eHealth required to pay CGI $26.9 million

TORONTO – An arbitrator has ruled that eHealth Ontario, the provincial electronic health records agency, must pay CGI Information Systems $26.9 million to compensate for its work on a registry of diabetes patients axed in 2012.

The Toronto Star reported that CGI sued eHealth for $102 million, but both sides agreed to send the case to arbitration by Warren Winkler (pictured), former chief justice of Ontario, avoiding court costs and publicity as a deal was worked out behind the scenes without public testimony.

“Today’s award was based on Mr. Winkler’s assessment of what represented fair and reasonable compensation for CGI,” eHealth chairman Ray Hession said in a statement.

The $26.9 million is more than half the value of the original $46 million contract, cancelled with no payment to CGI as eHealth claimed the company had not delivered a functional registry by the deadline.

“Today’s decision protects taxpayers from $46 million spending,” then health minister Deb Matthews boasted at the time.

Matthews – who is now president of the treasury board for Premier Katheen Wynne –declined to comment. Also deputy premier, Matthews is in charge of curbing expenses as the government tries to erase an $8.5-billion deficit within three years.

Her successor as health minister, Dr. Eric Hoskins, would not elaborate on what happened with the CGI contract. “The specific terms of the arbitration settlement are subject to confidentiality,” he said in a statement.

eHealth had countersued CGI for $25 million, a claim Winkler apparently found unconvincing, raising questions about the government’s insistence it had an ironclad agreement with the company.

Hession’s statement suggested the agency has had a change of heart on CGI’s efforts.

“Our work with CGI has benefitted the creation of foundational technological elements of our electronic health system that have helped improve healthcare in the province.”

CGI officials hailed the settlement.

“As a global technology company founded and headquartered in Canada, our history and reputation have been built on satisfying our clients, effectively serving all provincial governments and their citizens from coast-to-coast and around the world,” chief executive Michael Roach said in a statement.

“I’m pleased that we have resolved this matter.”

In its lawsuit, the company said it invested “significant effort and resources” in the project and blamed eHealth for “substantial delays” in its design and scope.

Opposition parties were aghast at the payout, saying it goes on a long list of Liberal government waste of public dollars, from previous eHealth scandals, to cancelled power plants and the new social assistance computer system.

“There’s a lot that could have been done in healthcare with this money going to CGI,” said New Democrat MPP France Gelinas.

The expense is a slap in the face to diabetics told two years ago that the government was saving up to $25 million a year by limiting reimbursements to them for blood glucose test strips, added Progressive Conservative MPP Bill Walker.

The award is the latest setback for eHealth, which said in 2012 that the registry to track the healthcare needs of diabetes patients 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 has more than doubled this century and accounts for at least $5 billion in annual healthcare costs.