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Fred Girling, seen near his home in Langley, B.C., on Wednesday his wife was a Hepatitis-C tainted blood victim.

John Lehmann/The Globe and Mail

The federal Liberal government is allowing hundreds of people who were infected with hepatitis C through tainted blood to go uncompensated even as it tries to recoup hundreds of millions of surplus dollars from a fund established for another set of victims of the same disease.

While thousands of those who contracted the hepatitis C virus (HCV) through blood transfusions have received money from the government, at least 300 of those who were infected before 1986 or after 1990, and who have been told they are eligible for compensation, have not been paid. That is because the billion-dollar fund established for that purpose in 2007 has run dry.

Meanwhile, government lawyers will be in a Toronto court next week to argue that an estimated $240-million that is sitting unused in a fund for those who were infected between 1986 and 1990 should be returned to federal coffers, a move that appears to break a Liberal campaign promise. The people who contracted the disease during that period have already received their money, but some say it was inadequate, and their lawyers will say the excess should be divided among their clients.

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Several MPs – including at least one member of the Liberal caucus – have proposed that the "moral" thing to do would be to ask the court to allow some of the surplus – about $60-million – to be transferred to the empty fund to compensate those who have not been paid.

But, so far, those suggestions have been rebuffed.

"I think there is a moral responsibility of the government to make sure that people are treated equally. It would be a shame if they decide to take that money back and put it into the federal treasury," said Mike McCarthy, a former vice-president of the Canadian Hemophilia Society who was infected with HCV by tainted-blood products in 1994 and is among those who were compensated.

The people who had not yet received payment at the time the fund ran dry "are families who have lost their income earner," Mr. McCarthy said. "Or these are people who are not well enough to work any longer and are living on a meagre pension. The income replacement was to bring them up to pre-infection income levels so they could lead a respectable life."

The reason there are two classes of Canadians who were infected with HCV through tainted blood dates back to 1998, when federal and provincial governments signed a settlement agreement to compensate those who contracted the disease between 1986, when the United States began testing donated blood, and 1990, when Canada began screening.

Eight years later, in the face of evidence that screening could have begun before 1986, the House of Commons agreed to compensate an estimated 5,500 "forgotten" victims who were infected either before or after the dates covered in the original settlement. A separate fund was established for those people.

But the estimate of 5,500 proved to be too low and, by 2010, the fund created for the second group was empty.

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Fred Girling of British Columbia, whose wife, Donna, received a transfusion of tainted blood, and died in 2013, has started an online petition demanding that the government turn the excess money over to all victims of HCV, including those infected before 1986 and after 1990 who have yet to receive settlements.

Mr. Girling and his wife were compensated. "It's not for me," he said in a telephone interview. "It's for some people who haven't got it."

In his petition, Mr. Girling points out that Anna Gainey, the president of the Liberal Party of Canada, promised in a letter to the Canadian Hemophilia Society dated Oct. 5, 2015 – two weeks before the federal election – that "a Liberal government will respect the purpose of this [surplus] fund and support its use for the compensation of victims."

Several MPs, including Liberal Rodger Cuzner, have written to Health Minister Jane Philpott asking that enough money be transferred from the fund with the excess cash to the one that is empty to ensure everyone is compensated. To allow approved claims to go unpaid "seems to increase the inequity of this tragedy, not lessen it," wrote Mr. Cuzner, who has a constituent who has been waiting for compensation since 2011.

Dr. Philpott responded that the courts do not have the authority to transfer money between the two funds.

David Klein, the lawyer who negotiated the settlement for the pre- and post-1986-to-1990 group, sent a letter on Feb. 15 to Paul Vickery, the Justice Department lawyer who is handling the case, asking him to suggest to the court at next week's hearing that some of the surplus money be transferred for those who have not been compensated.

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Mr. Vickery wrote back on March 17 to say: "I am instructed that my client is not prepared to seek an order directing that monies be transferred from the '86-'90 fund."

When asked by The Globe and Mail on Tuesday to explain why the government would not pay money to the victims who are eligible, whatever the outcome of the government's bid to recoup the excess cash, Health Minister Jane Philpott's office did not provide a direct response.

"The two hepatitis C settlement agreements were negotiated on behalf of two different groups of people, and are administered and funded differently," her spokesman wrote.

"The courts have the jurisdiction to make decisions regarding the sufficiency of the funds and the allocation of any surplus within the parameters set out in each settlement agreement, but, they do not have the authority to order a transfer between agreements."

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