Federal public servants should be compensated for Canada Life fiasco, government report recommends

The Peace Tower on Parliament Hill is pictured from the West Gate in Ottawa on Monday, May 6, 2024. (Sean Kilpatrick/THE CANADIAN PRESS)

A federal committee is recommending that public servants who suffered financial losses as a result of delayed or denied claims by Canada Life Insurance be compensated.

The standing committee on government operations and estimates published a report into the changeover of the public service health-care plan (PSHCP) from Sun Life to Canada Life. It comes after a slew of complaints from federal public servants who experienced long wait times or denied insurance claims since the changeover on July 1, 2023.

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The new Canada Life plan covers approximately 1.7 million federal workers, retirees and their dependents.

The committee report makes nine recommendations, including better monitoring of Canada Life's performance and that affected clients be compensated.

"Ensure employees who have suffered financial loss as a result of Canada Life's unjustified delays or denials of claims are fully compensated for these losses," the fifth recommendation reads.

Canada Life said last summer that it was dealing with higher-than-normal call volumes and longer wait times within its call center, driven primarily by people who were working to complete the enrolment process and by pharmacies that were transitioning prescription claim data to the plan.

In December, representatives from Canada Life appeared before committee to apologize for the problems. Canada Life senior vice-president Ryan Weiss said, "The transition has not been smooth for all members of the [PSHCP]."

Weiss added that Canada Life made improvements to its ability to manage claims.

"Call wait times as noted are now an average of approximately one to three minutes, claims are being processed within approximately two days and our top priority now is maintaining service levels," he said.

According to the report, the Public Service Alliance of Canada (PSAC) noted a backlog of thousands of claims this spring.

"As of 5 March 2024, Canada Life's dashboard indicates that the average processing time was one day for digital claims and five days for paper claims. Data provided to the committee by showed that, as of 26 February 2024, the Canada Life claims processing backlog of more than 16 days was 3,867, with 226 of these claims being over 60 days old."

In a statement PSAC national president Sharon DeSouza said, "PSAC is pleased by many of the recommendations presented by the Standing Committee on Government Operations and Estimates. Some of them address concerns that we have brought forward previously, notably the committee's recommendation to compensate employees for unjustified delays or denials of claims.The recommendation to revisit the existing caps on physiotherapy coverage, as well as increasing transparency and accountability around service and language standards are also important ones.

"Now, what we want to know is when these recommendations will be implemented. We have been calling on the government to hold Canada Life accountable since the beginning of the transition. Our members don’t want empty promises, they want action."

The report also recommends Canada Life improve communication with plan members when changes are made to coverage and that the government take into account members' access to the internet and technology.

Federal unions, including PSAC and the Canadian Association of Professional Employees (CAPE), have heard from union members frustrated by Canada Life's service.

"Confronted with denied claims, members are often faced with two difficult choices. They can launch a laborious process to dispute the decision or decide to pay the amount out of their own pocket, in the hope that they can find an alternative treatment covered by the insurance provider," said CAPE.

In a statement sent to CTV News Ottawa, CAPE said it welcomes the recommendations made by committee. 

"We had recommended that those covered by the plan who experienced unjustified denials of claims or suffered financial loss as a result of the delays be compensated until Canada Life is able to fulfil its contractual obligations. We have been heard," the statement said. 

"We urge the Treasury Board to expeditiously follow the recommendations and to commit to offering their employees the benefits promised in their employment contract. This employer cannot continue to experiment with cheap and faulty service providers, as they did with Phoenix and now with Canada Life, at the cost of failing their basic obligations as the country’s biggest employer."

CAPE said the transition to Canada Life has diminished the quality of coverage to which many employees were guaranteed, especially people with severe disabilities and members of the LGBTQ+ community.

According to the report, Marie-Chantal Girard, Senior Assistant Deputy Minister at the Treasury Board of Canada Secretariat, said that the change to a new plan administrator and the modernization of coverage created challenges.

"Of course, it requires some training, and we understand that the previous administrator had 27 years of implementing the same plan," she is quoted saying. "Every person who is owed money based on the plan parameters and the admissibility has been or will be made whole. They are being reimbursed everything that was due to them according to the plan. It might take longer, but they will get their reimbursement."

In a statement, the Treasury Board of Canada Secretariat (TBS) said it has seen "significant improvements" in call centre wait times and claim reimbursement turnaround times since Canada Life impleted its customer service action plan in November 2023.

"We will continue to work collaboratively with Canada Life and Public Services and Procurement Canada to resolve any outstanding challenges PSHCP members may be experiencing," a TBS spokesperson said.

"For members using the emergency travel and comprehensive coverage services, Canada Life worked with MSH International to introduce a similar action plan, investing in additional staff to answer calls and process claims, as well as prioritizing urgent cases by leveraging Canada Life’s established escalation process. An online dashboard was created to show current contact centre and claim processing wait times and an updated online portal to improve the PSHCP member experience by including a simplified registration page, a detailed claims information page and the ability for members to verify their explanation of benefits information."

Full list of recommendations

Recommendation 1

That the Government of Canada involve representatives of employees and retirees in the re-tendering process when the time comes to renew the "Administrative Services Only" contract for the Public Service Health Care Plan; and that efforts be made to involve people with disabilities and their caregivers in the process to ensure that their needs are understood.

Recommendation 2

That the Government of Canada work with the administrator of the Public Service Health Care Plan to improve communication with plan members when changes are made to coverage; and that in doing so, the government consider members' access to the Internet and/or new information and communications technologies.

Recommendation 3

That the Government of Canada begin monitoring the performance of the Plan Administrator on the first day when the contract comes into force; that the transition period prior to activation include monitoring milestones to ensure that the chosen contractor is capable of providing a functional website and bilingual services, among other things; and that in the future, contracts with plan administrators do not provide a grace period to a contractor that has no or few consequences for severe underperformance.

Recommendation 4

That the Government of Canada provide the rationale behind the decision to transition to a new plan administrator and to modernize benefits on the same date, given that Canada Life acknowledged that this decision contributed to the issues facing the Public Service Health Care Plan since 1 July 2023.

Recommendation 5

That the Government of Canada ensure employees who have suffered financial loss as a result of Canada Life's unjustified delays or denials of claims are fully compensated for these losses.

Recommendation 6

That the Government of Canada make available to employees the service standards included in its contract with Canada Life and provide regular updates to stakeholders on both Canada Life's adherence to those standards and any penalties levied against Canada Life for failing to meet those standards.

Recommendation 7

That the Government of Canada revisit its existing caps on coverage for physiotherapy services to bring them in line with previous coverage and distinguish between short and long-term needs.

Recommendation 8

That the Government of Canada develop separate processes for monitoring the timeliness and accuracy of a) prior authorization decision-making and appeals; and b) claims made for drugs, treatments, and devices not requiring prior authorization, in order to properly enforce the service-level standards contained in the contract.

Recommendation 9

That the Government of Canada ensure that the selected company has the capacity to provide services in French at all times and within the same amount of time as services provided in English.