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Taxpayers will be left with a legal bill of more than $1 million after a two-week court fight over a half-billion-dollar laboratory services contract.
Auckland District Health Board general counsel Bruce Northey told the Weekend Herald the joint district health boards had not reckoned on legal challenges to
the laboratory contract, and had so far spent $1 million defending their decision.
The next bill, due at the end of the month, would knock the total even higher. The costs will be spread across the three boards, Auckland, Waitemata and Counties-Manukau.
The hearing in the High Court at Auckland wound up yesterday, with Justice Raynor Asher reserving his decision. It is not known how long his decision will take, but as the Labtests contract is due to begin on July 1 he is likely to be working quickly.
Though Mr Northey was not willing to go into detail about the boards' legal costs, he said the bill would likely continue rising if Justice Asher's decision was appealed.
Medlab is seeking a judicial review of last July's decision to award Australian-backed Labtests Auckland the contract to provide laboratory testing services in the Auckland region.
When Labtests takes up the eight-year, $560 million contract it is expected to almost halve the number of sample collection points serving the region's 1.4 million people, reduce the number of testing staff and try to get more GPs taking samples.
Labtests has been working toward its start-up date since the contract was awarded last July, and lawyer Paul Davison, QC, yesterday warned investment worth millions of dollars was at risk if the contract was ruled invalid.
The company has already spent more than $17 million setting up a new laboratory and infrastructure, and Mr Davison said Labtests would be "clearly prejudiced" if the joint health boards were found to have acted improperly and yet allegations of a conflict of interest against Labtests chief Tony Bierre - a former Auckland health board member - were rejected.
The company could be forced to re-bid for the contract "whilst holding the cost of a newly established laboratory for which there was no work and an uncertain future".
Outside court, Dr Bierre refused to say whether Labtests would sue the health boards for compensation - which could cost the public even more.
"It's a bridge we have not come to, and we hope we will not get to it."
Labtests had acted "in good faith in terms of setting up and going ahead", and its contract with the health boards was legally binding.
Taxpayers will be spared having to cover the legal bills for one health boards subsidiary, however.
Harbour Public Health Organisation, which broke ranks with funding provider Waitemata DHB, represents 33 GP practices and serves a population of 148,000. It is the largest public health organisation in Waitemata.
It claimed members were concerned about issues of access and quality to the new service, and the delivery of services under Labtests. Lawyer Bruce Gray, QC, argued Harbour had a "legitimate expectation" it would be consulted about the proposed laboratory services change.
But Harbour chief executive Susan Turner yesterday confirmed the Medical Protection Society would foot the bill for the PHO's challenge.
She said the society had agreed to pay the legal expenses because of the high risk to which the Labtests' contract exposed society members.
