B.C. Cost Recovery Legislation Has Significant Implications for Product and Service Providers

The Government of British Columbia has announced its intention to facilitate civil suits by provincial and federal governments seeking cost recovery, on an unprecedented scale, for “health-related wrongs” from companies that promote, market and distribute products and services in British Columbia via Bill 12: the Public Health Accountability and Cost Recovery Act (the “Act”). This proposed legislation is scheduled to be debated at second reading when the British Columbia legislature reconvenes in April.

The proposed Act expands upon existing cost recovery legislation in British Columbia (and subsequently other provinces in Canada) that is targeted at manufacturers and distributors of tobacco and opioids, including the Tobacco Damages and Health Care Costs Recovery Act and the Opioid Damages and Health Care Costs Recovery Act.

Implications of Bill 12

The proposed legislation carries the potential for significant consequences upon targeted companies found liable. Key features include:

• A Right of Direct Action for the British Columbia and Federal Governments to Recover Costs ‘Caused or Contributed by a Health-Related Wrong’: The proposed legislation permits the British Columbia or federal government to recover, on an individual or aggregate basis, a broad variety of costs related to “disease, injury or illness,” including those associated with benefits, services (i.e., medical treatment) and programs (i.e., preventive education) where the government is able to establish “a health-related wrong,” defined as a breach of a common law, equitable or statutory duty, or obligation owed to persons in British Columbia, or a tort committed in British Columbia that causes or contributes to disease, injury or illness.
• Broad Applicability to Companies Doing Business in British Columbia: “Product” is defined broadly in the proposed legislation to include “goods, a service and a by-product,” which will allow the government to commence an action against nearly any company doing business in British Columbia and seek to recover costs much broader than precursor legislation pertaining to tobacco and opioid products.
• Recovery of Costs Based Upon the Risk of Harm: The proposed legislation requires the court to presume causation where the government is able to establish, on a balance of probabilities, that the defendant breached a common law, equitable or statutory duty owed to benefit recipients and that benefit recipients were exposed to the risk of disease, injury or illness as a consequence of the breach, significantly expanding the circumstances in which cost recovery will be ordered.
• Limitation Period Extended to 15 Years and Dismissed Actions Are Revived: No action is barred that is commenced by the British Columbia or federal government within 15 years of (i) the coming into force of the Act or (ii) the day on which a claim is discovered. An action may be brought for a health-related wrong, whenever the health-related wrong occurred. Any action commenced by the government for damages substantially similar to the cost of health-care benefits is revived if the action was previously dismissed in relation to limitations legislation.
• Prior Settlements and Adjudications Are Not a Defence to an Action: It is not a defence to an action for damages caused by a health-related wrong that such an action has previously been adjudicated or settled, with the effect that previous actions involving decisions by the court or settlements of an action may be re-litigated.
• Joint and Several Director and Officer Liability: A director or officer of a corporation who directs, authorizes, assents to, acquiesces in, or participates in a health-related wrong committed by the corporation is jointly and severally liable for the costs of health-care benefits. While a due diligence defence is available to directors and officers, there is no cap on damages should liability be found.
• Immunity for Whistleblowers: The proposed legislation provides immunity for whistleblowers by providing that no legal proceeding may be commenced or maintained against a person because the person has, in good faith, provided information to the provincial or federal government for the purposes of the Act.

In addition to the above key features, the proposed legislation introduces specific rules related to class actions as well as several distinct evidentiary principles:

• Federal and Provincial Governments Included in Class Proceedings: The proposed legislation permits the government to bring an action under the Class Proceeding Act on behalf of a class consisting of one or more of the Government of Canada, the government of another jurisdiction in Canada, or a federal or provincial payment agency. This provision is similar to a provision found in the Opioid Damages and Health Care Costs Recovery Act, which was found to be constitutional by the British Columbia Court of Appeal but which is currently under appeal to the Supreme Court of Canada.
• Individual Proof Not Required: Similar to predecessor tobacco and opioid legislation, where a government seeks to recover the costs of health-care benefits on an aggregate basis, the proposed legislation provides that it is not necessary for the government to identify particular individual benefit recipients or prove the cause of disease, injury, illness or cost of health-care benefits for any particular individual benefit recipient; moreover, an individual’s testimony and health-care records are generally not compellable evidence (with the exception of an anonymized statistically meaningful sample of documents at the court’s direction).
• Minister’s Certificate Accepted as Evidence of Conclusive Proof of Costs: A certificate from a minister of the federal or provincial government will be accepted as proof of the health-care benefits that have or will be provided and conclusive proof of the cost of health-care benefits that have or will be provided in relation to damages caused or contributed to by a health-related wrong.
• Statistical Information Has Broad Evidentiary Use: Distinct from class proceedings legislation in British Columbia and other provinces, where statistical information may only be used for determining issues relating to the amount or distribution of an aggregate monetary award, the proposed legislation permits statistical and sampling information to be admitted as evidence for the purposes of establishing causation, liability and quantifying damages or the cost of health-care benefits related to a health-related wrong.

Conclusion

The proposed legislation dramatically expands the potential liability that companies doing business in British Columbia and across Canada may face in relation to government health-care-related costs and expenditures stemming from past and future product (and services) claims. The proposed legislation provides significant evidentiary advantages to the government, to the detriment of companies defending cost recovery actions, and alters the conduct and strategy of defending class proceedings across Canada for companies against whom class actions are commenced under this legislation.

The press release announcing the proposed legislation specifically advises that the proposed legislation “provides a way for government to go after social media companies for the harms their algorithms cause people, especially kids,” but has far-reaching implications for and applies equally to companies in the pharmaceutical, technology, health, food and beverage, cannabis, gambling, gaming and manufacturing industries, together with any company providing a product or service that can cause or contribute to disease, injury or illness.

On April 23, 2024, the B.C. government issued a press release advising that it was putting the proposed legislation on hold pending the first meeting of the newly formed B.C. Online Safety Action Table.

The Litigation & Dispute Resolution Group at Aird & Berlis LLP will continue to monitor developments in regards to Bill 12: the Public Health Accountability and Cost Recovery Act. If you would like to better understand how the proposed legislation may impact your company, please contact the author.