Ghosts of Atcon affair haunt debate over travel-nurse contracts

Maybe it was inevitable that within 24 hours of a report into what one MLA called "one of the worst economic scandals in the history of New Brunswick," politicians invoked another of the worst-ever scandals.

It was Liberal MLA Robert Gauvin who labelled the travel-nurse controversy as "one of the worst" — and Health Minister Bruce Fitch who promptly tried to one-up him.

"When he talks about financial disasters — remember the Atcon scandal," Fitch said during question period Wednesday.

For a second straight day, exchanges at the legislature were dominated by the scathing report by Auditor General Paul Martin on $173 million in contracts with private sector travel-nurse companies filling staffing gaps in New Brunswick hospitals.

Martin described a litany of problems with the contracts, particularly three agreements between the Vitalité Health Network and Canadian Health Labs, that he says were inked without due diligence.

"There's some common sense missing here that went out the window. People were just pressing 'click' on the pay button," Martin said earlier this week.

New Brunswick Auditor General Paul Martin delivered a report on Tuesday criticizing travel-nurse contracts signed during the pandemic. (Jacques Poitras / CBC)

Vitalité has paid Canadian Health Labs up to $300 per hour per nurse — far more than what it would cost to employ unionized nurses.

In some circumstances, the company can deploy its nurses "regardless of the actual need" and can still be paid up to $85 million during the life of its agreements, Martin said.

Vitalité has argued it urgently needed to do something to avoid closing or reducing services at some of its hospitals in 2022 — though critics say a properly funded public health-care system wouldn't need a costly private-sector backstop in the first place.

Government money couldn't save Atcon

Liberals argued they were responding to an emergency, too, when they approved $70 million in loans and loan guarantees for Atcon in 2009 — potentially major job losses in Miramichi if the company shut down.

But the money didn't save Atcon.

The company went bankrupt anyway, in April 2010, and taxpayers lost almost all of the $70 million.

How exactly that ranks compared to the travel-nurses controversy is hard to measure precisely.

The Liberal premier at the time, Shawn Graham, was eventually found to be in a conflict of interest for his role in the loans because of his father's business connections to the company.

The Atcon scandal happened under Shawn Graham's Liberal government. The Atcon loans were approved despite advice from civil servants who warned that the company was likely to fail. (Radio-Canada)

Even after Graham was gone, the Progressive Conservatives feasted on Atcon for years.

They used the legislature's public accounts committee, Atcon's drawn-out bankruptcy proceedings and two auditor-general reports to keep the Liberal loans in the public eye.

They zeroed in on six former Graham cabinet ministers who approved the funding, remained MLAs and returned as ministers in Brian Gallant's Liberal government in 2014.

In 2015, Fitch, then the acting leader of the PC opposition, took part in a photo-op where he and some party staffers delivered Atcon computer servers — purchased during a bankruptcy auction — to the RCMP for investigation.

No charges were ever laid as a result of the stunt.

Bruce Fitch, right, was the acting PC opposition leader in 2015 when he helped carry an Atcon server into the RCMP for investigation. (Jacques Poitras/CBC)

The travel nurses affair has the potential to drag on for a similar extended period.

Health-care officials will be grilled over the contracts by the public accounts committee later this month, but other aspects of the story could ripple for years.

Vitalité said this week it's in a "dispute" with one of its travel-nurse contractors, while the government says it will try to "extricate" the health authority from the current Canadian Health Labs agreement.

Both scenarios could lead to lengthy lawsuits.

The so-called "auto-renewal" clause in the Canadian Health Labs contract may also allow the company to extend its role in the province beyond 2026, Martin says.

Still, there are differences between the current controversy and Atcon.

The Atcon loans were approved by Liberal politicians, despite advice from civil servants who warned that the company was likely to fail regardless and take the $70 million with it.

"With Atcon, we've been able to find out over time that cabinet was directly related to that," PC MLA Jeff Carr observed this week.

"We don't know here [with the travel nurses] if any of that happened."

The opposition is trying to pin responsibility on Premier Blaine Higgs but haven't proven the case.

Higgs fired the CEO of Horizon Health, shuffled Fitch into the health minister position and fired the Horizon and Vitalité boards just two weeks before Vitalité signed the first of three contracts with Canadian Health Labs.

Premier Blaine Higgs told Liberal Leader Susan Holt he was not micro-managing the health authorities or their contracts. (Ed Hunter/CBC)

"I'm prepared to do whatever is necessary to protect and improve the health-care system in our province," Higgs declared at a July 15, 2022 news conference.

This week, Higgs told Liberal Leader Susan Holt he was not micro-managing the health authorities or their contracts.

"If she thinks all of these invoices show up on my desk, well, they don't."

The health department's deputy minister, Eric Beaulieu, said in February he knew of Vitalité's first contract with Canadian Health Labs, dated July 29, 2022, but wasn't told of two subsequent agreements.

The trustee running Vitalité at the time, Gérald Richard, was also in the loop and said in March he supported the decision.

He and Richard both reported to Higgs.

"It is important to note that the use of agency staff was endorsed by the Department of Health," Vitalité said in a statement this week.

"Several meetings were held with the Department during which travel nurses were discussed."

'Who knew what,' and when

Higgs said in February he didn't know about the $300 hourly billing rate until the Globe and Mail revealed it in a story earlier that month.

"What I really want to know is who knew what, and when," Green MLA Megan Mitton said.

Fitch says he was briefed on Vitalité's first contract in the fall of 2022, but only grasped the cost implications in early 2023 as the annual government budgeting process began.

By then Vitalité had signed two more contracts with Canadian Health Labs.

The three contracts were worth up to $98 million, more than half of the total $173 million value of all travel-nurse agreements.

That's much more than what was lost with Atcon but Fitch argues there was a key difference.

"The Atcon money went to the bank. The bank just ended up taking it," he said.

"The travel nurse money went to help provide care to the people of New Brunswick."

Health Minister Bruce Fitch says the Atcon scandal is worse because the money spent by the government went right to the banks, while money spent on travel-nurse contracts went into health care. (Ed Hunter/CBC)

But not all the money, according to the auditor general.

Martin said the Canadian Health Labs contract allows it to deploy nurses even if they're not needed.

"You pay whether they show up or not," he said.

Fitch acknowledged that to reporters, who asked him whether he thinks Vitalité should have signed the second and third contracts with Canadian Heath Labs.

"We're looking in the rear-view mirror now, which is always 20-20 vision," said the minister, who earlier in the morning was looking back himself at the Atcon controversy.

"They signed those contracts," Fitch said, "and if we had had a look at it, it might have been a different outcome."