This article, the first in a series about insurance clawbacks, was written by Steven Muller, Vice President Litigation at Share Lawyers. Click here to read the rest of the series.
After years of delay, the Canada Disability Benefit came into law last week. The purpose of the program is to provide a supplement income to impoverished disabled in addition to existing provincial and territorial income supports and other forms of income. It is not replacement income. It is not employment income or employment earnings. It is meant to be a poverty reduction measure. The multibillion dollar a year program has yet to have been costed, accounted for, or funded. The framework legislations regulatory details are a year away. The Canada Disability Benefit is being celebrated as a historic milestone with the hope to improve the lives of impoverished disabled Canadian. Twenty-three percent of working-age persons with disabilities in Canada live in poverty.
Six months ago, I contacted the Federal Government concerned that disability insurance clawbacks were not addressed in the draft legislation. Long-term disability benefits in Canada are an important part of our social safety net: 8.8 billion was paid out in benefits in 2021 representing 20% of total spending of benefits in Canada. Insurance clawbacks by private insurers were never studied in HUMA. It was never addressed in 3rd reading in the House of Commons. After having an hour meeting with three policy advisors of the Minister of Employment, Workforce Development and Disability Inclusion, I reached out to my colleague Hart Schwartz who has 35 years of experience in Constitutional law. With the assistance and support of many colleagues and friends Hart and I prepared a discussion paper which was endorsed by disability groups, disability advocates, and every Provincial Trial Lawyers Associations in Canada. We attended as witnesses to the Senate Social Affairs Committee studying the Bill, we asked the Senate to adopt an amendment to ensure that no private insurance company can claw back the Canada Disability Benefit from impoverished disabled. After careful study on the problem and the constitutional solution, the first of six amendments that the Senate Social Affairs Committee adopted was the no insurance clawback amendment. The amendment was further adopted by the Senate and sent back to the House for consideration. In addition to the media spotlight on the issue we wrote to all Senators and many MPs educating them that it is not a benefit if the practical impact is that impoverished Canadians do not get the benefit, insurer's profits get increased, and taxpayers of Canada indirectly subsidize the insurance industry. We spoke to the PMO’s office and in the end, the Government adopted all amendments proposed by the Senate except for the insurance clawback amendment. It was disingenuous for the Government to reason that the small and simple amendment that touches on one part of the insurance contract “regulates the insurance industry“. The decision was clearly political.
When I started practicing law 26 years ago, there were no lawyers who practiced in the area of long term disability insurance. A small group of us pushed the Ontario Trial Lawyers Association to create a long term disability section. We were the small cousin to the Personal Injury bar. Since that time, I have represented folks from every Province who have been struck with terrible sickness. It is funny we think of Personal Injury as depicted in the movies, but we never think of the Long Term Disability case. While most of us have had access to a disability policy, few of us think about long term disability insurance unless we need it. Unfortunately, many very nice people need this protection, and many claims are paid out and many are not and as such my services have been needed.
We highlighted to the Senate the alternative view from the Plaintiff’s bar that countered the Insurance lobby groups' submissions to the Senate. We educated Senators, MPs. and staffers that the legislation has no regulation powers to prohibit set-off of the disability benefit. There was an assumption by staffers, policy advisors and politicians that long-term disability benefits are for the rich. I had to explain to them that that was not the case. It is amazing how many people I have come across now in government that never bothered to read their own policy of long-term disability benefits. Hopefully they will never need to make a claim but when they do, I can assure you that they will be complaining about clawbacks by insurance companies from government programs.
So the Senate and House debate on this subject is probably the first time long term disability benefits were discussed in this country in Parliament. All Trial Lawyers Associations have come together to have a united front on this subject for the disabled. People in government have been educated that these policies are not for the rich but also for everyone. We raised some very important constitutional law issues and some very important policy issues. Clawbacks, poverty reduction, consumer protection, power imbalance, access to justice, spending powers, and who should be the beneficiary of taxpayers’ monies have now been raised.
Minister Qualtrough, Provinces and Territories, and Private Insurance Industry, insurance clawbacks for the Canada Disability Benefit are a red line not to be crossed. Our impoverished disabled expect no less.
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