Ottawa could face four class-action lawsuits over $165M error at Veterans Affairs

The federal government now faces four proposed class-action lawsuits over a $165 million accounting error at Veterans Affairs which shortchanged more than 250,000 former soldiers, sailors and aircrew, CBC News has learned.

Botched accounting shortchanged more than 250,000 ex-military members

Soldiers of the 33 Field Engineer Squadron wear poppies on their uniforms as they march during a ceremony at a Calgary military cemetery on Remembrance Day in 2011. (Jeff McIntosh/Canadian Press)

The federal government now faces four proposed class-action lawsuits over a $165 million accounting error at Veterans Affairs that shortchanged more than 250,000 former soldiers, sailors and aircrew, CBC News has learned.

The latest claim was filed this week by the Ottawa law firm headed by retired colonel Michel Drapeau. It joins similar cases launched by lawyers with Koskie-Minsky of Toronto, McInnis-Cooper of Halifax and the Kelowna office of Murphy-Battista.

The court actions, which have not yet been certified, relate to a bungled calculation of disability awards and pensions at Veterans Affairs — an oversight that started in 2002 and ran undetected for almost eight years.

Last month, CBC News revealed internal federal documents that explained how the error happened and detailed some of the flawed assumptions bureaucrats used to bury the mistake when it was uncovered.

Veterans ombudsman Guy Parent speaks to media October 1, 2013 in Ottawa. (Adrian Wyld/The Canadian Press)

In 2010, when the department discovered and corrected the indexing mistake, it did not notify any of the 272,000 veterans who were affected. The matter did not become public until former veterans ombudsman Guy Parent blew the whistle last November.

The Liberal government owned up to the error and promised to reimburse veterans, beginning in 2020 — but Dennis Manuge, the former soldier who initiated the first class-action claim, said the mushrooming number of cases is a sign of the frustration and impatience felt by those affected.

The fact that it will take until after the next election to rectify the situation is one of the major factors driving the court cases, he added.

"The trust level isn't there, and I think that's regardless of the party in office," said Manuge, who noted the former Conservative government fought a separate class-action lawsuit related to a clawback of veterans' disability payments.

In that case, Manuge — acting on behalf of roughly 7,500 former soldiers — won an $887 million settlement in 2013.

The documents obtained and published by CBC News last month show how Veterans Affairs officials traced the confusion over the disability payments back to changes in forms related to the 2001 overhaul of the Income Tax Act.

Critics say the revelations over the unchecked error raise important questions about fiscal accountability at Veterans Affairs.

They're asking what actions bureaucrats took when the error was first discovered — and why it was kept hidden for almost a decade.

Many of the affected veterans have died

A significant number of the affected veterans — 170,000 — have passed away since the error was discovered. The Liberal government promised to repay their estates, but the documents show Veterans Affairs does not keep track of next-of-kin and has no means of finding them.

Manuge said he has no confidence that all affected veterans' families will get justice.

"If we wait another two years, the older veterans involved, well, many of them will be gone," he said. "I can only speak for myself ... that's one of the major factors in my making a decision to have a go at this."

The government's handling of the error "just isn't good enough," he said. "It's not acceptable."

Since the matter is before the courts, federal government officials declined comment on Wednesday.


Murray Brewster

Senior reporter, defence and security

Murray Brewster is senior defence writer for CBC News, based in Ottawa. He has covered the Canadian military and foreign policy from Parliament Hill for over a decade. Among other assignments, he spent a total of 15 months on the ground covering the Afghan war for The Canadian Press. Prior to that, he covered defence issues and politics for CP in Nova Scotia for 11 years and was bureau chief for Standard Broadcast News in Ottawa.