Action No. 0503 13196

IN THE COURT OF QUEEN’S BENCH OF ALBERTA

JUDICIAL DISTRICT OF EDMONTON

BETWEEN:

ELDER ADVOCATES OF ALBERTA SOCIETY and JAMES O. DARWISH, Personal Representative of the Estate of JOHANNA H. DARWISH, deceased

Plaintiffs

and

HER MAJESTY THE QUEEN IN RIGHT OF ALBERTA, ASPEN REGIONAL HEALTH AUTHORITY, CALGARY HEALTH REGION, CAPITAL HEALTH, CHINOOK REGIONAL HEALTH AUTHORITY, DAVID THOMPSON REGIONAL HEALTH AUTHORITY, EAST CENTRAL HEALTH, NORTHERN LIGHTS HEALTH REGION, PALLISER HEALTH REGION, PEACE COUNTRY HEALTH

Defendants

AMENDED AMENDED STATEMENT OF CLAIM

1. The Elder Advocates Of Alberta Society (“EAAS”) is a non-profit society incorporated pursuant to the Societies Act, R.S.A. 2000, c. S-14, as amended.
2. Johanna H. Darwish, was born September 19, 1910. She resided in the City of Edmonton in the Lynnwood Nursing Home from March, 1994 until her death on February 22, 2006. The Lynnwood Nursing Home is operated by the Defendant, Capital Health.
3. James O. Darwish is the natural son of Johanna H. Darwish and until her death on February 22, 2006 was her Guardian and Trustee by Order of the Honourable Madam Justice J. B. Veit dated January 26, 1994. James O. Darwish is now the executor of the estate of Johanna H. Darwish, deceased.
4. EASS and James O. Darwish, Personal Representative of the Estate of Johanna H. Darwish, deceased, bring this action pursuant to the Class Proceedings Act, R.S.A. 2003 c. C-16.5, as amended, on behalf of all persons and the estates of such persons who have since August 1, 2003 resided in any facilities in Alberta which provide nursing home care as defined by the Nursing Homes Act, R.S.A. 2000 c. N-7 (the “Class”), and on behalf of the Sub-class defined in paragraph 39 herein.
5. The Defendant, Her Majesty the Queen in right of Alberta, (“the Crown”), through the Department of Alberta Health and Wellness, administers and operates a plan to provide benefits for health services to all residents of Alberta pursuant to the terms of the Alberta Health Care Insurance Act, R.S.A. Chap. A-20, as amended, and the regulations made thereunder.
6. The Crown funds public health care services in the Province of Alberta by providing operational grants to the other Defendants, all of which are bodies corporate and regional health authorities established pursuant to the Regional Health Authorities Act, R.S.A. 2000 c. R-10 (hereafter the “Regional Health Authorities”).
7. The Regional Health Authorities are responsible for delivering health care services in hospitals, facilities that provide nursing home care (hereafter “Continuing Care Facilities), community health services and public health programs in Alberta. They deliver health care services to the residents of their respective regions, including the Class members, as agent for the Crown.

Fiduciary Duty

1. The Class members are frail elderly who are incapable of living on their own. They are among the most vulnerable members of our society.
2. The Class members are completely at the mercy of the Defendants because:
   1. The Class members rely completely on the Defendants to preserve and protect their entitlement to publicly funded health care services;
   2. Together, the Defendants have exclusive decision-making power and control over all aspects of funding for Continuing Care Facilities, including the amounts paid by the Class members as the accommodation charge and the amounts paid by the Defendants as health care costs;
   3. The Defendants set the basics standards for care and housing for Continuing Care Facilities, and
   4. The Health Authorities control all aspects of the administration of the Continuing Care Facilities they operate as agent for the Crown;
3. The Defendants are in a position to unilaterally exercise their power or discretion so as to affect the Class members’ practical interests as well as their legal right and entitlement to publicly funded health care services and benefits.
4. Each of the Class members stands in a relationship of trust and confidence with the Defendants.
5. Because of the unique power that the Defendants exercise on behalf of the Class members and the peculiar vulnerability of the Class members, the Defendants owe a duty to the Class to avoid conflicts of interest and to act in the best interests of the Class.
6. The Defendants at all times knew, or ought to have known, that the Class members were relying upon them to care for them, to protect their right and entitlement to publicly funded health care services and benefits, and to act in their best interests.
7. By virtue of the foregoing, the Defendants owe a fiduciary duty to the Class members.

The Accommodation Charge

1. Pursuant to s. 8(2) of the Nursing Homes Act, R.S.A. 2000 ch. N-7 as amended, the Crown, by the Minister of Health and Wellness, assumed the responsibility for setting the rates for “accommodation charges” paid by residents of the Continuing Care Facilities.
2. The Crown’s discretion in setting the accommodation charge is constrained by and is subject to its fiduciary duty to the Class members.
3. The Crown owed a fiduciary duty to the Class members to act in good faith and in the best interests of the Class members to ensure that the accommodation charge is fair, reasonable and justifiable.
4. On August 1, 2003, pursuant to A.R. 260/2003, the Crown, by its Minister of Health and Wellness, increased the accommodation charges paid by the Class members to the following rates:
   1. $39.62 per day for residents of standard wards;
   2. $42.00 per day for residents in semi-private rooms; and
   3. $48.30 per day for residents in private rooms.
5. The accommodation charge increases in paragraph 18(a) and (b) represent a 40% increase over previous rates. The increase in paragraph 18(c) represents a 48% increase.

The Accommodation Charge Increase: Breach of Fiduciary Duty

1. In breach of the fiduciary duty owed by the Crown to the class members, the accommodation charge increase was not fair, reasonable or justified and was not in the best interests of the Class members. The accommodation charge increase was implemented by the Crown in bad faith and in breach of the Crown’s fiduciary duties in circumstances where:
   1. the Crown had no basis for determining what accommodation costs should consist of;
   2. the Crown had no basis for determining how to calculate the accommodation charge;
   3. the Crown had no rational basis for raising the accommodation charge;
   4. the Crown had no basis for separating or distinguishing health care costs, which are the responsibility of the Crown, from accommodation charges, which are the responsibility of the Class members; and
   5. The Crown, by its Minister of Health and Wellness, was in an untenable conflict of interest vis a vis the Class members by controlling both aspects of funding for Continuing Care Facilities: the amount of the accommodation charge paid by the Class members and the level of health care funding paid by the Crown or by the Health Authorities as agent for the Crown.
2. The accommodation charge increase was arbitrary and was not a bona fide exercise of the Crown’s responsibility to set the accommodation charge.
3. As a result of the unlawful and unwarranted accommodation charge increase, the Class members have suffered damage and loss.

The Accommodation Charge Increase: Misrepresentation

1. At all times material hereto, the Crown owed a fiduciary duty and a duty of care to the Class members to be honest, forthright and candid with respect to the accommodation charge, the reasons for the accommodation charge increase, and the benefits the Class members would receive as a result of the increase.
2. At the time that the Crown increased the accommodation charge, the Crown, acting on its own behalf or, in the alternative, as agent for the other Defendants, deliberately or in the alternative negligently made representations to the Class members which the Crown knew or ought to have known were untrue, inaccurate or misleading, particulars of which include:
   1. The accommodation charge increase would result in the operators of the Continuing Care Facilities having an additional $58 million a year to improve the living environment of the Class members;
   2. The accommodation charge increase would improve the quality of resident care and services for the Class members; and
   3. The accommodation charge increase would allow the operators to provide the Class members with the best possible quality of life.

None of the above representations are true or accurate.

• The Crown made the foregoing representations to induce the Class members to pay a higher accommodation charge, knowing and intending that the Class members would rely on the said representations.
• The Class members relied on the representations by paying higher accommodation charges commencing August 1, 2003, as a result of which they have suffered damage and loss.
• The misrepresentations constitute a breach of the Crown’s fiduciary duty and duty of care owed to the Class members

Health Care Costs: Unjust Enrichment

1. At the same time that the Crown, by its Minister of Health and Wellness, increased the accommodation charge to be paid to by the Class members, the Defendants reduced or failed to fully fund the cost of providing health care services to the Class members including, but not limited to, administration costs for health care delivery, nursing care, physician services, nutritionists and dieticians, therapists, porters, therapy/recreation aides, medications, medical supplies and dressings, medical equipment such as beds, lifts and therapy equipment, medically required transportation, and building maintenance and improvements.
2. In particular, the Crown increased the accommodation charges to be paid by the Class by a factor of 40 – 48%. At the same time, the Defendants decreased the health care funding to Continuing Care Facilities by 5.35% at a time when health care costs were increasing.
3. From the fiscal year ended March 31, 2002 to the fiscal year ended March 31, 2005, health care funding from the Crown to the Health Authorities increased by 27% (from $4,169,939 to $5,299,508). During the same period of time, health care funding to the Continuing Care Facilities remained essentially flat (there was an insignificant increase of .58% from $574,365 to $577,699).
4. The Class members, by paying a higher accommodation charge, in effect subsidized health care costs which are the legal responsibility of the Defendants, as a result of which the Class members have been unjustly impoverished and the Defendants have been unjustly enriched.

Health Care Costs: Duty of Care and Fiduciary Duty

1. The Defendants owed a fiduciary duty to act in the best interests of the Class members and a duty of care to the Class members to carefully audit, supervise and administer the operating grants paid by the Crown to the Health Authorities to ensure that:
   1. the operating grants were fairly allocated to the Continuing Care Facilities;
   2. the health care needs of the Class members would be met,
   3. the cost of services properly characterized as health care services would be paid for by the Defendants and not by the Class members;
   4. to preserve and protect the Class members’ right and entitlement to publicly funded health care services and benefits; and
   5. to provide the Class members with the health care services and benefits they are entitled to receive under the statutory regime in force in Alberta,

Health Care Costs: Breach of Fiduciary Duty and Breach of Duty of Care

1. The Defendants breached their fiduciary duty and duty of care owed to the Class members by:
   1. Failing to act in the best interest of the Class members;
   2. Failing to carefully audit, supervise and administer the operating grants provided by the Crown to the Health Authorities;
   3. Failing to properly allocate sufficient funds from the operating grants to provide for health care costs at Continuing Care Facilities, with the result that shortfalls in health care costs at such facilities were made up, in whole or in part, by the accommodation charges paid by the Class members;
   4. Failing to protect the Class members’ entitlement to publicly funded health care services and benefits, and
   5. Failing to provide the Class members with the health care services and benefits they are entitled to receive under the statutory regime in force in Alberta,

as a result of which the Class members have suffered damage and loss.

The Alberta Bill of Rights

1. A.R. 260/2003, by its operation, imposed on the Class members an unlawful obligation to pay for costs that are properly characterized as health care costs. This constitutes a violation of their right, recognized and guaranteed by the Alberta Bill of Rights, not to be deprived of liberty, security of the person and enjoyment of property except by due process of law.

Section 15(1) of the Charter

1. A.R. 260/2003, by its operation, imposed on the Class members an unlawful obligation to pay for costs that are properly characterized as health care costs. This constitutes a violation of section 15(1) of the Canadian Charter of Rights and Freedoms because the Crown thereby established a differential entitlement to statutory health care benefits that is discriminatory in that the Crown imposed on the Class members financial burdens for health care costs that are not imposed on others.
2. The basis for the differential treatment is arbitrary and an affront to the needs and circumstances of the Class members.
3. The infringement of the Class members’ equality rights guaranteed by section 15(1) of the Charter is not justified in a free and democratic society.

The Sub class

1. The Regional Health Authorities are operators of “nursing homes” and provide “nursing home care” within the meaning of the Nursing Homes Act.
2. Residents of Alberta who receive nursing home care from the Regional Health Authorities entered into contracts, either directly or through legal representatives acting on their behalf, with the Regional Health Authorities or their predecessors, with respect to the provision of such care. The members of the Class who entered into such contracts are the “Sub-class”.

The Sub-class: Breach of Contract by the Health Authorities

1. Each and every contract between the Sub-class members and the Regional Health Authorities contained the following terms, either expressly or by implication:
   1. In consideration of each member of the Sub-class paying the higher accommodation charge referenced in paragraph 18 herein, the members of the Sub-class would receive improved quality of resident care and services and improved living conditions;
   2. The Sub-class members would not pay for the cost of services properly characterized as health care services.
2. The Regional Health Authorities breached their contracts with the Sub-class by:
   1. Failing to provide the Sub-class members with improved quality of resident care and services and improved living conditions, and
   2. Requiring the Sub-class members to pay for costs that are properly characterized as health care costs,

as a result of which the Sub-class members have suffered damage and loss.

• The Plaintiff proposes that the trial of this action be held at the City of Edmonton, in the Province of Alberta and believes that the trial of this matter will take in excess of twenty-five days.

WHEREFORE THE PLAINTIFFS CLAIM:

1. An Order certifying the action as a class proceeding;
2. A Declaration that the Nursing Homes Operation Amendment Regulation AR 260/2003 is inconsistent with s. 15(1) of the Charter of Rights and Freedoms and, to the extent of the inconsistency, of no force or effect;
3. A Declaration that the Crown violated the Class members’ rights protected by the Alberta Bill of Rights not to be deprived of liberty, security of the person and enjoyment of property except by due process of law.
4. An Accounting and Order of restitution to each Class member on account of the increased accommodation charges paid by or on behalf of the Class members since August 1, 2003;
5. In the alternative, an award of Damages equivalent to the increased accommodation charges paid by or on behalf of the Class members since August 1, 2003;
6. A Declaration that the Defendants failed to properly audit and administer the funding of Continuing Care Facilities so as to ensure that the Class members did not pay for health care benefits they were entitled to receive;
7. A Declaration that the Defendants have been unjustly enriched at the expense of the Class members by requiring the Class members to pay for services and benefits which are properly characterized as health care costs;
8. An Accounting and Order of restitution for each Class member on account of the money they have spent for services properly characterized as health care services since August 1, 2003;
9. In the alternative, an award of Damages equivalent to the money spent by the Class members for services properly characterized as health care services since August 1, 2003;
10. Damages for breach of contract for each Sub-class member in an amount to be determined at trial;
11. General, special and exemplary damages for the misrepresentations made by the Crown referenced in paragraph 24 herein in an amount to be determined by this Honourable Court;
12. A Declaration that the Class members are entitled to damages pursuant to s. 24 of the Charter;
13. Damages in such amount as this Court finds appropriate for the cost of administering the plan of distribution of the recovery of this action;
14. Interest pursuant to the Judgment Interest Act, R.S.A. 2000, c. J-1 as amended;
15. Costs on a solicitor and client basis or alternatively enhanced party/party costs, with full indemnity for disbursements and GST; and
16. Such further and other relief as this Honourable Court may consider appropriate.

DATED at the City of Edmonton, in the Province of Alberta, this 29th day of July, 2005 AND DELIVERED by Parlee McLaws LLP, 1500, 10180-101 Street, Edmonton, Alberta T5J 4K1, solicitors for the within Plaintiff whose address for service is in care of the said solicitors.

ISSUED out of the Office of the Clerk of Court of Queen’s Bench of Alberta, Judicial District of Edmonton, this 29th day of July, 2005.

Clerk of the Court

(signed)

CONSENT TO AMENDMENT BY:
Alberta Justice

Per:

(signed)

David William Kinloch, Counsel for Her Majesty the Queen

FIELD LLP

Per:

(signed)

D. M. McLaughlin, Counsel for all Defendants except Her Majesty the Queen

NOTICE TO THE DEFENDANTS

Action No. 0503 13196

TO:

HER MAJESTY THE QUEEN IN RIGHT OF ALBERTA, ASPEN REGIONAL HEALTH AUTHORITY, CALGARY HEALTH REGION, CAPITAL HEALTH, CHINOOK REGIONAL HEALTH AUTHORITY, DAVID THOMPSON REGIONAL HEALTH AUTHORITY, EAST CENTRAL HEALTH, NORTHERN LIGHTS HEALTH REGION, PALLISER HEALTH REGION, PEACE COUNTRY HEALTH

IN THE COURT OF QUEEN’S
BENCH OF ALBERTA
JUDICIAL DISTRICT OF EDMONTON

You have been sued. You are the Defendant. You have only 15 days to file and serve a Statement of Defence or Demand of Notice. You or your lawyer must file your Statement of Defence or Demand of Notice in the office of the Clerk of the Court of Queen’s Bench in Edmonton, Alberta. You or your lawyer must also leave a copy of your Statement of Defence or Demand of Notice at the address for service for the Plaintiff named in this Statement of Claim.

WARNING: If you do not do both things within 15 days, you may automatically lose the lawsuit. The Plaintiff may get a Court judgment against you if you do not file, or do not give a copy to the Plaintiff, or do either thing late.

This Statement of Claim is filed by:

Parlee McLaws LLP

Barristers & Solicitors

Patent & Trade-Mark Agents

1500, 10180-101 Street

Edmonton, Alberta T5J 4K1

Allan A. Garber

Telephone: (780) 423-8500

Facsimile: (780) 423-2870

Solicitor for the Plaintiff who resides at Edmonton, Alberta.

And whose address for service is c/o the said Solicitor and is addressed to the Defendant whose residence so far as known to the Plaintiff is Edmonton, Alberta.

AMENDED AMENDED STATEMENT OF CLAIM

Parlee McLaws LLP

Barristers & Solicitors

Patent & Trade-Mark Agents

1500, 10180-101 Street

Edmonton, Alberta T5J 4K1

Allan A. Garber

Telephone: (780) 423-8500

Facsimile: (780) 423-2870

File Number: 616-2/AAG

News Release June 2003 promising to improve long term care services.

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“Every person in long term care deserves the best possible quality of life.”

-The Honorable Minister of Health, Gary Mar