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Broader Public Sector Compensation Restraint and Accountability Remain Top of Mind in Ontario

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Health Law Bulletin

It has been an eventful month in the area of broader public sector accountability.

The Ontario Sunshine List was released on March 27, 2015. Perhaps not coincidentally, a NDP private member's bill, Bill 78 Transparent and Accountable Health Care Act, 2015, passed second reading in the Ontario legislature on March 26, 2015. The Bill proposes to, among other things, greatly extend the reach of compensation restraint, salary disclosure and oversight laws in the healthcare sector, and to mandate the public disclosure of OHIP payments, including to physicians.

Meanwhile, the Broader Public Sector Executive Compensation Act, 2014 was proclaimed in force on March 16, 2015. The Act gives broad power to the government to establish "compensation frameworks" for executives in the broader public sector from time to time. The definition of "broader public sector" under the new Act broadly includes, among others, public hospitals, community care access centres, and many "public bodies" under the Public Service of Ontario Act, 2006. While no compensation frameworks have yet been announced, the government has strongly hinted it will use the frameworks to introduce hard pay caps for broader public sector executives.

These developments will be of particular interest to those in the health sector in Ontario.

NDP Private Members' Bill on Health Sector Accountability Passes Second Reading

On March 11, 2015, France Gélinas, the NDP's health critic introduced Bill 78, the Transparent and Accountable Health Care Act, 2015. The Bill passed second reading in the Ontario legislature on March 26, 2015 and was referred to the Standing Committee on Social Policy.

1. Extending the Reach of the BPSAA, Sunshine Act, Ombudsman and Auditor General

The Bill proposes to extend the reach of Part II.1 of the BPSAA to all "major health sector organizations". Part II.1 of the BPSAA restrains executive compensation increases and performance pay for "designated employers".[1] At present, public health hospitals are the only entities in the health sector that are subject to those restraints.

In addition, the Bill would broaden the reach of the Public Sector Salary Disclosure Act, 1996—the law that establishes Ontario's annual Sunshine List disclosure. It would give the Auditor General the power to audit "major health organizations" and "publicly-funded suppliers" and would also make those entities subject to oversight by the Ontario Ombudsman.

The term "major health organization" would include any person or entity that receives $1 million or more in public funds from the Ministry of Health and Long-Term Care in a year. As currently drafted, the Bill could include for-profit corporations, such as for-profit independent health facilities, long-term care homes and out-of-hospital premises.

The same requirements would also extend to "publicly-funded suppliers". The Bill defines a "publicly-funded supplier" as a person or entity that receives, directly or indirectly, $1 million or more per annum in public funds from major health sector organizations or from other publicly-funded suppliers.

We expect significant pushback, in particular, to extending these accountability and compensation restraint requirements to for-profit entities. The category of "publicly-funded suppliers" will likey also give rise to concern given its broad definition.

2. Publication of OHIP Payments

The Bill would also require the Minister of Health and Long-Term Care to publish an annual statement of payments made by OHIP, notably to physicians. Disclosure would be required wherever a person or entity received $100,000 or more from OHIP in a given year. The Bill would require that the disclosure be accompanied by a cautionary statement reminding readers that the amounts represent gross payments rather than net income of an individual physician or practice.

The publication of OHIP billings is a controversial subject. Proponents of disclosure point to the need for transparency in the spending of public dollars and note that Manitoba and British Columbia already disclose this information. Opponents argue that disclosure may breach the privacy of individual physicians and is open to misinterpretation given that many physicians must cover significant overhead costs from their gross billing amount.

We expect the proposed Bill will be the subject of vigorous debate at Committee.

New BPS Executive Compensation Act in Force

The Broader Public Sector Executive Compensation Act, 2014 came into force on March 16, 2015. The Act applies to public hospitals and a broad range of other entities in the broader public sector, including community care access corporations, entities that are prescribed as "public bodies" under the Public Service of Ontario Act, 2006 (other than Commissions) as well as others.[2]

The Act applies to any designated executive who is entitled to receive (or could potentially receive) $100,000 or more in a calendar year and who:

  •  is the head of the designated employer, regardless of whether the title of the position or office is chief executive officer, president or something else,
  • is a vice president, chief administrative officer, chief operating officer, chief financial officer or chief information officer or holds any other executive position or office, regardless of the title of the position or office, or
  • is the director of education or a supervisory officer of a designated employer that is a board within the meaning of the Education Act.

The Act does not itself establish specific compensation restraints but rather gives broad power to the government to establish "compensation frameworks" from time to time. To the extent the government enacts a compensation framework that applies to a particular type or group of executives, the framework will effectively take the place of applicable restraints under Part II.1 of the Broader Public Sector Accountability Act (BPSAA) as they apply to those executives.

The government has not yet announced specific compensation frameworks. The government has indicated that it will use the frameworks to introduce hard pay caps on broader public sector executives. It has been suggested that such caps could be set at $418,000 (twice the Premier's salary).

We have published additional commentary on the Public Sector and MPP Accountability and Transparency Act, 2014.

[1] Briefly, Part II.1 of the BPSAA: (a) prohibits compensation increases for "designated executives"  until Ontario ceases to have a budget deficit, subject to certain very limited exceptions; and (b) restricts the overall amount of performance pay that can be paid to all non-union employees by a designated employer.

[2] The following is the full list of "designated employers" under the Act: (1) Every hospital within the meaning of the Public Hospitals Act and the University of Ottawa Heart Institute/Institut de cardiologie de l'Université d'Ottawa; (2) Every board within the meaning of the Education Act; (3) Every university in Ontario and every college of applied arts and technology and post-secondary institution in Ontario whether or not affiliated with a university, the enrolments of which are counted for purposes of calculating annual operating grants and entitlements. (4) Hydro One Inc. and each of its subsidiaries; (5) Independent Electricity System Operator, (6)  Ontario Power Generation Inc. and each of its subsidiaries. (7) Every community care access corporation within the meaning of the Community Care Access Corporations Act, 2001. (8) Every body prescribed as a public body under the Public Service of Ontario Act, 2006 that is not also prescribed as a Commission public body under that Act. (9) The corporation known as Ornge, incorporated under the Canada Corporations Act on October 8, 2004 as Ontario Air Ambulance Services Co. (10) Subject to subsection (2), every other authority, board, commission, committee, corporation, council, foundation or organization that may be prescribed for the purposes of this section.


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