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Georges L. Dumont Public Hospital in Moncton, New Brunswick, on October 8, 2020. Marc Grandmaison/The Canadian Press
New Brunswick's francophone health authority has sent auditors to the Toronto office of a major supplier of temporary workers as part of a year-long effort to recover costs from a company that contributed to a $100-million deficit, a legislative committee heard Thursday.
Officials with Vitalite Health Network told lawmakers they are engaged in a lengthy legal battle with Toronto company Canadian Health Labs, and excessive fees and expense claims that CHL charged Vitalite for hiring temporary staff are the subject of an investigation by the province's auditor general.
Vitalite's lawyer, Daniel Surette, testified that the two sides have gone through mediation and will likely move on to arbitration next.
Vitalite CEO France Desrosiers also revealed that Vitalite has signed three contracts with CHL worth up to $158 million after receiving a “verbal green light” from Deputy Minister of Health Eric Beaulieu. Now, Vitalite and the province can't agree on whether that approval applies to all three contracts and whether that means additional funding.
Details of the dispute were revealed before the public accounts committee which reviewed this month's report from Auditor-General Paul Martin, which criticised Vitalite's oversight of the CHL contract.
The hearing ended with committee member and former Health Minister Dorothy Shepherd calling for an open judicial investigation, given the amount of money involved. She said CHL and more staff should be summoned to the committee. “Further investigation is needed,” she said.
Martin's audit found that from 2022 through this year, state health officials paid $173 million to private agencies to supply temporary out-of-state nursing assistants and nurses, also known as travel nurses.
Vitalité paid CHL more than $98 million for these services, which included not only personnel costs but also travel and accommodation costs.
In documents submitted to the committee, Vitalite released a letter from Surette saying the health authority hired him in February 2023 “in consideration of litigation relating to the CHL contract.”
Dr. Desrosiers said government lawyers also advised Mr. Vitalite.
Vitalite deputy CEO Patrick Parent testified that the main issue was that CHL could charge “market rates” for car rentals and accommodation, but the contracts did not stipulate what those amounts should be.
Many of the nurses were staying in apartments owned by a company related to CHL CEO Bill Hennessy, and CHL charged Vitalite the equivalent of $219 per nurse per night, according to invoices obtained by The Globe and Mail.
“That's why we've been in the legal process for over a year now, to make sure that we either get what's not in the contract or we get a financial relief for taxpayers,” Parent said.
The contract allows Vitalite to audit CHL's records. “We currently have a group of external auditors in CHL's offices reviewing our internal documents in preparation for legal consultations,” Parent said.
Dr Desrosiers told the committee that at one point Vitalite refused to reimburse CHL without proper receipts. The company then sent a solicitor's letter complaining about the late payment, she said.
CHL did not respond to a request for comment sent on Thursday. The company has previously said the contract was “fair and transparent” and reflected the “extraordinary logistical challenges” of deploying workers in rural areas.
CHL's practices sparked investigations by the auditors general of New Brunswick and Newfoundland after a Globe and Mail investigation was published in February.
When asked by the Globe in January about the legal battle that began in 2023 between the two companies, both CHL and Vitalite declined to comment.
Desrosiers said Vitalité contracted with CHL because it was the only company able to provide bilingual nurses on short notice, as her network was experiencing severe staffing shortages that threatened emergency and dialysis services.
Additionally, in July 2022, just before the first CHL contract was signed, Premier Blaine Higgs appointed a replacement director to the Vitalite board as part of a shake-up of the local health authority.
Desrosiers said Vitalité officials had received a “green light to resolve the issue” from Health Minister Beaulieu, which he took as meaning several contracts would be approved and funded.
But according to an affidavit provided to the committee during a meeting between trustee Gerald Richard, Dr Desrosiers and Mr Beaulieu in March 2023, “the deputy minister was caught in the middle and told us that our contract with the recruitment agency would not be funded.”
