Miscalculation of Disability Pensions Class Action

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 because of errors in the calculation of annual adjustments under section 75 of the Pension Act.

CASE NAME
Manuge v Her Majesty the Queen

COURT
Federal Court, Action No.: T-119-19

DATE FILED
Consolidated Statement of Claim, filed 30 October 2019

ABOUT THE ACTION

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 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:

  1. 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);
  2. VAC failed, from 2007 to present, to include the Canada Employment Amount in its calculation of the Wage Rate; and
  3. 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.

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.

Updates

Statement of Defence filed July 30, 2021

July 30, 2021

The Attorney General of Canada has filed a statement of defence in this class action. You can view the document and all court documents in relation to this matter here.

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Notice of Certification Published July 30, 2021

You can find the Notice of Certification and the Opt Out Form here: https://vetspensionerror.ca/court-documents/

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CBC: Federal Government in exploratory talks to settle class action lawsuit over Veterans Affairs $165M accounting error

January 19, 2021

CBC reports on recent steps by the federal government to address an accounting error by Veterans Affairs Canada regarding the calculation of disability awards and pensions. The $165 million accounting error, affecting over 250,000 veterans, began in 2002 and continued undetected until 2010. Read the full story:  Federal government looking to settle lawsuit over $165 […]

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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.