The three district health boards serving 1.5 million people in Auckland acted outside their legal powers when they signed a new $560 million contract for medical laboratory tests, a court was told today.
Diagnostic Medlab Limited (DML) lost the multi-million dollar contract last year to Labtests Auckland, aconsortium led by Healthscope Limited, Australia's second largest private hospital operator.
The $560m, eight-year contract was $15m below the DML tender figures but in the High Court in Auckland today, DML told Justice Raynor Asher the decision by Auckland District Health Board and others would do serious and irreversible harm to diagnostic services in Auckland.
It would reduce collection rooms from 80 to 43, cut staff by 161 and reduce pathology services by 36 per cent, DML lawyer Jack Hodder told the court.
In his opening address he told the court the three boards were in breach of their legal obligations and outside their legal powers when they signed the contract which was due to begin in July.
He said DML wanted the contract set aside so the process could begin again with the proper processes followed.
The DHBs failed to consult users and were poorly informed. They made a bad decision, he said.
The DHBs were looking for a long-term, sustainable provider of medical laboratory services but the figures showed that could not happen if the contract stood.
The hearing is scheduled to last two weeks and a reserved decision is expected.
