British Columbians' claims under the province's medical services plan have been contracted out to the private sector and will be handled by MAXIMUS Inc., a U.S.-based firm.
The Thursday announcement comes in the midst of privacy concerns raised recently by the province's Privacy Commissioner regarding the U.S. Patriot Act and the possibility of confidential information about Canadians being accessible in the U.S.
The Commissioner concluded private information about Canadians could be viewed by U.S. authorities despite Canadian attempts to thwart the probes.
Commissioner David Loukidelis said the long arm of the Patriot Act allows U.S. authorities to access the personal information of Canadians if it ends up in the United States or if it is held by U.S. companies in Canada.
The plan announced Thursday with MAXIMUS is a "10-year performance-based service contract with a five-year renewal option."
The government said it had incorporated a subsidiary - MAXIMUS BC - to deliver the services.
The service centre will be located in Victoria and all current employees will be offered positions with the new employer.
The government, aware of the privacy concerns, said ensuring privacy was a "fundamental element of the project."
"The Ministry sought assurances that the significantly enhanced privacy and security arrangements required under existing and new legislation as well as rigorous contract parameters that could be met consistently and reliably by MAXIMUS BC."
The government said the new arrangement with the private sector was necessary because the delivery of medical services plan is complex.
The B.C. government passed a law last month aimed at preventing U.S. authorities from examining information about British Columbians held by private U.S. companies. It included fines ranging from $2,000 for individuals to $500,000 for corporations.
The Patriot Act was enacted following the terrorist attacks of Sept. 11, 2001. Section 215 of the act allows a special court to secretly issue an order requiring "the production of any tangible things" to the FBI.
The B.C. Government and Service Employees' Union has already launched a lawsuit challenging the outsourcing of MSP administration.
MSP was established in 1965 and since then B.C.'s population has grown by 80 per cent.
About 545 applications for MSP are made daily and about 138,000 new or returning residents apply for MSP benefits every year.
The systems used by MSP have become comparatively archaic, using the same basic software for the past 30 years, the government said.