2003 Annual Report

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Schedule R - Canadian Blood Services - Cost Recovery Budget Proposal for Year 4

Ms. Bonnie Tough
Hodgson Tough Shields DesBrisay
O’Donnell
Barristers & Solicitors
Suite 550
36 Toronto Street
Toronto, ON M5C 2C5

Dear Ms. Tough:

Re: 2003-2004 Cost Recovery Budget – Litigation Notification Program

Attached is a document titled “Cost Recovery Budget Proposal For the Period April 1, 2003 – March 31, 2004” which sets out Canadian Blood Services (“CBS”) projected costs for the period April 1, 2003 to March 31, 2004 for its Litigation Notification Program (“LNP”).

If you wish to discuss this Budget Proposal or have any questions, please do not hesitate to contact me.

Yours truly,

Lindsay Patterson
Manager, Transfusion Medicine Programs

Schedule R - Canadian Blood Services - Litigation Notification Program

COST RECOVERY BUDGET PROPOSAL
For the period April 1, 2003 to March 31, 2004

A. Introduction

Canadian Blood Services (“CBS”) conducts Tracebacks for the Fund Administrator (“LNP Tracebacks”) pursuant to the Order of Mr. Justice Winkler dated April 13, 2000 (the “Order”).

For the fiscal year (April 1, 2002 – March 31, 2003) the Joint Committee requested CBS to revise its Budget Proposal to reflect an anticipated twenty (20) new traceback requests per month for the period ending March 31, 2003. CBS received an average of 30 claims per month for the period April 1, 2002 to present. Looking forward for the fiscal year 2003-2004 it is anticipated that twenty (20) new traceback requests per month will be processed. CBS has also taken into account the other activities it conducts on behalf of the Fund Administrator including Hospital Record Confirmations (HRCs) and work done for appeals.

B. Staffing Costs

CBS conducted a detailed workload measurement study of its entire Lookback/Traceback program in the fall of 2001. Relying on national data, CBS determined that the average amount of time required to complete an average traceback investigation was about 26 hours and the average cost per hour of CBS’ traceback staff for the 2003/2004 fiscal period was $21.10 per hour. Using these figures, CBS calculates that the average staffing costs for an average traceback investigation are $548.60. CBS has used this average staffing cost per case to provide the estimate based on the anticipated influx of 20 traceback cases per month. In addition, CBS has added in additional costs for the administration of the Litigation Notification Program, namely the LNP Associate position. These costs are summarized in Appendices 1 and 2.

1. Twenty (20) cases per month
   
   Based on an assumption that CBS will receive 20 cases per month or 240 cases per fiscal year, CBS seeks $169,302.00 for cost recovery to the traceback program. Included in this sum is the average costs of the traceback investigation of $131,664 (240 cases at $548.60 per case) and an additional $37,638.00 for the salary of the LNP Associate.
   
   CBS will charge $548.60 for each case it receives from the Fund Administrator. CBS understands that should the workload increase, it may be necessary for the Joint Committee to seek a court order varying the budget to accommodate the increased workload.
    
2. Deficient cases
   
   In addition to the anticipated influx of 20 cases per month, CBS has about 97 cases that are deficient. CBS’ practice is to prioritize its traceback work by working on clean cases in which the six-month time frame under the protocol has commenced. Therefore, it is likely that little work, if any has been done on the deficient cases. CBS seeks recovery of its costs for these deficient cases at the same rate of $548.60 per case or $53,214. A summary is set out in Appendix 4.
    
3.  
   1. Hospital Record Confirmations
      
      In addition to the regular traceback investigation costs, there are about 25 cases that require hospital record confirmations (HRCs). We estimate that each HRC takes approximately 2 hours to complete for our field staff and an additional hour for administrative matters (ie. clarifications with Fund Administrator, interpreting results and report to Fund Administrator). As CBS’ administrative costs are built into its costs for the LNP Associate, CBS has not added in this extra one hour of time. In summary, CBS seeks an additional 2 hours of funding for each HRC or $42.20 per HRC. The total sought for the 25 outstanding HRCs is $1,055.00.
       
   2. Additional Hospital Record Confirmations
      
      In addition CBS anticipates that there will be an additional 50 requests for HRCs from the Fund Administrator for the next fiscal year. CBS therefore seeks $42.20 per HRC or $2,110.00. CBS understands that, at the end of the fiscal period, the Joint Committee will account for any of these additional HRCs and payment for each additional HRC will be made at the rate of $42.20.

C. Additional Overhead Costs

1. Travel Expenses
   
   As requested by the Joint Committee, CBS has prepared a separate budget, submitted to Fund Counsel, to address anticipated travel expenses for appearance at appeal hearings. We are estimating minimal travel to the Blood Centres for LNP, and would estimate $10,000.
    
2. Office Supplies and Stationary
   
   The projected costs for office supplies and stationary are $2,000.
    
3. Mailing and Courier Costs
   
   The projected costs for mailing and courier are $200.00 per month or $2,400.00 per annum. It is the LNP Associate’s practice to courier our Reports on the LNP Tracebacks to the Fund Administrator. It is our practice to courier the LNP Traceback requests to the Centres to ensure that the requests are received by the Centres in a timely manner.
   
   The LNP Associate copies the interim and final Reports on the LNP Tracebacks to the claimants and these Reports are sent by regular mail. We are seeking to recover the costs of the mailings.

D. Stored Sample Costs

At our meeting on February 1, 2002, the Joint Committee advised CBS that it would oppose any move by CBS to destroy the stored samples that have undergone testing. As a result, CBS must continue to store these samples and incur costs of storage. CBS seeks the full recovery of its costs of the storage of these samples in the amount of $836.54 per month or $10,038.48 for the fiscal year as set out in Appendix 5.
**Note: This amount is an estimate only. We will advise once the actual numbers for fiscal 2003-2004 are confirmed.

Please note that the Order of April 13, 2000 provided that CBS was entitled to recover one-half of the annual cost of storage of the stored samples to a maximum of $14,300 per annum for a period of two years. That two year period is now at an end.

E. Appeals

CBS has been required to participate in the appeals of the Fund Administrator’s decisions in a number of ways. For cases in which CBS’ traceback investigation plays an important role in the Fund Administrator’s decision to deny compensation, the Fund Administrator requests CBS to provide a summary letter of CBS’ traceback investigation (the “Appeal Letter”). The Appeal Letter is produced by Head Office. In order to prepare the Appeal Letter, a copy of the pertinent documentation must be obtained from the regional blood centre that conducted the traceback investigation. The LNP Associate is responsible for coordinating with the Centre staff to obtain this documentation and then drafts the Appeal Letter. The Appeal Letter is then reviewed, quality assessed and executed by assistant counsel for CBS. CBS estimates that it takes about ten (10) hours of staffing time to complete the Appeal Letter. It takes about three (3) hours for the Centre staff to pull the traceback file, review it and copy the relevant documentation. It takes about 4 hours for the LNP Associate to review the documentation and draft the Appeal Letter and it takes about three (3) hours for review and quality assessment of the Appeal Letter by legal counsel.

CBS has had completed 24 requests for this fiscal year for Appeal Letters from the Fund Administrator. CBS does not know the number of future Appeal Letters that will be requested. Based on the fact that there are currently over 465 negative traceback investigations and about 70 positive pre-class traceback investigations, CBS anticipates that about 20% of these, or 107 cases, will result in future appeals. Given that CBS has already been involved in 24 cases for this fiscal year, it is anticipated that CBS will be asked to provide an Appeal Letter in about 107 appeal cases.

On the basis that CBS’ LNP Associate will be funded for the next year, CBS will seek recovery of the following costs of the Appeal Letters:

Traceback staff time of 5 hours x $21.10/hour totals $105.00; and
Legal counsel time of 1 hours x $75.00/hour totals $75.00

Therefore the total sought for each Appeal Letter is $180.00 and CBS will charge only for those Appeal Letters that are requested by the Fund Administrator or Fund Counsel. On the assumption that CBS will be asked to provide 107 Appeal Letters for the fiscal period, the cost is estimated at $19,260.00, as set out in Appendix 1. CBS understands that an adjustment on the cost will be made at the end of the fiscal period based on the number of Appeal Letters actually provided.

In addition to the time spent to produce the Appeal Letter, CBS is increasingly involved in providing evidence and support for the appeals. The National Coordinator of the Lookback/Traceback program has testified at one hearing and is scheduled to testify at another hearing in May. We have had at least three additional requests for CBS staff to testify at future appeal hearings. CBS seeks to recover the costs of these appeals, including the staffing costs for attendance at and preparation for the appeals, and the ongoing costs of its legal counsel in coordinating with Fund Counsel and attending at appeal hearings. The Joint Committee has advised CBS that these additional appeal costs are to be submitted to Fund Counsel for submission to the Courts.

Overview of Costs to Be Recovered

Based on our projections for the costs, the staffing costs sought to be recovered for the 2003-2004 fiscal year based on an influx of 20 cases per month is $188,043.00. In addition, CBS seeks additional costs including the cost of the stored sample storage, various overhead costs, travel, and costs for preparing Appeal Letters. Based on an influx of 20 cases per month, the total estimated costs are $81,886.48, for a total cost recovery of $269,929,48.

APPENDIX 1

APPENDIX 2

**Does not include Storage Costs for Stored Samples
($10,038.48 is set out in Appendix 5)

APPENDIX 3

APPENDIX 4

APPENDIX 5