Former CFS executive files lawsuit against Manitoba gov't over allowance clawback

The former CEO of the Southern Authority is fighting back against the Manitoba government by taking them to court in hopes of launching a class action lawsuit to end a long-standing practice of the province clawing back a federal allowance earmarked for kids in care.

Elsie Flette is seeking restitution and punitive damages for First Nations and Mé​tis kids in care

Representatives from the six Indigenous Child and Family Services agencies who are taking the Manitoba government to court over its long-standing practice of clawing back federal funds earmarked for children in care are seen at an April 26, 2018, press conference. (Kristin Annable/CBC)

The former CEO of the Southern Authority is taking the Manitoba government to court in hopes of launching a class action lawsuit over the province's clawback of a federal allowance earmarked for children in care.

The result could take tens of millions dollars out of the provincial treasury each year and cost the Manitoba government hundreds of millions more in restitution payments.

"I think it is fundamentally wrong," Elsie Flette said, who retired as CEO of the Southern First Nations Network of Care (Southern Authority) in 2013.

"This is not provincial money, this is federal money and the province is taking that money."

According the 2017-18 public accounts, the government collected almost $40 million from the allowance during that fiscal year.

Through the allowance, the federal government gives roughly $455 to $530 per child to government CFS agencies each month.

Manitoba government says they are reviewing lawsuit

The province's NDP government began forcing child and family services agencies to remit this money in 2006, but some agencies refused to comply. In 2013, the government began estimating future allowance payments and would deduct the estimate from any funding to be paid to agency. The money remitted by the agencies is put into general revenue. 

The issue made headlines in 2017, when then-Families Minister Scott Fielding admitted his government was continuing the practice, even though the Tories had criticized the policy while in Opposition. Fielding pledged to review the clawback. The government's long-standing argument has been because the province already covers care and education-related costs for kids in care, the allowance is a "duplication."

A spokesperson for the Families department said Friday they have received the claim and are reviewing it to determine their position. 

Flette says she long pushed back against the government on this issue when she was with the Southern Authority and now feels she is in the position to take action.

"I know there are many children who are provincially funded who are impacted by this practice and a class action lawsuit would allow those children as well the opportunity to join the suit and demand a remedy from the province," she said.

"I have been after this issue for a long time."

She filed the statement of claim last week in the Court of Queen's Bench, proposing a class action on behalf of all First Nations and Mé​tis kids in care who had their allowance taken from their Child and Family Service agency by the provincial government.

She would stand as representative for the class, on behalf of two minor children.

The suit seeks to certify the lawsuit as a class proceeding — meaning it is brought forth by one person on the behalf of a group of people.

'It is really unfair' 

It also seeks to have the forced remittance of the allowance deemed unlawful and to have all past allowances taken by the government restituted to the affected agencies.

She is also seeking punitive damages, as "the opportunities lost and experiences forgone as a result of the details of the CSA benefits to the class members during formative years can never be replaced."

As of March 31, 2018, there were more than 10,700 children in care, almost 90 per cent of whom are Indigenous.

Cora Morgan, the First Nations Family Advocate at the Assembly of Manitoba Chiefs, has long advocated against the clawback.

"The tax benefit belongs to the children, it's intended for the children," she said.

"And so that money goes into the province of Manitoba's general revenue and I think it is really unfair our children are subsidizing our provincial government."

She points to other ways the money could be used if given directly to the agencies.

"Before this became practice in Manitoba, agencies would either create a trust fund for the child for when they aged out when they were 18 or they left the child welfare system, then they would have that whole amount," she said. "Some agencies would split it 50-50 … then we would also hear of agencies utilize it so the kids can have extra things while in care, like play sports or an instrument."

Cora Morgan, Manitoba First Nations family advocate, said the practice of forcing agencies to remit its allowance is "despicable." (CBC)

This is the latest legal action against the government involving this allowance. In April a group of six First Nation CFS agencies filed an application in court to have the clawback ruled illegal by the Manitoba courts.

The lawyers representing Flette could not be reached, but the lawyer representing the agencies who filed the application in April said this proposed class action suit's probability of certification will be bolstered if the court rules in favour of the agencies.

"If we are successful in the application that we filed — which is seeking a declaration that the clawback is illegal … if we are able to get that declaration then in my opinion the class action should be complete. At that point there is no process for the government to defend," lawyer Harold Cochrane said.

Cochrane said the application is being held up because the provincial government has failed to file its evidence within the allotted time.


Kristin Annable is a member of CBC's investigative unit based in Winnipeg. She can be reached at