CITATION: The Corporation of the Town of Whitby v. The Whitby Professional Fire Fighters’ Association, Local 2036, 2020 ONSC 936

DIVISIONAL COURT FILE NO.: 653/18

DATE: 2020/02/12

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Sachs, Kurke and Ryan Bell JJ.

BETWEEN:

The Corporation of the Town of Whitby

Applicant

– and –

The Whitby Professional Fire Fighters’ Association, Local 2036

Respondent

Frank Cesario and Amanda Cohen, for the Applicant

Mark Wright, for the Respondent

HEARD at Toronto: September 10, 2019

REASONS FOR DECISION

h. SACHS j.

Overview

[1] This is an application by the Corporation of the Town of Whitby (the “Employer”) to judicially review the decision of Arbitrator Christine Schmidt in which she allowed the grievance of the Whitby Professional Fire Fighters’ Association, Local 2036 (the “Association”) and ordered the Employer to pay the estate of one its former members life insurance proceeds for Accidental Death.

[2] The grievance involved the interpretation of a Collective Agreement that contained two clauses. The first provided that each employee was entitled to life insurance for Accidental Death in a specified amount and that the Employer was to pay the premiums on such an insurance policy. The second stated that these benefits were to be “consistent with the rules and regulations of the Plans as provided by various insurance carriers.”

[3] In this case the employee (a fire fighter) died of lung cancer as a result of being exposed to toxic substances during the course of his employment. Under both common law insurance principles and the statutory regime governing workplace injuries, his death was considered an “Accidental Death”, rather than a death by natural causes.

[4] The Group Insurance Policy provided by the Employer contained a clause that excluded from coverage all losses directly or indirectly related to illness or disease. On the basis of this clause the insurance company refused to pay the deceased employee’s estate any Accidental Death benefits.

[5] The Association grieved, arguing that it was the Employer’s obligation to pay this benefit since the employee’s death was clearly an “Accidental Death”. The Employer opposed the grievance, relying on the provision in the Collective Agreement which stated that the life insurance benefits provided by the Employer were to be “consistent with the rules and regulations” of the insurance policy it obtained. According to the Employer, those rules and regulations were clear – there was no benefit payable if death occurred as a result of a disease or illness.

[6] The Arbitrator allowed the grievance, finding, among other things, that her job was to construe the Collective Agreement in a way that accorded with the intent of the parties when they made their bargain. According to the Arbitrator, the parties’ bargain was that the families of firefighters who died from an accident were to receive Accidental Death benefits. “Accidental Death” is a term of art in the insurance and labour relations contexts, and includes any death that results from an accidental exposure to hazardous material during the course of employment. Given this, the bargain between the parties also included an expectation that any “illness and disease” exclusion in an insurance policy would not apply when an accidental event was the cause of the illness or disease.

[7] For the reasons that follow I would dismiss the application.

Factual Background

[8] The grievance arbitration proceeded by way of an Agreed Statement of Facts. Mr. Tureski, the employee in question, began his career as a firefighter in 1987. He stopped working on February 26, 2017. On March 1, 2017, he was diagnosed with lung cancer and he died on April 27, 2017.

[9] On May 11, 2017, the Workplace Safety and Insurance Board confirmed Mr. Tureski’s estate’s entitlement to benefits “for an occupational illness presumed to be work related for firefighters under the Workplace Safety and Insurance Act” (Whitby (Town) v. Whitby Professional Fire Fighters' Assn., Local 2036 (2018), 296 L.A.C. (4th) 267 at para. 3).

[10] Mr. Tureski’s estate applied to the insurance carrier (Manulife) for Accidental Death benefits. Approximately three months later, on August 22, 2017, that claim was denied on the basis of the “illness or disease” exclusion clause contained in the policy.

The Clauses in the Collective Agreement Relating to Accidental Death Benefits

[11] There are two clauses in the Collective Agreement that relate to Accidental Death benefits. They are as follows:

11.02 Life Insurance

Each employee shall be entitled to the benefits and privileges of a Life Insurance Plan provided by the Town. The amount of the insurance for each employee shall be two (2) times the employee’s annual salary computed to the nearest $1000.00. Each employee shall also be insured through the said Life Insurance Plan for an additional amount of Life Insurance for Accidental Death based on two (2) times the employee’s annual salary computed to the nearest $1000.00, and insurance coverage for dismemberment. The Employer agrees to pay 100% of the cost of the premiums for such plans (emphasis added).

11.06 The benefits provided in Article 11 shall be consistent with the rules and regulations of the Plans as provided by the various insurance carriers.

Relevant Exclusion Clause in the Group Policy

[12] The applicable Manulife Group Policy contained the following exclusion clause:

Losses Not Covered

No benefit is payable for any loss directly or indirectly related to:

(c) an infection (except pyogenic infections from an accidental cut or wound), illness or disease, or the medical treatment of any illness or disease, or bodily or mental infirmity.

[13] When the Collective Agreement was entered into the Association was not provided with a copy of the actual Group Policy. However, it was given a benefits booklet which contained the exclusion clause that Manulife relied upon to deny the Accidental Death benefit claim made by Mr. Tureski’s estate.

Standard of Review

[14] Both the Association and the Employer agree that the standard of review that this court should apply to the Arbitrator’s decision is reasonableness.

[15] In Canada (Minister of Immigration) v. Vavilov, 2019 SCC 65, the Supreme Court provided updated guidance on the proper application of the reasonableness standard. According to Vavilov, “the reviewing court asks whether the decision bears the hallmarks of reasonableness – justification, transparency and intelligibility – and whether it is justified in relation to the relevant factual and legal constraints that bear on the decision” (para. 99). Those factual and legal constraints include the governing statutory scheme (paras. 108-110), other relevant statutory or common law (paras. 111-114), the principles of statutory interpretation (paras. 115-124), the evidence before the decision-maker (paras. 125-126), the submissions of the parties (paras. 127-128), the past practices and decisions of the administrative body (paras. 129-132), and the potential impact of the decision on the individual to whom it applies (paras. 133-135).

[16] The Supreme Court has repeatedly emphasized that a reviewing court cannot interfere with a decision because it would have decided the matter differently or because an alternative interpretation would have been open to the arbitrator (para. 83). Reasons need not be perfect or comprehensive (para. 91-92). The decision must also be read

…in light of the history and context of the proceedings in which they were rendered. For example, the reviewing court might consider the evidence before the decision maker, the submissions of the parties, publicly available policies or guidelines that informed the decision maker’s work, and past decisions of the relevant administrative body. This may explain an aspect of the decision maker’s reasoning process that is not apparent from the reasons themselves, or may reveal that an apparent shortcoming in the reasons is not, in fact, a failure of justification, intelligibility or transparency. Opposing parties may have made concessions that had obviated the need for the decision maker to adjudicate on a particular issue; the decision maker may have followed a well-established line of administrative case law that no party had challenged during the proceedings; or an individual decision maker may have adopted an interpretation set out in a public interpretive policy of the administrative body of which he or she is a member (para. 93).

[17] The reviewing court must be satisfied that the decision it is reviewing does not contain a “fatal flaw” in its “overarching logic” and that “there is [a] line of analysis within given reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived” (para.102). Decisions that contain a “fundamental gap” or that are based “on an unreasonable chain of analysis “cannot be sustained even if the outcome of the decision could be reasonable under different circumstances (para. 96).”

Was the Arbitrator’s Decision Reasonable?

Mr. Tureski’s Death Was Accidental Under Common Law Insurance Principles

[18] The Arbitrator began her analysis by noting there was no dispute before her that under the jurisprudence pertaining to Accidental Death entitlement, as well as the definition of “accident” under the Workplace Safety and Insurance Act, Mr. Tureski’s death was accidental. This is set out at para. 16 of her decision:

The Town does not take issue with the fact that in light of the jurisprudence pertaining to AD&D benefit entitlement, consistent with the definition of “accident” under the WSIA, the development of an occupational disease such as lung cancer is no less of an accident for the purpose of accident insurance benefits than, for example, a fall.

[19] The Arbitrator then went on to find that in Article 11.02 of the Collective Agreement the Employer made a specific promise “to obtain for its employees a Plan that provides for entitlement to AD&D benefits for Accidental Death in the amounts stipulated and to pay 100% of the cost of the premiums for that Plan…The parties’ expectations and joint intent was that in cases of ‘Accidental Death’, like Mr. Tureski’s, the families of the deceased would receive benefits in accordance with common law insurance principles”(paras. 28-29).

The Employer’s Position with Respect to this Analysis

[20] The Employer submits that the Arbitrator’s conclusions regarding the meaning and effect of Article 11.02 were unreasonable because the common law jurisprudence concerning the meaning of Accidental Death (which the Employer concedes is a term of art) has no application. According to the Employer, in none of the cases relied upon by the Arbitrator and the Association did the collective agreement at issue contain the equivalent of Article 11.06. The Employer says that in this Collective Agreement the term “Accidental Death” in Article 11.02 must take its meaning from Article 11.06, which stipulates that the AD&D benefits the Employer commits to provide must be consistent with the rules and regulations of the Group Insurance Policy the Employer puts in place to cover its obligations. In this case, according to the Employer, the rules and regulations of the Manulife Plan are clear – there is no coverage for a death resulting from a disease or illness such as lung cancer. Further, the Association was aware of this exclusion, having been provided with a copy of the benefits booklet, and thus could not have had the expectation that a death such as Mr. Tureski’s would be covered.

The Arbitrator’s Reasons with Respect to the Employer’s Position

[21] In effect, the Employer’s submission is that any obligations assumed by the Employer in Article 11.02 could be modified and potentially reduced by virtue of the rules and regulations of the insurance plan it put in place. According to the Employer, this is the effect of Article 11.06.

[22] The Arbitrator dealt with this submission as follows:

I agree with counsel for the Association when he submits that Article 11.06 cannot do the “heavy lifting” the Town would have it do here. Article 11.06 does not absolve the Town of liability for payment of AD&D benefits where the Town’s insurance carrier’s denial to those benefits is because it has determined that an active firefighter who died of lung cancer, an occupational illness presumed to be work related under the WSIA, died of an “illness or disease”. The insurance carrier’s conclusion is clearly inconsistent with the Court’s decision in Ritchie. Manulife obviously did not make a determination whether what caused Mr. Tureski’s illness resulted in whole or in part from an accidental event, i.e. an unexpected or untoward event, or arose solely from natural causes. Even thought the Manulife benefit booklet was shared with the Association, and even though it carves out an exclusion from AD&D coverage in cases of illness or disease, it could not be the case, as it was in the City of Brampton decision, that the Town or Association would have understood the Plan to mean that bargaining unit members would be denied AD&D benefits on the basis advanced by Manulife, when in fact Mr. Tureski’s death was attributable to a disease or illness arising wholly or in part from an accidental event.

Article 11.06 does not diminish or alter the Town’s promises made elsewhere in Article 11. Rather it affirms that Manulife’s coverage will be consistent with the promises made in Article 11. As Arbitrator Kaplan in the second City of Hamilton decision put it: “The authorities are clear that the insurance policy cannot diminish the benefit provided by the Collective Agreement; indeed it must be consistent with it..”…I must assess the provisions of the insurance plan – in this case the exclusion of the disease or illness- to ensure that it is at least consistent or compliant with the terms of the Collective Agreement. If it does not meet the Collective Agreement requirements, the Town is responsible for satisfying the negotiated benefit.

In this case there is no question that the Plan was shared with the Association. The Association was entitled to believe, having had the opportunity to review the Plan, as was the Town having contracted the Plan, that a firefighter who died as a result or partially as a result of an accidental event, would receive AD&D benefits. The parties’ bargain and their expectation was that the illness or disease exemption has no application in the case of a firefighter whose death is attributable in any measure to an accidental event. And though the Town is not at fault for Manulife’s decision to deny benefits, the Town’s obligation was to purchase a Plan that paid in cases of death attributable wholly or partially to an accidental event. Since it did not do so, the Town must assume its Collective Agreement obligation and pay the AD&D benefits to Mr. Tureski’s estate.

[23] In essence, the Arbitrator concluded that Article 11.06 could not be used to undermine the Employer’s obligation to provide Accidental Death benefits as set out in Article 11.02. This is a reasonable conclusion. To find otherwise would be to leave it up to the insurance company, a non-party to the Collective Agreement, to define the extent of the benefits to be provided to employees under the Collective Agreement.

[24] The Arbitrator’s conclusion is also consistent with the labour relations jurisprudence concerning the meaning of the term “Accidental Death” in collective agreements, as well as the jurisprudence on the relationship between an employer’s obligations under a collective agreement and the terms of an insurance policy. The Employer’s obligation is determined by the terms of the collective agreement and the Employer must obtain insurance to cover that obligation. If the insurance company declines to provide benefits consistent with the Employer’s obligation, this does not relieve the Employer of its obligation; it must pay the employee the benefits they are entitled to.

[25] In effect the Arbitrator concluded that the Employer’s obligation to provide Accidental Death benefits to Mr. Tureski’s estate was consistent with the rules and regulations of the policy because the illness and disease exclusion did not apply in these circumstances. This was reasonable, given that the policy was meant to provide coverage for all Accidental Deaths as that term of art was understood by the parties.

[26] The Employer submits that the Arbitrator’s decision is unreasonable because it conflicts with the decision of the arbitrator in Brampton (City) v. Brampton Professional Firefighter’s Association, Local 1068, 2015 32320. According to the Employer this decision is the one that is most “on all fours” with the facts of the case at bar.

[27] The collective agreement at issue in City of Brampton provided that the employer was to provide accidental death benefits and to pay 100% of the premiums for life insurance to cover those benefits “consistent with the Rules and Regulations of the various plans.” The plan obtained by the employer contained two provisions of relevance to the decision – one that defined “accident” as a “sudden, unforeseen, and unexpected event which… is independent of illness, disease or other bodily malfunction” and another that specified that any death that occurred more than one year after an accidental event would not be covered.

[28] In City of Brampton the deceased employee’s exposure to hazardous material occurred more than one year prior to his death. As a result, the insurer refused coverage. The Association filed a grievance which the arbitrator denied, finding that the Association had been provided with the insurance policy when the collective agreement was entered into and “knew or ought to have known that that the AD&D benefit provided under the Collective Agreement was subject to a one-year limitation as set out in both the AD&D plan and the applicable RBC insurance policy” (para. 40). The arbitrator also found that the employer did not violate the collective agreement by obtaining insurance that contained the limitation at issue.

[29] In the case at bar the Arbitrator distinguished City of Brampton by finding that in that case the language of the exclusion was very clear – no coverage if death occurs one year after the accidental event. However, in the case before her, “in the absence of very clear language in the insurers’ policies, the Association ought not to be taken to have known that the insurer’s rules and regulations created an exemption to AD&D benefits in circumstances where death was due in whole or in part to an accidental event that gave rise to a disease or illness” (para. 38).

[30] In my view, the Arbitrator’s reasoning in this aspect of her decision is transparent, intelligible and justifiable. In the case at bar, the exclusion clause did not clearly state that the exclusion applied to a death that would otherwise be considered at law to be “accidental”. Further, there is a difference between a one-year limitation period and the complete denial of a benefit in circumstances where otherwise under the law a benefit would be paid. The former is about process and therefore, could more reasonably be set by the insurance company in its rules and regulations. The latter is about the very nature of the benefit to be provided.

[31] It is also interesting to note that in City of Brampton the arbitrator did advert to the “illness and disease” exception to the definition of “accident” in that policy. However, he did not decide the case on that basis. The arbitrator clearly felt that it was an open question whether coverage could have been denied on that basis, given the caselaw “supporting the proposition that a generous interpretation should be given to the term ‘accident’, unless the insurance policy clearly restricts the meaning” (para. 43).

[32] In summary, the Arbitrator’s conclusion that the exclusion clause in the insurance policy was not meant to apply to Accidental Deaths was a reasonable one.

Conclusion

[33] For these reasons the application is dismissed. As agreed by the parties, the Association is entitled to its costs of the application fixed in the amount of $7500.00, all inclusive.

Sachs J.

I agree _______________________________

Kurke J.

I agree _______________________________

Ryan Bell J.

Released: February 12, 2020