Yes the applicant can be refused on medical grounds.
What are the reasons for Canada immigration visa refusal on medical grounds?
There are three grounds on which an application for Canadian permanent residence may be denied on health grounds: An applicant’s health condition may be
1) danger to public health due to communicable disease.
2) danger to public safety due to mental disorder and
3) may impose excessive burden on Canadian healthcare and social services.
Danger to public health
Active Pulmonary Tuberculosis (TB) and untreated Syphilis are considered a danger to public health unless they are treated according to Canadian standards; HIV positive is not considered danger to health.
In cases of inactive Pulmonary Tuberculosis (TB) and/or adequately treated syphilis, the officer may grant visa and put conditions on the applicant for medical surveillance or medication in Canada.
Danger to public safety
Serious uncontrolled and/or uncontrollable mental health problems such as:
certain impulsive sociopathic behaviour disorders;
some aberrant sexual disorders such as pedophilia;
certain paranoid states or some organic brain syndromes associated with violence or risk of harm to others;
applicants with substance abuse leading to antisocial behaviours such as violence, and impaired driving; and
other types of hostile, disruptive behaviour.
3. Excessive demand on Canadian health care or social services
This provision is not applicable on a convention refugee or a spouse and a child of a sponsor. The spouse or a child of an inadmissible person is also exempt from this provision.
If an applicant is likely to impose a burden on Canadian health care or social services, he or she may be inadmissible. Excessive health care demand means expenditure more than the average health care costs of Canadians. For year 2013, the per capita health and social services cost for Canadians is $6285 per year. This amount is multiplied by the number of years required in the medical assessment for health care and social services,which is usually 5 years but not more than 10 years. Thus an applicant who is likely to spend more than $31,425 in 5 years on health care and social services will be inadmissible.
The ability and intent to defray the costs of health and social services by opting out of public services and availability of private insurance in some provinces is a positive factor to be considered by the officer. This factor is only relevant in out-patient health care and it is not relevant in publically funded in-patient health care since there is no cost recovery mechanism.(Deol v. Canada (M.C.I.) 2002 FCA 271 (ability to defray health care costs in in-patient cases irrelevant factor since most health care services are government funded, without cost recovery provisions), Companioni v. Canada (M.C.I.) 2009 FC 1315 (ability to defray health care and social services costs relevant factor in out-patient cases, if the applicant has ability to opt out of publically funded health care medication system by private insurance or otherwise), Hilewitz v. Canada (M.C.I.); De Jong v. Canada (M.C.I.) 2005 SCC 57, Colaco v. Canada (M.C.I.) 2007 FCA 282) (ability to defray social services costs is relevant factor).