On March 24, 2009, the Québec Government filed Bill 34 entitled the Act to amend various legislative provisions concerning specialized medical centres and medical imaging laboratories (“Bill 34”). This bill significantly limits the operation of specialized medical centres and medical imaging laboratories compared with what is currently provided for in the Act respecting health services and social services1 and in the Act respecting medical laboratories, organ, tissue, gamete and embryo conservation and the disposal of human bodies.2

This bulletin summarizes the main amendments introduced by Bill 34 by referring more particularly to those that apply to specialized medical centres and medical imaging laboratories.

Amendments Applicable to Specialized Medical Centres

List of Specialized Medical Treatments Which Must Be Provided in a Specialized Medical Centre

Bill 34 provides that the Minister will no longer determine, by regulation and after consultation with the Collège des médecins du Québec, what treatments must be offered in specialized medical centres. That role will now be assumed by the government, making the amendment process much more stringent than before. Certainly, the underlying objective of this amendment is to address the criticism directed at the regulation determining the list of treatments that must be offered in specialized medical centres adopted by Health Minister Philippe Couillard.

Currently, the Regulation respecting the specialized treatments provided in a specialized medical centre sets forth a list of treatments that must be offered in specialized medical centres, and complements the list already provided in Section 333.1 of the Act respecting health services and social services (hip, knee, cataract).

Conditions Applicable to the Holding of Voting Rights of a Specialized Medical Centre

Where a specialized medical centre is operated by a partnership or company, more than 50% of the voting rights attached to the shares of the company or the interests in the partnership must be held by:

  1.  physicians who are members of the Collège des médecins du Québec;  
  2.  a company or partnership all of whose voting rights attached to the shares or interest are held:  
  1. by physicians who are members of the Collège des médecins du Québec;  
  2. by another company or partnership all of whose voting rights attached to the shares or interests are held by physicians members of the Collège des médecins du Québec;  
  1. 3. both by physicians described in subparagraph 1 and by one or more companies or partnerships described in subparagraph 2.  

In order to avoid any ambiguity over the interpretation of the current Section 333.2 of the AHSSS, and to allow for the development of corporate structures and tax planning, Bill 34 specifies that physicians are deemed to hold a majority of the voting rights of the specialized medical centre if they hold such rights directly or indirectly through companies they fully control. Therefore, this prevents a person who is not a physician member of the Collège des médecins du Québec from holding even a 5% interest in such a company. This limitation brings a great rigidity to corporate structures without any legal justification in terms of the objective sought, which is to give physicians ultimate control over the activities of specialized medical centres to ensure the safety and quality of care and services provided in such facilities.

Board of Directors or Internal Management Board

Currently, the board of directors or internal management board of a company or partnership operating a specialized medical centre must have a majority of physicians who are members of the Collège des médecins du Québec (Sec. 333.2 of the AHSSS). This requirement becomes even more stringent under Bill 34, because in addition to representing a majority of physicians members of the Collège des médecins, these physicians must also practice their profession in the specialized medical centre and form the board’s quorum. We understand that the goal of requiring a board of directors or internal management committee to be made up of a majority of physicians is a way of ensuring the safety and quality of the care and services provided in the specialized medical centre; however, requiring that these physicians also practice their profession in the specialized medical centre is a limitation that goes beyond the objective sought.

Shareholders’ Agreement

Bill 34 prohibits the shareholders or partners of a company or partnership operating a specialized medical centre from restricting the powers of the board of directors of the company or partnership. Such a limitation might understandably apply to routine decisions regarding the management of a specialized medical centre and the care offered to patients. However, prohibiting such restrictions for extraordinary decisions, such as altering a company’s or partnership’s share capital, merging a company or partnership, or approving the employment contract of a key manager, is neither justified nor appropriate in our opinion. This limitation will greatly restrict the specialized medical centres’ capacity to attract external shareholders.

Medical Director

Bill 34 provides that medical directors must henceforth be chosen from amongst physicians who practice their profession in the specialized medical centre.

Preoperative and Postoperative Services

Bill 34 is more flexible than the current legislation in that it no longer requires specialized medical centres to also provide preoperative and postoperative services. Bill 34 now allows specialized medical centres to provide such care through the intermediary of other private resources with which they have entered into an agreement, as is already the case for rehabilitation services and home care support services needed for a patient’s complete recovery.

Cancellation, Suspension or Non-Renewal of Permit

Bill 34 allows the Minister to suspend, cancel or refuse to renew the permit of a specialized medical centre’s operator, including if the operator fails to maintain control over the operations of the specialized medical centre and, for instance, if the operator is not the owner or lessee of the centre’s facilities, is not the employer of the personnel required for the operations of the specialized medical centre and does not have the authority required to allow physicians who apply to practice in the centre to do so.

AMENDMENTS APPLICABLE TO MEDICAL IMAGING LABORATORIES

List of Examinations Offered in a Medical Imagery Laboratory

While it is now the government that is in charge of the list of medical treatments that are to be offered in specialized medical centres, under Bill 34 it will be the Minister who, by regulation, will determine what types of examinations of medical imagery using diagnostic radiology or magnetic resonance imaging can be carried on in a medical imaging laboratory. No regulation has yet been published in that regard.

Conditions Applicable to the Holding of Voting Rights of a Medical Imagery Laboratory

When Bill 95 came into force in 2008, it introduced restrictions on members of an association and the voting rights attached to shares or interests of a company or a partnership operating a medical imagery laboratory. Therefore, just as Bill 34 provides for specialized medical centres, where a medical imagery laboratory is operated by a company or partnership, Bill 95 provides that more than 50% of the voting rights attached to shares must be held by:

  1. physicians holding a specialist’s certificate in diagnostic radiology;  
  2. a company or partnership all of whose voting rights attached to the shares or interests are held:  
  1. by radiologists; or  
  2. by another company or partnership all of whose voting rights attached to the shares or interests are held by radiologists;  
  1. 3. both by radiologists or a company or partnership described in paragraph 2.  

As is the case for specialized medical centres, in order to avoid any ambiguity over the interpretation of the current provisions and to allow the development of corporate structures and tax planning, Bill 34 specifies that radiologists are deemed to hold the majority of voting rights of the medical imagery laboratory if they hold such rights directly or indirectly through the intermediary of a company they fully control. Therefore, this prevents a person who is not a physician who holds a specialist’s certificate in radiology from holding a 1%, 5% or 10% interest in such a company. Here again, we find this provision very restrictive and hardly justified given the objective sought, namely the “public” safety and quality of services offered by the laboratory.

Board of Directors or Internal Management Board

Currently, the board of directors or internal management board of a company, partnership or association operating a medical imagery laboratory must be made up of a majority of radiologists. Bill 34 narrows the obligation even further, since it requires that the majority of these radiologists be radiologists who practice their profession in the laboratory and form the board’s quorum. Here again, we understand that compelling a board of directors or internal management board to consist of a majority of radiologists is a way of protecting the safety and health of patients; however, requiring that radiologists practice their profession within the company, the partnership or the association seems to be a restriction which, once again, goes beyond the objective sought.

Shareholders’ Agreement

Bill 34 prohibits shareholders or partners of a company or partnership for which a permit for a medical imagery laboratory is issued from restricting the powers of the directors of that company or partnership. Such a restriction could understandably apply to routine decisions regarding management and services provided to a laboratory’s patients. However, adding such provisions for extraordinary decisions, such as altering a company’s or partnership’s share capital, merging a company or partnership, or approving the employment contract of a key manager, is neither justified nor appropriate in our opinion. This new restriction will certainly limit a medical imagery laboratory’s capacity to attract external shareholders.

Medical director

Bill 34 provides that medical directors must henceforth be chosen from amongst radiologists who practice their profession in the medical imagery laboratory.

Cancellation, Suspension or Non-Renewal of the Permit

Bill 34 allows the Minister to cancel, suspend or refuse to renew the permit of a medical imagery laboratory’s permit holder, including if such operator fails to maintain control over the operations of the laboratory and, for instance, if the company, the partnership or the association for whose benefit the holder acts is not the owner or lessee of the laboratory facilities, is not the employer of the personnel required for the operations of the laboratory or does not have the authority required to allow radiologists who apply to practice in the laboratory to do so.

Conclusion

Many of the changes proposed in Bill 34 seem to meet objectives that are far more political than practical. We hope the government will be responsive to the comments voiced by the various stakeholders in the industry and will limit the restrictions introduced only to those truly required to ensure the safety and quality of care and services.