Health Minister weighed in following Ottawa Hospital lawsuit

Ontario Health Minister Eric Hoskins sent a letter out earlier this year to all hospitals in the province reminding them the ministry could audit the books to deal with concerns of "financial irregularities."

The letter was released to the CBC on Friday following new allegations from one of the defendants in the Ottawa Hospital legal battle over an alleged kickback scheme involving construction contractors and two employees.

The new allegations are contained in a statement of defence from the hospital's former director of capital projects, Frank Medwenitsch, and filed with the Ontario Superior court this week.

His defence to the hospital lawsuit alleges the hospital's chief operating officer, Cameron Love "at times directed hospital staff to allocate the cost of other projects onto the Ministry-funded project (...) without Ministry knowledge or consent."

A spokesperson for the Minister of Health and Longterm Care, Eric Hoskins, said the Ministry could not respond specifically to the allegations because the issue is before the courts.

Ministry of Health sends letter to hospital

However, the spokesperson wrote in an email that in response to these concerns, the Minister of Health had sent a letter to all hospitals in Ontario in February "reaffirming the expectations regarding rules around procurement outlined in the (Broader Public Sector Accountability Act-BPSAA) and (procurement) directives. It was and continues to be our expectation that these rules are followed."

The BPSAA and the directives are the rules the Medwenitsch statement of defence says were allegedly breached.

The spokesperson attached a copy of the letter sent out Friday.

The letter states: "Hospitals are reminded that the ministry has the authority to audit hospital finances, including where there are concerns regarding financial irregularities related to capital procurements."

"I wish to remind hospitals that it is the ongoing expectation of the ministry that each hospital is actively ensuring that management and staff engaged in procurement activities that are compliant with the BPSAA and the (Directive.)"

It also details protection for whistle blowers.

Call for full inquiry: forensic lawyer

Ottawa lawyer and president of the Association of Forensic Investigators of Canada David Debenham said he'd like to see more from the province since he says it appears auditors may have missed problems.

"Why didn't they catch it sooner? Someone should be jumping up and down saying, 'I want to get to the bottom of this.' And we don't do that with a lawsuit," said Debenham, who would like to see a more formal inquiry that could have an impact on all hospitals in the province.

The Medwenitsch statement of defence for instance includes an allegation that senior management would release year-end surplus funds launching a spending spree called "March Madness," where projects are paid out before they are complete to meet the end of year budget deadline.

"The fact that they have a system that allows 'March Madness' and all the other things that you've heard about should have been caught; the auditors should have been on top of it and the fact that it went on for so long should have drawn the ministers attention for a full scale inquiry."

Hospital Board of Governors stands by executive staff

The spokesperson for the Ministry of Health and Long-term Care, however, wrote in its e-mail while the ministry is watching the lawsuit closely, it is satisfied the hospital is working to improve the way it does business.

"Recently, through internal control procedures," the e-mail statement says, "the Ottawa Hospital identified issues of concern. We understand that the hospital is currently evaluating additional changes which will further enhance accountability; that the results of their audit were turned over to the police; and that the hospital has launched a lawsuit."

Hospital board chair James McCracken wrote in an email statement that the Ottawa Hospital Board of Governors is monitoring developments in the lawsuit.

"The Board has complete confidence in the hospital's executive leadership and supports the steps it has taken in this matter," McCracken wrote.