The Dos And Don'ts When Dealing With Provincial Health Insurers In National Class Actions – Post Perdikaris v. Purdue

It's been one year since the release of Justice Barrington-Foote's decision in Pedikaris v. Purdue Pharma et al. (2018 SKQB 86). At that time, his message was loud and clear: "The Provincial Health Insurers are not members of the class. They must each approve the settlement of their subrogated claim. They, unlike individual litigations, are well able to protect their own interest".

This article will provide an overview of the health insurance legislation in each Province and Territory, which grants Provincial Health Insurers (PHI) their recovery rights in class actions. It will also offer practical tips on how to navigate PHI claims in the context of settlement approval to ensure that the rights and interests of both the Class Members and PHIs remain protected.

Best Practices

In order to minimize Court scrutiny and satisfy the legislative requirements of the PHIs, the following points should remain at the forefront of any negotiation:

Courts will not approve a Settlement Agreement unless it has been approved by all PHIs in accordance with their subrogation legislation. 1.1 Class counsel should ensure they are familiar with the particular rights of each province/territory. For example, Saskatchewan requires that the PHI consent to the settlement of its subrogated claim as well as the claim of the injured plaintiff.

1.2 Class counsel should also ensure that any proposed draft release be reviewed and approved by the PHIs, in accordance with the requirements of their particular legislation.

2. Class counsel should make sure that PHIs are involved in a potential settlement prior to the conclusion of an agreement. Steps should be taken, by class counsel, with assistance from the PHIs, to ensure that past and potential future health care costs for PHIs are identified and adequately assessed.

3. In order to avoid a potential conflict of interest, class counsel should avoid negotiating a "global settlement", which does not specify the amount payable to PHIs. It has been suggested, although not explicitly ruled on in Perdikaris, that such a settlement could result in a competition between PHIs and class members as to who gets what share of the proceeds, potentially creating a conflict of interest for class counsel. A separate mandate approach would avoid class counsel having to "broker" the allocation of funds.

Independent Right vs. Subrogated Right?

When discussing a potential settlement with the PHIs, it's important to note that every province (except for Quebec, Nova Scotia and Saskatchewan) has been granted an independent right to sue, as opposed to a subrogated right (all territories operate on subrogated rights only). This has the potential of informing a PHI's decision with regards to a proposed settlement. Those...