Introduction
Public hospitals in Ontario are operating in an increasingly complex and highly regulated environment. Over the years, they have become subject to a growing number of legal requirements, due to changes at the health system level, and evolving policy and regulatory developments. Hospitals are required to meet their obligations as not-for-profit corporations, including addressing governance, compliance and business operations issues. In addition, as employers, and given their mandate in the provision of health care, hospitals are also required to comply with various statutes on matters ranging from employment standards to health information privacy.
The sixth version of the Understanding Your Legal Accountabilities Guide, now named A Guide to Hospital Statutory Compliance (Guide) was developed by the Ontario Hospital (OHA), in consultation with Borden Ladner Gervais LLP (BLG). This resource endeavours to offer an overview of statutory obligations applicable to hospitals. While previous versions focused primarily on periodic reporting requirements, this Guide takes a broader approach, grouping key legislation thematically and providing practical compliance considerations for hospitals. This Guide continues to provide an overview of director liability by outlining the legal responsibilities of hospital boards and identifying areas where directors may be personally liable for non-compliance (but no longer provides commentary on general offences). See below for additional commentary on director liability.
By consolidating some key statutory compliance requirements into a single reference document, this Guide aims to help hospitals stay informed of their legal obligations, reduce risk exposure, and implement effective compliance measures. Hospitals are encouraged to integrate this resource into their governance and operational policies, and to share it with leadership, compliance officers, and other key stakeholders within their organizations. Please note that this is a general resource and is intended to serve as preliminary guidance only. It does not represent an exhaustive summary of all legislation with which hospitals have to comply, nor does it exhaustively list all requirements of legislation referred to. Hospitals may wish to use this Guide as a starting point for their own processes and policies to manage statutory compliance.
Director Liability
While directors are not generally personally liable for the acts, omissions, and/or contractual obligations of the corporations they serve, there are exceptions to this general rule. These exceptions include the direct imposition of liability under certain federal and/or provincial legislation (some of which are referred to in this resource). Where legislation does not include director-specific offence and penalty provisions, this does not preclude the possibility of director liability in respect of provisions relating to individuals.
In addition to legislative liability, directors may be held personally liable for breach of fiduciary duty, failing to meet the requisite standard of care, contractual obligations in certain circumstances, and director negligence contributing to corporate action resulting in damage or harm.
For most offences created under legislation, directors have a “due diligence defence”, even if it is not expressly included in the legislation. Where a director can demonstrate that he/she met the standard of care and took reasonable steps to prevent the offence, he or she can be relieved of liability. Good governance practices are an essential element in a successful due diligence defence. Directors will not be held liable for errors in judgment if their decision was informed and they engaged in a reasonable decision-making process. Unless there is reason to suspect the contrary, directors are entitled to assume that senior managers of the corporation are acting honestly.
Disclaimer
This resource was prepared as a general guide to assist hospitals and health care providers in understanding areas where they have legal accountability to various stakeholders. It does not provide an in-depth analysis of applicable law, nor is it comprehensive of all legal requirements to which hospitals are subject. It is intended to provide a general overview to help hospitals decide when to seek advice or additional information. Organizations should not rely solely on the summary information contained in this toolkit when deciding whether to take or refrain from taking action.
The material in this toolkit is for general information only and may need to be adapted by hospitals and health care providers to accommodate their unique circumstances. This document reflects the interpretations and recommendations regarded as valid at the time of publication based on available information, but the law may change. It is not intended as, nor should it be construed as, legal or professional advice or opinion. Hospitals and individuals concerned about the applicability of the materials are advised to seek legal or professional counsel.
The Ontario Hospital Association (OHA) and Borden Ladner Gervais LLP (BLG) will not be held responsible or liable, jointly or severally, for any harm, damage, or other losses resulting from reliance on, or the use or misuse of the general information contained in this toolkit. Further, the OHA and BLG make no representation or warranty, express, implied or otherwise, as to the currency, accuracy or fitness for purpose of the Guide or any supplements, translation or derivations thereof.
