Self-Insured Group Long Term Disability Benefits Violate the Charter

350 Nortel disabled former employees and their 160 dependent children are among 937,000 Canadians in self-insured group long term disability benefit plans, whose disability income is protected by the Charter of Rights and Freedoms, trust and consumer protection legislation and common law governing trusts and misrepresentations.

The Companies' Creditors Arrangement Act (CCAA) and Bankruptcy and Insolvency Act (BIA) do not have paramountcy over the Charter as these are all Federal Acts. When insolvency judges approve dramatic cuts in disability income on the so-called bedrock of equal treatment of unsecured creditors, they are failing in their duty to execute the Charter.  The dramatic cutting of disability income by an insolvency judge violates S. 15(1) of the Charter by producing serious inequality, loss of dignity, exclusion and marginalization in Canadian society.  It also violates S. 7 by depriving disabled persons' rights to life, liberty and dignity, as defined in human rights documents ratified by the Federal Government, such as the International Covenant on Economic, Social and Cultural Rights (ICESC) and United Nations Convention on the Rights of Persons with Disabilities (UNRPD.)  

S. 15(1) and S. 7 are intended to protect the economic interests of disabled persons, and the Supreme Court of Canada (SCC) has invited a case to set precedent on the matter of the Charter protecting economic interests of persons, while not protecting the economic interests of commercial entities. 

Application of the SCC Oakes Test would determine that the dramatic cutting of disability income in insolvencies is not demonstrably justified in a free and democratic society under S. 1 of the Charter because such cuts do not serve the purpose of the CCAA. The purpose of the CCAA has not been specified in the Act or in SCC case law to be pari passu treatment of all unsecured creditors. Rather the CCAA's purpose is to facilitate the restructuring or reorganization of the corporation with a court bound compromise of creditor claims, so as to avoid the social and economic costs of liquidation. This serves the public interest by facilitating the survival of suppliers of goods or services crucial to the health of the economy and saving large numbers of jobs.  The Oakes Test fails because disabled employees' creditor claims are a de minimus proportion of total creditor claims since disabled persons are less than 1% of the labour force. Such a small group cannot affect the odds of other creditors supporting reorganizations and restructurings over liquidations.  More importantly, the Supreme Court of Canada has determined as an adjunct to the Oakes Test that there should be no deleterious impacts on  persons from an Act, regardless of benefits to others in Canadian society. Disabled persons  without the possibility of ever working again have a deleterious impact from reduced disability income, which provincial and federal social security programs do not mitigate.   

Representatives of the disabled persons in self-insured group long term disability benefit plans are seeking a constitutional lawyer to carry their  Charter case to the SCC. 

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