Miscalculation of Disability Pensions Class Action
Manuge v Her Majesty the Queen
Federal Court, Action No.: T-119-19
Consolidated Statement of Claim, filed 30 October 2019
ABOUT THE ACTION
Each year, as required by the Pension Act, Veterans Affairs Canada (VAC) calculates annual increases in monthly disability benefits to account for inflation. Through this certified class proceeding, Class Counsel has identified several errors in VAC’s calculations. These alleged errors date back to 2002.
Class Counsel believes that hundreds of thousands of veterans and their surviving family members have been, and continue to be, underpaid each month. Class Counsel brought these errors to the Government of Canada’s attention in October 2019. So far, Canada has not corrected the alleged errors for ongoing payments.
Class Counsel is calling on VAC to promptly resolve the miscalculation and compensate disabled veterans and their surviving family members for the past two decades of what Class Counsel believe are underpayments of benefits.
Class Counsel continue to work with the Canadian Department of Justice to facilitate documentary discovery, which will be conducted electronically. A judicial case conference is expected in the coming weeks to formalize a discovery timetable and discuss other procedural issues. Concurrent with discovery, Class Counsel are committed to settlement discussions, which we are hopeful will take place with the Department of Justice after Parliament resumes, and once Ministers are in receipt of their mandates
- The Pension Act provides various disability benefits to recognize and fulfill the “obligation of the people and Government of Canada to provide compensation to those members of the forces who have been disabled or have died as a result of military service, and to their dependents.”
- The Pension Act provides for an annual adjustment to disability benefits to account for the impact of inflation.
- The class action was commenced in January 2019 and amended in October 2019 to seek compensation for new VAC calculation errors identified by Class Counsel.
- The class action was certified by the Federal Court in December 2020.
- Class Counsel estimate that there are approximately 300,000 class members.
On 23 December 2020, the Federal Court certified the action as a class proceeding. The class is defined as:
All members and former members of the Canadian Armed Forces and Royal Canadian Mounted Police, and their spouses, common law partners, dependants, survivors, orphans, and any other individuals, including eligible estates of all such persons, who received – at any time between 2002 and the present – disability pensions, disability awards, and other benefits from Veterans Affairs Canada that were affected by the annual adjustment of the basic pension under section 75 of the Pension Act including, but not limited to, the awards and benefits listed at Schedule “A” of the certification order:
- Pension Act: pension for disability; pension for death; attendance allowance; allowance for wear and tear of clothing or for specially made apparel; and exceptional incapacity allowance;
- Veterans Well-being Act: disability award; and clothing allowance;
- Veterans Well-being Regulations: remuneration of an escort;
- Veterans Health Care Regulations: remuneration of an escort; and treatment allowance;
- Veterans Review and Appeal Board Act: compassionate award;
- Civilian War-related Benefits Act: war pensions and allowances for salt water fishers, overseas headquarters staff, and air raid precautions workers; and injury for remedial treatment of various persons and voluntary aid detachment (World War II);
- Children of Deceased Veterans Education Assistance Act: monthly allowance for education; and
- Flying Accidents Compensation Regulations: flying accidents compensation.
Register to participate in the class proceeding
If you are a member or former member of the Canadian Armed Forces or the Royal Canadian Mounted Police – or a spouse, common law partner, or dependant of a veteran – and you received, at any time between 2002 and the present, certain disability benefits from Veterans Affairs Canada, you may be a member of the class. Eligible estates of persons who received these disability benefits may also be class members.
Learn more about this Class Action
What is a class proceeding?
A class proceeding (often referred to as a class action) is a type of lawsuit where a group of people who have been subjected to the same, or similar, legal wrongs are represented collectively by one or more members of the class, who act as the voice for the group as a whole and who instruct the lawyers for the plaintiffs on behalf of the whole class.
A proposed class proceeding is not a class proceeding until the court determines that it has met the requisite legislative test and certifies the action as a class proceeding.
Class proceedings have three main goals: access to justice, behaviour modification, and judicial economy. A class proceeding makes the legal process simpler and more manageable for each class member seeking to make a claim. It often does not make economic sense for each person of an affected class to sue the defendant individually, because the money sought on an individual basis is less than the legal costs it would take to prosecute the case. A class proceeding functions as an affordable procedural vehicle for the victims of mass wrongs.
What is this proceeding about?
Veterans Affairs Canada administers certain disability benefits for current and former members of the Canadian Armed Forces and the Royal Canadian Mounted Police, which must be adjusted annually. The class proceeding seeks damages for alleged underpayments that occurred between 2002 and the present because of errors in the calculation of annual adjustments under section 75 of the Pension Act.
What are the allegations in the proceeding?
Annual adjustment provisions under Part V of the Pension Act require that the basic pension amounts listed in Schedule I be adjusted annually based on the statutory formula set out in section 75 of the Pension Act.
Annual adjustments ensure that basic monthly disability pensions and awards keep pace with the cost of living and price inflation. The annual adjustments are based on calculations that take into account: (a) annual increases in the Canadian Consumer Price Index; and (b) average wages of certain categories of federal public sector employees minus income tax for a single person calculated in the province with the lowest combined provincial and federal income tax rate (“Wage Rate”).
On 5 November 2018, Canada’s Veterans Ombudsman announced that his office had discovered that Veterans Affairs Canada (“VAC”) had failed to factor the basic provincial tax credit into the Wage Rate used in indexing calculations under section 75 of the Pension Act, which resulted in “an accounting indexation error” by VAC and lower annual adjustment rates than what the rates would have been in the absence of the error. This error led to reduced payments to eligible recipients of disability benefits. The Veterans Ombudsman reported that VAC estimated that this error affected about “270,000 Veterans” of the Canadian Armed Forces and the Royal Canadian Mounted Police as well as “survivors and their estates”. The Government of Canada has publicly acknowledged this error and announced that $165 million had been secured for correcting the error, which Canada has said it will pay out without interest.
Based on access to information requests and other investigations made since the Veterans Ombudsman discovered the original indexation error, the Plaintiffs have learned about additional errors in VAC’s annual indexing calculations under section 75 of the Pension Act, and allege:
- VAC failed, from 2002 to present, to calculate the Wage Rate using the province or territory with the lowest combined provincial and federal income tax rate (the Nunavut income tax rate should have been used instead of the rates applicable in Ontario and British Columbia);
- VAC failed, from 2007 to present, to include the Canada Employment Amount in its calculation of the Wage Rate; and
- VAC failed, from 2002 to present, to include the Northern Resident Deduction in its calculation of the Wage Rate.
The Plaintiffs allege that affected individuals are entitled to interest on the amounts wrongfully withheld and that they are entitled to equitable compensation for loss of use of entitlements on the amounts wrongfully withheld.