Travel nurse firm challenges constitutionality of Holt government law

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An Ontario staffing agency is challenging the constitutionality of a law put in place by the Holt government to stop legal action on health-care worker contracts.

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Canadian Health Labs (CHL) is asking the Court of King’s Bench to strike down the Travel Nurses Act – a law enacted in June to protect the government from legal fallout over agreements between the health-care staffing agency and Vitalité Health Network.

According to new court filings, CHL claims the law is “improper, unconstitutional and unconscionable,” and alleges Vitalité, in concert with the Province of New Brunswick, is “engaging in a continuing and ongoing act of conspiracy and legislative bad faith.”

Health Minister John Dornan introduced travel nurse legislation in March in an effort to curb possible legal action after Vitalité pulled CHL workers under contract out of its hospitals.

But even before the bill could clear the legislative process, CHL filed three separate lawsuits against Vitalité – one for its current contract and two for expired contracts.

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In all three, CHL alleges breach of contract and seeks unspecified amounts for damages.

Last month, Vitalité responded to the allegations by filing countersuits, arguing CHL breached the contracts and has no legal grounds to sue, in part due to the Travel Nurses Act.

In its latest court filings, CHL states it has notified the Attorney General of Canada and New Brunswick’s Attorney General “of the questions of constitutionality raised in this matter.”

New Brunswick’s Office of the Attorney General declined to comment Friday due to the matter being before the courts.

In the event the Travel Nurses Act isn’t deemed “entirely unconstitutional,” CHL argues that the law doesn’t prevent it from “bringing an action or arbitration for damages.”

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In that alternative scenario, the company seeks “a declaration that Vitalité is bound by the terms of the contracts with CHL and that arbitration and/or the within action can proceed on its merits.”

Constitutional lawyer weighs in

In its latest court filings, CHL lays out a dozen arguments why the Travel Nurses Act needs to be struck down in its entirety.

Chief among those is that the province designed the legislation to purportedly eliminate CHL’s ability to access justice.

“This direct interference with the jurisdiction of and the function of the Court of King’s Bench of New Brunswick and other superior courts is not only unconstitutional but is in flagrant disregard for the Rule of Law and the principle of division of powers of government, all of which are fundamental constitutional principles under Canadian law and which the courts are bound to uphold,” the filings read.

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CHL also alleges the Act amounts to “unlawful interference” from the New Brunswick legislature “into a freely negotiated commercial relationship between two commercial entities.”

As a result, CHL argues the law allows “Vitalité and the Province of New Brunswick to not pay its debts, obtain statutorily protected unjust enrichment, not be held accountable to the various liabilities Vitalité incurred during its commercial relationship with CHL, and attempts to shield Vitalité and the Province of New Brunswick from judicial oversight and reprimand for its bad faith conduct.”

None of the allegations have been tested in court.

Dornan told reporters in March the travel nurse bill was designed to “mitigate the opportunity to be sued for cost.”

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“It was an unhealthy contract for New Brunswickers, for taxpayers, and so legislation was the only way we could do this,” Dornan said in March, noting the government had consulted with “our lawyers, our teams at Vitalité and Horizon.”

The legislation initially cancelled only the current CHL contract, but the two expired contracts were later added in, at the request of Vitalité, before the bill was passed – a fact the company took umbrage at in its latest court filings.

Lyle Skinner is a constitutional lawyer based in Ottawa. He says the provincial legislature used its “exceptional but constitutional power to confer legal immunity in regard to any breach of contract.”

A similar clause was included in public sector pension legislation back in 2012-13, he said, but “in that case, it was a modification to an act rather than simply a contract.”

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“The biggest issue, in my view, (is) not legal but practical,” Skinner said in an email. “If the legislature makes it a routine practice of providing legal immunity from breaching contracts, companies or individuals may no longer enter into contracts with government entities.

“However, this exceptional power is being used in relation to (an) exceptional situation, so the risk is abstract rather than real,” he opined.

‘Patients would have died’: CHL

The Ontario health-care staffing agency has denied all allegations recently laid out by Vitalité’ in a stack of statements of defence and countersuits.

CHL maintains it met its obligations under the three health-care worker contracts, inked during the COVID-19 pandemic back in 2022. Two of those contracts were for travel nurses, while one dealt with personal support workers.

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“Without CHL providing nurses, patients would have died,” the company states in its recent filings.

“Vitalité could not find the health-care workers required to meet its mandate without signing the agreement with CHL.”

According to its new filings, CHL alleges it served Vitalité with notices of arbitration earlier this year to settle disputes over the three contracts, but the regional health authority didn’t respond to these notices, which partially contributed to the subsequent legal action.

Vitalité declined comment on these allegations Friday as the matter is before the courts. In its own filings in French, Vitalité acknowledged it received notices of arbitration for the alleged contract breaches.

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In November 2024, Vitalité told Brunswick News it was involved in an “alternative dispute resolution” process with CHL, citing this in part for its decision not to hand over internal audit reports related to those health-care worker contracts.

New Brunswick’s auditor general Paul Martin has continued to seek those documents even after he released his June 2024 report into travel health-care worker contracts signed by Horizon and Vitalité health networks, as well as the Department of Social Development, during the pandemic.

In his report, Martin concluded the contracts posed an “undue risk” to the province, noting there wasn’t any evidence of “proper contract development, management or oversight.”

More than a quarter of a billion dollars has been spent on travel health-care workers to date, Brunswick News recently reported. Horizon has phased out its use of travel nurses altogether, but Vitalité has continued to use them to meet ongoing staffing challenges.

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