Major Partial Victory but Huge Setback for Impoverished People with Disabilities on Private Long-Term Disability Insurance Benefits – Trudeau Government Today Proposes to Ratify All Senate Amendments to Bill C-22 (the Canada Disability Benefit Act) Except the Senate Ban on Private Insurance Companies Clawing Back this Benefit from Poor People on Long-Term Disability


June 14, 2023 Toronto: The Trudeau Government plans to have Parliament leave private insurance companies totally free to claw back the forthcoming new Canada Disability Benefit from impoverished people with disabilities who receive private long-term disability (LTD) insurance benefits, according to the Order Paper for today’s House of Commons debates. (Notice of motion set out below) Prime Minister Trudeau will propose a motion today that the House of Commons ratify all the Senate’s recent amendments to Bill C-22 except the one that would ban private insurance companies from clawing back this new federal social assistance benefit from impoverished people with disabilities who are on private long-term disability benefits.

The Federal Government has repeatedly pledged that no people with disabilities in Canada should ever live in poverty. It offered Bill C-22 to create a new social benefit, the Canada Disability Benefit, to lift eligible people with disabilities out of poverty. However, if it refuses to ratify this critically important Senate amendment, it will fail people with disabilities who must survive on their private insurance LTD benefits.

“We call on the opposition parties in the House of Commons, who have a majority of the votes, to amend the Trudeau Government’s motion this afternoon, in order to ratify the Senate’s ban on private insurance companies clawing back the Canada Disability Benefit from people on private long-term disability benefits,” said David Lepofsky, chair of the non-partisan AODA Alliance, one of the grass roots organizations that pressed for this Senate amendment to Bill C-22. “Otherwise, the Federal Government will knowingly end up giving rich private insurance companies public money that was meant to lift poor people with disabilities out of poverty. Does Prime Minister Trudeau think that poor people with disabilities on private long-term disability benefits have too much money, but rich insurance companies don’t have enough?”

Two Toronto lawyers with expertise in this area, Steven Muller and Hart Schwartz, led the charge for this Senate amendment. They secured the backing of every provincial Trial Lawyers Association in Canada.

Building on their earlier effort, Muller and Schwartz today released a powerful new public statement which we endorse, set out below. It tears to pieces the Trudeau Government’s arguments against the Senate amendment in issue. They show that the Federal Government is wrong to claim that this Senate amendment invades provincial legislative authority. Muller and Schwartz mounted an overwhelming argument that this amendment is fully constitutional, backed by a recent Supreme Court of Canada decision that held that the federal ban on genetic testing by insurance companies lies within Parliament’s powers.

“Federal Disabilities Minister Carla Qualtrough has commendably committed that she has a red line that there must be no clawbacks of the Canada Disability Benefit, but killing this Senate amendment flies in the face of that pledge,” said Lepofsky. “She told a Senate Standing Committee on March 22, 2023 that she agrees that such clawbacks by private insurance companies would be a problem, but the Trudeau Government has committed to no effective federal substitute that ensures that they never happen.”

To date, no provincial government and no private insurance company has publicly objected to the Senate’s amendment in issue, as far as the AODA Alliance has ascertained. In any event, there is no good reason why the House of Commons could not ratify today, including the one on private insurance clawbacks, and then invite every province to pass a similar ban on private insurance clawbacks of the Canada Disability Benefit. No province and no private insurance company could complain.

Despite this troubling major setback, the Trudeau Government’s motion in the House of Commons today also gives disability advocates an important partial victory for which we fought long and hard. The Government proposes to ratify all the other amendments that the Senate made to Bill C-22, at the behest of disability advocates, to strengthen this bill. These include amendments that entrench in the bill a right of people with disabilities to appeal if they apply for the Canada Disability Benefit but are refused, a one-year deadline for Cabinet to enact regulations needed to start paying the Canada Disability Benefit, and a requirement that Cabinet take into account the added costs of living with a disability, the added intersectional needs of disadvantaged groups, and Canada’s international obligations when deciding on the amount of the Canada Disability Benefit.

“Disability advocates won important amendments to Bill C-22 in the House of Commons last fall, and even more amendments in the Senate this spring, despite the Trudeau Government’s months of massive effort to block any amendments to this bill,” said Lepofsky. “This proves once again that no matter how much the political deck is stacked against us, the tenacity of people with disabilities can win the day when they try to strengthen disability rights in the law!”

Once the House of Commons passes the Trudeau Government’s motion today, either as is, or with the opposition amendments that we seek, it will have to go back to the Senate once again for final approval. It is expected that by the Senate’s tradition, the Senate will vote to approve whatever the House of Commons now sends to it.

For more background, check out:

* The May 30, 2023 letter to Prime Minister Justin Trudeau from Toronto lawyers Steven Muller and Hart Schwartz , which was endorsed by every provincial Trial Lawyers Association in Canada.
* The June 8, 2023 news release by four senators calling for the immediate ratification of the Senate’s amendments to Bill C-22.
* AODA Alliance Chair David Lepofsky’s May 29, 2023 guest column in the Toronto Star’s Metroland newspapers. * The AODA Alliance website’s Bill C-22 page.

Text of the Trudeau Government’s June 14, 2023 Notice of Motion on Bill C-22 (the Canada Disability Benefit Act)

Originally posted at: C-22

An Act to reduce poverty and to support the financial security of persons with disabilities by establishing the Canada disability benefit and making a consequential amendment to the Income Tax Act

June 13, 2023 The Minister of Employment, Workforce Development and Disability Inclusion That a message be sent to the Senate to acquaint Their Honours that, in relation to Bill C-22, An Act to reduce poverty and to support the financial security of persons with disabilities by establishing the Canada disability benefit and making a consequential amendment to the Income Tax Act, the House:

agrees with amendments 1, 4 and 5 made by the Senate;

agrees with the Senate proposal to make any necessary consequential changes to the numbering of provisions and cross-references resulting from the amendments to the bill;

respectfully disagrees with amendment 2 because it raises significant constitutional concerns by seeking to regulate the insurance industry specifically or contracting generally, both of which fall within provincial jurisdiction;

proposes that amendment 3 be amended to read as follows:
“New clause 10.1, page 4: Add the following after line 5:
10.1 Subject to regulations, a person, or any other person acting on their behalf, may appeal to a body identified in regulations made under paragraph 11(1)(i) in respect of any decision (a) relating to the person’s ineligibility for a Canada disability benefit;
(b) relating to the amount of a Canada disability benefit that the person has received or will receive; or (c) prescribed by the regulations.””.

June 14, 2023 Public statement by Toronto Lawyers Steven Muller and Hart Schwartz

As witnesses to the Senate Committee studying this Bill, we asked theHouse of Commonsto 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 thede factobeneficiaries 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 Claw back 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, Parliamenthas 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 forbid 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 “cannotbe 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 targetedfor 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