TORONTO – A legal dispute between eHealth Ontario and CGI Information Systems over a cancelled registry for diabetic patients will go to arbitration. The dispute over the $46 million cancelled contract was originally set to go to court, but will now be settled privately, away from public scrutiny.

The Toronto Star reported that eHealth Ontario is being sued for $102 million by CGI Information Systems, which was contracted to design and build an online registry of diabetes patients. The $46-million contract was “terminated” by eHealth in 2012 with no payment to CGI.

eHealth Ontario officials claimed deadlines had not been met and a functional registry system never delivered, contrary to the agreement.

“Today’s decision protects taxpayers from $46 million in spending,” then-health minister Deb Matthews, now deputy premier under Kathleen Wynne, said on Sept. 18, 2012.

In its lawsuit, CGI says it invested “significant effort and resources” in the project and that eHealth was to blame for delays.

eHealth launched a countersuit for $25 million, and now the case – which was slated to go to trial this month – will be settled out of court by an arbitrator, away from the public eye.

Opposition parties fear taxpayers will be left on the hook.

If the arbitrator’s decision goes against the government, “we’re going to be paying for something we didn’t receive yet again,” said Progressive Conservative MPP Bill Walker, alluding to the $1.1-billion spent to cancel and relocate two gas-fired power plants in Oakville and Mississauga.

Health Minister Eric Hoskins would not comment on what happened with the CGI contract, which his predecessor Matthews had characterized as ironclad.

“Decisions on litigation matters rest with eHealth Ontario and their board,” his officials said in a statement. “It would be inappropriate to comment further on any ongoing legal proceeding.”

The arbitration process should conclude “at the end of June,” eHealth told the Star.

“CGI and eHealth Ontario have agreed to have their disputes relating to the termination of the diabetes registry contract determined through a confidential arbitration process by former chief justice of Ontario, the Hon. Warren Winkler (pictured),” eHealth spokesman Mark Ellsworth said in an email.

CGI issued an identical statement and declined further comment.

“It is anticipated that, upon issuance of an award by the arbitrator, there will be disclosure of that award together with some explanatory public statement,” Ellsworth said.

In its 12-page statement of claim in the lawsuit, CGI blamed eHealth for “substantial delays” through changes in the design and scope of the project. “The delays caused by eHealth resulted in significant damages to CGI … notwithstanding the delays, CGI substantially completed the project by the summer of 2012.”

The company is suing eHealth for the $46-million value of the contract plus $56.4 million in damages for breach of contract – a total of just over $102 million – plus interest and costs.

A statement of defence from eHealth said the diabetes registry – to help improve outcomes for patients and reduce healthcare costs by keeping closer track of their needs – was supposed to “go live” on June 30, 2011.

“Fifteen months later, despite significant co-operative assistance on the part of eHealth Ontario in attempting to bring the project to fruition, CGI had still not delivered any application – let alone a usable or functional application,” the 28-page document states.

“CGI falsely led eHealth Ontario to believe that CGI had the requisite ability, experience, skill, resources and capacity to perform the project in a timely and professional manner.”

At the time the contract was cancelled, eHealth said the registry was no longer needed because 9,000 Ontario doctors were already using the agency’s EMR 4.1 system developed by 13 other vendors.

The number of diabetics in Ontario has more than doubled this century, accounting for at least $5 billion in annual healthcare costs.