Canada has a single-payer health insurance scheme that covers virtually all residents.  Most physicians are in private practice and they bill the insurance plans for their services.  Being in private practice, they require medical liability insurance.  This is usually obtained through a professional organization.  However, physicians are reimbursed for a large portion of their insurance premiums by provincial governments.  Fees are lower than in the United States for a number of reasons.  Two of these are that Canada’s highest courts have set limits on awards and the country’s liability laws make establishing professional negligence more difficult.  Another is that the physicians’ insurance company defends lawsuits very vigorously.

As can be seen from the above, the Canadian system is more accurately described as a “single-payer” system than a “socialized” one.  However, even this description needs to be qualified.  Canadian physicians are not required to submit bills for their fees to the provincial health insurance plans.  They can “opt out” of the systems and bill their patients directly.  However, physicians who do decline to participate in a provincial plan must operate entirely outside it as they are generally prohibited from billing the insurance plan for some of their services and patients for others.  In other words, physicians cannot be partial participants.  For this reason, the vast majority of Canada’s physicians are enrolled in the provincial health insurance plans and earn virtually all of their income from the bills they submit to them.

Canada’s provincial health insurance plans are generally similar, but do have some differences.  For example, the Province of Quebec has more generous prescription drug coverage than any other province.  However, the similarities are far greater than the differences.  One of the major reasons for this is that in order to qualify for federal subsidies, provincial health insurance plans must adhere to the guidelines set out in the Canada Health Act.  The one guideline that has been the subject of the most controversy over the years has concerned “extra-billing.”  The Canada Health Act does not allow the provinces to permit physicians to bill patients for a portion of their services through co-payments or other types of additional fees.  The federal government has remained firm in this position for many years on the grounds that it does not want to see the creation of two-tiered systems in which patients who could afford to pay for a portion of their health care would receive more comprehensive coverage and preferential treatment compared to those who could not afford additional health costs.  In the past, some provinces have lost a portion of their transfer funds for allowing some extra-billing, but a number would still like to be able to allow for extra-billing in certain cases in order to help keep their costs down without having to pay a penalty in the form of reduced transfer payments.

Canada’s provincial health insurance plans do not cover all services.  Dental care, eye exams, and cosmetic surgery are three examples of services that generally are not covered.  However, most Canadian employees have supplemental medical insurance provided by their employers that give at least partial coverage for these services.  For example, supplemental insurance will usually cover one eye exam and one pair of glasses per year.  Many collective bargaining agreements provide for supplemental insurance.  In other cases, supplemental insurance is offered as a non-mandated work benefit, but it is not required.

Liability Insurance

Canadian physicians who are in private practice or work for hospitals are required to obtain medical liability insurance.  Such insurance is available through the Canadian Medical Protective Association (CMPA).  Insurance premiums or “membership fees” are based upon the type of work a physician performs and the region in which he or she practices.  The three fee regions are Quebec, Ontario, and the Rest of Canada.  The CMPA has published Fee Schedules. Fees are not based upon a physician’s record and are not increased for a history of complaints or on account of claims paid.

Table showing the Average CMPA fees in 1989.

Membership fees paid to the CMPA give physicians insurance coverage and a right to representation in medical malpractice lawsuits.  However, provincial governments reimburse physicians for at least a portion of their membership fees.  These arrangements are not generally made public.  However, a recently released Memorandum of Understanding between the Ministry of Health, the Ontario Medical Association, and the CMPA reveals that physicians are currently reimbursed for about 83 percent of their membership fees.  It has been reported that the Ontario government paid about Can$112 million to reimburse physicians for medical malpractice fees in 2008.  Government officials in Ontario have explained that the purpose of the reimbursement program is to encourage physicians to practice in the province and not to move to another province or the United States where average incomes may be higher.  Critics contend that because the CMPA’s fees are not based upon a physician’s record, the system does little to penalize physicians who are found to be liable for malpractice even on multiple occasions.  Physicians who have committed acts of malpractice may, however, be disciplined by their provincial licensing body.  Discipline can range from suspensions to losses of the privilege to continue practicing medicine.

The CMPA has also been criticized for defending medical malpractice suits extremely vigorously and turning down reasonable offers to settle claims to discourage other lawsuits on a number of occasions. One judge reportedly referred to the CMPA as pursuing a “scorched earth policy.” In Canada, a losing party is generally required to pay about two-thirds of a successful party’s legal fees.  Since the CMPA often incurs large legal expenses in defending claims, this is an additional disincentive to persons who believe that they have been injured through malpractice from bringing an action for damages.

One other feature of Canadian law that tends to discourage parties from suing physicians for malpractice is that the Supreme Court has set out guidelines that effectively cap awards for pain and suffering in all but exceptional cases.  In a trilogy of decisions released in 1978, the Supreme Court established a limit of Can$100,000 on general damages for non-pecuniary losses such as pain and suffering, loss of amenities and enjoyment of life, and loss of life expectancy.  The Supreme Court did state that there may be extraordinary circumstances in which this amount could be exceeded, and courts have allowed the figure to be indexed for inflation so that the current suggested upper limit on awards for non-pecuniary losses is close to $300,000.  Nevertheless, the flexible cap on non-pecuniary losses is a major disincentive to persons considering whether they should sue a physician for malpractice and for lawyers to specialize in or seek out malpractice cases.

The Supreme Court of Canada has also limited the types of cases in which punitive damages may be awarded, although it has allowed as much as Can$1 million in punitive damages in an extraordinary case. A Canadian law firm has summarized the holding in this leading case concerning punitive damages as follows:

• Punitive damages are very much the exception rather than the rule;
• Imposed only if there has been high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behavior.
• Where they are awarded, punitive damages should be assessed in an amount reasonably proportionate to such factors as the harm caused, the degree of the misconduct, the relative vulnerability of the plaintiff and any advantage or profit gained by the defendant,
• Having regard to any other fines or penalties suffered by the defendant for the misconduct in question.
• Punitive damages are generally given only where the misconduct would otherwise be unpunished or where other penalties are or are likely to be inadequate to achieve the objectives of retribution, deterrence and denunciation.
• Their purpose is not to compensate the plaintiff, but

to give a defendant his or her just desert (retribution), to deter the defendant and others from similar misconduct in the future (deterrence), and to mark the community’s collective condemnation (denunciation) of what has happened.

• Punitive damages are awarded only where compensatory damages, which to some extent are punitive, are insufficient to accomplish these objectives, and

they are given an amount that is no greater than necessary to rationally accomplish their purpose.

• While normally the state would be the recipient of any fine or penalty for misconduct, the plaintiff will keep punitive damages as a “windfall” in addition to compensatory damages.
• Judges and juries in our system have usually found that moderate awards of punitive damages, which inevitably carry a stigma in the broader community, are generally sufficient.

Thus, punitive damages in tort actions in Canada are relatively rare.

Negligence

Despite the above factors that discourage medical malpractice lawsuits in Canada, there are numerous reported cases in which doctors, hospitals, and health care professionals have been found liable for acts of negligence in the delivery of health care.  In order to be successful, a plaintiff must show that the defendant owed him or her a duty of care, the defendant did not deliver the standard of care owed, the plaintiff’s injuries were reasonably foreseeable, and the defendant’s breach of the duty of care was the proximate cause of the plaintiff’s injuries.  An error of judgment is not necessarily negligence even if it causes injury.

Common types of negligence actions are as follows:

• Failure to attend a patient
• Failures in diagnosis
• Failures in re-diagnosis
• Failures in referral or consultation
• Failure to communicate with other physicians
• Failure to protect or warn third parties
• Failure to report abuse
• Substandard treatment

Hospitals can be held liable under the doctrines of vicarious liability or direct liability for the conduct of their staffs.

Concluding Remarks Regarding the Issue of Malpractice

Controversy over the effect that malpractice lawsuits are having on the delivery of health care have never risen in Canada to the levels that they have in the United States.  Awards against physicians have, on a per capita basis, been much less frequent than in the United States and awards have generally been much smaller for similar injuries.  There are a number of factors as to why this is the case.  Proving negligence can be harder, the CMPA defends malpractice lawsuits very vigorously, there is a flexible cap on non-pecuniary losses, and punitive damages are seldom awarded.  Nevertheless, there is a growing body of case law respecting medical malpractice that demonstrates a tendency of the courts and juries to be somewhat more open to claims that a physician should be held liable for committing an act of negligence that causes injury to a person to whom he or she owes a duty of care.

I have also included the Malpractice trends in Canada as compared to the U.S.. The amount of malpractice litigation in Canada was minimal in the 1940s and 1950s, but it began to grow in the 1960s. Between 1971 and 1989, the number of malpractice claims filed against Canadian physicians increased almost sevenfold, from 130 to 878. The number of claims per physician increased by an average of 6.4 percent per year in that period, with the peak occurring in 1985. Between 1976 and 1987, 33 percent of the Canadian claims resulted in payments, as compared with between 43 and 50 percent of the U.S. claims. Still, the Canadian malpractice situation compares favorably as compared to our U.S. problem.

Malpractice Trends in Canada and the U.S.

Now, how is the physician educated in Canada?

In order to become a physician, you must complete a three or four year Medical Doctor (MD) degree program at an accredited university, followed by family medicine or specialty post-graduate training. Subsequently, completion of the qualifying examinations of the Medical Council of Canada and licensing by the provincial or territorial licensing authority are required. This means a commitment of seven to nine or more years. Some medical schools require two to three years of pre-med while others may require a bachelor’s degree. After the MD degree, you may choose between Family Practice (2 years minimum) or other medical specialties (at least 4 years) and will spend your time as a resident physician training for certification while being paid (currently about $35,000 a year) to care for patients.

In terms of educating and training health providers, provincial ministries of health work in tandem with provider organizations to set or alter the number of “seats” or entry positions in professional programs in postsecondary institutions. Since education is exclusively within the jurisdiction of the provinces and almost all education in Canada is financed publicly, provincial governments determine the funding for the postsecondary education of the health professions that is delivered by universities, colleges and technical institutions (Tzountzouris & Gilbert, 2009).

There are 17 medical programs offering a medical doctorate (MD) in Canadian universities. The programs vary in length from three years (McMaster University and University of Calgary) to the more typical four-year program including the clinical practicum (CIHI, 2011a). After graduating, medical students enter a residency program in family practice or some specialization and complete their training – a minimum two-year residency program in the case of family practice and four or more years in other specialties in medical, surgical and laboratory medicine. As in most countries, the number of physician specialties has grown over time. As of 2011, there were 28 specialties, 36 subspecialties and two special programs for a total of 66 individual study and training programs. A small number of physician assistants (250 as of 2011) work in Manitoba and Ontario, the two provinces that also offer university-based programs for these physician extenders.

While undergraduate education and the awarding of undergraduate medical degrees (the basic “medical doctorate”) is the purview of the 17 medical schools in Canada, the RCPSC is responsible for overseeing the graduate education and training of physicians. As such, the RCPSC accredits 17 residency programs, all run by the university-based medical schools. Specialists are also certified by the RCPSC, which is recognized by all province medical licensing authorities except for Quebec, where the Collège des médecins du Québec is the primary certifying body (Flegel, Hébert & MacDonald, 2008; Bates, Lovato & Buller-

Taylor, 2008; CIHI, 2011a).

Educational requirements for nurses have increased dramatically over the last two decades, with a major shift from two-year diploma programs to four-year bachelor degree programs. Nurse practitioners are RNs whose extra training and education entitles them to an “extended class” designation. Their scope of practice – which includes prescribing certain classes of prescription drug and ordering some diagnostic tests – overlaps with that of family physicians. More importantly, given the evidence of the declining comprehensiveness of the primary care offered by physicians since the late 1980s, the range of health services offered by nurse practitioners has been of interest to primary health care reform advocates and provincial ministries of health (Chan, 2002b; College of Nurses of Ontario, 2004; CIHI, 2011c). In addition to their RN education and training, nurse practitioners must get additional training from accredited institutions that are offered in all ten provinces. The length of these programs, including the clinical practicum, varies from one year to slightly in excess of two years (CIHI, 2011a).

How Much?

Depending on where you live tuition fees can vary widely. The fees range from about $6000 to $16000 per year for Canadian residents. Compare that to the average tuition fees in the U.S. $45,00-$75,000. The exception to these higher costs is Quebec. For the year 2004-2005, Quebec residents pay around $3000 for a year’s tuition at Universite Laval, Universite de Sherbrooke, Universite de Montreal, and McGill University. However, if you do not live in the province, your rates are about twice or triple that, still cheap as compared to here in the U.S.. As with all Canadian university programs, foreign students and visa holders can expect to pay much more.

A recent survey found that there are 10,500 medical students in Canada and about 3600 Canadians studying medicine abroad – enough to fill about 6 Canadian medical schools.

The same survey found that more than 75% of Canadians studying medicine abroad say that they did so because they were not able to obtain a spot in a Canadian medical school. Competition here in Canada is fierce. Although there has been an expansion in medical school spots across Canada in recent years, about 25% of applicants are accepted. In the United States, 43% of applicants get into medical school.

Medical School Region	Average Yearly Tuition ($CAD)
Ireland	49,800
Caribbean	25,608
Australia	42,334
Canada	12,214

Source: CaRMs 2010 report Canadian Students Studying Medicine Abroad

Again we see a definite economic advantage in the foreign malpractice and education system that will result in a more sustainable health care system. However, is the Canadian system really advantageous and should we adopt their system? Next week I will break down the similarities and differences.

• An analysis by Crowe Horwath LLP suggests healthcare providers should be mindful of the increased adoption of high-deductible health plans (HDHPs).
• While the majority of uncompensated care is still associated with the uninsured population, the analysis found consistent growth in the share of uncompensated care associated with the insured population, the company reports.
• Given the trend, healthcare providers should be proactive in identifying these patients and take their costs under consideration. The analysis suggests the popularity of HDHPs will continue to grow as health insurance consumers seek out plans with affordable premiums. It notes, however, “currently, an astounding 84% of hospitals are not creating unique HDHP codes while an additional 9% are not effectively registering this growing insured patient population, which makes them prone to revenue leakage and financial risk.”

The analysis says insured patients’ share of uncompensated care jumped from 2013 to 2014, with bad debt up 22% and charity rates up 130% in Medicaid expansion states. In nonexpansion states, bad debt rose 35% and charity rates rose 130%. How sustainable will this situation be and will anyone be able to afford basic health care?