Court File and Parties

Court File No.: CV-1500534694-0000 Date: 2019-01-16 Ontario Superior Court of Justice

Between: Leisa Hutton, Plaintiff – and – The Manufacturers Life Insurance Company c.o.b. as Manulife Financial, Defendants

Counsel: John Philp and Aron Zaltz, for the Plaintiff Amir Tamari, for the Defendants

Heard: December 13, 2018

A.J. O’MARRA j.

[1] The plaintiff, Leisa Hutton has commenced an action against the defendant Manufacturers Life Insurance Company carrying on business as Manulife Financial (“Manulife”) for denial of Long Term Disability Benefits (LTD) under an insurance policy issued by the defendant contracted by the plaintiff’s employer, Quinte Health Care (“QHC”), as required by the terms of the collective agreement with the plaintiff’s union, the Ontario Public Service Employees Union (OPSEU).

[2] The defendant, Manulife has brought a motion to dismiss the plaintiff’s action on the basis that the court lacks jurisdiction to deal with a claim that arises out of and is governed by the terms and conditions of a collective agreement between her union OPSEU and employer, QHC, a matter exclusively within the arbitral jurisdiction of the collective agreement.

Background

[3] The plaintiff was a full-time employee of QHC, employed as a Laboratory Technician III. She was a member of OPSEU, the exclusive bargaining agent that represented all employees of the bargaining unit. QHC and OPSEU were parties to the collective agreement governing the terms and conditions of employment of all QHC employees, including the plaintiff.

[4] On or about August 17, 2011 the plaintiff sustained injuries in a motor vehicle collision from which she claimed caused her to become disabled, and thereby qualified to receive long-term disability benefits under the carrier’s insurance policy as provided under the terms of the collective agreement.

[5] In January 2012 the plaintiff applied to the defendant insurance carrier, Manulife for long-term disability benefits as being “totally disabled”. The plaintiff’s claim was approved initially by Manulife and she received benefits as being disabled from March 19, 2012 through to August 22, 2013.

[6] A review of her file was conducted by Manulife and by letter dated July 10, 2013 she was advised that her condition did not meet the definition of total disability under the terms of the Manulife policy, which required the following:

Restriction or lack of ability due to an illness or injury which prevents an employee from performing the essential duties of:

(a) his own occupation, during the 2 years immediately following the date of disability; and

(b) any occupation for which the employee is qualified, or may reasonably become qualified, by training, education or experience, after the 2 years specified in Part a) of this provision.

[7] The plaintiff, as a result of having the LTD benefits terminated initiated a grievance against QHC filed December 17, 2013 in the following terms: “I grieve that the employer has violated Article 15 of the collective agreement, by denying my claim for long-term disability benefits.”

[8] In the OPSEU grievance form under the heading “Settlement Desired” the plaintiff stated: “Full redress, including approval for LTD benefits as well as anything else an arbitrator deems appropriate.”

[9] On September 2, 2014 the Union requested on behalf of the plaintiff that Manulife reconsider the termination of the long-term disability benefits. Even though the deadline for appeal had passed Manulife accepted the request to conduct a review. On November 10, 2014 Manulife advised the plaintiff that notwithstanding consideration of additional medical evidence she provided the termination of the LTD benefits was upheld and its decision would be final.

[10] The grievance was scheduled to be heard September 1, 2015. In advance QHC through its lawyer notified the Manulife case manager of the Plaintiff’s file that her attendance at the hearing was necessary to give evidence as to Manulife’s position.

[11] The plaintiff commenced her action against Manulife on August 19, 2015.

[12] Before the arbitration was scheduled to commence on September 1, 2015 the plaintiff’s grievance was settled as between QHC and OPSEU on behalf of the griever. Manulife was not involved in the Minutes of Settlement.

[13] In the Minutes of Settlement at the outset it stated:

Minutes of Settlement between OHC and OPSEU 480 in the matter of the grievance by Leisa Hutton (“the griever”) the parties, desirous of fully and finally resolving issues arising out of the grievance and the griever’s application for LTD benefits, as against QHC agree as follows, without prejudice or precedent to any other matter between QHC and OPSEU:

1. The grievance is irrevocably withdrawn. The griever and OPSEU waive and release all rights to file a grievance in future in respect of the griever’s eligibility for LTD benefits, regardless of the outcome of any contemplated or outstanding proceedings against Manulife Insurance.

[14] The remainder of the Minutes of Settlement refer to general damages and loss of income relating to allegations of failure to accommodate her continuing disability, and ongoing monthly premiums for various care costs:

• $5,000.00 to reimburse the plaintiff for drug costs;
• $30,000.00 non-pecuniary damages for QHC’s breach of duty to accommodate the plaintiff’s “continuing disability”;
• $31,800.00 for loss of income, allocated in the following amounts: 2013 - $5,000.00; 2014 - $13,400.00; 2015 - $13,400.00; and monthly premiums chargeable to maintain health, semi-private and dental coverage under the Policy, until the earlier of . . . (d) the final positive disposition of proceedings by the griever against Manulife.

[15] In paragraph 8 it states: “these Minutes of Settlement are not intended in any way to preclude the griever from pursuing her claim against Manufacturer’s Group Policy 48524, Claim 5533780”, (which was the numerical reference to the claim made under the group policy).

Grievance and Arbitration Procedure

[16] Under Article 8.0 of the collective agreement it states that “any grievance, including a question as to whether the grievance is arbitrable, may be submitted to arbitration as herein provided.”

[17] Further, in Article 8.08 it states “all agreements reached under the grievance procedure between the representatives of the hospital, the representatives of the Union and the griever(s) will be final and binding upon the parties.”

Position of the Parties

[18] The defendant takes the position that under the collective agreement the employer is obligated to provide LTD benefits. The plaintiff’s rights to LTD benefits arise from the collective agreement. Any grievances may go to arbitration, and all agreements reached will be final and binding. The plaintiff settled her LTD claim by electing to go through arbitration with her employer, which according to the terms of the collective agreement is final and binding.

[19] The plaintiff’s position is that the long-term disability claim is inarbitrable because QHC lacks legal and financial liability for benefit entitlement under a policy issued by Manulife, and the collective agreement lacks sufficient “degree of detail” to establish QHC’s obligation to provide “certain . . . benefits”. The remedy sought by the plaintiff in her LTD claim against Manulife is not within the arbitral jurisdiction to grant and accordingly the Superior Court retains inherent jurisdiction over the action.

The Plan

[20] The collective agreement between QHC and OPSEU under the heading Article 15, Sick Leave and Long-Term Disability, states the following:

Note: Articles 15.01 – 15.09 apply to full-time employees only.

(Articles 15.01 – 15.02 are related to Sick Leave and Long-Term Disability will be incorporated in all collective agreements:)

15.01 The Hospital shall provide a short-term sick leave plan at least equivalent to that described in the 1992 Hospitals of Ontario Disability Income Plan (HOODIP) brochure.

Copies of the HOODIP brochure will be made available to employees upon request.

15.02 The Hospital will pay seventy-five percent (75%) of the billed premium towards coverage of eligible employees under the long term disability plan (HOODIP or equivalent); employees shall pay the balance of the billed premiums through payroll deductions.

Article 15.03 No sick pay benefit is payable under HOODIP for the first fifteen (15) hours of absence for the sixth (6th) and subsequent period(s) of absence in the same fiscal year (April 1st through March 31st).

15.04 a) Any dispute which may arise concerning an employee’s entitlement to short-term or long-term benefits under HOODIP may be subject to grievance and arbitration under the provisions of this agreement.

b) If a claim for long-term disability is denied the employee must fully comply with the carrier’s Medical Appeal Process prior to filing a grievance, provided that the process is completed within sixty (60) days of its inception, unless that time is extended by mutual agreement of the hospital and OPSEU.

The Law: Arbitrable v. Inarbitrable

[21] In the Labour Relations Act, 1995, SO 1995, c.1, section 48(1) it states:

Every collective agreement shall provide for the final and binding settlement by arbitration, without stoppage of work, of all differences between the parties arising from the interpretation, application, administration or alleged violation of the agreement, including any question as to whether a matter is arbitrable”.

[22] In the Rights of Labour Act, R.S.O. 1990 c. R. 33, at section 3.3(3):

A collective bargaining agreement shall not be the subject of any action in any court unless it may be the subject of such action irrespective of the Labour Relations Act, 1995 or the Rights of Labour Act.

[23] The issue is whether the plaintiff’s dispute about LTD benefits was within the exclusive arbitral jurisdiction under the collective agreement, or in the circumstances of this case, the inherent jurisdiction of the court.

[24] In Weber v. Ontario Hydro, [1995] 2 S.C.R. 929 the Supreme Court of Canada on the issue as to whether the court has jurisdiction, or strictly an arbitrable matter, can be determined by asking, “whether the dispute, in its essential character, arises from the interpretation, application, administration, or violation of the collective agreement”. If so, the dispute is within the sole jurisdiction of the arbitrator to decide. (See also Regina Police Association Inc. v. Regina (City) Board of Police Commissioners (2000), 2000 SCC 14, 183 D.L.R. (4th) 14 at para. 25.)

[25] In Barber v. Manufacturers Life Insurance Company, 2017 ONCA 164 it was noted at para. 9 that arbitration jurisprudence has developed a well understood method of deciding the arbitrability of benefit entitlement claims by considering the four categories referenced in Brown and Beatty, Canadian Labour Arbitration, 3rd edition (1988), as adopted in London Life Insurance Co. v. Dubreuil Brothers Employees Assn. (2000), 49 O.R. (3d) 766, at para. 10:

1. where the collective agreement does not set out the benefit sought to be enforced, the claim is inarbitrable;
2. where the collective agreement stipulates that the employer is obliged to provide certain medical or sick-pay benefits, but does not incorporate the plan into the agreement or make specific reference to it, the claim is arbitrable;
3. where the collective agreement only obliges the employer to pay the premiums associated with an insurance plan, the claim is inarbitrable; and
4. where the insurance policy is incorporated into the collective agreement, the claim in arbitrable.

[26] The defendant submits that the matter is arbitrable falling squarely within category 2, in that the essential character of the dispute relates to the defendant’s termination/discontinuation of the plaintiff’s claim for LTD benefits as provided in the collective agreement. The ambit of the collective agreement encompasses the plaintiff’s entitlement to be paid LTD benefits directly from Quinte Health Care. The collective agreement specifically provides for the payment of LTD benefits in certain circumstances.

[27] The plaintiff submits that the dispute falls within category 3, because the collective agreement really only requires the employer to pay the insurance plan premiums, Article 15.02. Counsel contends category 2 is inapplicable because: i) the employer, QHC is neither the payor nor administrator of the long-term disability benefits at issue in the plaintiff’s claim, it is the defendant; and ii) there is uncertainty as to the criteria applied by the insurer to determine eligibility of such benefits due to the different language used in the plan referred to in the collective agreement, HOODIP, and the policy.

[28] Counsel argues in this instance it is Manulife who is responsible to provide payment of the long-term disability benefits and to determine eligibility of benefits, and under both the policy and collective agreement QHC has no discretion with respect to the determination of entitlement.

[29] However, the collective agreement requires the employer to provide coverage for eligible employees under the Long Term Disability Plan through “HOODIP or equivalent”, for which the employer pays 75% of the billed premium and the employees pay the balance of the billed premiums through payroll deductions. The employer is contractually liable to provide that benefits.

[30] Further, in the OPSEU Guide to the Hospitals of Ontario Disability Income Plan for its membership, it is noted that under the collective agreement the local employer (such as QHC) will contract with an insurance company or a third party administrator to assist in the adjudication of short term and long term HOODIP benefits. Manulife, under contract to QHC is the “equivalent” as required under the collective agreement. Under Article 15, that the employee has the right to grieve any dispute as to entitlement to short or long term benefits under the plan.

[31] Article 15 of the collective agreement is the root of the contractual entitlement to the LTD insurance. The fact that LTD benefits are paid or administered under the policy does not change the fact that the employee’s entitlement to those benefits is provided by the collective agreement, and under which it is the employer’s obligation to provide those benefits. (See also Barber v. Manulife, 2017 ONCA 164, at para. 15.) It is specifically addressed in the collective agreement.

[32] Counsel for the plaintiff argues that the collective agreement lacks sufficient detail to establish QHC’s obligation to provide “certain” benefits as required under category 2 because the definition of “total disability” to qualify for LTD is different in HOODIP from the definition in the Manulife policy.

[33] To obtain LTD benefits the employee must be “totally disabled”.

[34] The definition of “total disability” under HOODIP requires “. . . that you have a medically determinable physical or mental impairment due to injury or illness that prevents you from performing the regular duties of your own occupation.” Further, after 24 months of being on long-term benefits the employee must show due to his or her illness or injury that he or she is unable to participate in “any gainful occupation for which you are, or may become fitted through training, education or experience”.

[35] The definition of total disability as provided under the Manulife Policy requires “restriction or lack of ability due to an illness or injury which prevents an employee from performing the essential duties of his own occupation during the qualifying period in 2 years immediately following the qualifying period; and any occupation for which the employee is qualified, or may reasonably become qualified, by training, education or experience.

[36] Counsel for the plaintiff argues that there is a distinction between the plan and the policy, and as such the policy is not an equivalent as required under Article 15.02.

[37] Counsel submits that the requirement that an employee be unable to perform his or her regular duties under HOODIP is a broader and less restricted criteria than the disability preventing the employee from performing the essential duties of occupation under the policy. In this regard he relies on a comment made by the arbitrator in Hamilton Health Sciences v. Ontario Nurses’ Association at para. 14 in which there was a similar difference as between the HOODIP definition of total disability and that used by the contracted administrator, that as a general matter regular duties is a broader category which encompasses but is not limited to essential duties.

[38] The other significant difference is that under HOODIP the employee’s disability must prevent any gainful occupation, whereas the policy refers to being prevented from any occupation, which makes the policy test for entitlement to benefits more onerous than under HOODIP.

[39] Here, he relies on Blackstone v. Mutual Life Insurance Company of New York, [1944] O.R. 607 (HCJ) for the proposition that the added qualifier “gainful” requires that there must be a prospect of the employee engaging in a substitute occupation in which there is a likelihood in his receiving an income reasonably comparable to that which he received before. It is a higher test than “any occupation”.

[40] However, in Brooks v. London Life Insurance, 1979 ALTASCAD 155, [1980] 2 WWR 205 (Alta. C.A.), Laycraft J.A. held that Blackstone did not stand for the proposition that income from the substitute occupation must equal that from the employee's former job. Rather, it might be a factor in considering whether the “any employment” is one for which the employee is reasonably well qualified by education, training or experience, which is the policy test. Further, in Constitution Insurance Company of Canada v. Coombe, [1997] O.J. No. 4105 at para. 6 the Ontario Court of Appeal in considering a policy definition of “total disability”, which referred to being prevented from “any occupation” concluded it to be an occupation “reasonably suited in status and reward”, for which “the employee is reasonably suited by education, training or experience”.

[41] Whether these differences have any bearing on the plaintiff’s entitlement to LTD benefits are matters which involve the interpretation, application, or administration of the collective agreement and can be properly dealt with by an arbitrator. They do not negate the employer’s obligation to provide certain benefits, or the employee’s rights to those benefits under the collective agreement. The arbitrator can examine the plan and collective agreement and determined whether the plaintiff was entitled to the benefits claimed. Indeed, as a matter involving the interpretation of criteria and alleged violation of the collective agreement, the decision as to whether the matter was arbitrable should have been left at first instance to the arbitrator, as set out in the Labour Relations Act, s. 48(1) and as permitted under the collective agreement.

[42] It was noted in Morris v. Manulife at para. 17 that the Brown and Beatty categories are not water tight compartments. However, it is clear that in reviewing the terms of the collective agreement, the employer is obligated to do more than only pay premiums associated with an insurance policy. As such, it does not fall within category 3.

[43] Here, Article 15 of the collective agreement requires the employer to provide LTD benefits. The collective agreement establishes the plaintiff’s rights to LTD benefits. The specific terms of the plan are not set out in the agreement itself, but referenced as the HOODIP or equivalent.

[44] HOODIP, separate from the collective agreement, although incorporated by reference, sets out the terms required for benefits, such as the qualifying criteria of “total disability” for LTD and the amount of income receivable depending on length of service of the employee. The specific Manulife policy contracted by QHC is not referenced in the collective agreement because, as the central collective agreement notes, local employers may change the insurance carrier at any time. It is also noted in the OPSEU Guide to HOODIP, that the employee has the right to dispute any grievance about entitlement to LTD under Article 15.

[45] In this instance, I am satisfied that the plaintiff’s entitlement to LTD benefits provided by Article 15 of the collective agreement properly falls within category 2 of the Brown and Beatty categories, and, as such any dispute as to those entitlements under the collective agreement was properly within the jurisdiction of an arbitrator to determine. It was an arbitrable matter, which if submitted to an arbitrator to determine could have resulted in a legally binding remedy.

[46] The defendant’s motion to dismiss the plaintiff’s action is granted.

[47] Costs are awarded in favour of the defendant. If the parties are unable to resolve the matter of costs as between themselves, they may make written cost submissions, no more than 4 pages in length inclusive of the outline of costs within 15 days of the release of these reasons.

**A.J. O’MARRA j.** **Released:** January 16, 2019