Apr 2019 Charity & NFP Law Update
On April 18, 2018, Bill 74, The People’s Health Care Act, 2019 (“Bill 74”) received Royal Assent. Schedule 1 of Bill 74 enacts the Connecting Care Act, 2019 (the “Act”), which will come into force on a date to be set by proclamation. While the Act is expansive, the following is a brief overview of select portions that may affect charities and not-for-profits.
The Act will establish a new province-wide health “super agency”, known as Ontario Health, which will ultimately take over the province’s Local Health Integration Networks (“LHINs”) – which themselves recently took over the former Community Care Access Centres – as well as a number of independent provincial health agencies, including Cancer Care Ontario. The Act also provides Ontario Health and the Minister of Health and Long Term Care (“Minister”) with broad powers to integrate the province’s health system. Ontario Health can integrate the health system through funding changes (subsection 31(a)), through facilitating and integrating the integration of persons, entities or services (subsection 31(b)) or by issuance of a facilitation decision pursuant to which parties or services are integrated by agreement of the parties (section 32).
Under section 33, the Minister may also make integration orders pursuant to which the Minister will require health service providers or integrated care delivery systems (“ICDs”, a group of persons or entities designated by the Minister that meets the conditions prescribed in the Act) to integrate, including:
- provide all or part of or cease to provide all or part of a service;
- cease operating, dissolve or wind up its operations;
- amalgamate with one or more persons or entities;
- co-ordinate services or partner with another person or entity; and/or
- transfer all or substantially all of its operations to one or more persons or entities.
While the Act is part of a larger health care reform plan through which ICDs, other groups of providers and other organizations will provide a coordinated continuum of care to a defined geographic population, the Act does not provide for any particular governance structure for ICDs, and notably does not require them to be not-for-profit.
There are some constraints currently in place for LHINs that will also be placed on the Minister’s integration powers regarding religious-based, not-for-profit and charitable providers, as follows:
- Paragraph 33(2)(a) of the Act provides that the Minister shall not unjustifiably, as determined under section 1 of the Canadian Charter of Rights and Freedoms, require a religious organization to provide a service that is contrary to the religion related to the organization.
- Paragraph 33(2)(b) of the Act provides that the Minister shall not require the transfer of property held for a charitable purpose to a person or entity that is not a charity.
- Paragraph 33(2)(c) of the Act provides that the Minister shall not require a person or entity that is not a charity to receive property from a person or entity that is a charity and to hold the property for a charitable purpose.
- Paragraph 33(2)(g) of the Act provides that the Minister shall not require a not-for-profit health service provider or ICD to amalgamate with for-profit health service providers or ICDs.
- Paragraph 33(2)(h) of the Act provides that the Minister shall not require a not-for-profit health service provider or ICD to transfer all or substantially all of its operations to a for-profit health service provider or ICD.
There are no similar constraints on the powers of Ontario Health under sections 31 and 32.
However, subsection 37(1) of the Act provides that if an integration decision requires a health service provider or ICD to transfer property that it holds for a charitable purpose, all gifts, trusts, bequests, devises and grants shall be deemed to be gifts, trusts, bequests, devises and grants to the transferee. Subsection 37(2) provides that, if such property being transferred was originally gifted for a specific purpose pursuant to a will, deed or other document, the transferee must use it for the specified purpose. From a charities law perspective, if the specified purpose can no longer be fulfilled, such as in a case in which the charitable property was originally gifted to support the operations of a charity that has been ordered to cease operations, the charity’s stakeholders may want to consider seeking legal advice in order to ensure that its charitable assets are dealt with appropriately and, as much as possible, in accordance with the donors’ intentions.
The sweeping changes introduced by the Act will likely result in several years of uncertainty in Ontario’s health care system, affecting thousands of organizations, entities and individuals. There may be risks to smaller providers, including charitable and not-for-profit providers, particularly if they have charitable assets that they wish to deploy in accordance with donors’ intentions. Charities and not-for-profits involved in the provision of health care in Ontario may need to obtain independent legal advice in order to develop appropriate strategies for managing or addressing these risks under the new legislation.