GSB#2011-0630

UNION#11-19

IN THE MATTER OF AN ARBITRATION

Under

THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT

Before

THE GRIEVANCE SETTLEMENT BOARD

BETWEEN

Canadian Union of Public Employees - Local 1750 (Carter)

Union

• and -

The Crown in Right of Ontario (Workplace Safety and Insurance Board)

Employer

BEFORE

Loretta Mikus

Vice-Chair

FOR THE UNION

Jim Morrison Canadian Union of Public Employees – Local 1750 National Staff Representative

FOR THE EMPLOYER

Gurjit Brar Workplace Safety and Insurance Board Counsel

HEARING

September 13, 2012.

Decision

1The grievor, Susan Carter, was hired by the WSIB in 2000 as a nurse consultant. In 2005 she and her daughter were attacked by a gang of youths. The grievor sustained numerous injuries, including a broken wrist and damage to her eye. More importantly, for purposes of this grievance, she developed Post Traumatic Stress Disorder (PTSD).

2She applied for and was awarded short and long term disability benefits for a period of time but which were subsequently denied by the insurer, Sun Life, in 2007. At that time the Employer placed her on an unpaid leave of absence. In accordance with the collective agreement she sued the insurer and reached a settlement in March of 2008, the terms of which were summarized in a letter from Sun Life to the Employer as follows:

Ms. Carter commenced an action against Sun Life for further LTD benefits. That action was settled in February of 2008. I have enclosed a copy of the Minutes of Settlement and Release for your information. The settlement was a negotiated amount for benefits, which represented approximately the arrears and 5 years of future benefits plus interest, costs and disbursements.

3Since then the grievor has made efforts to return to work without success. The Employer maintains her status is “on approved leave without pay” and the Union argues that she is off work while in receipt of LTD benefits. The characterization of her status has a significant bearing on her rights to benefits under the collective agreement. The grievor filed a grievance that stated as follows:

Statement of Grievance

I grieve the Employer acted in contravention of Articles 15.01, 11, Article 21 and Appendix 2 of the Collective Agreement and any other relevant sections of the Collective Agreement and the Crown Employees’ Collective Bargaining Act or Related Legislation.

I have been treated unjustly when the employer…

Placed me on unpaid LOA in 2007 and did not acknowledge an award from LTD Carrier – Sun Life as “LTD benefits providing me with the entitlement to pensionable service time, benefits and continuous service.

Settlement required includes but is not limited to FULL REDRESS

-retroactive vacation and attendance credits

-recognition of pensionable service for period of LTD payment.

-adjustment to continuous service date per LTD payment

-payment of health care benefits per collective agreement noting LTD payment.

-recognition of 2007 date as “absence due to illness”

The relevant provisions of the collective agreement read as follows:

12.02 – Definition

It is the intent of this Agreement to adjust as quickly as possible any complaints or differences between the parties arising from the interpretation, application, administration or alleged contravention of this Agreement, including any question as to the whether a matter is arbitrable. In such cases the procedure set out below will be followed.

12.08 Arbitration

The Grievance Settlement Board shall have no jurisdiction to alter, change, amend or enlarge any provision of the Collective Agreement.

4.02 No Accumulation of Seniority

Seniority will not accrue during periods of Layoff or after the 60^th working day of a General Unpaid Leave.

11.01 Calculation of Vacations

…An employee will not accumulate vacation entitlement after any unpaid absence of 60 (60) consecutive working days. Accumulation will resume upon the employee’s return to work. Where the Employer returns to work for less than five (5) consecutive working days, the absence will be considered continuous.

ATTENDANCE CREDITS

15.01 Amount of accumulation

One and one-half (1 1/2) days for each full calendar day of work employment. An employee will not accumulate attendance credits after any unpaid leave of sixty (60) consecutive working days.

Joint Insurance Benefits Review Committee

7. LTD Insurance Plan

Disputes regarding disputes to LTD benefits are between the Plan carrier and the Employee. The Employer’s obligation is limited to providing an LTD Insurance Plan in accordance with the Collective Agreement.

Article 28

PENSIONS

The Employer and the Union recognize that the Administration of the WSIB Employees Pension Plan has a fundamental fiduciary obligation to act in the best interests of the pension plan members.

The Employer will maintain the WSIB Employees Pension Plan as prescribed and continued under section 17(3) of the Workplace Safety and Insurance Act during the term of this Collective Agreement subject to the terms of the WSIB Employees Pension Plan as set out in O. Reg. 455/9 and as amended from time to time.

4This award deals with the Employer’s contention that, since 2007, the grievor has been on an unpaid leave of absence and the provisions of the collective agreement state clearly that an employee on an unpaid leave of more than 60 days does not accumulate vacation credits, attendance credits, pension credits or seniority. Her entitlement to the benefits under the collective agreement is subject to her entitlement to LTD benefits.

5The Union took the position that the grievor’s settlement with the insurer resulted in a retroactive payment of LTD benefits and the equivalent of five years of LTD payments into the future. The settlement altered her status from an employee on an unpaid leave of absence to an employee in receipt of LTD benefits and re-established her entitlement to benefits.

6There is no dispute between the parties about the facts of this case. The grievor suffered an injury that resulted in LTD payments for the first two years of her illness, commonly referred to as “own occupation”. She was denied benefits for the next phase of her claim, commonly referred to as “any occupation”. She sued the insurance company and reached a settlement that was described as “the arrears and 5 years of future benefits plus interest, costs and disbursements”.

7While she was pursing this civil action, the Employer placed her on an unpaid leave of absence which, according to the terms of the collective agreement, affected her entitlement to various provisions of the collective agreement, including vacation credits, attendance credits, benefits, seniority and pension credits.

8The dispute between the parties lies in the proper characterization of that settlement. The Employer takes the position that the settlement is not a reinstatement of her LTD benefits but simply a monetary agreement of damages in lieu of benefits. The full settlement specifically states there was no admission of liability and contains a full release by the grievor of all future claims against the insurer. The Union asserts that the allocation of the settlement to retroactive and future payments is proof that it was intended as LTD payments.

9I am not being asked to determine whether the grievor was entitled to LTD benefits under the LTD Plan. That clearly is a matter between the grievor and the insurer and I do not have the jurisdiction to consider that question.

10I am being asked to determine whether the agreement between the insurer and the grievor reinstated her entitlement to LTD benefits. That raises a question concerning the interpretation and application of the terms of the settlement.

11The terms of the settlement are lengthy and comprehensive. It is relevant for our purposes to note that it contained common clauses often seen in settlements, such as a release from all future claims, actions, demands and grievances, including any matters that might arise in another proceeding, a confidentiality clause and a denial of liability.

12Some portions of the settlement are particularly significant to the positions of the parties. The Employer relies on the grievor’s agreement in the settlement that any claims under the policy terminated for all purposes once the settlement was executed.

13Mr. Gordon Harris represented the grievor during her pursuit of claims against the Criminal Injuries Compensation Board and the Niagara Police Services Board as well as her claim for disability benefits under her policy with Sun Life. An action was commenced in respect of the latter in Superior Court but a settlement was reached during pre-trial mediation. He was present during the negotiations of that settlement and testified about the intentions of the parties to the negotiation. He stated that the compensation was meant to be damages for arrears from the date the benefits were terminated and for five years into the future. It included legal expenses, disbursements and a modest amount of interest. He referred to a letter from in-house counsel at Sun Life to the Employer which affirmed his understanding.

14In cross-examination he stated that initially the grievor had asked for remedies on numerous grounds, including reinstatement, but ultimately settled on a sum of money. He testified that the releases and denial of liability were “boilerplate” provisions in settlements and that their purpose is to make it clear that, although the insurer paid the plaintiff a sum of money, it had done nothing wrong. He insisted that the payment was not damages but rather compensation due her under the policy in the past and into the future. He stated that the portion of the settlement that represented past wages was reported as wage loss on her T4P. Sun Life gave her a T4 which included $23,000 as wages, which she included on her tax return as income.

15Ms. Carter testified that her action against the insurer was only for LTD benefits. She did not ask for damages. She stated it was the insurer who proposed a settlement that included a waiver of future claims. They were no longer the insurers for WSIB and wanted to clear her from their books.

16The Employer took the position that the Union is trying to convert a mediated settlement of damages into a claim for LTD benefits. The collective agreement states that the issue of the payment of those benefits is between the insurer and the grievor and only if the grievor is in receipt of these benefits is she entitled to other benefits under the collective. The Workplace Safety and Insurance Act, 1997, S.O. 1997, Chapter 16 states as follows:

Pensionable Service

13 1) This section applies with respect to a member who,

(a) is suffering from a physical or mental impairment that prevents the member from performing the duties of the employment in which he or she was engaged before commencement of the impairment; and

(b) Is receiving benefits under the long term disability plan as a result of impairment incurred on or after October 1, 1974.

The Employer took the position that the settlement does not refer to the reinstatement of benefits but rather a sum of money that represented benefits. The letter from the insurer to the Vice-President of the WSIB in November of 2011 states, in part:

Ms. Carter commenced an action against Sun Life for further LTD benefits. The action was settled in February 2008. I have enclosed a copy of the Minutes of Settlement and Release for your information. The settlement was a negotiated amount for benefits which represented approximately the arrears and five years of future benefits plus interest, costs and disbursements.

The Employer also pointed to the Release signed by the grievor in which she explicitly stated:

It is further understood and agreed that as a result of the payments mentioned above, I renounce any rights that may directly or indirectly arise under the said Policy and that my coverage under the said Policy is now terminated for all intents and purposes.

That provision, it was said, shows that her future payments were not LTD benefits but damages. If the Board finds she did she receive any benefits under the Settlement, they ended as of the date she signed the release.

17I have reviewed the Minutes of Settlement, the Release and the correspondence between the parties and cannot find any reference to damages. The sum of money ultimately agreed to has been characterized as benefits by Sun Life in reference to both the arrears and the future payments. Sun Life reported a portion of the payment as lost wages for income tax purposes and the grievor included that amount in her earnings for the tax year of 2008. The Notice of Assessment she received advised her that the lump sum payment she had received was in compensation for payments she had not received and that as such it was eligible for special tax consideration that would allow her to decide what year to allocate the wages to. There is no evidence before me that any of the settlement monies was treated as tax-exempt damages.

18From the evidence before me, I am persuaded that the payment made to the grievor under the settlement was intended to be a combination of arrears for LTD benefits denied to her under the policy and compensation in lieu of future benefits. I come to that conclusion for several reasons: first, the settlement specifically refers to arrears, which is described in the Webster dictionary as “amount outstanding” or “amount due” or a “debt”; second, the insurer reported that amount to be $23,000, a specific amount for a fixed period of time, that is from the denial of benefits to the settlement and, finally, the fact that the money was treated as taxable income by the insurer, the grievor and Revenue Canada.

19For the same reasons I am unable to reach the same conclusion with respect to the future payments. The remaining monies are not defined as arrears. There is no evidence that it was reported as income or that any taxes were paid by the grievor in the subsequent years. I am of the view that the portion of the payment allocated to the future was monies in lieu of LTD benefits. I think the grievor was right when she said the insurer wanted to get her off their books. They were no longer the carrier of the LTD plan and, rather than maintaining a relationship with the grievor into the future, offered to pay her a sum of money to buy her entitlements under the plan. In doing so it limited its liability to that five year period. In doing so, it gave up its right to challenge her medical condition for that same period of time. If she was found to be fit to return to work during that time, she would not be expected to repay any of the settlement monies. Each party, by signing the agreement, terminated all claims and rights to each other for all purposes. It would be incongruous to bind the Employer to the insurance contract when he was not a party to the settlement. The Union is proposing that the Employer be bound by the insurance contract even though the insurer has been relieved of its obligations under that very contract.

20For the reasons set out above, the grievance succeeds in part. The grievor is an employee in receipt of LTD benefits from the date of the denial of benefits to the date the settlement was executed. As such she is entitled to the benefits set out in the collective agreement. For the time following the date of the settlement, the grievor is no longer an employee in receipt of LTD benefits and is subject to the terms of the collective agreement as if she was an employee on an unpaid leave of absence.

21I remain seized in the event the parties have difficulty implementing the award.