Supreme Court May Be Last Hope for Disabled Nortel Employees

Jonathan Chevreau 
January 10, 2011 – 4:26 pm

Some 400 disabled former employees of Nortel Networks have suffered another legal setback in their fight to receive long-term disability benefits from the former telecom equipment colossus. On Friday, the Ontario Court of Appeal denied a Leave to Appeal motion brought by a group of disabled Nortel employees regarding a Health and Welfare Trust (HAWT) distribution. See decision at the link below.

As the web site reported at the time, as of January 1st, these former Nortel employees are finding themselves cut off from most or all of their expected long-term disability benefits. On New Year’s Eve, disability benefits were to cease as part of a court-approved pension settlement for Nortel and its former workers. After Friday’s denial of leave of appeal, they now have 60 days to decide whether to file an application for Leave to the Supreme Court of Canada.

Even with CPP, many getting only 27% of expected disability  benefits

One of the financial experts working on their behalf — Diane Urquhart — says that even when CPP Disability benefits are included in their income, this group will get only 27% of the benefits they would have received had the Nortel insolvency not occurred: from $40,200 on average to just $17,900. She estimates
disabled former Nortel workers have average annual medical costs of $7,200 and as much as $50,000. Disabled with two children receive more than $47,000 a year in both the United States and the United Kingdom (via Social Security and the UK Pension Protection Fund respectively).

The HAWT assets that were intended to fund the long term disability benefits have been used for other purposes that Urquhart says they were not legally
entitled to use. Some of the funds are instead being used to pay life insurance payouts for pensioners who are still living. “Our position is that future
life insurance premiums promised by Nortel were the obligation of the Nortel estate and it was not appropriate for the judge to attach that obligation
to the HAWT, which is a distinct legal entity,” Urquhart told me in a telephone interview.

The same thing could happen to 1.1 million other workers

The group estimates 1.1 million Canadians are covered by self-insured disability income benefits plans in the workplace but their security is “now compromised” because of these legal decisions. If their employers meet a similar fate as Nortel, they too could find themselves in similar circumstances. Based on the courts’ current stance, such workers would be well advised to “get out” of them, she added, “The legal doors are closing.”

Reproduced from