Docket: T-311-15
Citation:
2017 FC 749
Ottawa, Ontario, August 1, 2017
PRESENT: The
Honourable Madam Justice McDonald
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BETWEEN:
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LORETTA
BEMISTER, RICHARD FERGUSSON, PETER KERR, OREST TORSKY, NANCY WILSON AND THE
NATIONAL ASSOCIATION OF FEDERAL RETIREES
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Applicants
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and
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THE ATTORNEY
GENERAL OF CANADA
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Respondent
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JUDGMENT AND REASONS
I.
Overview
[1]
The Applicants are retirees from various facets
of the federal public service, and are voluntary participants in the Public Service
Health Care Plan [PSHCP]. The PSHCP is the health care plan established pursuant
to the Financial Administration Act, RSC 1985, c F-11 [FAA] which
provides coverage for active federal employees and retirees from the federal public
service. The National Association of Federal Retirees [NAFR] is a non-profit organization
who advocates on behalf of federal retirees.
[2]
In this judicial review application pursuant to
section 18.1 of the Federal Courts Act, RSC, 1985, c. F-7, the Applicants
seek declarations that the Respondent, acting through the Treasury Board [TB],
breached their contractual rights and infringed upon their Charter of
Rights and Freedoms [Charter] with respect to the process
followed and the changes made to the PSHCP cost sharing ratio in 2014. At that
time it was announced that the cost sharing ratio would be moved from a 75-25 %
split, where it had been held for a number of years, to a 50-50 % split. Meaning
that retirees pay 50% of the premiums for coverage under the PSHCP and the
federal government pays the other 50%. Prior to this, the retirees paid 25% of
the premiums. Active federal employees currently do not pay premiums for PSHCP
coverage.
[3]
This judicial review application is not about pension
benefits. It is about the increase in the cost of PSHCP coverage for retirees, and
it is about the course of conduct followed by the TB to achieve that increase. The
retirees had input into the PSHCP changes as announced in 2014, by virtue of
having a representative of the NAFR on the PSHCP oversight Committee. Although,
they disagreed with the move to a 50-50% cost-sharing ratio, they obtained
other concessions, and obtained agreement that the new ratio would not apply to
lower income retirees. They had recourse to an alternative dispute resolution
process in the event of an impasse, but they choose not to trigger that
process.
[4]
For the reasons that follow, I conclude that the
retirees and the NAFR agreed, albeit reluctantly, to the 50-50% cost sharing
ratio on PSHCP premiums. I also conclude that there were no violations of the Applicants’
Charter rights.
[5]
This application for judicial review is
therefore dismissed. The parties did not seek costs.
II.
Background
A.
PSHCP
[6]
The PSHCP is established under section 7.1 (1) of
the FAA which allows the TB to “establish or
modify any group insurance or other benefit programs for employees of the
federal public administration and any other persons […]”.
[7]
The PHSCP provides coverage for various health
care benefits including: prescription drugs, medical supplies, vision care,
medical practitioner services, hospital coverage and travel coverage. Members
of the PSHCP include current employees, as well as retired federal public servants,
and their eligible dependants. Upon retirement, employees may choose to
continue coverage under the PSHCP. Because participation in the PSHCP is
voluntary, retirees are free to withdraw from the plan at any time.
[8]
Currently, the PSHCP provides coverage for over
600,000 members. Of the estimated 239,000 retirees from the federal public
service, approximately 174,500 participate in the PSHCP. The PSHCP is funded
through contributions from the TB, participating employers, and PSHCP members.
Retiree contributions for PSHCP premiums are deducted from their pension
payments.
[9]
The PSHCP has undergone various changes including
changes to coverage, co-pays and the cost-sharing percentages. Although it is
the changes in 2014 that are in issue on this judicial review application, some
background to the governance of the PSHCP is necessary for context.
(1)
1999-2005
[10]
On December 1, 1999, a Memorandum of
Understanding [MOU] and a Trust Agreement [Trust] were entered into between the
TB, the National Joint Council [NJC] of the Public Service of Canada
(representing various public service bargaining agents), and the retiree
association, which was then known as the Federal Superannuates National
Association [FSNA], and is now known as the NAFR.
[11]
The MOU was for the period of April 2000 to
March 31, 2005, and outlined the financial and management framework of the
PSHCP.
[12]
During the 2005 renewal negotiations, the TB,
the NJC and FSNA agreed to replace the PSHCP Trust with a corporation to be
known as the Federal Public Service Health Care Plan Administration Authority and
a collaborative forum known as the Public Service Health Care Plan Partners Committee
[Partners Committee].
(2)
2006-2011
[13]
A new MOU was entered into for the period of
April 1, 2006 to March, 2011. This MOU states it purpose as follows:
“The purpose of this MOU is to set out
changes that will be made to the Public Service Health Care Plan (PSHCP) with
regard to benefits, cost-management measures, the introduction of a pay direct
drug card (PDDC), as well as changes to its governance framework.”
[14]
With respect to retirees’ (referred to as
pensioners) contributions, the 2006 MOU states as follows in Appendix B “Cost Management Measures”:
Pensioner contributions will be based on the
principle of 75/25 percent cost sharing; and pensioner contribution rates will
be fixed for the period April 1, 2006 to March 31, 2011. Effective April 1,
2011 contribution rates will be recalculated to once again reflect the 75/25
principle.
[15]
Appendix D of the MOU outlines “The PSHCP Governance Structure” as follows:
A final detailed governance proposal will be
developed by the representatives of the Parties and submitted to the President
of the Treasury Board for approval. The main elements of the new governance
framework would be as follows:
● The current PSHCP Trust to be terminated.
● A corporation would be created under subsection 7.2 (1)
of the Financial Administration Act (FAA) through the issuance of
letters patent of incorporation by the President of the Treasury Board, on the
recommendation of the National Joint Council. The corporation would be charged
with oversight of the administration of the Plan.
● A corporation would begin its operations on April 1,
2006.
● A collaborative committee to be known as the Partners
Committee, to be established made up of representatives of the Parties to allow
for a joint problem-solving process where the Parties will work together to
reach consensus on plan development and cost-management issues.
● The Partners Committee to be mandated to develop recommendations
for approval by the Treasury Board on changes to the terms of the PSHCP to deal
with cost pressures and other matters; and
● The terms of reference of the Partners Committee will
include a dispute resolution process to be developed by the representative of
the Parties. Should the representatives of the Parties fail to reach an
agreement on a dispute resolution process, the process set out in the
Memorandum of Understanding in respect of the 2011 Renewal will apply.
[16]
A dispute resolution process was outlined in
Appendix A to the 2006 MOU “Concerning the 2011 Renewal
of the PSHCP” as follows:
● In the event that the parties fail to reach a new
agreement by June 2010, a mediation process may be initiated by either the
representatives of the Treasury Board Secretariat or by the representatives of
the certified bargaining agents of the National Joint Council or by the representatives
of the pensioners.
● Should mediation not be successful by October 2010, a
Dispute Resolution Process may be initiated by the Treasury Board Secretariat
representatives or by the representatives of certified bargaining agents of the
National Joint Council, or by the representatives of pensioners.
● The Dispute Resolution Process shall consist of hearings
conducted by and decisions rendered by a Dispute Resolution Panel made up of
three persons, one chosen by the Treasury Board Secretariat representatives,
one to be chosen by the representatives of certified bargaining agents of the
National Joint Council, and the representatives of pensioners, and a third
person selected by those who will act as the chair of the panel.
● A decision of the Dispute Resolution Panel is a decision
of the majority of the members, or if there is no majority decision, the decision
of the chair of the panel.
● The decision of a Dispute Resolution Panel shall form
part of the renewal agreement unless
○ the parties agree to reject the decision, and
○ the parties agree to other conditions within 30 days of
the decision of the Dispute Resolution Panel.
[17]
The 2006 changes led to the creation of two bodies
involved in the PSHCP governance, a corporation called the Administrative
Authority [AA] and the Partners Committee.
[18]
The AA Board of Directors, pursuant to section
7.3 of the FAA, is composed of members appointed by the President
of the TB, as well as the bargaining agents of the NJC. The Board of Directors
includes one director representing the retirees who is appointed by the
President, on recommendation of the NJC.
[19]
The Partners Committee consists of seven (7)
members: three employer representatives appointed by the TB President; three
employee representatives appointed by the bargaining agents of the NJC; and one
representative for the retirees appointed by the NJC.
[20]
The Partners Committee works on a consensus basis,
and when all members agree to the terms of the renewal of the PSHCP, a joint
submission is signed by all Partners and presented to the TB President for
ratification. If no consensus is reached, the dispute resolution process can be
triggered. Regardless, the TB has the final approval authority.
(3)
MOU Renewal
[21]
Renewal of the MOU for the period beyond 2011
was a topic of discussion at the regular Partner Committee meetings.
[22]
As early as 2009, the Partners Committee was
advised by the TB representatives on the Committee that the “arguably unprecedented” economic situation in Canada
and the necessity for a period of economic restraint would be a factor in the
2011 MOU renewal (Sametz Affidavit para 53).
[23]
In December 2011, a two-year extension to the
2006 MOU was approved which included maintaining the 75-25 cost sharing ratio. The
renewal period was June 1, 2012 to March 2013.
[24]
In the interim, meetings continued with respect
to developing a proposal for the period following the renewal. Following a
series of meetings, on February 13, 2012, the NJC on behalf of the Partners
Committee made a joint recommendation to the TB President. This recommendation included
extending the MOU then in effect and maintaining the 75-25 cost-sharing ratio
for retirees. This recommendation acknowledges that the Partners Committee took
into consideration “…the effect on cost and
cost-effectiveness of the Plan, its comparability to health plans of other
employers and the consequences for plan members...”.
[25]
The TB President did not respond to the February
2012 recommendation until June 2013. In his response the TB President asked the
Partners Committee to address moving to a 50-50 cost-sharing ratio for retirees,
in addition to other changes.
[26]
The NAFR says it was surprised by this response.
Following the response, the Partners Committee met on a number of occasions to
discuss the implications to the retiree members of the PSHCP on a move to a
50-50 cost sharing model. A meeting with the TB President was requested, it did
not happen.
[27]
On October 8, 2013, the TB President wrote to
the Partners Committee and reiterated his position regarding the need to move
to a 50-50 cost-sharing ratio to ensure that the PSHCP remained affordable and
comparable to other public and private health care plans. In this letter, the
TB President explained that his response was delayed in order to “fully assess the implications of the recommendation”.
[28]
At a Partners Committee meeting on January 23,
2014, the TB representatives indicated that if no recommendation was reached, changes
to the PSHCP could be imposed by the government.
(4)
2014 Budget Announcement
[29]
On February 12, 2014, in conjunction with the
Federal Budget, it was announced that there would be a move to a 50-50 % cost
sharing ratio for retiree members of the PSHCP as a cost saving measure.
[30]
Following this announcement, the Partners
Committee met on numerous occasions to formulate a recommendation.
[31]
On March 21, 2014, the NJC on behalf of the
Partners Committee made a reformulated recommendation to the TB President on
changes to the PSHCP. The “Record of Decision”
states “The Partners Committee at its March 21, 2014
meeting reached consensus on the elements of a reformulated Joint
Recommendation to the Treasury Board.”
[32]
The reformulated joint recommendation included expanded
vision care benefits, expanded reimbursement for certain medical devices, increased
coverage for psychological services, elimination of the annual deductible, and
the implementation of the 50-50 cost sharing ratio for retiree members to be phased
in over a four-year period. However the 50-50 cost sharing ratio would not be
applied to certain low income retirees who would remain at the 75-25 cost
sharing ratio. This joint recommendation was signed by Dennis Jackson on behalf
of the NAFR.
[33]
By letter dated March 26, 2014, the TB President
wrote to the Partners Committee formally announcing the approval of their March
21, 2014 joint recommendation, stating:
I would like to thank the Public Service
Health Care Plan Partners Committee for its letter of March 21, 2014, outlining
a reformulated Joint Recommendation for renewing the Public Service Health Care
Plan. The 2014 Joint Recommendation represents an important commitment to
ensuring the Public Service Health Care Plan and pensioner benefits remain
current, relevant, and aligned to the principles of comparability,
affordability, and sustainability.
B.
The Evidence
[34]
The parties relied upon Affidavit evidence on
this application. Written cross examination was conducted on the Affidavits.
(1)
Applicants’ Evidence
[35]
The individual Applicants, who are also members
of the NAFR, filed Affidavits in support of this Application summarized as
follows:
Loretta Bemister - worked for the Federal Government for approximately thirty (30)
years as a Certified General Accountant and as an employee of Canada Post. She
retired from the Public Service in 2011, in an executive position at age 56. As
of April 2018, the changes in the PSHCP premiums will increase her monthly
premium from $42.76 to $85.00.
Richard Fergusson - served in the Armed Forces for twenty-four (24) years as a
Non-Commissioned Officer in the Meteorological classification and as a training
development instructor. He retired as a Master Warrant Officer in 1992 at age
45. Mr. Fergusson’s monthly PSHCP premium in 2014 was $59.32 per month.
Peter Kerr - is a
director of the NAFR and served in the Armed Forces for thirty-three (33) years
in the Electrical and Mechanical Engineering field. He retired as Lieutenant
Colonel in 1996 at age 49. In March 2015, Mr. Kerr’s monthly PSHCP premium
changed from $38.34 to $49.98.
Orest Torsky - was
a member of the RCMP for thirty-four (34) years. He retired for health reasons
in 2005 at the age of 57. After retirement, he continued to work in the RCMP as
a civilian on contract for approximately five (5) years. In 2014, Mr. Torsky’s
monthly PSHCP premium was $52.93.
Nancy Wilson - worked
as an administrative clerk for the Canadian Forces Base, in London, Ontario for
nineteen (19) years. She retired due to the closure of the base in 1996, but
continued working part-time as an administrative assistant for the Canadian
Coast Guard. In 2012, at age 73, cutbacks resulted in the termination of her
part-time position. In 2014, Mrs. Wilson’s monthly PSHCP premium was $21.78.
[36]
The Applicants also relied upon Affidavits from
Sylvia Ceacero, the CEO of the NAFR, and Louise Bergeron, a health officer
employed with the NAFR.
[37]
Dennis Jackson, the NAFR representative on the
Partners Committee since 2006, filed an Affidavit. In his Affidavit, he details
the governance background of the PSHCP and provides details of the meetings of
the Partners Committee regarding the 2012 joint recommendation to the TB, as
well as the events of 2013 and 2014 leading to the “agreement”
announced in March 2014.
[38]
The Applicants filed an Affidavit from Bernard
Dussault, an actuary and a pension benefits officer at the National Office of
the Processional Institute of Public Service Canada.
[39]
The Applicants also filed an Affidavit from an expert
witness, Douglas Hyatt. Mr. Hyatt is a Professor of Business Economics at the
Rotman School of Management. He is offered as an expert on industrial
relations, income security and income replacement programs. Mr. Hyatt expresses
the opinion that in 2014 the TB President may not have engaged in good faith
bargaining. Mr. Hyatt states that with meaningful collective bargaining, the
legitimate concerns of employees are “required to
confront the equally legitimate concerns of employers” (para 19). Mr.
Hyatt explains that even though the unilateral changes in the case only affect
retirees, this can affect existing active employees because many of them will
eventually become retirees (para 20). Mr. Hyatt explains that an “employer who abrogates that arrangement and requires a 50%
copayment is effectively expropriating what the employees had already paid for
their tenure with the organization” (para 26). A retiree cannot go back
and negotiate for higher wages in order to compensate for the less generous
pensions arrangement (para 26-27). He states that the increase in cost of
retirement benefits amounts to expropriation without compensation because retirees
have already paid for the benefits while they were employed (para 29).
[40]
He argues that retirement benefits are a form of
deferred compensation. He explains that deferred compensation arrangements
usually involve individuals being underpaid relative to their productivity in
their early years with an organization in return for being overpaid relative to
their productivity in their later years with the organization (para 37-39). Deferred
compensation fosters a positive work environment by ensuring that employees
remain with the employer to receive their vested benefit, which leads to a
longer-term employment relationship (para 41). “The
vested benefits from a health plan on retirement provide workers with the
security that is highly valued during retirement” (para 42).
(2)
Respondent’s Evidence
[41]
The Respondent relies upon the Affidavit of
Tracey Sametz, who has worked for the Federal Government since 1985. Between
March 2009 and January 2015, she was a Senior Director with the Pensions and
Benefits Sector at Treasury Board. Between March 2009 and January 2015, she
attended the Partners Committee meetings as the TB technical advisor.
[42]
The Respondent also filed an Affidavit from an
expert witness, Dr. Richard P. Chaykowski, who is a Professor at Queens
University with expertise in industrial and labour relations. Attached to his Affidavit,
is a report he prepared titled: “The provision of
Health Care Benefits to Federal Public Service Retirees under the PSHCP”.
In this report he makes various conclusions, including:
● federal government employees have a substantial and
ongoing pay advantage relative to other comparable workers in the private
sector (page 6)
● the majority of workers in Canada are not covered by a
registered pension plan (page 6)
● a large proportion of employees in Canada (about 50%) do
not have a supplemental medical insurance plan, essentially all employees
working in the federal public service are covered (page 6)
● the average age of retirement of retirees from the federal
public service was consistently and substantially lower than the average
retirement age in either the public or private sectors (page 7)
● overall, retirees from the federal public service have a
pension plan that is more valuable than most other pension plans. (page 7)
[43]
Dr. Chaykowski also states that collective
bargaining rights apply only to employees who are in a bargaining unit where a
labour union is the bargaining agent. For this reason, the retirees, who are
former employees of the federal government, fall outside this framework. The
PSHCP is a health care plan that is entirely distinct and separate from the
federal Public Service Pension Plan and was implemented through a National
Joint Council (NJC) directive. For this reason, reimbursement provided to
federal public service retiree under the PSHCP do not form any part of the
pension income that a retiree may be eligible to receive as a result of their
participation in the federal Public Service Pension Plan. Retirees also have
the choice whether or not to enroll in the PSHCP. He also states that it is the
TB who retains final decision-making authority in determining the cost-sharing
for the PSHCP.
III.
Issues
[44]
The Applicants raise two (2) main issues:
1)
Was there a breach of contract?
2)
Was there a breach of the retirees section 2(d),
section 7 and section 15 Charter rights?
IV.
Analysis
A.
Standard of review
[45]
Although not addressed by the parties, the applicable
standard of review must be considered. Here the Applicants seek review of the changes
to the PSHCP announced in 2014 and they also seek review of the TB’s course of
conduct in the events leading up to that announcement. The Applicants are not
attacking the constitutionality of a law.
[46]
The statutory mandate of the TB with respect to
the PSHCP is outlined in the FAA as follows:
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Group insurance
and benefit programs
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Programmes d’assurances collectives et autres avantages
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7.1 (1) The Treasury Board may establish or modify any group insurance or
other benefit programs for employees of the federal public administration and
any other persons or classes of persons it may designate to be members of
those programs, may take any measure necessary for that purpose, including
contracting for services, may set any terms and conditions in respect of
those programs, including those relating to premiums, contributions,
benefits, management, control and expenditures and may audit and make
payments in respect of those programs, including payments relating to
premiums, contributions, benefits and other expenditures.
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7.1 (1) Le Conseil du Trésor peut établir ou
modifier des programmes d’assurances collectives ou des programmes accordant
d’autres avantages pour les employés de l’administration publique fédérale et
les autres personnes qu’il désigne comme cotisants, individuellement ou au
titre de leur appartenance à telle catégorie de personnes, prendre toute
mesure nécessaire à cette fin, notamment conclure des contrats pour la
prestation de services, fixer les conditions et modalités qui sont
applicables aux programmes, notamment en ce qui concerne les primes et
cotisations à verser, les prestations et les dépenses à effectuer ainsi que
la gestion, le contrôle et la vérification des programmes, et faire des
paiements, notamment à l’égard des primes, cotisations, prestations et autres
dépenses y afférentes.
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[47]
The statutory language affords the TB
significant discretion in the operation of the PSHCP with the use of the words “may establish or modify”, “may
take any measure necessary”, and “may set any
terms and conditions”.
[48]
Previous decisions of this Court have concluded
that discretionary decisions of the TB are reviewed on the reasonableness
standard (see: Brauer v Canada (Attorney General), 2016 FC 124).
[49]
In Brauer v Canada (Attorney General),
2014 FC 488, Justice Mosley states:
[32] The Supreme Court has given direction
that where the question is one of the exercise of discretion or policy,
deference will usually apply: Agraira v Canada (Minister of Public Safety
and Emergency Preparedness), 2013 SCC 36, [2013] SCJ no 36 at para 50. On
that basis, and not without doubt about the matter, I find that the standard of
review is reasonableness. […]
[50]
With respect to the Charter arguments,
the applicable standard of review was outlined by the Supreme Court of Canada in
Doré v Barreau du Québec, 2012 SCC 12 [Doré] as follows:
[36] […] the approach used when reviewing
the constitutionality of a law should be distinguished from the approach used
for reviewing an administrative decision that is said to violate the rights of
a particular individual […]. When Charter values are applied to an
individual administrative decision, they are being applied in relation to a
particular set of facts. Dunsmuir tells us this should attract deference
[…]
[Citations omitted.]
[51]
The issues raised by the Applicants relate to
the conduct of the TB with reference to the process followed and the changes
implemented to the PSHCP in 2014.
[52]
The applicable standard of review is therefore reasonableness
(Doré at para 7). Reasonableness requires that a decision be
justifiable, transparent and intelligible, and fall within a range of
acceptable outcomes (Dunsmuir v New Brunswick, 2008 SCC 9 at para 47).
[53]
Doré also states
that in reviewing the reasonableness of an administrative decision a “margin of appreciation, or deference, to administrative and
legislative bodies in balancing Charter values against broader
objectives” will be afforded (para 57).
[54]
In the context of the Charter, if the changes
to the PSHCP proportionately correspond to the ultimate goal of ensuring a
sustainable future program for employees and retirees, while being fair to the
Canadian public (who fund some of the benefits under the PSHCP), the decision would
fall within a range of reasonable outcomes.
B.
Was there a Breach of Contact?
[55]
The Applicants raise two (2) related issues with
respect to their breach of contract arguments. First, they argue that the
changes to the PSHCP announced in 2014 to be implemented starting in 2015, fail
to respect the retirees vested rights to a guaranteed cost sharing ratio of
75-25. Second, they argue that the conduct of the TB in 2013 and 2014 failed to
respect their rights to a meaningful process of negotiation for any changes to
the MOU as outlined in governance documents. These issues will be addressed
below.
(1)
Vested rights
[56]
With respect to vested rights, the Applicants
argue that the TB President unilaterally imposed changes to the PSHCP and in so
doing, breached their contractually vested rights. They claim these rights were
acquired through their employment contracts or applicable collective agreements
and that PSHCP benefits are a form of deferred compensation.
[57]
The Applicants argue that effective 1999, when
they got representation as part of the PSHCP negotiations, they also got a
default contribution rate of 75-25 % and they got the right to a process that
had to be followed for any future changes to the PSHCP. The Applicants argue
that the MOUs which replaced the Trust arrangement were intended to preserve
the rights which the Applicants had acquired.
[58]
This position is explained in the Affidavit of Sylvia
Ceacero who states as follows:
55. The rights of retirees vested when they
retired and any subsequent changes to their benefits requires acceptance from
the retirees, as occurs when the Partners Committee consents to a unanimous
joint recommendation that is ratified by the President of the TB. Without
acceptance or consideration of these changes, the contractual rights of the
retirees, and all members of the Association, have been breached.
[59]
The Applicants rely upon Dayco (Canada) Ltd.
v CAW-Canada, [1993] 2 S.C.R. 230 [Dayco] to argue that a pension or
other benefits negotiated during the course of employment represent deferred
compensation for services performed and they are an incentive to remain employed.
Hence, when a person retires, retirement benefits crystallize into a form of
vested rights. The Applicants also rely on Ontario v Ontario Crown
Attorneys' Assn (Retiree Benefits Grievance), [2015] OLAA No 511 [OCAA]
to argue that retiree benefits are part of a compensation package for active
employees. Both of these cases are in the union context and deal with rights
pursuant to a collective agreement.
[60]
While these cases stand for the proposition that
certain benefits earned through employment enjoy protected or vested status on
retirement, the issue here is if access to the benefits provided by the PSHCP
fall into that category of employment benefits. And if it does, were unilateral
changes made to the PSHCP by the TB.
[61]
The inescapable fact here is that the PSHCP is a
program created pursuant to section 7.1(1) of the FAA. It is not a
program administered pursuant to a collective agreement. The terms and
conditions of the PSHCP are outside the collective bargaining process. Furthermore,
the benefits of the PSHCP are available to union and non-union employees.
[62]
The Applicants rely upon case law developed in
the collective bargaining context as being applicable to their participation in
a voluntary health care benefits scheme. Even if some of the retirees gained
entry to the PSHCP through the collective bargaining process, that is not the
case for all of the retirees as some were non-unionized employees. Therefore, I
conclude that the collective bargaining case law relied upon, and the rights
recognized in those cases, do not apply to the rights of the Applicants with
respect to the PSHCP in this context.
[63]
For retirees, the PSHCP is not a pension plan or
a benefit tied to a pension plan. The fact that the PSHCP premiums are
collected from the retiree’s pension funds does not alter the essential character
of the plan. This is an administrative convenience and does not change the
fundamental nature of the plan to a “pension”
benefit. The PSHCP is an insurance scheme created by legislation.
[64]
The Applicants’ vested rights argument is, in
essence, an argument that they were entitled to have their contribution rates
frozen. However, this argument is not tenable as the very reason for the
existence of the Partners Committee is to provide input in recognition that
there will be changes to the PSHCP. There is no evidence to support the argument
that the rates were locked in perpetuity and that they were not subject to future
adjustment.
[65]
Further, the Applicants did not provide evidence
in the form of employment contracts to establish that the health benefits
afforded as part of the PSHCP were an essential part of the employment bargain,
such as it became a vested right on retirement. They also failed to provide any
applicable collective agreements which contain language to support this
position. They rely on the past course of conduct and the wording of the MOUs
to support this position. This, however, is insufficient to support the vesting
argument.
[66]
For these reasons, I conclude that the “vesting” arguments made by the Applicants are not
applicable to their rights under the PSHCP and do not support their argument
that they are entitled to a 75-25 cost sharing ratio.
(2)
Duress
[67]
The related breach of contract argument made by
the Applicants is that the “agreement” reached in
2014 was reached under duress. They request a declaration that the TB letter of
March 26, 2014 not be recognized as an agreement.
[68]
The Partners Committee in their deliberations
throughout 2011 and 2012 and leading up to the proposal made to the TB on
February 13, 2012, recognized that they needed to make PSHCP recommendations that
allowed the plan to be cost sustainable and comparable.
[69]
The Applicants assert that the proposal provided
to the TB on February 13, 2012, was based upon reliable evidence that the ratio
could be maintained at 75-25 and still provide a stable, cost effective, and
comparable plan. They argue that the TB President’s response that it was
necessary to move to a 50-50 model was without any justification and without
any reasons.
[70]
Therefore, the Applicants argue that the changes
made in 2014 were not the result of good faith negotiations or a consensus as
required by the terms of the MOU. They state that when the TB President
notified the Partners Committee that he was insisting on a move to a 50-50 cost
sharing ratio for retirees, that was proof that the TB was no longer bargaining
in good faith and was not going to honour the terms of the MOU.
[71]
Further, the Applicants argue that when the
announcement was made as part of the 2014 Budget that there would be a move to
a 50-50 cost sharing for retirees, this was further proof that the TB was no
longer negotiating. This and the suggestion that the 50-50 cost sharing ratio could
be imposed by legislative action if the Partners Committee did not come to an
agreement is the evidence relied upon by the Applicants to argue that the TB
President was imposing his will on the process.
[72]
Dennis Jackson, the NAFR retiree representative
on the Partners Committee, states as follows in his Affidavit:
55. After the Federal Government’s
budgetary announcement of February 11, 2014, the Partners attempted to
negotiate with the President of the TB. The President made it clear that if the
Partners did not come to an “agreement”, legislation would be enacted providing
for, among other important changes, a contribution rate of 50% - 50% between employer
and retirees.
56. The threat of a legislated
response exerted immense pressure on the Partners Committee to reach an
“agreement.” The President was only open to discussions on minor issues, such
as the phasing in of the changes, or potential exemption for retirees on a very
low income. If no agreement was achieved, none of these mitigating measures
would be adopted in legislation.
57. In order to mitigate our losses
and avoid the more severe consequences that could come with a legislated
response, the Partners Committee decided to accede to the unilaterally imposed
terms.
[73]
The argument that the TB had an obligation to
bargain in good faith is premised on the assumption that the rights which have
been recognized in the collective bargaining process are applicable to the
PSHCP and the retiree members. As indicated above, as the PSHCP is outside the
collective bargaining process as it relates to the retirees, those principles
are not applicable to this situation.
[74]
To establish duress, the Applicants must demonstrate
that the pressure amounted to coercion of the will; that the pressure was
illegitimate and that they have taken steps to avoid the act complained of (see
Stott v Meir Investment Corp (1988), 63 OR (2nd) 545.)
[75]
The Affidavit of Ms. Sametz (paras 63-82)
details the numerous meetings held and the information discussed by the
Partners Committee following the direction in June 2013 that the TB intended to
move to a 50-50 model.
[76]
Here, based upon the evidence, I am not
satisfied that there is evidence of the nature necessary to establish coercion.
Clearly based upon the evidence of Mr. Jackson, the retirees did not like the
position taken by the TB. But there is evidence that discussions, meetings and
negotiations at the Partners Committee continued after the announcement by the TB
of the move to a 50-50 model. They ultimately agreed to the change in premiums
in exchange for other changes to the PSHCP and for protection of the lower
income retirees. A consensus was reached which saw increases in psychological
services, elimination of deductibles and protections for low income retirees.
[77]
The diverse membership of the retiree group of
participants within the PSHCP means that at times, differing interests, and
perhaps even conflicting interests, have to be balanced. Here, in the context
of these negotiations, the NAFR choose to protect the interests of the “most vulnerable”.
[78]
Despite the circumstances under which the
agreement was reached, it ultimately remains that the Applicants signed on to
the agreement. Furthermore, concessions were made to the Applicants in the form
of increased services and the elimination of deductibles as well as a staged
phasing-in of the increase in premiums.
[79]
Finally, the retirees had a dispute resolution process
available to them if they felt the negotiations had reached an impasse. They
chose not go that route. Presumably, that was a calculated decision which the
Applicants must accept.
[80]
In the circumstances, I do not find any evidence
of duress or coercion.
(3)
Conclusion – Breach of Contract
[81]
There is no evidence that the 75-25 % split on
premiums, or any set formula for that matter, was guaranteed as a term of
employment or a was a term of any applicable collective agreement. Therefore I
conclude that the Applicants have not established that they have a vested right
to a default cost sharing ratio of 75-25.
[82]
I also conclude that there was no evidence of
duress with respect to the process leading to the PSHCP changes announced in
2014.
C.
Was there a breach of the retirees section 2(d),
section 7 and section 15 Charter Rights?
(1)
Section 2 (d) – Freedom of Association provisions
[83]
The Applicants argue that their right to a
meaningful process of collective negotiation in the context of the PSHCP was
breached by the TB’s actions. They argue that the fact the TB failed to
negotiate in good faith frustrated the NAFR’s ability to negotiate on behalf of
the retirees, thereby violating the retirees’ rights to association as
guaranteed by section 2(d) of the Charter.
[84]
The Applicants argue that because of their
retirement status, they have no recourse against their former employer(s) and
they argue that there is a power imbalance between them and current employees (who
can exercise the right to strike). The Applicants argue that in effect, they have
no voice in the process and this is a substantial interference with their
rights of association.
[85]
Section 2(d) of the Charter protects
three types of activities: “(1) the right to join with
others and form associations; (2) the right to join with others in the pursuit of
other constitutional rights; and (3) the right to join with others to meet on
more equal terms the power and strength of other groups or entities”
(see Mounted Police Association of Ontario v Canada (Attorney General),
2015 SCC 1 [MPAO] at para 66).
[86]
The Applicants argue that they are entitled to
the benefits recognized in the collective bargaining process as a necessary
precondition to the meaningful exercise of the right of association (see MPAO).
[87]
For the reasons outlined above regarding the
Applicants’ breach of contract arguments, I am not satisfied that the individual
Applicants or the NAFR can bring themselves within the collective bargaining
context with respect to their rights as part of the Partners Committee
concerning the PSHCP.
[88]
Furthermore, retired public servants are
excluded from the terms of the Federal Public Service Labour Relations Act
(SC 2003, c 33, s 2) by the definition of an employee under subsection 2(1).
The NAFR does not represent employees with collective bargaining rights. Unlike
trade unions, the NAFR has no formal statutory mandate to represent all federal
government retirees. It is not a bargaining unit like the unions that make up
the NJC.
[89]
However, even if the NAFR could bring itself
within the collective bargaining sphere, the Supreme Court of Canada in MPAO
held that the right to a meaningful collective bargaining process “is one that guarantees a process rather than an outcome
or access to a particular model of labour relations” (emphasis added; see
para 67). In other words, section 2(d) of the Charter protects a “process” rather than a “particular
outcome” (Ontario (Attorney General) v Fraser, 2011 SCC 20 at
para 47).
[90]
The NAFR is an association of retired public
servants and, with respect to the PSHCP, as a member of the Partners Committee
they are given the opportunity to have input and make representations to the TB
on changes to the PSHCP. The process permits collaboration with the NJC and the
employer representatives, with the common goal of maintaining a stable,
cost-effective and sustainable healthcare benefits plan for all participants.
This is the process contemplated by the MOUs and it was the process followed
here. The evidence shows that the NAFR had the opportunity to make
representations and they had input to the process.
[91]
Here, even after the TB indicated that the move
to a 50-50 model was the direction they needed to move to, there is evidence of
multiple meetings with the Partners Committee with various options and models
being considered.
[92]
With respect to the NAFR itself, the Applicants
have the freedom to be part of the NAFR, to pursue common goals, and to decide
upon the structure of the NAFR and its leadership. The NAFR is independent of
the government and is free to decide what interests to pursue and how those
interests should be pursued in the Partners Committee forum. There was no
evidence of interference with the NAFR by the TB. The evidence of Mr. Jackson
is that the NAFR created its own bylaws and has a board of directors, and it
operates independently of the TB or government.
[93]
Therefore it cannot be said that the TB
substantially interfered with the process by which the retirees pursue their
associational activity within the NAFR and within the Partners Committee. The
evidence is that there were multiple meetings of the Partners Committee to
reformulate the proposal within the parameters set by the TB.
[94]
In these circumstances, I conclude there is no
section 2(d) Charter breach of the Applicants’ rights.
(2)
Section 15 – Equality provisions
[95]
The Applicants argue that the TB’s decision was
discriminatory pursuant to section 15(1) of the Charter as it imposed a
burden on the retirees which burden was not also imposed upon active federal employees,
thus creating a distinction based on age and on retirement status.
[96]
Section 15(1) provides:
|
15.(1) Every individual is equal before and under the law and has the
right to
the equal
protection and equal benefit of the law without discrimination and, in
particular,
without discrimination based on race, national or ethnic origin,
colour, religion,
sex, age or mental or physical disability.
|
15. (1) La loi ne fait acception de personne et
s’applique également à tous, et
tous ont droit à
la même protection et au même bénéfice de la loi, indépendamment
de toute
discrimination, notamment des discriminations fondées sur la race, l’origine
nationale ou
ethnique, la couleur, la religion, le sexe, l’âge ou les déficiences
mentales ou
physiques.
|
[97]
The Supreme Court in Withler v Canada
(Attorney General), 2011 SCC 12 [Withler] at para 30 set out the
two-part test to be applied under section 15 of the Charter as follows: (1)
whether the law creates a distinction that is based on an enumerated or
analogous ground, and (2) whether the distinction creates a disadvantage by
perpetuating prejudice or stereotyping.
[98]
The first step in the analysis is if the Applicants
can establish a distinction on an enumerated or analogous ground. They argue
that it is the combination of age and retirement status which creates the
distinction.
[99]
Given the range of ages of the Applicants at the
time of retirement (between ages 45 – 73) and considering there is no mandatory
age of retirement, they cannot rely upon “age”
as an enumerated ground. It is therefore the retirement status that is the
trigger. The question then becomes: is “retirement
status” “immutable or changeable only at
unacceptable cost to personal identity” (Corbière v Canada (Minister
of Indian and Northern Affairs), [1999] 2 S.C.R. 203 [Corbière] at para
13).
[100] Here retirement is a chosen status which is changeable, albeit
perhaps with more difficulty with age. However, it is nonetheless a changeable,
and therefore not immutable. Furthermore, retirement status has not been
identified in case law as a ground of discrimination analogous to those
enumerated in section 15(1) of the Charter. Additionally, retirement
status cannot be deemed to constitute an integral “personal
characteristic that is immutable or changeable only at an unacceptable cost to
personal identity” (see Corbière at para 13).
[101] However, even assuming the Applicants can establish that the PSHCP
creates a distinction or an enumerated or analogous ground, where the
provisions at issue also created a distinction based on age, the Court in Withler
stated that the reduction provisions did not violate section 15, because all
public service employees suffer a reduction, which is inevitably compensated in
some way. In Withler the Court concluded that the distinction, although based
on age, is neither discriminatory in its effect nor purpose. It is simply a policy
choice to ensure the viability of a larger benefit conferring scheme.
[102] In Withler the Court states:
[67] In cases involving a pension
benefits program such as this case, the contextual inquiry at the second step
of the s. 15(1) analysis will typically focus on the purpose of the provision
that is alleged to discriminate, viewed in the broader context of the scheme as
a whole. Whom did the legislature intend to benefit and why? In determining
whether the distinction perpetuates prejudice or stereotypes a particular
group, the court will take into account the fact that such programs are
designed to benefit a number of different groups and necessarily draw lines on
factors like age. It will ask whether the lines drawn are generally
appropriate, having regard to the circumstances of the persons impacted and the
objects of the scheme. Perfect correspondence between a benefit program and
the actual needs and circumstances of the claimant group is not required.
Allocation of resources and particular policy goals that the legislature may be
seeking to achieve may also be considered.
[103] In this case, the distinction made does not undermine the “presumption upon which the guarantee of equality is based”
(see Corbière at para 16) and it was appropriate in order to maintain a plan
that is fair, competitive and sustainable which all the while respects Canadian
taxpayers’ dollars.
[104] Here, the change in the cost sharing ratio does not impose a burden
on retirees in a manner which reflects stereotypical applications to an already
disadvantaged and vulnerable group in society, nor does it have the effect of
reinforcing, perpetuating or exacerbating this disadvantaged group (see Kahkewistahaw
First Nation v Taypotat, 2015 SCC 30 at para 20).
[105] Further, the Respondent’s expert, Dr. Chaykowski, states that
federal service retirees cannot be said to be marginalized or economically
disadvantaged as their private pension income generally exceeds the average
retirement income among all seniors in Canada and because approximately 50% of
the Canadian population does not have a supplemental medical insurance plan.
[106] In any event, prior to the move from a 75-25 to a 50-50 cost sharing
ratio, the contribution rate between active employees and retirees was
different as well. Active federal employees have not paid health insurance premiums
for a number of years. Whereas retirees have always paid a portion of their
premiums. Therefore I do not accept that the change to 50-50 cost sharing ratio
has somehow changed the nature of the PSHCP such that the plan now violates the
retirees Charter rights.
[107] That change was not of sufficient magnitude to support a section 15 Charter
argument.
(3)
Section 7 – Life, liberty and security of person
[108]
Under section 7 of the Charter, the Applicants
argue that the changes to the PSHCP interfered with their ability to afford
healthcare, thereby infringing their right to life, liberty and security of the
person. They argue that they only had the option of paying the increased
premium or giving up the benefits.
[109]
They rely upon Canada (Attorney General) v
PHS Community Services Society, 2011 SCC 44, where the Supreme Court of
Canada states that if a “law creates a risk to health
by preventing access to health care, a deprivation of the right to security of
the person is made out” (see para 93).
[110]
They also rely upon Chaoulli v Quebec
(Attorney General), 2005 SCC 35 [Chaoulli], where the court stated
that the “state is not entitled to arbitrarily limit
its citizens’ rights to life, liberty and security of the person” (see
para 129).
[111]
However, the Court in Chaoulli also
stated that the Charter “does not confer a
freestanding constitutional right to health care”.
[112]
Here the Applicants have not adduced sufficient evidence
on how the change in the cost sharing ratio constitutes a barrier to accessing health care. Nor have
they produced evidence to establish psychological harm such as to establish a
deprivation of the right to security of the person.
[113]
The positive changes to the PSHCP which occurred
simultaneously with the increase to a 50-50 cost sharing ratio were not
addressed by the Applicants. It may be that for some retirees the other
changes, such as the elimination of deductibles and increase in coverages for
certain treatments, may have resulted in a net benefit even with the increase
in premiums.
[114]
Furthermore, I would not characterize the increase
in the cost sharing ratio as overbroad, grossly disproportionate or arbitrary (Canada
(Attorney General) v Bedford, 2013 SCC 72, at para 107). The Supreme Court of Canada has stated that an
arbitrary law is a law that “bears no relation
to, or is inconsistent with, the objective that lies behind [it]” (AC v Manitoba
(Director of Child and Family Services),
2009 SCC 30 at para 103). Here, the increase in ratio contribution was done in connection
with the TB-stated goal of ensuring the PSHCP remains sustainable and
comparable with plans of other large employers in both the public and private
sectors.
[115]
Fundamentally, at the core of the Applicants’
case is the increase in the cost of PSHCP premiums. However, the Applicants
have not established by evidence that the increased cost in premiums constitutes
a barrier to access PSHCP coverage. The retirees also have the freedom to leave
the PSHCP altogether and obtain coverage through a private insurer.
[116]
Finally, economic interests are not protected by
section 7 (Irwin Toy Ltd v Quebec, [1989] 1 S.C.R. 927 at 1003-4 and
Chaoulli at para 201).
[117] I conclude that the arguments made by the Applicants with respect to
section 7 are broad and general. There is no evidence to support the claims that
the TB’s decision has brought restrictions to the Applicants’ life, liberty and
security of the person. There is no evidence of deprivation of rights (see Toussaint
v Canada (Attorney General), 2011 FCA 213 at paras 78-79).
[118]
As a result, I conclude that the Applicants have
not established that they have been deprived of their right to life, liberty or security of the person, or that the deprivation has
been contrary to a principle of fundamental justice.
[119]
In light of this conclusion it is unnecessary to
do a section 1 determination.
V.
Conclusion
[120] I conclude that the Applicants have not established any breach of
the Charter. Further, had I concluded there had been a breach of Charter
rights, I would have also found that the actions of the TB reflect a
proportionate balancing of Charter values against the broader statutory
objectives, and therefore that the TB’s actions and its decision were reasonable.
[121] This application for judicial review is dismissed.
VI.
Directed Verdict
[122] The Applicants have requested relief by way of a directed verdict. However,
given my findings above, it is not necessary to address this relief.
VII.
Costs
[123] Costs were not sought by the parties and therefore none are awarded.
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