Vitalité files counterclaims to travel nurse contract lawsuits by Canadian Health Labs

Vitalité Health Network has filed counterclaims to the three lawsuits launched by Canadian Health Labs, alleging the travel nurse agency has "seriously compromised its ability to provide safe, effective and continuous health care."

In documents filed with the Court of King's Bench in Saint John earlier this week, the regional health authority cites the Ontario-based company's alleged failure to fulfil "several" contractual obligations.

These failures include deploying staff who don't have the training Vitalité requires, "including workers under unknown designations or as personal support workers" when the contract provided only for the use of licensed practical nurses and registered nurses, and not respecting the average number of daily teams required, according to the French documents.

"Repeated and systemic failures" by Canadian Health Labs, or CHL, have also resulted in "considerable" financial losses, Vitalité claims, "constituting an abusive use of public funds."

Among other things, it alleges CHL billed for services not rendered; incorrectly charged for HST; and overcharged for accommodation fees, travel expenses, vehicle rentals and daily allowances.

In addition, Vitalité contends CHL failed to disclose a conflict of interest. No details are provided in the documents.

Vitalité is seeking damages for breach of contract, punitive or aggravated damages, interest, costs and any other relief the court deems just.

None of the allegations have been proven in court.

Canadian Health Labs did not respond to a request for comment.

CHL lawsuits allege breaches of contracts

The company filed its first lawsuit against Vitalité in March, after the regional health authority cancelled the remaining shifts of travel nurses employed by CHL, even though its contract wasn't set to expire until February 2026.

It alleged breaches of contract, including non-payments, and damages, including "irreparable" harm to its reputation.

CHL subsequently filed two more lawsuits related to two contracts that expired last year. It alleged, among other things, that Vitalité deployed fewer "human health resource professionals" than stipulated in the contracts.

Last week, the legislature adopted a law designed to get out of the contracts without facing any legal or financial penalties.

"It's as tight as we can make it," Health Minister Dr. John Dornan recently told the legislature's standing committee on economic policy. "It does not absolutely preclude these current actions or subsequent actions," he said, but he believes any actions are "less likely to be successful."

Contracts include termination clause, Vitalité says

According to the counterclaims filed by Vitalité, its contracts with CHL state a party may terminate the agreement if the other party fails to meet its obligations, subject to prior notice.

"On or about June 30, 2023, the network issued a letter of non-compliance to CHL describing their contractual breaches.

"These shortcomings were never corrected by CHL and led the network to carry out an … audit of all invoices for the contract," which is still in effect.

Auditor General Paul Martin lost his legal bid to get Vitalité to turn over its audits.

He sought a court order to compel the regional health authority to disclose the documents as part of his investigation last year into the management and use of private agency nurses by Vitalité, Horizon and the Department of Social Development, dating back to 2022.

Vitalité refused to provide the audit reports, saying they were commissioned in anticipation of litigation with CHL, and therefore protected by both litigation and solicitor-client privilege.

Martin argued the Auditor General Act says his office is entitled to "free access" to all documents, whether they're confidential or not.

Court of King's Bench Chief Justice Tracey DeWare dismissed Martin's application in a written decision June 2, saying the law doesn't explicitly state the auditor general is entitled to "privileged" documents.

Martin is "assessing next steps," according to a statement from his office.

He previously said the "risks that [Vitalité] identified in the audit reports and to what extent those risks were addressed" remain unknown.

In a scathing report last June, Martin concluded "a lack of clearly defined vendor selection processes, poor contract oversight and deficiencies in payment review processes" with travel nurse contracts "resulted in undue risk to the province."

He found Vitalité spent $123 million in travel-nurse contracts, including more than $98 million on the three contracts with CHL.

The company charged about $300 an hour per nurse — roughly six times what a local staff nurse earns.