Muller/Schwartz Statement on the Opposition to the Insurance Claw Back Senate Amendment

As witnesses to the Senate Committee studying this Bill, we asked the House of Commons to support Bill C-22, as amended by the Senate, and in so doing ensure that no private insurance company can claw back the Canada Disability Benefit from impoverished people with disabilities. The amendment, that prevents insurance companies from being the de facto beneficiaries of the new benefit, was adopted by the majority of the Senate Social Affairs Committee and then passed by the Senate as a whole. The Government of Canada has the political option to support all Senate Amendments.

The House of Commons Order Paper And Notice Paper dated June 14, 2023 states that the Senate Insurance Clawback Amendment “raises significant constitutional concerns by seeking to regulate the insurance industry specifically or contracting generally, both of which fall within provincial jurisdiction.” However, we have pointed out that there are strong constitutional arguments in favor of the amendment that were endorsed by all Provincial Trial Lawyers Associations in Canada. Under its spending power, Parliament has the power to attach conditions to the money that it spends, lends and grants, including taking steps to ensure that the grant is received by its intended beneficiary, not an insurance company. The simple Senate amendment has a precedent in other federal legislation and is perfectly supportable in law.

People challenge legislation for strong reasons and weak reasons, but it does not mean the Government should not do the right thing. There is a broad coalition of support of the legal position to the contrary of the Government’s position. The impoverished disabled deserve a fair and equitable dialogue. Let the courts decide ultimately.

It is also disingenuous to state that the small and simple amendment that touches on one part of the insurance contract “regulates the insurance industry“. It does no such thing. The industry is not "regulated" by this single clause which merely touches on one small part of an insurance contract. Indeed, the Supreme Court of Canada upheld federal legislation that forbids insurance companies from requiring their clients to take a genetic test or disclose the results of such testing.

The Federal Government should be able to protect the money it provides to ensure that the money is received by the intended beneficial and does not become a windfall to an insurance company or for that matter anyone who tries to take what is not theirs. The policy intention in this legislation is to design the benefit as a supplement to those already existing benefits currently provided by provincial programs and private contracts. If existing benefits were sufficient to “reduce poverty and support the financial security” of persons with disabilities, there would be no need for a new, and additional, federal program.

The Government's Order Paper and Notice Paper also state that the Senate amendment deals with "contracting generally" which it claims falls within provincial jurisdiction. But many federal statutes, from banking to bankruptcy, maritime insurance to divorce, human rights codes to genetic non-discrimination legislation, touch on and affect the terms and conditions of contracts. Indeed, Bill C-22 itself deals with "contracting generally" in a provision that the Government fully supports. Section 9(b) provides that the new disability benefit "cannot be assigned, charged, attached or given as security". This prohibits "contracting generally" such as a lender or landlord demanding as a term of a loan or lease that the person sign over their disability benefit.

Under the government's approach, the insurance industry effectively wins its constitutional challenge without ever even having to start it in the first place. From day one, that industry will be allowed to claw back monies targeted for the impoverished disabled. The Government is effectively granting the victory without requiring the insurance industry to go to court.

To now reject the amendment, and consciously provide this subsidy to insurance companies creates an intended consequence. The taxpayers of Quebec and the rest of Canada are indirectly subsidizing private insurance providers. This Government has now given the biggest subsidy to the insurance industry in Canada’s history by not allowing the Senate protections in the amendment. The Government has been hyper-focused on arguing based on urgency but the irony here is that they have slowed the process down by forcing Bill C-22 to go back to the Senate again. Rejecting the Senate’s amendments, in our view, introduces a legacy of a Canada Disability Benefit that is inequitable, not inclusive and fails to achieve its salutary goal.

Yours truly,

Steven Muller

Vice President of Litigation at Share Lawyers ,

Lexpert Ranked Lawyer 2023 in Long-Term Disability


Hart Schwartz

Adjunct Professor, Osgoode Hall Law School

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