Executive Summary: Key Legal and Evidentiary Issues

• Kelsey Fehr and Kelly Fehr, twin sisters aged thirty-eight, both suffer from a severe form of lipedema and sought out-of-province health insurance coverage for lipedema reduction surgery unavailable in Manitoba or elsewhere in Canada.
   
• Manitoba Health Insured Benefits, Insurance Division denied insurance for subsequent surgeries following a successful first surgery at Stanford University Medical Center, relying on section 2(18)(b) of the Excluded Services Regulation, Man Reg 46/93, which excludes emerging treatments whose efficacy has not been established.
   
• The Manitoba Health Appeal Board dismissed the applicants' appeal on May 10, 2023, accepting Manitoba Health's position that the surgery was an emerging treatment and therefore not an insured service.
   
• Judicial review before the Court of King's Bench upheld the board's decision, finding it reasonable despite acknowledging shortcomings in the board's analysis.
   
• The central issue on appeal was whether the board unreasonably applied section 2(18)(b) of the Regulation by conflating the concept of "emerging" treatment with the absence of a standard of care in Manitoba, and by applying an effectiveness standard rather than the legislatively prescribed efficacy standard.
   
• Justice Mainella JA, writing for the Court of Appeal, found the board's decision unreasonable and allowed the appeal, setting aside the order of the Court of King's Bench, quashing the appeal decision, and remitting the matter to a differently constituted panel of the board for re-determination if necessary.

Facts of the case

Kelsey Fehr (Kelsey) and Kelly Fehr (Kelly) are twin sisters, thirty-eight years of age, who both suffer from a severe form of lipedema — a genetic, likely hereditary disease causing abnormal buildup of dense fibrotic fatty tissue in the extremities of the body, particularly the lower abdomen, hips, buttocks, and limbs. Hallmarks of the disease include inflammation resulting in tissue fibrosis and pain, progressively decreased mobility, and difficulties in daily living. Untreated lipedema can result in secondary problems including osteoarthritis, psychological impairment, and lower self-esteem. Lipedema is often misunderstood and misdiagnosed as general obesity or lymphedema. Both applicants reside in Winnipeg, Manitoba, and are insured persons within the meaning of The Health Services Insurance Act, CCSM c H35 (the Act).

Conventional treatment in Manitoba and across Canada consisted of compression stockings, pneumatic compression pump for lymphatic drainage, manual lymphatic drainage, medication, exercise, and a healthy diet (the conservative modalities). These modalities proved ineffective for the applicants, who lived with chronic pain and worsening mobility impairment. Learning that countries such as the US, the UK, Germany, and the Netherlands allow lipedema reduction surgery — specifically tumescent liposuction or water-assisted liposuction — that cannot be addressed by the conservative modalities, the applicants sought coverage for out-of-province treatment.

On April 18, 2018, Kelsey's vascular surgeon, Dr. Asad Junaid, sought approval from Manitoba Health for funding for a consultation with the Lipedema Surgery Center in Roswell, Georgia. Manitoba Health denied the request on May 24, 2018, relying on section 2(18)(b) of the Excluded Services Regulation, Man Reg 46/93 (the Regulation), on the basis that water-assisted liposuction was an emerging treatment whose efficacy had not been established. Kelsey appealed to the Manitoba Health Appeal Board (the board), which dismissed the appeal. On September 18, 2019, the applicants sought approval for total body lymph-sparing liposuction at the Stanford University Medical Center in Palo Alto, California (Stanford). Manitoba Health denied both water-assisted and tumescent liposuction on November 19, 2019. The applicants appealed the 2019 denial in relation to tumescent liposuction at Stanford only. On May 21, 2020, Manitoba Health reversed its position and announced it would approve the insurance for both applicants, and on July 23, 2020, it formally advised the applicants that it had approved coverage to attend Stanford to receive the surgery, noting that further treatment or follow-up would require another letter and prior approval.

Travel to Stanford was delayed by COVID-19 pandemic restrictions. On August 9, 2021, the applicants attended Stanford for a pre-surgical consultation with Dr. Dung Nguyen, a plastic and reconstructive surgeon specializing in lymphedema and lipedema surgery. Dr. Nguyen evaluated both applicants and diagnosed them identically, noting significant fibrotic fatty tissue overgrowth causing disability. Manitoba Health paid the fees related to the pre-surgical consultations. Prior to the first surgery, Stanford advised Manitoba Health of the procedures to be performed and their cost, and advised that the applicants would need four to five surgeries as part of their treatment plans. Manitoba Health confirmed it would cover costs, except compression garments.

The first surgery took place on April 22, 2022, targeting the bilateral lower extremities and hips. Approximately twelve to fourteen litres of diseased tissue was removed from each of the applicants' thighs. Each lost between thirty-five to forty pounds and reported significant improvement in overall pain and gait balance. However, on June 10, 2022, Manitoba Health advised Kelly that it would no longer cover the surgery because plastic surgeons in Manitoba had determined it was no longer a standard of care. On November 23, 2022, Manitoba Health formally denied insurance for a second surgery at Stanford based on sections 2(18)(b) and (c) of the Regulation (the 2022 denial decision), stating it had been determined that liposuction is not considered a standard of care for the treatment of lipedema. Unable to afford further surgeries at Stanford, the applicants arranged a further surgery at their own expense in September 2023 at the Ernst von Bergmann Hospital in Bad Belszig, Brandenburg, Germany, which resulted in similar improvement. Their doctors advised they will likely require five further surgeries to address remaining areas of diseased tissue buildup.

Policy and legislative provisions at issue

The key provision in dispute is section 2(18)(b) of the Regulation, which excludes from insured services those that are determined by the minister, after reviewing the available evidence, to be "an emerging treatment or diagnostic procedure for an illness, injury or condition for which the efficacy of the service has not been established." Manitoba Health's 2022 denial decision was based on a brief two-page memorandum authored on December 20, 2022, by Deputy Minister of Health Karen Herd (the memo). The memo drew on the opinion of Dr. Denis Hosking, who had opined in relation to a 2017 request that there was not "adequate proof of efficacy" for water-assisted liposuction, and a more recent consultation with Dr. Jennifer Guiffre, the lead for plastic surgery in Manitoba, who concluded the medical evidence was not strong enough to consider liposuction as the standard of care for high-grade lipedema. The memo took the position that insurance for "any type" of liposuction surgery for Grade 3 and 4 lipedema should be denied under sections 2(18)(b) and (c) of the Regulation. Before the board, Manitoba Health argued that section 2(18)(b) should be interpreted to mean that if effectiveness of the treatment has not been established, it is an emerging treatment, and that the CADTH reports confirmed the lack of a randomized clinical study demonstrating the surgery is a safe and effective treatment.

The Court of Appeal found this interpretation to be a material misreading of the provision. Section 2(18)(b) is clear that it is only where the efficacy of the procedure has not been established that insurance may be denied — not merely because the procedure is not the standard of care in Manitoba. The court distinguished between the standard of efficacy (whether the procedure works under ideal conditions) and effectiveness (whether it works in real-world clinical settings), noting that the Regulation deliberately uses "efficacy," which is a more specific and higher standard than "effective." In 2005, the Regulation was amended to draw a distinction between experimental procedures under section 2(18)(a) and emerging treatments under section 2(18)(b), removing the prior requirement to consult the College of Physicians & Surgeons of Manitoba. The court held that proper application of section 2(18)(b) requires a two-step analysis: first, whether the procedure is emerging; and second, if emerging, whether efficacy has been established. The board collapsed these two questions into one, treating the absence of a Manitoba standard of care as determinative.

Reasoning and analysis

Justice Mainella JA, writing the lead judgment for the Court of Appeal, conducted a de novo review of the board's appeal decision, applying the Vavilov reasonableness standard (Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65). The court emphasized that legislative intent is the "polar star" of judicial review and that the board was required to adhere to the essential aspects of the legal standard created by section 2(18)(b) of the Regulation. The court found that the Act and the Regulation constitute remedial social welfare legislation designed to protect the health of eligible insured persons, requiring a liberal interpretation that resolves any doubt in legislative language in favour of the claimant.

On the first question — whether the surgery is emerging — the court found the board's conclusion untenable on the record. The evidence before the board was that the surgery had been used around the world for decades to successfully treat lipedema, with medical professionals developing newer techniques such as water-assisted liposuction to improve patient results. The board itself recognized in past decisions that many Western nations permit and publicly fund the surgery for severe lipedema cases. Manitoba Health conceded before the board that the fact the surgery does not exist in Canada but does exist in foreign jurisdictions is not determinative of insurability. The applicants provided uncontradicted evidence from Stanford and the American report (Karen L Herbst et al, "Standard of care for lipedema in the United States" (2021) 36:10 Sage Journals) confirming the surgery is a standard of care in multiple jurisdictions. The court found that the real reason the surgery is not available in Manitoba is not because it is new, but because of a shortage of trained plastic surgeons — a fact supported by the uncontradicted statements of Dr. Ziesmann and Dr. McCarthy, and the training record of Dr. Nguyen herself.

On the second question — whether efficacy was established — the court held that the board completely ignored the relevant legislative standard of efficacy and instead applied a standard of effectiveness. The court emphasized the distinction between these two standards: efficacy measures whether a procedure can produce the intended result under ideal conditions, while effectiveness measures beneficial effect in real-world settings. The board's reliance on the CADTH reports was also found to be flawed because those reports themselves primarily spoke to effectiveness rather than efficacy. The court found there was significant evidence before the board — from Stanford, the American report, and the applicants' own doctors — establishing the surgery works under ideal conditions, and that the board's failure to engage with this evidence constituted a fundamental flaw warranting intervention.

Ruling and overall outcome

Justice Mainella JA concluded that the board applied the wrong legal standard when it dismissed the applicants' appeal under section 2(18)(b) of the Regulation. The board unreasonably collapsed the two-part inquiry into a single question — whether the surgery is the standard of care in Manitoba — thereby ignoring the evidentiary record establishing that the surgery had emerged and that its efficacy had been established. The court found that, had the board properly addressed efficacy, the evidence before it provided only one reasonable conclusion: that the efficacy of the treatment was established. The Court of Appeal allowed the appeal brought by Kelsey Fehr and Kelly Fehr, the successful parties. The court set aside the order of the Court of King's Bench, quashed the appeal decision denying the insurance for a second surgery out of province, and remitted the matter to a differently constituted panel of the board for re-determination in accordance with the court's reasons, if necessary. The applicants were also awarded one set of costs on a tariff basis in this Court and the Court below.