Manitoba Court of Appeal: Fehr v Manitoba Out-of-Province Health Coverage Standard

• The Manitoba Court of Appeal ruled that Manitoba Health wrongly denied out-of-province coverage for follow-up surgeries for twin sisters with severe lipedema.
• The court found the province collapsed a two-step legal test under the Excluded Services Regulation and confused 'efficacy' with 'effectiveness' standards.
• Broad medical service exclusions were improperly made via an internal memo instead of formal regulation under The Health Services Insurance Act Manitoba.
• The decision, Fehr v. Manitoba (Health Insured Benefits, Insurance Division), 2026 MBCA 52, sets a new legal standard for assessing treatment coverage claims.
• The case has been remitted to a differently constituted panel of the Manitoba Health Appeal Board for reconsideration.

The court found that the Appeal Board improperly collapsed a two-step legal test into a single inquiry.

After an eight-year battle and multiple rejections, twin sisters Kelsey and Kelly Fehr have achieved a significant victory in their quest for out-of-province health coverage for a severe chronic illness. The Manitoba Court of Appeal, in its decision Fehr v. Manitoba (Health Insured Benefits, Insurance Division), 2026 MBCA 52, overturned previous denials, ruling that the province had applied an incorrect legal standard when assessing their claim for follow-up surgeries. This landmark decision not only grants the sisters a crucial win but also establishes a new precedent for how provincial health authorities must evaluate future treatment coverage requests.

Kelsey and Kelly Fehr, both 38 and residents of Winnipeg, suffer from a debilitating form of lipedema, a genetic condition characterized by the abnormal accumulation of dense fibrotic fatty tissue in the limbs. With no surgeon in Manitoba or elsewhere in Canada performing the specialized procedure required, the sisters sought provincial insurance coverage for treatment at Stanford University Medical Center in Palo Alto, California. Their initial surgery in 2020, which successfully removed approximately 12 to 14 litres of diseased tissue from each sister's thighs, was approved by Manitoba Health and resulted in significant pain relief and improved mobility. However, after being advised that four to five additional surgeries would be necessary, Manitoba Health reversed its stance in June 2022, denying coverage for these subsequent procedures, categorizing the treatment as an "emerging treatment."

The sisters' appeal journey was arduous. The Manitoba Health Appeal Board dismissed their case in May 2023, a decision subsequently upheld by a Court of King's Bench judge in December 2024. Undeterred, the Fehrs pursued their case to the Manitoba Court of Appeal, which ultimately sided with them, identifying fundamental errors in the province's previous assessments. The matter has now been remitted to a differently constituted panel of the Manitoba Health Appeal Board for reconsideration, with the sisters anticipating the need for five more surgeries.

The Manitoba Court of Appeal identified several critical errors in how Manitoba Health and its Appeal Board processed the Fehrs' claim, particularly concerning the application of the Excluded Services Regulation 2(18)(b). The court found that the Appeal Board improperly collapsed a two-step legal test into a single inquiry. The regulation specifies that services can be excluded if they are not the standard of care in Manitoba, but this is only the first step. Crucially, the board failed to proceed to the legally required second question: whether the treatment's efficacy had been established. This omission was deemed a fundamental error, as the analysis ceased prematurely.

Further, the court drew a clear distinction between the terms "efficacy" and "effectiveness," which Manitoba Health had used interchangeably throughout its assessment. The Regulation mandates proof of "efficacy" only. The province's demand for a randomized controlled clinical trial, the court clarified, represented an "effectiveness" standard, which is a higher and different bar than the "efficacy" standard prescribed by the legislation. This misapplication of the required standard was another key error highlighted by the court.

Beyond the misapplication of the legal test, the Manitoba Court of Appeal also scrutinized the process by which Manitoba Health made its broad exclusion decision regarding the Fehrs' treatment. The court found that the decision to deny coverage was based on a two-page internal memo authored by former Deputy Minister of Health Karen Herd, rather than through a formal regulation as stipulated by section 113(1) of The Health Services Insurance Act, CCSM c H35. The court emphasized that significant policy decisions concerning which medical services are accessible to all Manitobans must be established openly through formal regulation, not through opaque bureaucratic channels or internal directives.

The ruling also reinforced the intended role of the Manitoba Health Appeal Board. The court clarified that the board is designed to serve as an independent check on the decisions made by Manitoba Health, rather than merely acting as a rubber stamp for the province's determinations. This clarification underscores the importance of a robust and independent review process for health coverage appeals, ensuring that decisions are made in accordance with the law and established regulations.

This decision in Fehr v. Manitoba sets a crucial new legal standard for how provincial health authorities in Manitoba must assess claims for out-of-province health coverage, particularly for treatments that may not be standard within the province. It clarifies the two-step legal test under the Excluded Services Regulation, mandating that both the standard of care and the efficacy of a treatment must be properly evaluated. The ruling also firmly distinguishes between "efficacy" and "effectiveness," ensuring that the correct evidentiary standard is applied in future assessments. This distinction is vital for patients seeking coverage for innovative or specialized treatments.

Moreover, the court's insistence on formal regulation for broad medical service exclusions, rather than internal memos, reinforces principles of transparency and due process in health policy. This means that significant changes to health coverage policies must undergo a public and formal regulatory process, providing greater accountability and clarity. For patients and legal professionals advising on health insurance appeals in Manitoba, this ruling provides new grounds for challenging denials and informs how provincial health authorities must process future claims, ensuring a more rigorous and legally compliant review.

Lawyers advising clients on health insurance appeals in Manitoba must be aware of the clarified two-step legal test under the Excluded Services Regulation, the distinction between 'efficacy' and 'effectiveness' in treatment assessment, and the requirement for formal regulation (not internal memos) for broad medical service exclusions. This decision provides new grounds for challenging denials and informs how provincial health authorities must process future claims.

Source: Original reporting via Canadian Lawyer