to establish a system of
basic socio-economic rights for all Canadians. There is no reason to regard the
C.H.A., particularly given the historical development of Medicare, any differently.
Consider the following provisions in the preamble to the C.H.A.:

Canadians, through their system of insured health services, have made out-
standing progress in treating sickness and alleviating the consequences of dis-
ease and disability among all income groups

[Continued access to quality health care without financial or other barriers
will be critical to maintaining and improving the health and well-being of Ca-
nadians … 17

The seeds of this approach can be found in the dissent, which decided in Fin-
lay’s favour. In construing the terms of the C.A.P., McLachlin J. relied on the ade-
quacy principle, developed by courts in the United States. According to this prin-
ciple, when faced with a statute establishing a scheme of social benefits, a court
“should adopt an interpretation which best assures adequacy of assistance”

The Court does not believe Congress chose by enactment of the Work-Study
Program to draw the cycle of poverty tighter, but rather was attempting to
break its bonds upon untrained poor. The Court will not allow the defendants to
defeat this beneficent purpose by their own interpretation of the law, especially
when the interpretation, however faithful it may be to the letter of the law, to-

116 C.A.R, supra note 86 at “Preamble”.

C.H.A., supra note 2 at “Preamble” [emphasis added]. The Act also provides:

It is hereby declared that the primary objective of Canadian health care policy is to
protect, promote and restore the physical and mental well-being of residents of Canada
and to facilitate reasonable access to health services without financial or other barriers
(C.H.A., ibid at s. 3) [emphasis added].

Finlay (no. 3), supra note 108 at 1113.

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tally defeats the spirit of the law, and services only a sterile administrative pur-
pose.1

But, applying the Bates dictum to the interpretation of the C.H.A. would impute an
intent to Parliament without explaining why it would legislate for that purpose. The
adequacy principle points to a deeper rationale for why Parliament may have in-
tended that the C.A.P. and the C.H.A. lay the foundation for social schemes that are
generous to the intended beneficiaries.

One possible rationale is found in liberal political theory, which serves as the
basis of many elements of the modem welfare state. A central claim of liberalism is
the importance of persons being able to pursue their own conception of the good
life, which is closely tied to the idea of fair equality of opportunity. Many liberals
believe that, from a moral point of view, events beyond one’s control, which often
change the range of opportunity that an individual may have to pursue one’s con-
ception of the good life, are arbitrary. These may be social contingencies, such as
disparities in income and education due to socio-economic class, or natural contin-
gencies, such as inherited talents and abilities. It then becomes a matter of social
justice to mitigate the results of this lottery in order to ensure a “level playing field”
for all persons, guaranteeing fair equality of opportunity for all.’2′

This version of liberalism requires schemes of social redistribution, including
progressive income tax, inheritance tax, subsidized access to education, and welfare
programs, because individuals’ opportunities are often limited by their poverty and
lack of education. But one’s range of opportunities is also influenced by one’s
health, which is, itself, dependent on social and/or natural contingencies. Norman
Daniels has made this argument: “Impairment of normal functioning through dis-
ease and disability restricts an individual’s opportunity relative to that portion of the
normal range his skills and talents would have made available to him were he
healthy.”‘ 2’ Indeed, poor health in the absence of Medicare would exacerbate the
existing inequalities which limit fair equality of opportunity. Those who are ill
would necessarily devote more resources to their medical needs than healthy indi-
viduals, and the rich would be able to meet these needs more easily than the poor.
The resulting inequity in the range of opportunities open to these persons would
mean that the relatively disadvantaged members of our society would be even more
limited than they already are in pursuing their own conceptions of the good life.

.” Brown v. Bates, 363 F. Supp. 897 at 902-903 (N.D. Ohio, 1973) [hereinafter Bates], quoted ibid.

at 1114, McLachlin J.

‘ E.J. Emmanuel, The Ends of Human Life: Medical Ethics in a Liberal Polity (Cambridge, Mass.:

Harvard University Press, 1991) at 121. For the seminal statement on fair equality of opportunity, see
J. Rawls, A Theory of Justice (Cambridge, Mass.: Harvard University Press, 1971) at 73-74, 83-89.

12 N. Daniels, Just Health Care (New York: Cambridge University Press, 1985) at 33-34.

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This reading of the C.H.A. is supported by statements made to the House of
Commons by Monique Begin when introducing the Act to Parliament.'” In criticiz-
ing premiums as a means of financing Medicare, she argued that they were defi-
cient: “[Tihey hit people in a very unfair way. They hit poor people in exactly the
same way as those with lots of money.”‘” Later, she reinforced this view by sug-
gesting that Medicare should be funded through a progressive tax system, ensuring
that “people would pay according to their means.. 2. These statements express the
view that everyone should have equal access to health services, regardless of differ-
ences in socio-economic status. But the concern with income disparities, albeit
implicitly, represents a commitment by Parliament to fair equality of opportunity
regardless of social and/or natural contingencies.

From a liberal reading of the C.H.A., it is clear that the point of Medicare is to
ensure that sick persons are restored to a state of health in which they may enjoy
the same range of opportunity as do healthy persons. For the purposes of statutory
interpretation, it requires that we imagine shared-cost programs, like the C.A.P. and
the C.H.A., as laying the foundation for a national social citizenship. This view is
supported by the fact that provincial plans must be universal and portable. As we
shall see, this theory of the C.H.A. becomes most important in assessing the mean-
ing of medical necessity.”

‘mThese statements are a guide to interpreting the Act (see generally R. v. Sullivan, [1991] 1 S.C.R.

489 at 502-503, 63 C.C.C. (3d) 97).

‘ House of Comnons Debates (16 January 1984) at 427.
2 Ibid. at 428.
2. Alternatively, it could be argued that it is unnecessary to debate the intent of Parliament in enact-
ing the C.A.P. and the C.H.A. Coupled with the possibility of obtaining standing under Finlay (no. 2)
to enforce these rights in the courts, it is no exaggeration to regard the C.A.P. and the C.H.A. as pro-
viding for “quasi-constitutional” rights, which should be interpreted purposively without any refer-
ence to Parliamentary intent. Bruce Porter has made this point regarding the C.A.P.:

Some people may think of C.A.P merely as a fiscal agreement or social policy legisla-
tion. For poor people, however, C.A.P. has meant more than national standards or so-
cial policy. C.A.P. entrenches fundamental human rights, that is rights of citizens which
are binding on our governments. If these rights are violated, we are able to go to court
to seek a remedy (Charter Committee on Poverty Issues, “Bill C-76 and the Human
Rights of Poor People in Canada” (Presentation to the Standing Committee on Finance
of the Parliament of Canada, 16 May 1995) at 3 [unpublished]).

It is also possible to make a communitarian argument for Medicare. For example, a communitar-
ian might argue that: Medicare promotes mutual dependence and, therefore, leads to the development
of relationships of trust between individuals, thereby, promoting the development of the “relational
aspects” of our identity; Medicare promotes deliberative democracy, because it requires collective
decisions to be made about the allocation of scarce social resources; and Medicare “offers a unique
opportunity to restore a sense of national community and to re-establish a principle of mutual sacri-
fice for the common good” (Note, “Universal Access to Health Care” (1995) 108 Harv. L. Rev. 1323
at 1328-29). See also: Emmanuel, supra note 120 at c. 4; D. Harris, Justifying State Welfare: The New
Right versus the OldLeft (Oxford: Basil Blackwell, 1987) at 55-57.

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b.

Assessing Compliance

Because the C.A.P. establishes a statutory list of basic requirements in section
2(a), the Court’s task in Finlay (no. 3) was relatively straightforward. There are
provisions in the C.H.A. which are equally specific and would therefore create few
difficulties of interpretation. 2 ‘ Difficulty arises, however, in trying to interpret the
requirements of accessibility at section 12 and comprehensiveness at section 9;
these provisions are most likely to be invoked to challenge provincial decisions to
ration health care. There are two sorts of concerns here, both coming under the ru-
bric of justiciability.” The first is judicial legitimacy. Under the doctrine of the
separation of powers in a parliamentary democracy, the legislature enacts laws,
which the executive implements, and the judiciary interprets. Asking courts to
analyze the content of medicare programs necessarily involves asking them to
make decisions about the allocation of resources. It is conventionally argued that it
is better for the executive and legislative branches to make these decisions, because
they are ultimately accountable to the electorate; hence the political enforcement
mechanism of section 15(1). These criticisms, however, work best against the
constitutionalization of social rights, which puts courts above elected legislatures.
In contrast, the statutory regime of the C.H.A. does not present the same concern;
in fact, on the traditional understanding of the doctrine of the separation of powers,
courts are under a constitutional duty to give meaning to the terms of the C.H.A.

The second justiciability concern is institutional competence. The idea is that
the courts are poorly equipped to adjudicate on these matters. The accessibility and
comprehensiveness provisions in the C.H.A. force the courts to wade into issues of
policy, a role to which they may be ill-suited. Health policy, on this argument,
should be left to the expertise of health administrators, while courts should confine
their activity to what they are good at, such as policing procedures. For example,
Lon Fuller defined adjudication on policy matters as “polycentric”:

We may visualize this kind of situation by thinking of a spider web. A pull on
one strand will distribute tensions after a complicated pattern throughout the
web as a whole. Doubling the original pull will, in all likelihood, not simply

2 For example, the C.H.A. provides: “[T]he health care insurance plan of a province must be ad-
ministered and operated on a non-profit basis by a public authority” (supra note 2 at s. 8(1)(a)).
Similarly, section 10 states that universality requires that a provincial plan entitle “one hundred per-
cent of the insured persons of the province to the insured health services provided for by the plan on
uniform terms and conditions”. The portability provisions are equally precise:

mhe health care insurance plan of a province

(a) must not impose any minimum period of residence in the province, or waiting
period, in excess of three months before residents of the province are eligible for
or entitled to insured health services (C.H.A., ibid. at s. ll(1)(a)).

,”See C. Scott & P. Macklem, “Constitutional Ropes of Sand or Justiciable Guarantees? Social

Rights in a New South African Constitution” (1992) 141 U. Pa. L. Rev. 1 at 17-26.

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[Vol. 41

double each of the resulting tensions but will rather create a different compli-
cated pattern of tensions.’ =

According to Fuller, while strictly legal questions are bipolar and lend themselves
to all-or-nothing answers, policy questions are a matter of degree and raise inter-
locking concerns that go beyond the specific disputes at hand.

Fuller may have underestimated the ability of courts to grapple with complex
policy matters as the jurisprudence under the Charter demonstrates.’ The issue is
better put as one of judicial experience:

“Justiciability” is a deceptive term because its legalistic tone can convey the
impression that what is or is not justiciable inheres in the judicial function and
is written in stone. In fact, the reverse is true: not only is justiciability variable
from context to context, but its content varies over time. Justiciability is a con-
tingent and fluid notion dependent on various assumptions concerning the role
of the judiciary in a given place at a given time as well as on its changing
character and evolving capability.’

Indeed, adjudication may have some advantages for the resolution of policy ques-
tions. For example, the adversarial process gives parties incentives to provide de-
tailed information. Moreover, if large numbers of parties are joined, a wide range of
information will be provided, leading to a better-informed decision.”‘

i.

Accessibility

The meaning of accessibility was debated in the decision of the Manitoba
Court of Appeal in Lexogest v. Manitoba (A.G.).’ The applicant, Lexogest Inc.,
owned and operated a free-standing abortion clinic in Winnipeg. The College of
Physicians and Surgeons of Manitoba had approved the clinic as a non-hospital
surgical facility where therapeutic abortions could be performed. Pursuant to the
Health Insurance Services Insurance Act,’ however, the provincial government
adopted a regulation which removed insurance coverage for therapeutic abortions
performed outside a hospital. The applicant argued, inter alia, that the regulation
did not comply with the intent of the C.H.A. Although the case is not directly on

‘ L.L. Fuller, “The Forms and Limits of Adjudication” (1978) 92 Harv. L. Rev. 353 at 395.
’29 See e.g.: R. v. Morgentaler, [1988] 1 S.C.R. 30, 44 D.L.R. (4th) 385 [hereinafter Morgentaler
cited to S.C.R.] and the discussion of this case, below; Titreault-Gadoury v. Canada (E.LC), [1991]
2 S.C.R. 22, 81 D.L.R. (4th) 358, in which the Court addressed a socio-economic policy question. In
that case denial of unemployment benefits to those over 65 years old violated section 15 of the Char-
ter and could not be saved under section 1, because there were less restrictive means of achieving the
legislative policy that persons over 65 years old should not receive a “double” return of both pension
and unemployment benefits.

230 Scott & Macklem, supra note 127 at 17 [emphasis added].
‘n See A. Chayes, “The Role of the Judge in Public Law Litigation” (1976) 89 Harv. L. Rev. 1281.
1 (1993), 85 Man. R. (2d) 8, 101 D.L.R. (4th) 523 (C.A.) [hereinafter Lexogest cited to Man. R.].
“‘ R.S.M. 1987, c. H35.

1996]

S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

point because the claim was brought against the provincial government, one could
imagine an action launched against the federal government to withhold funding
from Manitoba for non-compliance with the C.H.A.

to hospitals breached

A majority of the court (Helper, Philip, and Huband J.J.A.) did not consider the
C.H.A. and held that the regulation was ultra vires the parent provincial statute.
Scott C.J.M. (Lyon J.A. concurring), however, in his dissent, did analyze the com-
patibility of the regulation with the C.H.A.'”‘ The issue was whether section 12’s
condition of accessibility had been breached. The applicant argued that restricting
coverage for therapeutic abortions
the requirement of
“reasonable access”. Scott C.J.M.’s simple reply was that “[r]easonable accessibil-
ity does not prohibit access to care being restricted in certain circumstances to a
hospital setting,’
but he did not attempt to elaborate those circumstances. Did the
regulation significantly impede access to abortions, or were hospital services ade-
quate to meet demand? Since the clinic was located in Winnipeg, access was per-
haps minimally affected (although there was no evidence on this point). But, what
if the clinic had served a rural area where no hospitals performed abortions? What
if no hospitals in the province performed abortions, as is the case in P.E.I.? What if
hospitals in Winnipeg performed abortions but were so understaffed that women
had to wait an unacceptable length of time?

The situation in Lexogest is further complicated by considering the province’s
reasons for excluding the service. Manitoba’s aim was purely political: to restrict
access to abortion in the wake of the Morgentaler decision. But suppose its motiva-
tion had been economic? Husband J.A. would have been willing to uphold the
regulation if it had been “designed to control costs by specifying where the service
is to take place”.’. On the facts, confining abortions to hospitals increased costs,
because free-standing clinics operated more efficiently; but if they had not, would
the principle of reasonable access have been violated?'”

” Scott C.J.M.’s opinions are clearly obiter dicta, since he was of the opinion that the C.H.A. did
not impose binding legal obligations on the provincial government. This point will be returned to be-
low.

‘135 Lexogest, supra note 132 at 23.
136 Ibid. at 31.
‘ It has been argued that allowing private and public health-care systems to provide the same
services might violate the principle of reasonable accessibility, because it would lead to a two-tier
system, one for the poor and one for the rich, who could avoid waiting-lists and obtain access to
higher quality specialists. This has become an important issue in Alberta, where a system of private
clinics is in operation. The province pays for the medical treatment, but the patient must pay a sub-
stantial facility fee (see C.B.A., supra note 7 at 90-91).

However, the C.B.A. report states that prohibiting private health-care services may be a violation
of section 7 of the Charter (ibid at 93-95). Although the Supreme Court has held that economic
rights (e.g. contractual freedom) do not fall within the ambit of section 7 (see Irwin Toy Ltd. v. Que-
bec (A.G.), [1989] 1 S.C.R. 927, 58 D.L.R. (4th) 577) that decision left open the question of “whether
those economic rights fundamental to human life or survival” (ibid. at 1003) could be protected by
section 7. Conceivably, a Charter claim might be made by a patient if medically necessary services

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In Lexogest, Scott C.J.M. may have been deterred by justiciability concerns. He
may have wished to defer to the political choices made by the provincial govern-
ment regarding the provision of abortion services; moreover, he may have doubted
his ability to assess the complex evidence which would have been required to es-
tablish a breach of section 12 of the C.H.A. A court is, however, capable of making
such an assessment. The Morgentaler decision is a good illustration.

In Morgentaler, the Supreme Court struck down the Criminal Code’s provision
on abortion’3 on the ground that it infringed a woman’s right, under section 7 of the
Charter, not to be deprived of life, liberty, and security of the person except in ac-
cordance with the principles of fundamental justice. In coming to its decision, the
Court examined a vast amount of data on Canadian abortion services. For example,
in Ontario, there was evidence of an average delay of eight weeks between first
contact with a physician and the performance of a therapeutic abortion.” Moreover,
because hospitals had allocated limited funds for abortions, there was some sug-
gestion that women had to apply to several hospitals to obtain an abortion, which
could create a delay;’ 38.2 percent of hospitals imposed quotas on abortions on the
basis of place of residence.”‘ The Court relied heavily on the results of a federal re-
port commissioned to examine the operation of procedures for obtaining therapeu-
tic abortions across Canada. The report found that the requirement that there be
three physicians on a therapeutic abortion committee, not including the physician
performing the abortion, resulted in 24.6 percent of hospitals being too small to
form committees.”‘ Furthermore, abortions could only be performed in hospitals
accredited by the Canadian Council on Hospital Accreditation and approved by
provincial ministers of health, according to criteria which varied from province to
province.”‘ On this measure, fifty-eight and one-half percent of hospitals were in-
eligible. Furthermore, eligible hospitals were under no obligation to actually estab-
lish committees, and only forty-eight and one-half percent had chosen to do so.”‘
Also, eighteen percent of committees were dormant; they existed on paper but did
not approve abortions.'”

were not being adequately provided by the public-health plan, but an individual could obtain those
services from a private provider. The crucial question, however, is whether such a restriction is “in
accordance with fundamental justice” (Charier, supra note 5 at s. 7) or a reasonable limit
“demonstrably justified in a free and democratic society” (ibid at s. I). Does Medicare minimally
impair the life and security interests protected by section 7?

On the ability of institutional providers and individual providers of health care to challenge the
constitutionality of public health care, see M. Jackman, ‘The Regulation of Private Health Care under
the Canada HealthAct and the Canadian Charte’

(1995) 6 Const. Forum 54.

‘ R.S.C. 1970, c. C-34 at s. 251.
m See Morgentaler, supra note 129 at 100.

See ibhd

‘ See ibid at 99.
141 See ibid at 66.
” See ibid
‘” See ibid at 97.
” See ibid

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S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

From this mass of empirical evidence, the Court was able to conclude that there
was an “absence or serious lack of therapeutic abortion facilities in many parts of
the country”.'” It was able to arrive at this conclusion even though there was no one
“right” way to organize abortion services, because the provision of health care is a
polycentric, not a bipolar, matter. Although the decision in Morgentaler is based on
the Charter, not the C.H.A., it demonstrates how a court can assess a complex and
rich body of evidence to arrive at an assessment of whether provincial governments
are meeting their commitment to provide reasonably accessible services to the pub-
lic. The question is not one of competence, but of judicial will.

ii.

Comprehensiveness

including the patient’s quality of life and

No cases have yet grappled with the definition of comprehensiveness, which
incorporates a requirement of medical necessity. This is bound to occur in the near
future, since provincial governments are moving toward setting priorities in their
allocation of scarce resources. Several different criteria for rationing have been
suggested,
life expectancy post-
treatment.”‘ Deciding which criteria to use, and how to apply them, is not an exact
science. In the end, it involves difficult trade-offs and requires that choices be made
among a number of medical procedures, all of which patients would like to have
included in a public-insurance plan. Put simply, how is a court to compare a hip
replacement with open-heart surgery? Which treatments are medically necessary,
which are not, and under what circumstances?

The C.H.A. is silent on the definition of medical necessity. The C.B.A. has
stated that this was a deliberate choice by the federal government. The goal was to
leave “it up to each province and territory to establish its own definition”.'” But no
province has defined medical necessity either.”‘ This lacuna, coupled with the
complexity of the question, makes it tempting to leave the matter to provincial gov-
ernments and not have the courts assess whether medically necessary services are
being provided. The message from Finlay (no. 3), however, is that there must be
some minimum content to provincial plans for federal schemes to be effective; re-
fusing to address the question of medical necessity would effectively read compre-
hensiveness out of the C.H.A. Furthermore, since the C.H.A. does not expressly
delegate to provincial governments the task of defining medical necessity, its
meaning remains a matter of statutory interpretation. Finally, failing to give mean-
ing to the requirement of comprehensiveness would defeat the whole point of
Medicare, which is to guarantee fair equality of opportunity. What has not been

‘”Ibil. at 95, Beetz J.
‘4 See J.F. Kilner, Who Lives? Who Dies?: Ethical Criteria in Patient Selection (New Haven,

Conn.: Yale University Press, 1990).

“‘ C.B.A., supra note 7 at 31.
“9 See ibid at 37-39.

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suggested in Canada to date, however, is that we look to this purpose in trying to
define what medical necessity means.

Health-care needs are a matter of social justice, because they limit the range of
individuals’ opportunities to pursue their conceptions of the good life. The idea is
that but for one’s disease or disability, one would be able to enjoy a wider range of
opportunities. Framing the impact of ill health in this way makes the relevant com-
parison between a diseased or disabled state of health and a normal state of health,
which persons are entitled to enjoy, a matter of justice. The object of Medicare is to
ensure that individuals are returned to that normal state.’0

Leaving aside controversies over the definition of disease and illness, medical
ethicist Ezekiel Emmanuel has written that it is possible to come up with a defini-
tion of “normal human functioning” which can serve as the basis for defining
medical necessity:

Biomedical science offers a fairly clear way of identifying the range of natural
human functions that constitute a healthy organism and the range of deviations
labelled diseases. Furthermore, this conception of medical need is not just a
theoretical definition, but also one that guides current medical practices.’

With this formulation of medical necessity, there is an intimate connection between
the purpose behind the C.H.A. and the sort of empirical evidence and expert testi-
mony with which courts are familiar. Although not ideal, the most sensible solution
would be to rely on expert evidence, on a case-by-case basis, to determine whether
a procedure is medically necessary.’ 2 Testimony would come not only from physi-
cians, but also from health-service researchers. On this theory of medical necessity,
Emmanuel suggests that insured services would include:

(I) preventive services – programs for public health, vaccination, food and
drug protection, nutrition education, and education for healthy life-styles; (2)
personal medical and rehabilitative services –
services that cure diseases and
restore normal functioning, such as antibiotics and appendectomies; (3) chronic
medical services –
services, such as dialysis, aimed at those diseases that can-
not be cured but only ameliorated; and (4) nursing and social services –
serv-
ices for those whose ailments cannot be cured or ameliorated, including See-
ing-Eye dogs, Braille education, wheelchairs, and specially designed vans for
the paralyzed.53

“” This argument was first made by Daniels, supra note 121.
‘ Emmanuel, supra note 120 at 109.
Proposals made by the R.A.N.D. Corporation for defining medical necessity in the United States
rely heavily on expert consensus (see D.C. Hadom & R.H. Brook, “The Health Care Resource Allo-
cation Debate: Defining Our Terms” (1991) 266 1 Am. Med. Assoc. 3328 at 3330).

’53Emmanuel, supra note 120 at 122.

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There is some precedent for this approach in the medical context. The Ontario
Regulated Health Professions Act’ makes it an offence to perform a “controlled
act” (defined by the Statute) “in the course of providing health care services to an
individual unless … the person is a member authorized by a health profession Act
to perform the controlled act”.’ For physicians, the relevant statute is the Medicine
Act.”‘ Section 4 authorizes physicians to perform controlled acts “[i]n the course of
engaging … in the practice of medicine” that are defined in section 3 as “the as-
sessment of the physical or mental condition of an individual and the diagnosis,
treatment, and prevention of any disease, disorder, or dysfunction”. What consti-
tutes the practice of medicine, which is at the core of this legislative regime, is left
largely undefined; but, the definition has been given specific content through the
testimony of members of the medical profession.

The decision in Morgentaler also demonstrates that a court, equipped with the
testimony of experts, can make sophisticated judgments about the advisability of
certain procedures. Beetz J. held that the Criminal Code’s abortion provisions re-
quiring abortions to be performed in hospitals did not conform with the principles
of fundamental justice, because they were unnecessary in relation to Parliament’s
objective, which was to ensure maternal safety.’7 Indeed, evidence suggested that
there was no medical justification for such a requirement. On the contrary, the evi-
dence indicated that first-trimester abortions could be safely performed in special-
ized clinics outside of hospitals, and that complications could be handled –
per-
haps even better handled – by such clinics.”‘ Beetz J. also looked at both the high
percentage of abortions (76.9 percent) performed on an out-patient basis and evi-
dence that performing the procedure in clinics did not raise the rate of complica-
tions.”‘

The real concern with this theory of medical necessity is not its lack of justi-
ciability, but its “voraciousness”: “[It] mandates that people receive most of what
modern medicine has to offer as a guarantee of fair equality of opportunity.””‘
Health-care coverage fashioned on this criterion could threaten other schemes of
social provision provided through the government, such as welfare and public edu-
cation, by consuming an ever-increasing share of society’s resources. This line of
criticism suggests that a new theory – not fair equality of opportunity –
should
underpin the C.H.A. and ground the interpretation of “medical necessity”. If this is
the case, however, the solution is not for courts to change their interpretation of the
C.H.A., but for Parliament to amend it. The basic theory underlying the Act de-
mands a generous approach to determining Medicare’s coverage. Abandoning this

‘ S.O. 1991, c. 18.

Ibid. at s. 27(1)(a).

,’ S.O. 1991, c. 30.
‘”See Morgentaler, supra note 129 at 114-15.
,s’ See ibid. at 115.
“9 See ibid. at 116.
” Emmanuel, supra note 120 at 110, 123.

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theory would fundamentally change the very nature of the C.H.A. Such a change
should be made by Parliament with the attendant political consequences. Addi-
tionally, by not proceeding by this route, the courts would allow provincial gov-
ernments to achieve a de facto amendment to a federal statute by changing their
definitions of medical necessity, even though the C.H.A. does not make an express
delegation.

2.

Reviewing Cabinet Discretion

In Hughes, the statement of claim asked for an injunction to restrain the Minis-
ter of National Health and Welfare from making payments under the C.H.A., pre-
sumably by analogy with Finlay (no. 3). It must be pointed out, however, that Fin-
lay (no. 3) is not directly on point, because of an important difference between the
C.H.A. and the C.A.P. Section 7 of the latter provides:

Contributions or advances on account thereof shall be paid, upon the certificate
of the Minister, out of the Consolidated Revenue Fund at such times and in
such manner as may be prescribed, but all such payments are subject to the
conditions specified in this Part and in the regulations and to the observance of
the agreements and undertakings contained in an agreement. “‘

Thus, transfer payments are conditional. Had Finlay successfully shown that the
province failed to meet a condition of the C.A.P., the federal payments would have
been illegal, and relief would have been granted accordingly. The C.H.A. contains a
similar provision, in section 7:

In order that a province may qualify for a full cash contribution … for a fiscal
year, the health care insurance plan of the province must, throughout thefiscal
year, satisfy the criteria described in sections 8 to 12 respecting the following
matters .. 162

Since provincial plans “must” meet the conditions described in sections 8 to 12
(public administration, comprehensiveness, universality, portability, accessibility),
section 7 of the C.H.A., on its face, looks like section 7 of the C.A.P.”‘ The problem
with this interpretation, however, is that it effectively reads out sections 14 to 17 of
the C.H.A.; no corresponding provisions exist in the C.A.P. These provisions es-
tablish an elaborate mechanism of consultation and investigation, culminating in a
decision by the federal cabinet whether to withhold funding under section 15(1):

“‘ C.A.P., supra note 86 at s. 7 [emphasis added].
C.H.A., supra note 2 at s. 7 [emphasis added].
l The bans against extra-billing, at section 18, and user charges, at section 19, are not listed in sec-
tion 7 as “program criteria”. This is because they are subject to their own enforcement mechanism,
requiring mandatory deductions from federal transfer payments (C.H.A., ibid. at s. 20).

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S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

Where … the Governor in Council is of the opinion that the health care insur-
ance plan of a province does not or has ceased to satisfy any one of the criteria
described in sectioris 8 to 12… the Governor in Council may, by order,

(a) direct that any cash contribution or amount payable to that province
for a fiscal year may be reduced, in respect of each default, by an amount
that the Governor in Council considers to be appropriate, having regard to
the gravity of the default; or
(b) where the Governor in Council considers it appropriate, direct that the
whole of any cash contribution or amount payable to that province for a
fiscal year be withheld.'”

The subjective wording of section 15(1) indicates that cabinet has a discretion to
withhold federal payments.” An action would arise if cabinet were to refuse to ex-
ercise its discretion. If the plaintiff is to succeed, this refusal must be challenged.

there

is

the “patently unreasonable”

Although there is a consensus that unfettered statutory discretion does not ex-
ist,'” there is some debate over the standard by which it should be reviewed. On the
one hand,
test, formulated by Lord
Greene M.R. in Associated Provincial Picture Houses Ltd. v. Wednesbury Co.: 6 “It
is true to say that if a decision on a competent matter is so unreasonable that no rea-
sonable authority could ever have come to it, then the courts can interfere … but to
prove a cause of that kind would require something overwhelming.”‘.. This standard
incorporates a high degree of deference toward administrative decision-makers.
Wednesbury has not been adopted by the Supreme Court but has been applied by
some provincial courts of appeal.”‘9 Its deferential approach would make it attractive
to a court seeking to avoid questioning a decision of cabinet. This argument is
based on the doctrine of the separation of powers. It is more appropriate that the
executive, which is accountable to the democratically-elected
legislature and,
through it, to the public, make decisions of an economic and social nature than an
unelected and unaccountable judiciary. The problem with this argument, however,
is that it places inordinate reliance on venues of political accountability, which may
function very poorly in practice.’70

‘”Ibid. at s. 15(1) [emphasis added].
,5This is unlike the duty to withhold payments for extra-billing and user charges imposed by sec-
tions 20(1) and 20(2), respectively, where the lack of any discretion makes the matter of enforcement
straightforward.

‘” See J.M. Evans et aL, Administrative Law: Cases, Text and Materials, 4th ed. (Toronto: Emond

Montgomery, 1995) at 1023.

“5[1948] 1 K.B. 223, [1947] 2 All E.R. 680 (C.A.) [hereinafter Wednesbury cited to K.B.].
‘”Ibid. at 230.
‘”See: Sundance Beach (Summer Vllage) v. W.A.W. Holdings Ltd. (1980), 2 A.R. 451, [1981] 1
W.W.R. 581 (C.A.); MacMillan Bloedel Ltd. v. British Columbia (Minister of Forests), [1984] 3
W.W.R. 270, 51 B.C.L.R. 105 (C.A.); McDonald v. North Norfolk (Rural Municipality) (1992), 83
Man. R. (2d) 44,98 D.L.R. (4th) 436 (C.A.).

171 For an analysis of the British situation, see I. Harden & N. Lewis, The Noble Lie: the British

Constitution and the Rule of Law (London: Hutchinson, 1988).

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[Vol. 41

Set against Wednesbury is the idea that a discretion must be exercised to pro-
mote the purposes of the act which confers it. The leading case on this approach is
the House of Lords’ decision in Padfield v. Minister of Agriculture.”‘ The Minister
declined to exercise his statutory discretion to refer a complaint about a milk-
pricing scheme to a committee of investigation. The House of Lords, however, is-
sued a writ of mandamus directing him to do so, because the purpose of the Statute
was to convene a hearing for aggrieved parties. Lord Reid said:

Parliament must have conferred the discretion with the intention that it should
be used to promote the policy and object of the Act … if the Minister, by rea-
sons of his having misconstrued the Act or for any other reason, so uses his
discretion as to thwart or run counter to the policy and objects of the Act, then
our law would be very defective if persons aggrieved were not entitled to the
protection of the court.”

The purposive approach to reviewing statutory discretion was recently adopted
by the Supreme Court in Shell Canada Products Ltd. v. Vancouver (City of).’ The
Vancouver City Council passed resolutions directing the City of Vancouver to ref-
use doing business with Shell Canada, because of Shell’s involvement in South Af-
rica. Shell Canada applied to have the resolutions quashed, because they were ultra
vires the enabling statute.” A majority of the Court held that the resolutions did not
promote the purpose of the Statute, because they did not “provide for the good rule
and government of the city”,” but were, rather, “based on matters external to the
interests of the citizens of the municipality”. 6

These cases show that statutory discretion may be subject to a stricter standard
of review than patent unreasonableness. It may be argued, however, that the Cana-
dian courts show extreme deference to the exercise of statutory discretion by cabi-
net, out of a concern for constitutional propriety.'” The Court in Collett took this
view, when it stated in obiter that the C.H.A. “intended that the Governor in

… [1968] A.C. 997, 1 All E.R. 694 (H.L.) [hereinafter Padfield cited to A.C.].
,72 ibid at 1030. See also Roncarelli v. Duplessis, [1959] S.C.R. 121, 16 D.L.R. (2d) 689.
‘ [1994] 1 S.C.R. 231, 110 D.L.R. (4th) 1 [hereinafter Shell cited to S.C.R.].
“7’ Vancouver Charter, S.B.C. 1953, c. 55.
‘ Ibid. ats. 189.
76 Shell, supra note 173 at 279, Sopinka J.
‘
‘”Thus, Dickson J. made this clear in Thorne’s Hardware Ltd. v. R., [1983] 1 S.C.R. 106, 143

D.L.R. (3d) 577 [hereinafter Thorne’s Hardware cited to S.C.R.]:

[D]ecisions made by the Governor in Council in matters of public convenience and
general policy are final and not reviewable in legal proceedings. Although, as I have
indicated, the possibility of striking down an Order in Council on jurisdictional or other
compelling grounds remains open, it would take an egregious case to wan-ant such ac-
tion (Thorne’s Hardward, ibidt at 111).

1996]

S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

49-)

Council have a great deal of discretion in relation to its options should a health in-
surance plan cease to satisfy the federal criteria”….

However, two other decisions suggest this attitude may be changing, at least in
the context of health care. In British Columbia Civil Liberties Assoc. v. British Co-
the B.C. Cabinet enacted a regulation which declared that abor-
lumbia (A.G.),
tions were not “medically required” and, therefore, not insured unless: (1) there was
a significant threat to the woman’s life, and (2) the abortion was performed in a
hospital. The regulation’s broad scope effectively eliminated coverage for abortions
under the provincial health-insurance scheme. The court found that the Cabinet had
exceeded its jurisdiction. Although it could have de-insured abortions entirely, it
did not have the power to declare abortions as not “medically required”.” Although
B.C. Civil Liberties is a case on jurisdiction (error of law), not discretion, it is very
hard, if not impossible, to prevent questions of jurisdiction from becoming evalua-
tions of the merits of a decision.” ‘

–

In Morgentaler v. Prince Edward Island (Minister of Health and Social Serv-
ices)”2, the court struck down a similar regulation de-insuring abortions unless: (1)
they were performed in a hospital, and (2) they were deemed necessary by a pro-
vincial agency or its medical advisory committee. The regulation was made by the
agency and approved by the provincial Cabinet. Unlike B.C. Civil Liberties, the
question before the court was one of discretion, not error of law. Applying Padfield
(and citing academic criticism of Thorne’s Hardware),’ the court held that the
regulation did not further any of the purposes of the parent legislation.'”

,7′ Collett, supra note 70 at 430. The issue in Collett was whether the limitation of hospital coverage

for treatment outside of Canada by O.H.IP. was ultra vires section 45(1)(h) of the Ontario Health In-
surance Act, R.S.O. 1990, c. H.6, which authorized the provincial cabinet to prescribe amounts pay-
able by O.H.I.P. for insured services except in a manner which “would disqualify the Province of
Ontario under the [C.H.A.], for the contribution by the Government of Canada because the [Ontario
Health Insurance] Plan would no longer satisfy the criteria under that Act”. The court held that the
application was premature because the consultation process set out by section 14 of the C.H.A. had
not yet been followed.

‘ (1988), 24 B.C.L.R. (2d) 189, 4 W.W.R. 100 (Sup. CL) [hereinafter B.C. Civil Liberties cited to
B.C.L.R.]. For a criticism of the decision, see D.G. Cowper, “Case Comment: B.C. Civil Liberties
Association versus Attorney General for British Columbia” (1989) 47 Advocate 621.

“4Ibid. at 193. The parent legislation was the Medical Service Act, R.S.B.C. 1979, c. 255.
,’ See R Cane, An Introduction to Administrative Law, 2d ed. (Clarendon Press: Oxford, 1992) at
113. This is unsurprising, since jurisdictional error is a “notoriously elastic concept” (J.M. Evans,
“The Principles of Fundamental Justice: The Constitution and the Common Law” (1991) 29 Osgoode
Hall L.J. 51 at 65).

,’ (1995), 122 D.L.R. (4th) 728, P.E.I.J. No. 20 (Sup. CL) (Q.L.) [hereinafter Morgentaler v. RE.L

cited to D.L.R.].
“‘Ibid. at 748.
‘See Health Services Payment Act, R.S.RE.I. 1988, c. H-2. These purposes were sustaining or ad-
vancing the role of hospitals, controlling the medical profession, ensuring the health of patients, and
controlling costs (see Morgentaler v. RE.L, ibid. at 750-51). A crucial element of the decision was

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[Vol. 41

Following B.C. Civil Liberties and Morgentaler v. PE.I, the federal cabinet
must exercise its discretion under section 15(1) in accordance with the purposes of
the Act. One purpose can be found in section 3 of the C.H.A., which articulates the
overall aims of Canadian health policy: “It is hereby declared that the primary ob-
jective of Canadian health care policy is to protect, promote and restore the physi-
cal and mental well-being of residents of Canada and to facilitate reasonable access
to health services without financial or other barriers.” This section must be read to-
gether with section 4:

The purpose of this Act is to establish criteria and conditions that must be met
before full payment may be made under the … [Federal-Provincial FiscalAr-
rangements and Federal Post-secondary Education and Health Contributions
Act] … in respect of insured health services and extended health care services
provided under provincial law.””

Taken together, sections 3 and 4 indicate that if cabinet were faced with a grievous
breach of the C.H.A. criteria (laid out in sections 8 to 12), it would be ultra vires
not to exercise its discretion under section 15(1) to withhold federal payments.
Failure to do so would undermine the explicitly stated goal of section 4, which is to
ensure that federal support is only provided to provincial health-insurance plans
that meet the requirements of public administration, comprehensiveness, universal-
ity, portability, and accessibility. Furthermore, in the absence of any obvious pur-
pose for a decision by cabinet not to withhold transfer payments, it may be open to
a court, in extreme circumstances, “to ponder the context and background realities
surrounding”” the breach of the C.H.A.’s criteria and, thus, rule the decision ultra
vires. These realities might include the desire of cabinet to avoid a confrontation
with the provinces, who are likely to point to declining federal contributions for
health care, or to avoid drawing attention to the inadequate monitoring mechanisms
in place at the Health Insurance Directorate.

D. Remedies

What remedies would be available to the applicant in Hughes? Remedies in
administrative law are granted at the discretion of the court. Two different direc-
tions suggest themselves: (1) a declaration that the Governor in Council’s failure to
exercise its discretion under section 15(1) was ultra vires or (2) an order of man-
damus directing the Governor in Council to withhold federal payments by exercis-
ing its discretion under section 15(1).'”

that the provincial agency had already determined that abortions were “basic health services” for the
Province. The court held that this determination was inconsistent with the regulation (ibid. at 754).

C.H.A., supra note 2 at s. 4.

” Morgentaler v. RE.., supra note 182 at 751.
“7An injunction stopping federal payments until a province had complied with the terms of the
C.H.A., however, would not be an appropriate remedy, as it is based on an incorrect reading of sec-
tion 7. This idea is discussed above.

1996]

S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

Mandamus would be the more effective of the two. However, it is an estab-
lished rule that this remedy (and other forms of mandatory relief) may not issue
against the Crown, which would, of course, include the Governor in Council. A le-
gal fiction employed extensively by the courts to circumvent that rule –
that is,
allowing mandatory relief against a servant of the Crown – would not apply, be-
cause the discretion is exercised directly by the Governor in Council. The position
is not entirely clear, however, because of the power of judicial review conferred on
the Federal Court of Canada under the Federal Court Act.”‘ The court has jurisdic-
tion to review the actions of “any federal board, commission or other tribunal”
which exercises powers “conferred by or under an Act of Parliament”.’8 ‘ It has been
held by some courts that this definition includes the Governor in Council.”‘ Since
the court has the power to issue a writ of mandamus against any body within its su-
pervisory jurisdiction, this power would seem to extend to the Governor in Council.

However, even if a writ of mandamus were available, it is unlikely that a court
would grant it. First, this writ is usually only granted to compel the exercise of a le-
gal duty. Although it is available to correct a mistaken exercise of discretion,”9 ‘ if a
discretion is not binary (that is, it does not leave only two choices), a court will
probably not grant mandamus. Since section 15(1) of the C.H.A. gives the Gover-
nor in Council considerable freedom to choose what an “appropriate” amount to
withhold would be, a court may be reluctant to determine this amount. A similar
choice was made by the Federal Court of Appeal in the Native Women ‘ Association
of Canada v. Canada (A.G.).”‘ The court found that the funding of certain aborigi-
nal organizations to the exclusion of the N.W.A.C. violated sections 2(b) and 28 of
the Charter. However, the court declined to issue a prohibition (a form of manda-
tory relief) on funding of those other groups until the N.W.A.C. was provided with
equal funding:

[Tihe evidence does not permit a judicial conclusion that funding of N.W.A.C.
equal to that provided to each of the designated aboriginal organizations is
what is necessary to accord aboriginal women the equal measure of freedom of
expression guaranteed them by s. 28 of the Charter. It may be inadequate or it
may be excessive. The appropriate quantum of funding would seem to me very
much a matter to be determined by the executive……

“‘R.S.C. 1985, c. F-7, as am. by S.C. 1990, c. 8.
‘ Ibid. at s. 2(1).

See e.g. National Anti-Poverly Organization v. Canada (A.G.), [1989] 1 F.C. 208, 21 F.T.R. 33,

rev’d (without comment on this point) [1989] 3 .C. 684,60 D.L.R. (4th) 712 (C.A.).

“‘ See P.. Craig, Ackninistrative Law, 3d ed. (London: Sweet & Maxwell, 1989) at 528. A famous

example of the use of mandamus to direct the exercise of a discretion is Padfield.

‘ [1992] 3 F.C. 192, 95 D.L.R. (4th) 106 (C.A.), rev’d (on other grounds) [1994] 3 S.C.R. 627, 119

D.L.R. (4th) 224 [hereinafter N.W.A.C. cited to F.C.].

Ibid. at 219.

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Moreover, when a problem is systemic, the court may decline to issue mandatory
relief, as Finlay (no. 3) demonstrates. In the Federal Court (Trial Division), after
finding for Finlay on the merits, the court issued an injunction against the Minister
of Finance prohibiting payments under C.A.P. until Manitoba brought its program
into compliance.’94 The Federal Court of Appeal, although upholding the decision
on the merits, allowed an appeal from the injunction, because it would have ad-
versely affected too many programs.””

On the surface, a declaration would seem to be a much weaker remedy than
mandamus, because it does not compel any sort of behaviour. Kent Roach has
written, however, that the Canadian courts have shown a preference for declarations
because they

do not require courts to supervise compliance by means of their contempt powers and
this allows declarations to be more open-ended and less specific than injunctions. This
in turn, allows governments some flexibility in deciding exactly what steps they should
take to implement the court’s declaration and this can contribute to an appropriate insti-
tutional division of labour between the court and the govement.” ‘

In the context of the C.H.A., declarations help courts to avoid playing health ad-
ministrator, leaving the federal government to determine the exact amount to with-
hold from an offending provincial government. Declarations are also useful be-
cause they may clarify the law, thereby helping to prevent future violations.’

The disadvantage of a declaration, however, is that it ends a court’s involve-
ment in a case; a court will be unaware of what steps are taken to respond to the
declaration. This shortcoming, however, may be offset by the involvement of the
Auditor General of Canada. Under the Auditor General Act,” the Auditor General
shall report to Parliament on matters that he or she considers to be important, in-
cluding cases where “money has been expended other than for purposes for which
it was appropriated by Parliament”.'” It would seem that a declaration that a prov-
ince was not complying with the conditions of the C.H.A., and that cabinet had
failed to exercise its discretion appropriately by failing to stop federal payments,
would certainly fall within the ambit of section 6(2)(c). This information would ap-
pear in the Auditor General’s report to Parliament and would, thus, become avail-
able to the public. The resulting political embarrassment would exert pressure on
the federal government to act in accordance with the court’s decision.

‘”4 (1989), 25 F.T.R. 45,57 D.L.R. (4th) 211.

See [1990] 2 F.C. 790,71 D.L.R. (4th) 422 (C.A.).
K. Roach, Constitutional Remedies in Canada (Aurora: Canada Law Book, 1994) at para. 12.30.

‘”See ibid. at para. 12.290.
‘”R.S.C. 1985, c. A-17.
‘”Ibid. at s. 6(2)(c).

1996]

S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

IV. Enforcing the C.H.A. Against Provincial Governments

A. Introduction

It is apparent that the above remedies are very indirect because they are tar-
geted at the federal government and not at the offending provincial health-care
scheme. The federal government would then have to use its financial leverage to
encourage provincial compliance. If judicial review is sought to alleviate specific
problems facing patients, however, the judicial remedies discussed above have in-
adequacies.

One obvious alternative would be to enforce the criteria of the C.H.A. directly
against a province. In a handful of cases, such attempts have proven unsuccessful.’
In order to succeed, an applicant would have to overcome three substantial hurdles.
First, the applicant must show that a province undertook to comply with the terms
of the C.H.A. It will be argued that the lack of written agreements between the
provinces and the federal government on Medicare (in contrast to the regime under
the C.A.P.) raises significant problems in meeting this requirement. Second, an
applicant must demonstrate that this undertaking or “agreement” was legally en-
forceable (that is, not merely a political document with unintended legal conse-
quences). The caselaw on inter-governmental agreements to date, however, proba-
bly points to the opposite conclusion. Finally, a claimant must obtain third-party
standing to challenge this agreement; however, this issue is unresolved under the
existing caselaw.

Only after overcoming these three hurdles could a claimant proceed to examine
the compliance of a provincial plan with the criteria of the C.H.A. This point was
dealt with in detail, above,”0′ along with the issue of remedies. The following dis-
cussion will therefore focus on the three barriers outlined above. As will become
apparent, the feasibility of such a claim is purely speculative and, in the end, would
most likely be unsuccessful.

B. Identifying an Undertaking

Nothing defines the era of co-operative federalism like the inter-governmental
agreement. Negotiated and signed by federal and provincial governments, these
documents range from the general to the very detailed. The incentive to enter these
agreements is evident: they help to formalize and regularize relations between lev-
els of government. Should a dispute arise, the terms of the agreement can be re-
ferred to and conduct assessed against them. An example of the use of inter-
governmental agreements in the field of shared-cost social programs is the C.A.P.
Section 4 authorizes the Minister of National Health and Welfare to enter into

“‘The C.H.A. was raised in argument in three cases: Lexogest, supra note 132; B.C. Civil Liberties,
20, See Part m, above.

supra note 179; Morgentaler v. RE.L, supra note 182.

McGILL LAW JOURNAL/REVUE DE DROITDE McGILL

[Vol. 41

agreements with provincial governments to pay a federal contribution toward their
social-assistance and welfare programs?’

A crucial distinguishing feature between the C.A.P. and the C.H.A. is the ab-
sence of agreements between the federal government and the provinces. In fact, in-
ter-governmental agreements have not been used in health care since the 1957
Hospital Insurance Act.’ The 1966 Medical Care Act, which extended Medicare to
cover non-hospital based medical care, did not utilize agreements. The C.H.A.
adopted this approach. Claude Forget has argued that this was a deliberate decision
on the part of the federal government, because Qu6bec had indicated that it would
no longer enter into such agreements.’

In the absence of an express agreement, a court would, therefore, have to imply
an undertaking. Professor Martin has drawn a useful private-law analogy, whereby
courts have implied the existence of unilateral contracts. ‘ Thus, the terms of the
C.H.A. would be an offer to the provinces, which they accept by taking monies
from the federal government. Provincial breach of those terms would lead to either
political or legal liability.’

The difficulty with this approach, however, is that the federal and provincial
governments could have entered into agreements had they so wished. This practice
is well established in other areas, such as the environment.”7 Unilateral contracts,
on the other hand, can be viewed as equitable devices, which are implied by a court
where no written contract could be reasonably negotiated. For a court to imply such
an agreement would import principles from contract law into inter-governmental
relations without a full appreciation of the different policy interests at stake. In fact,
by doing so, courts may dissuade governments from co-operating, since they may
have deliberately chosen to cooperage informally in a particular area, perhaps in an
effort to pre-empt the possibility of judicial involvement.

2” A partial text of the agreement between British Columbia and the federal government under
C.A.R can be found in Reference Re Canada Assistance Plan, [1991] 2 S.C.R. 525 at 537-38, 83
D.L.R. (4th) 297 [hereinafter C.A.R Reference cited to S.C.R.].

2

Subject to this Act, the Minister may, with the approval of the Governor in Council,
enter into an agreement with any province to provide for the payment by Canada to the
province of contributions in respect of the cost of insured services incurred by the
province pursuant to provincial law (Hospital Insurance Act, supra note 16 at s. 3 (1)).

See Forget, supra note 43 at 134.

20 See Martin, supra note 7 at 18. A classic example of a unilateral contract is Carlill v. Carbolic

Smoke Ball Co., [1893] 1 Q.B. 256, 67 L.T. 837 (C.A.).

‘ This distinction will be discussed in Part IV.C, below.
207 See: S.A. Kennett, Managing Interjurisdictional Waters in Canada: A Constitutional Analysis
(Calgary: Canadian Institute of Resources Law, 1991) at 63-89; S.A. Kennett, “Hard Law, Soft Law
and Diplomacy: The Emerging Paradigm for Intergovernmental Cooperation in Environmental As-
sessment” (1993) 31 Alta. L. Rev. 644; J.O. Saunders, Interjurisdictional Issues in Canadian Water
Management (Calgary: Canadian Institute of Resources Law, 1988) at c. 5.

1996]

S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

C. Legal Status of Inter-governmental Agreements

Even if a court were to imply an agreement between the provincial and federal
governments concerning the terms of transfer payments, its legal status would be
unclear at best.’ It has been suggested that inter-governmental agreements could be
characterized as contracts, treaties, or hybrids “encompassing aspects of both”.”
However, the better view is that these agreements are purely political in nature and
do not carry legal force. The leading case on this point is the C.A.P Reference.”‘
Pursuant to section 4 of the C.A.P., the federal government entered into agreements
with each of the provinces in 1967. Section 5 stated that the federal government
would pay fifty percent of the cost of provincial plans. Section 8(1) provided that
“every agreement shall continue in force so long as the provincial law remains in
operation,” subject to section 8(2), which allowed termination by consent or with
one year’s notice by either party. In 1990, the federal government decided to limit
its payments to Ontario, Alberta, and British Columbia.”‘ British Columbia ques-
tioned the power of the federal government to unilaterally amend the agreement.

The Supreme Court upheld the legality of the limit on C.A.P. There are three
possible ways to interpret the decision, and each of them has different implications
for the enforceability of inter-governmental agreements. First, a narrow reading
would hold that the agreement did not specify the levels of payment, leaving this
matter to federal legislation. Thus, the agreement was not breached, and the ques-
tion of legal enforceability was not decided.2 A second, and slightly broader,
reading of the decision would be that the agreement was binding but could be dis-
charged by conflicting legislation. The Court made it clear that “the government
could not bind Parliament from exercising its power to legislate amendments to the
Plan. To assert the contrary would be to negate the sovereignty of Parliament. 2.3

‘ Unlike constitutionalized inter-governmental agreements, such as the British Columbia Terms of

Union, R.S.C. 1985, Appendix II, which do have legal force.

20 D. Culat, “Coveting thy Neighbour’s Beer Intergovernmental Agreements Dispute Settlement

and Interprovincial Trade Barriers” (1992) 33 C. de D. 617 at 620.

21 Supra note 202. For criticism, see S. Rutwind, “A Cap on CAP” (1991) 3 Const. Forum 38.
211 See Government Expenditures Restraint Act, supra note 50 at s. 2.
212 See K. Swinton, “Law, Politics, and the Enforcement of the Internal Trade Agreement” in M.J.
Trebilcock & D. Schwanen, eds., Getting There: An Assessment of the Agreement on Internal Trade
(Ottawa: Hignell, 1995) 196 at 199-200.

213 C.A.P Reference, supra note 201 at 548. See also Re Lofstrom (1971), 22 D.L.R. (3d) 120 (Sask.
C.A.) [hereinafter Re Lofstrom]. The applicant sought a writ of certiorari to quash a decision of the
Saskatchewan Welfare Board, on the grounds, inter alia, that it contravened the C.A.P. The Sas-
katchewan Court of Appeal stated that the C.A.P.

in no way restricts the legislative competence of a provincial legislature … The fact
that the provincial legislation and Regulations contravene the term of the agreement
[entered into under the C.A.P.] would not render such legislation and Regulations inva-
lid if it is otherwise within the legislative competence of the Province (Re Lofstrom,
ibid. at 122).

Re Lofstrom was approved by the Supreme Court in Finlay (no. 2):

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[Vol. 41

Until Parliament or a provincial legislature did enact conflicting legislation, gov-
ernments would be bound to comply with the terms of the agreement and could be
held accountable by a court. The third, and broadest view, however, seems to be
that the agreements only created political, not legal, obligations:

[I]t must be remembered that this is not an ordinary contract but an agreement
between governments … In lieu of relying on mutually binding reciprocal un-
dertakings which promote the observance of ordinary contractual obligations,
these parties were content to rely on the perceived political price to be paid for
non-performance.24

Even in the absence of formal, written agreements, similar arguments have
been put before the courts regarding the enforceability of the C.H.A. In two deci-
sions that pre-date the C.A.P Reference, the courts applied the third view of the le-
gal status of inter-governmental agreements with reference to the C.H.A. In B.C.
Civil Liberties, it was argued that the provincial regulation limiting access to abor-
tion was in breach of the accessibility requirement of the C.H.A. McEachern
C.J.S.C. dismissed this point. In his view, that the provincial regulation may have
disqualified British Columbia from federal transfer payments had no bearing on the
question of law before the court: “It is for the Cabinet .to assess the risk of losing
federal funding and take such other political steps and political responsibility as it
may be advised. ” 5

Scott C.J.M., dissenting in Lexogest, took a similar view. There, the applicants
had argued that the provincial regulation conflicted with the C.H.A., and was,
therefore, rendered inoperative by the doctrine of paramountcy. His Lordship re-
jected this argument: “[A]ny conflict between the two statutes (not going to the
constitutional vires of the provincial regulation in question) is not justiciable in any
event … The consequences of non-compliance … are set out in the federal Act it-
self, and are of a political nature.”.. The comments in B.C. Civil Liberties and Lex-
ogest were obiter dicta but were, nevertheless, followed by the court in Morgen-
taler v. RE. In that case, the impugned policy was challenged, inter alia, on the
ground that it was inconsistent with the C.H.A. The court quickly dismissed this
point, stating that it was for the government, and not the court, to weigh “the risk of
losing federal funding and to exercise political considerations as it may be ad-
vised. 27

A declaration that the federal cost-sharing payments are illegal would necessarily in-
volve a finding that the province had failed to comply with the conditions and under-
takings imposed by the Plan, but this would not affect the validity of the provincial
legislative provisions about which complaint is made … (Finlay (no. 2), supra note 85
at 623).

224 C.A.P Reference, supra note 202 at 553-54, Sopinka J. [emphasis added].
215B.C Civil Liberties, supra note 179 at 193.
2″6 Lexogest, supra note 132 at 23 [emphasis added].
2,7 Morgentaler v. PE.L, supra note 182 at 740. Although it was decided after the C.A.R Reference,

Morgentaler v. RE.I did not refer to that decision.

1996]

S. CHOUDHRY – ENFORCEMENT OF THE CANADA HEALTH ACT

Morgentaler v. RE.L probably represents an accurate view of the existing law.
Inter-governmental agreements, in general, and the C.H.A., in particular, do not
impose enforceable legal obligations on provinces. Indeed, proposed constitutional
amendments which formed part of the Charlottetown Accord would have conferred
legal status on inter-governmental agreements,”‘ an unnecessary measure had these
agreements already been legally enforceable.”‘

However, the legal position of inter-governmental agreements remains some-
what unclear. To some extent, the broad reading of the C.A.P. Reference is drawn
from a classical version of Canadian federalism, with federal and provincial gov-
ernments operating in discrete and exclusive areas of jurisdiction. However, as the
caselaw on inter-governmental delegation of authority indicates, the courts have
shown some flexibility in facilitating the arrangements of co-operative federalism.”
The interpretation of the C.A.P Reference that is most consistent with co-operative
federalism would allow for agreements to be binding on governments in the ab-
sence of conflicting legislation. Given Sopinka J.’s statement in the C.A.P. Refer-
ence,”2 however, this is probably an unlikely prospect.

D. Third Parties

Even if these agreements were legally binding, it is unclear if a third party
could enforce them in the courts. Reference Re Anti-Inflation Act’ established that
an inter-governmental agreement required implementing legislation in order to be-
come part of the law of a province. An issue in the case’ concerned an agreement
between Ontario and the federal government purporting to apply the terms of the
federal Anti-Inflation Act ‘ to the provincial public sector. Although the Supreme
Court held that the government had the authority to enter into the agreement,
Laskin C.J. stated that this alone “would not make the agreement part of the law of
In short, without implementing legislation, there is no cause of action
Ontario”.”

,’ See Draft Legal Text (9 October 1992) (Ottawa: Supply & Services Canada, 1992) at s. 17. This

section proposed inserting a new section 126A into the B.N.A. Act (see supra note 35).

219 See generally, L. Friedlander, “Constitutionalizing Intergovernmental Agreements” (1994) 4

NJ.C.L. 153.

” Compare: Coughlin v. Ontario (A.G.), [1968] S.C.R. 569,68 D.L.R. (2d) 384 (allowing anticipa-
tory incorporation by reference of provincial legislation by federal legislation); Nova Scotia (A.G.) v.
Canada (A.G.), [1951] S.C.R. 31, [1950] 4 D.L.R. 369 (Nova Scotia Reference) (holding it unconsti-
tutional for a provincial legislature to delegate legislative authority to Parliament).

“‘ See quote accompanying note 214, above.
22 [1976] 2 S.C.R. 373, 68 D.L.R. (3d) 452 [hereinafterAnti-hflation Reference cited to S.C.R.].
3The major issue was whether the Statute could be brought within Parliament’s power to legislate

for the peace, order, and good government of Canada (see B.N.A. Act, supra note 35 at s. 91).

214 S.C. 1974-75-76, c. 75.
.. Anti-Inflation Reference, supra note 222 at 433. Legislation by prerogative has been unknown to
the Common law since The Case of Proclamations (1611), 12 Co. Rep. 74. Thus, international trea-

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[Vol. 41

for an individual. Strictly speaking, however, the case did not consider the standing
of a third party to sue on an agreement which was otherwise legally enforceable,
and so, the question remains undecided.

Relying on contractual principles, one could argue that third parties are not
privy to inter-governmental agreements and should, therefore, not be able to sue on
them. That view of third parties, however, should be reconsidered in light of Finlay
(no. 2).. In addition to defining the law on public-interest standing, Finlay (no. 2) is
also notable for allowing a private person (albeit acting in the public interest) to le-
gally challenge certain aspects of inter-governmental relations. Prior to that deci-
sion, it was thought that inter-governmental relations were solely relations between
governments. Finlay (no. 2) changed this equation and also highlighted the weak
mechanisms of political accountability, which govern the conduct of federal-
provincial relations. Donald Smiley, most famously, underscored this fact by coin-
ing the phrase “executive federalism””. If Finlay (no. 2) helped to promote ac-
countability and transparency in inter-governmental relations through judicial scru-
tiny, the same concern would support the argument for an extension of the decision
to third-party actions on inter-governmental agreements. The privity objection
makes little sense, because the policy concerns in contract law are very different. In
contract, privity serves to protect the control over agreements by the parties who
entered into them. In the political realm, however, where the parties themselves
need to be held accountable, the rationale for privity disappears.

* Nigel Bankes has suggested a strategy whereby federal criteria could be legally
enforced by individuals against provincial governments without the need for ex-
tending the caselaw. Federal spending statutes, such as the C.H.A., could require
that provinces adopt implementing legislation identical to the terms of the C.H.A.,
or that they clearly state that the legislation is intended to adopt the federal criteria
and should be interpreted in a manner consistent with those criteria. This would al-
low for the possibility of judicial review of provincial governments along the lines
described above in relation to the federal government. Individuals would have to
obtain standing and then establish that the provincial plan did not comply with one
of the C.H.A.’s criteria. The advantage of this approach is that successful claimants
would have access to a host of public-law remedies against a provincial govern-
ment which would enhance the effectiveness of a court challenge. To encourage
provinces to adopt such legislation, federal payments could be conditional upon the
adoption of provincial legislation. As Bankes states, “[t]his would dramatically im-
prove the prospects for success in the provincial superior courts. ‘

ties must be implemented by federal or provincial legislation to become part of the law of Canada
(see Canada (A.G.) v. Ontario (A.G.), [1937] A.C. 326, 1 D.L.R. 673 (PC.) (Labour Conventions)).

” D.V. Smiley, Canada in Question: Federalism in the Eighties, 3d ed. (Toronto: McGraw-Hill Ry-

erson, 1980) at 91.

7 N. Bankes, “Co-operative Federalism: Third Parties and Intergovernmental Agreements and Ar-

rangements in Canada and Australia” (1991) 29 Alta. L. Rev. 792 at 806.

1996]

S. CHOUDHRY – ENFOR CEMENT OF THE CANADA HEALTH ACT

Unfortunately, the prospects for this sort of initiative are very poor at present.
We are currently witnessing a retreat from federal involvement in welfare and
health care. The Budget Implementation Act is only the latest episode in this story.
Some indication of the direction of federal policy in this area can be gleaned from
the fact that the Act will repeal the C.A.P., thereby ending the regime of inter-
governmental agreements which governed transfer payments. As discussed above,
they will be replaced by a system of block grants with almost no conditions at-
tached for social assistance. Coupled with the attitude of the federal government
would be the hostility of the provinces to the imposition of new conditions so long
after the adoption of the C.H.A., especially at a time when federal funding for
health care is declining.

E. Conclusions

Ultimately, the lack of a legal remedy against an offending provincial govern-
ment may not really matter. Since the issue in the judicial review of federal pay-
ments under the C.H.A. would be the compliance of a provincial government with
federal criteria, a declaratory judgment against the federal government would be
politically damaging for the offending provincial government. The publicity cou-
pled with the political popularity of Medicare would make it politically costly for a
provincial government not to respond in some way.

Conclusion: The Politics of Medicare

This article began by stating that the C.H.A. had largely been viewed as a po-
litical document, and relatively little had been written on the legal enforceability of
its criteria. The criteria of the C.H.A. are capable of giving rise to legal liability.
The scope of liability, however, would most likely be limited to the federal gov-
ernment, since the C.H.A. is probably not directly enforceable against the prov-
inces. Moreover, the courts’ preference for declaratory relief would limit the effec-
tiveness of an action for judicial review.

At the end of the day, it may be the political value of litigation which makes le-
gal challenges based on the C.H.A. worthwhile. The political impact would operate
on two levels. At the level of individual claims, a decision finding a provincial pro-
gram in breach of the C.H.A. would exert significant pressure on both levels of
government to respond. A legal determination of rights and responsibilities would
play an important role in the political process.

Litigation on the C.H.A., however, could do more than achieve justice in spe-
cific disputes; it has the potential to remind governments and citizens alike of the
importance of Medicare. Widely publicized litigation against the government would
serve to highlight the value that Canadians place on access to quality health care
and would feed into the larger political discourse. If successful, claims under the
C.H.A. might result in governments being more vigilant in meeting the Act’s crite-

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[Vol. 41

ria. Even if unsuccessful, claims framed in terms of the language of the C.H.A.
would have the potential to raise public awareness of the challenges facing Medi-
care and could, therefore, lead to political change.’

It is readily apparent that the enforcement of the C.H.A. is not merely a legal,
but also a political, question. It would be a mistake, however, to conclude that this
fact would dissuade the courts from adjudicating on the matter. As the Patriation
Reference… showed, the courts are sensitive to the defining characteristics of our
country. Since the C.H.A. is part of Canada’s definition of social citizenship, the
courts will likely take cases like Hughes very seriously indeed.

The legislative response to the Supreme Court’s decision in Thibaudeau v. R., [1995] 2 S.C.R.
627, 124 D.L.R. (4th) 449, is a good illustration of the political impact of public-law litigation. In that
decision, the Court rejected a constitutional challenge to provisions of the Income Tax Act, S.C. 1970-
71-72, c. 63, which tax child support payments in the hands of the custodial parent, while allowing
the parent who has paid such amounts to deduct them from income. It had been argued that these
provisions violated section 15(1) of the Charter and could not be justified under section 1; the Court
found no violation of section 15(1). Although the decision upheld the legislation, the federal govern-
ment has recently announced that it will amend the Income Tax Act in order to tax child-support pay-
ments in the hands of parents who made those payments, not in the hands of custodial parents. No
doubt, this legislative initiative was prompted in large part by the litigation launched by Ms. Thi-
baudeau.

‘ Reference Re Amendment of the Constitution of Canada, [1981] 1 S.C.R. 753, 125 D.L.R. (3d) I.