Unchartered waters: bad faith bargaining or responsible government?

On June 12, 2012, the OMA announced its intention to launch a constitutional challenge to the Ontario Government’s decision to reduce physician fees for 37 procedures and services. No doubt the OMA’s decision to attempt to shift the locus of its dispute with the government from the bargaining table to the courts was motivated by a variety of strategic considerations. In this post, I will leave those aside, and focus on explaining the various arguments and counterarguments that may be made if the matter ever gets litigated in the courts.

According to the OMA’s media release, the OMA’s challenge, which has not yet been formally initiated, will rest on the “freedom of association” guarantee in section 2(d) of the Canadian Charter of Rights and Freedoms.

Until 2007, there would have been no legal basis whatsoever for the OMA’s challenge. This is because over 25 years ago, in 1987, the Supreme Court of Canada (SCC) had ruled that the “freedom of association” constitutional guarantee in s. 2(d) of the Charter did not protect any right to collective bargaining.

However, in a landmark 2007 ruling in a case called B.C. Health Services, the SCC reversed itself, and ruled that s. 2(d) protects the right of employees to engage in a process of collective bargaining with their employer, including protection for the principle of good faith bargaining.

How do these principles apply to a potential OMA constitutional challenge?

The first hurdle the OMA will have to overcome (if the case is ever litigated) is to establish that the constitutional right to collective bargaining extends beyond employees and applies to self-employed physicians.

On the one hand, the government can be expected to argue that these constitutional protections are limited to the employer/employee relationship, and do not extend to independent, self-employed physicians, who like many other providers, simply bill government for services provided.

However, the OMA will likely  respond that (with the exception of a very small number of “grand-parented” physicians), Ontario physicians are now precluded by the Commitment to the Future of Medicare Act from opting out of OHIP, with the result that they are as dependent as ordinary employees on a single paymaster. On this view, the government acts, in effect, as their only employer when it comes to providing insured services. Similarly, the OMA may point to the Canada Health Act which, while banning extra-billing, also requires as a quid pro quo that physicians have a right to reasonable compensation — a requirement which is deemed to be met where there is some kind of bargaining process culminating in conciliation or arbitration. (I will say more about the reasonable compensation requirement under the CHA in a future post).  Moreover, the OMA can point to international law freedom of association principles, which recognize that self-employed professionals should enjoy the right to a good faith process of collective bargaining

Assuming Ontario physicians are protected by a constitutional right to a process of collective bargaining analogous to ordinary workers, the issue becomes whether the Ontario Government has “substantially interfered” with the right of physician to collectively bargain. According to its press release, the OMA is arguing that:

A)  As the bargaining representative for Ontario’s physicians, the OMA has the right to bargain changes to the fee schedule;

B)  Government has a corresponding obligation to bargain with the OMA in good faith; and

C)  Government breached this obligation by failing to consider the OMA’s representations concerning changes to the fee schedule in good faith, by refusing to agree to a third party neutral conciliator to assist the OMA and Government in their negotiations, and ultimately by unilaterally proceeding to cut the fee schedule.

At this stage, it is difficult to assess the merits of the OMA’s claim, or of the Government’s response, since none of us have been privy to the details of what was communicated at the bargaining table, or to all of the positions taken by and proposals exchanged between the bargaining parties, nor have any court documents been filed.

However, it can be expected that the OMA’s case will turn upon its being able to present evidence which persuades a court that the Government’s conduct at the bargaining table fell below the standards of good faith bargaining. These standards – which are primarily procedural in nature — include that both parties rationally discuss each side’s proposals, that they each approach the challenge of reaching an agreement with an open as opposed to a closed mind, that the “employer” recognize the “union’s” right to bargain on behalf of its members, and that relevant information be disclosed.

Indeed, from its press release, the OMA seems to be arguing that that the government failed to comply with at least some of these aspects of the obligation to bargain in good faith, including that the Government was not open to real bargaining, presented the OMA with a rigid and unalterable position, or threatened its representation rights.

It can be expected the Government would  counter these allegations by  asserting that, while it may have adopted a “hard” bargaining position, good faith bargaining principles do not prevent it from doing so and, in any event, that it was at all times willing to come to an agreement with the OMA. The Government would also likely point out that a labour board or court would normally shy away from assessing the reasonableness or justification for particular bargaining proposals in assessing whether the obligation to bargain in good faith has been breached.

Moreover, it is important to understand that the duty to bargain in good faith does not, in itself, prevent either bargaining party, once an impasse is reached at the bargaining table, from resorting to economic sanctions or other measures, in order to secure a favourable outcome. Indeed, this is the very essence of a collective bargaining process.

These measures can include the employer (in this case the government) unilaterally proceeding to implement its final offer. Readers in the City of Toronto may well remember that this is exactly the strategy employed by the City in its recent round of bargaining with its unions.  In response, under the ordinary principles of our collective bargaining system, if the employees (in this case doctors) do not wish to accept the terms which are imposed, their normal recourse is to engage in some form of withdrawal of services — for example, work slowdowns, targeted or rotating job actions or outright strikes.

As a result, Government may also argue that, to the extent that bargaining with the OMA had reached a dead end, it was not bargaining in bad faith for it to move to the next stage and unilaterally impose its bargaining proposals — just as it would not have been bargaining in bad faith for the OMA to have responded by engaging in some form of job action (as doctors did recently in the U.K. in response to government significantly increasing their pension contributions).

However, if the OMA is able to establish that the Government’s actions have interfered with freedom of association, the government will still be able to rely on section 1 of the Canadian Charter of Rights and Freedoms, which allows it to override a constitutional breach where it can establish that this is “demonstrably justified as a reasonable limit in a free and democratic society”.

The OMA will likely argue that the courts do not readily accept cost-based arguments as amounting to sufficient justification for overriding constitutional rights. In response, the Government would attempt to present evidence that, in the current post-Drummond fiscal climate, it is facing an economic crisis justifying it in acting unilaterally. The government will likely also argue that it had sufficient grounds for concluding that it would not be able to reach agreement with the OMA on fee schedule changes it believed to be necessary, and that it had a reasonable evidentiary basis for making the particular changes it imposed.

For its part, the OMA would likely respond with evidence and argument seeking to establish that, no matter how serious the fiscal situation, the changes unilaterally imposed by government were neither reasonable nor necessary, and that had the government negotiated in good faith it would have been able to reach an agreement with the OMA and at the same time achieve its legitimate public policy objectives.

My own track record for predicting the outcome of Charter challenges is far from perfect. However, it seems safe to predict that any litigation, if pursued, would take years before it finally winds its way through the courts.  In the meantime, the pressure on both government and the OMA to address physician compensation issues will not patiently stand by waiting for judges to deliver their verdict. The real game remains in the negotiating and political arena, not the courts.  Given the public interest in both uninterrupted medical services and in a medical profession that can get behind needed reforms, both parties should be encouraged to agree to a skilled conciliator or other third party assistance so that they can get on with the real task at hand.