Travel nurse company launches lawsuit against Vitalité
Canadian Health Labs alleges breaches of contract, seeks damages
A travel nurse company is suing Vitalité Health Network over alleged breaches of contract, including non-payments, as well as anticipatory breach of contract.
Canadian Health Labs filed its lawsuit with the Court of King's Bench in Saint John on March 21 — two days after the provincial government introduced legislation to get out of the contract with the Toronto-based company and avoid facing legal or financial penalties.
That legislation has not yet been passed.
Vitalité cancelled the remaining shifts of travel nurses employed by Canadian Health Labs (CHL) on Jan. 30, even though its controversial contract with the private staffing agency wasn't set to expire until next year.
In its statement of claim, Canadian Health Labs alleges it has suffered loss and damages, and will continue to suffer "irreparable" harm to its reputation.
It is seeking damages in a number of areas, including for alleged unpaid invoices, for breach of the duty of good faith, for "unjust enrichment," and for "intentional interference with economic relations," as well as costs. The claim is also asking for pre-judgment interest at a rate of seven per cent.
In addition, the company is seeking a declaration that its contract is valid and legally binding, and a permanent injunction to prevent Vitalité from soliciting the company's nurses to work directly for the regional health network instead of another travel nurse company it deals with.
None of the allegations have been proven in court.
Vitalité has not yet filed a response. In an emailed statement Thursday, an unidentified spokesperson for the regional health network said it not been served "with any statement of claim or other originating process before the Court of King's Bench.
"We recommend that you contact CHL. We are not in a position to speak to their legal actions or intentions."
Canadian Health Labs declined to comment through spokesperson Tom Vernon.
No plan for public inquiry
The Department of Health did not immediately respond to a request for comment but Premier Susan Holt addressed the lawsuit during her weekly update on U.S. tariffs in Fredericton on Thursday.
She called the timing of the lawsuit "interesting" and vowed to fight to defend New Brunswickers against what she called "a bad contract."
"I feel quite confident in the legislation that we've put forward. I think it's strong and it will do what we need it to do," she said.
"I think our case against CHL is strong. In the face of a bad contract, I don't know how they can defend it, but we're putting the mechanisms in place to protect New Brunswickers."
Although the Liberals called for a public inquiry into the travel nurse contracts while in Opposition, Holt said her government has no plans for one "at this point," but they do plan to get to the bottom of how this contract happened.
Vitalité's three contracts with the company, which covered from July 2022 to February 2026, totalled $98 million, according to Auditor General Martin. The company charged about $300 an hour per nurse — roughly six times what a local staff nurse earns.
While the health system was facing dire staffing shortages in 2022 when the authority signed its first contract with Canadian Health Labs, the deployment of travel nurses in Vitalité's hospitals "did not correlate with staff absences due to COVID-19," Martin found in June.
"The contracts with private nursing agencies were not reflective of best practices and did not demonstrate value for money," he said.
Terms of the contract
According to the statement of claim, the parties entered a contract on Dec. 2, 2022, where the company would supply Vitalité with human health resources to "fill critical staffing gaps" in its hospitals.
The contract was slated to end on Feb. 5, 2026, "subject to rights of extension or early termination set out in the contract," the document states.
Under the contract, the company was to deploy human health resources in teams, with each team consisting of an agreed upon ratio of registered nurses, licensed practical nurses, and administrative and management staff.
The contract required Vitalité to meet certain deployment levels measured in "team days" — a certain number of hours being worked by the collective team per day.
Generally, Vitalité was to compensate the company by way of a fixed fee per team day.
Vitalité was also responsible for paying Canadian Health Labs' expenses, including travel and boarding costs for the workers, according to the statement of claim.
'Numerous breaches'
The company alleges Vitalité committed "numerous breaches." These include that Vitalité has not paid agreed amounts for services, stopped using CHL nurses before the contract expired, and encouraged nurses to leave the company.
Vitalité "repeatedly failed" to meet the payment terms and timelines under the contract, according to the court document. "Several invoices" remain unpaid our partially unpaid, it says.
"The failure of Vitalité to pay the outstanding amounts constitutes a breach of the terms of the contract, is evidence of bad faith in commercial dealings by Vitalité and results in an unjust enrichment to Vitalité," the company claims.
Canadian Health labs also alleges Vitalité underpaid for some services.
The company, "in a good faith effort to help resolve some of the issues between the parties regarding its other contractual relationships … temporarily agreed to transfer certain Teams deployed by Vitalité under another contract between the parties to be used under this contract."
No details about the other contracts are provided, but the transferred teams had a higher proportion of registered nurses to licensed practical nurses and cost more, yet Vitalité "refused or failed" to compensate the company for the higher-cost teams or correct the ratios.
The company contends Vitalité stopped using its nurses on Jan. 30, has indicated it does not intend any further deployments, and refuses to discuss the matter, referring to this as "anticipatory breach of contract."
On Jan. 30, Vitalité advised CHL nurses that the contract was being cancelled and that they should seek alternate employment with either Vitalité or another travel agency,
This "unauthorized communication" contained "misrepresentations, factual inconsistencies, and confidential and privileged information," according to the statement of claim.
It resulted in "significant contractual turmoil" between Canadian Health Labs and its human health resources, significant disruption between CHL and its other logistics support providers, and significant reputational harm, the company contends.