The AiMHi Prince George Association for Community Living has been hit with a bill for $575,000 by its former benefits provider.
AiMHi pulled out of the Healthcare Benefit Trust four years ago and has been refusing for years to pay exit levies representing its share of the trust's deficit.
Now, the non-profit trust is going after AiMHi and 45 other community service agencies for $4.8 million in outstanding levies. It argues that the agencies signed contracts and knew they would be responsible for a share of the deficit if they left.
In 2011, the deficit topped $17 million in the trust's pool of community service agencies that work with some of B.C.'s most vulnerable people.
The deficit - known as an unfunded liability - was created when long-term disability claims by agency employees outstripped the trust's ability to pay.
The trust has issued letters giving agencies 30 days to decide whether to pay their levies in one lump sum or sign a settlement agreement to repay the money with interest over 10 years.
Jan Grude, the trust's chief executive officer, was unavailable for comment on Friday. In an earlier interview, he said that if agencies refuse to pay, the trust likely will take legal action.
The trust issued a prepared statement on Friday noting that when agencies leave the trust, their disabled employees stay behind. The trust, therefore, has a legal duty to collect exit levies so that there will be enough money to look after sick or injured employees.
"HBT must also ensure fairness for its current membership, who should not be burdened with the financial obligations of their peers who choose to leave the trust," the statement said.
The trust said it hopes to avoid further legal action, and says that by allowing payments over 10 years, agencies would be able to clear their debt without hurting services.
But Melinda Heidsma, AiMHi's executive director, said her agency will refuse to sign the agreement and is preparing to fight the bill in court. She questioned how the trust and the government expect her agency to pay $6,000 a month for 10 years without hurting front-line services.
"What is it that government and HBT are proposing we do?" she said.
"We don't have administrative funds that would allow us to make that kind of payment. Bake sales aren't going to do it."
Heidsma said the proposed settlement would require AiMHi to guarantee payment by putting up group homes for adults with developmental disabilities as collateral.
"I mean, what other assets would a non-profit typically have that you can go out and mortgage? It's going to be the places where people receive services."
Heidsma heads the B.C. CEO Network, which represents about 80 agencies primarily in the community living sector. She said the network is gathering the trust's demand letters from other agencies and contemplating a co-ordinated legal defence. The network is represented by former B.C. attorney general Geoff Plant, who is now a lawyer at Heenan Blaikie.
The agencies dispute that they are responsible for HBT's deficit. They say that government forced them to join the trust in the late 1990s as part of a labour settlement, and that the trust set its rates too low to cover increases in long-term disability claims.
The CEO Network further argues that government should pick up the tab since it, ultimately, pays the agencies' bills and saved money on the low premiums for years.
Government has rejected that suggestion. It intervened in the dispute nearly two years ago after the trust filed a number of lawsuits, but talks broke down in recent weeks, setting the stage for a possible legal battle in which all sides will be spending government money on lawyers and court fees.
© Copyright 2013