Class Actions: Supreme Court Allows Nursing Home Claim to Proceed on Narrower Grounds

The Supreme Court of Canada released it’s decision today in Alberta v. Elder Advocates of Alberta Society

A class action was filed on behalf of residents in long-term care facilities in Alberta claiming that the government artificially inflated the accommodation charges to subsidize the cost of medical expenses. They initiated a class action alleging that the Province of Alberta and the the resident’s health care. Under provincial legislation, Alberta is responsible for the cost of medical care required by the residents of nursing homes and auxiliary hospitals.

The class members claimed damages for breach of fiduciary duty, negligence, bad faith and/or unjust enrichment. They also filed a claim under s. 15(1) of the Canadian Charter of Rights and Freedoms.

The certification judge struck out the breach of fiduciary duty claim and limited the duty of care alleged in negligence.

The class members appealed and the Alberta Court of Appeal allowed the appeal and confirmed the right of the class to pursue the causes of action.

Today the Supreme Court of Canada held (unanimously) that the appeal should be allowed in part. The claims for breach of fiduciary duty, negligence and bad faith were struck out (upholding the decision of the certyfication judge). But the claims for unjust enrichment and Charter breach were allowed to proceed to trial.

Chief Justice McLachlin in writing for the unanimous court, said:

“It is a sad reality of life that as people age they may become unable to care for themselves and be obliged to live in special facilities providing greater or lesser degrees of assistance and medical care. In Alberta, chronic care for the elderly is provided through nursing homes and auxiliary hospitals. In principle, the government of Alberta is responsible for the costs of residents’ medical care, but residents may be asked to contribute to the costs of their housing and meals through the payment of accommodation charges. In this case, 12,500 residents of Alberta’s long-term care facilities (“LTCFs”) sue as a class, alleging that the government artificially elevated the required resident contributions to subsidize medical expenses that are properly the responsibility of government.

The class has filed a statement of claim in which it alleges that the government’s conduct constitutes a breach of fiduciary duty, negligence, bad faith in the exercise of discretion and/or unjust enrichment. The class seeks the return of monies or damages equivalent to the amount of any over-payment of the permitted accommodation charges. It is on the basis of these allegations that the action was certified. The class also brings an equality claim under s. 15 of the Canadian Charter of Rights and Freedoms, which Alberta does not seek to have struck but argues should not proceed by way of class action.

At certification, the Province of Alberta challenged the claims of fiduciary duty, negligence, and bad faith in the exercise of discretion. The certification judge struck out the plea of breach of fiduciary duty and partially limited the duty of care alleged in negligence (2008 ABQB 490, 94 Alta. L.R. (4th) 10). The Court of Appeal upheld the entitlement of the plaintiff class to pursue all three causes of action (2009 ABCA 403, 16 Alta. L.R. (5th) 1). The Crown in Right of Alberta now appeals to this Court, contending that all the claims should be struck out and the action decertified.

This is not a decision on the merits of the action, but on whether the causes of action pleaded are supportable at law. The question is whether the pleadings, assuming the facts pleaded to be true, disclose a supportable cause of action. If it is plain and obvious that the claim cannot succeed, it should be struck out.

I conclude that the pleas of fiduciary duty, negligence and bad faith in the exercise of discretion disclose no cause of action and should be struck out in their entirety, but that the claim of unjust enrichment should survive. It follows that the certification of the class is upheld, and the unjust enrichment claim may proceed to trial, together with the claim for discrimination under s. 15(1) of the Charter.

…Based on the foregoing, I would allow the appeal in part and strike the pleas of breach of fiduciary duty, negligence and bad faith. Without endorsing them, I would leave untouched the claim of discrimination under s. 15(1) of the Charter and the plea of unjust enrichment, along with any other pleas which survived in the lower courts and were not appealed to this Court. Certification of the class and the unaffected common questions will remain, since the action, in truncated form, survives.”