KEY POINTS:
Health Minister Pete Hodgson is refusing to back Auckland district health boards until they sort out community laboratory testing.
Today the High Court at Auckland has ruled that the decision to award Auckland medical testing to a new company is invalid.
District Health Boards in the Auckland region handed the $560 million contract to Labtests Ltd, stripping the role from Diagnostic Medlab.
Labtests said it could do the work more cheaply, but Medlab claimed services would suffer and jobs would be lost.
Today, the High Court in Auckland said the decision by Auckland, Counties-Manukau and Waitemata DHBs was invalid, and so the contract itself was "invalid and of no effect".
National Party health spokesman Tony Ryall in Parliament grilled Health Minister Pete Hodgson over the decision and the role Auckland District Health Board chairman Wayne Brown played.
"Does he have confidence in the chairman of the Auckland District Health Board now that in an unprecedented move the High Court in Auckland has set aside the contract that he was responsible for negotiating?"
Mr Ryall said Mr Brown had made assurances about the contract but the court had now dismissed those over "Mr Bierre's conflict and the use of confidential information in his own bid".
Mr Hodgson said his priority was to ensure that when the existing contract expired on July 1 that Aucklanders got reliable community laboratory services.
"I expect this to be the focus of the three Auckland DHBs involved and will be seeking advice on their intentions."
The minister would not say the board or Mr Brown had his confidence -- yet.
"My confidence in the board will of course hinge on their ability...to repeat the request for proposals process -- this time successfully."
ACT health spokeswoman Heather Roy said the judicial review showed health service contracts had to be transparent and properly consulted and was a warning for other DHBs.
Mrs Roy said some experienced staff had left New Zealand after effectively losing their jobs with the loss of the contract.
She said Mr Hodgson should have stepped in earlier.
Appeal
The community pathology services contract was due to start in July this year but Justice Raynor Asher upheld Diganostic Medlab's appeal against the decision on two grounds.
Firstly, he said the DHBs failed to ensure the tendering process was fair as Auckland DHB member Dr Tony Bierre was also involved in the Labtests bid.
The court said in its judgement released this afternoon: "The boards' failure to prevent Dr Bierre's involvement in the boards' attempt to reform the provision of community laboratory services meant the only pathologist involved was seeking outcomes that suited his commercial goals rather than the boards' statutory objectives of improving and protecting public health.
"The boards' failure to prevent Dr Bierre's involvement damaged the integrity of the boards' considerations and undermined public confidence in board processes."
Secondly, Justice Asher said the DHBs failed to properly consult with Primary Health Organisations representing GPs in the region.
The DHBs said they were "extremely disappointed" by the ruling. They said they would ensure services continued after June.
Their lead CEO for the community laboratory project Garry Smith said they believed they managed the situation regarding Dr Bierre appropriately on the information available at the time but respect the fact the judge has ruled otherwise.
"The DHBs will be reviewing the implications of the decision and the options open to them over the next several days," he said.
"The focus in the first instance will be to map out a pathway to ensure there is a continuity of community laboratory service in place for people in the wider Auckland region from 1 July."
He added: "Both companies are very capable providers, and the court did not accept the argument that the Labtests contract would produce a reduction in quality."
Labtests said in a statement that it has "at all times complied with the tender requirements and requests of the Auckland Region DHBs (ARDHBs) "and will continue to cooperate with the ARDHBs in any process to ultimately determine the award of the contract".
It added: "Labtests is confident of its capacity and ability to deliver a quality, internationally competitive service to the Auckland region community.
"Labtests will await further information from the ARDHBs and will consider its options once available."
The Case:
* Medlab was seeking a judicial review of last July's decision to award Australian-backed Lab Tests Auckland the contract to provide laboratory testing services in the Auckland region.
* When Labtests took up the eight-year, $560 million contract it was due to halve the number of sample collection points for the region's 1.4 million people and reduce the number of testing staff.
* Medlab said the DHB boards changed their expectations of a medical testing provider without telling it.
* It also alleged then-Auckland District Health Board member Dr Tony Bierre used his inside knowledge of changing board tender requirements to secure the contract for Labtests.
- NZHERALD STAFF / NZPA
