Ottawa Hospital audit that led to settled 2016 construction procurement lawsuit cost more than $500,000: CBC

Ontario Construction News staff writer

An audit for The Ottawa Hospital (TOH) that led to a 2016 lawsuit alleging a fraudulent conspiracy between several construction contractors and two of the hospital’s managers – settled more than four years later without going to trial – cost taxpayers more than $500,000, the Canadian Broadcasting Corporation (CBC) has reported.

The end result, years after the TOH filed an explosive Statement of Claim, is that the contractors named in the lawsuit are working again for the hospital as the multi-billion dollar Civic Campus Experimental Farm redevelopment takes shape.

CBC reported on May 24 that the hospital fought the broadcaster’s efforts to obtain information about the litigation’s “true cost”.

However, an appeal by the broadcaster under Freedom of Information legislation “resulted in access only to the cost of the audit itself,” CBC says.

Likely litigation costs would be much higher, including legal fees and any settlements, lawyer and forensic auditor David Debenham told the CBC.

“They spent a lot of money on this, and the question is, is it well spent?” he said. “Did they get value for money? We have no way of telling.”

CBC reports that EY Canada was hired in 2015 as an outside auditor “to investigate ‘irregularities’ among the hospital’s procurement practices.”

The resulting Statement of Claim filed the next year alleged a “fraudulent scheme” involving two former longtime directors, both in charge of large budgets and projects. The suit alleged the managers conspired with five contractors to defraud the hospital in exchange for luxury vacations, family favours and discounts on home renovations.

EY’s investigations continued for three more years, billing a total of $549,235.32, according to the information released by the hospital, the broadcaster reported.

However, three years after launching the suit in early 2019, the hospital’s lawyers still hadn’t shared their evidence with the defendants. Some began planning a motion for summary judgement to ask the judge to throw out the case against them, CBC reported.

That spring, the hospital began settling the litigation with each of the parties, including countersuits by the two managers, CBC says.

In July 2020, four years after the lawsuit began, the hospital announced on its website that “the proceedings have now entirely concluded. All settlements are confidential.”

In an emailed statement to the broadcaster on May 24, the hospital noted Ontario’s information and privacy commissioner upheld its decision to withhold its legal fees and settlement costs.

The hospital then repeated its online statement from July 2020:

“As a public institution, TOH holds its financial practices to the highest standard of accountability and follows all procurement rules required by provincial and federal governments,” the hospital said.

“As a result of the proceedings, TOH completed detailed internal reviews and implemented additional controls and monitoring processes that are much more stringent. TOH continues to remain diligent in the stewardship of health-care funding while ensuring the community receives first-class care.”

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