Ontario Court of Appeal confirms when benefit entitlement claim will be arbitrable

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In its recent decision (February 27, 2017) in Barber v. The Manufacturers Life Insurance Company (Manulife Financial), the Ontario Court of Appeal upheld the dismissal of an employee’s claim for long-term disability benefits (LTD), finding that the claim fell within the exclusive jurisdiction of a labour arbitrator.

Adrian Barber was employed as a police constable in the town of Port Hope. The collective agreement between the Port Hope Police Services Board and the Port Hope Police Association, which governed Barber’s employment, required the Board to offer disability insurance coverage to the Association’s members. When Barber became disabled from her employment in 2009, she applied for LTD benefits. Manulife, the group insurance provider, assessed Barber’s claim and paid benefits to her for approximately three and half years, at which point it terminated her benefits.

Barber brought an action against Manulife before the Superior Court, alleging that her benefits ought to have been continued. Manulife successfully brought a motion to dismiss the claim on the basis that the Court had no jurisdiction over the subject matter of the action; rather, as the motion judge found, the matter was arbitrable under the collective agreement.

On appeal, the Court of Appeal upheld the motion judge’s decision, finding that the judge had properly found that the court lacked jurisdiction over the matter.

In its reasons, the Court of Appeal confirmed that the applicable test for determining whether a court has jurisdiction over a dispute regarding LTD benefits is: whether the claim’s essential character arises from the interpretation, application, administration, or violation of a collective agreement. If so, an arbitrator, not the court, has exclusive jurisdiction to decide the matter. In applying this test, the motions judge and the Court of Appeal both approved of the application of the following four “Brown and Beatty categories”:

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.

The motions judge concluded that Barber’s matter was arbitrable because it fell under Category 2, or possibly Category 4. On appeal, Barber argued that the matter fell instead within Category 3.

In rejecting Barber’s argument and upholding the conclusion of the motions judge, the Ontario Court of Appeal considered the detailed nature of the collective agreement at issue, reasoning as follows:

 [14]        Article 18 [the collective agreement; “CA”] establishes Barber’s rights to LTD benefits. They do more than merely oblige the employer to pay premiums for insurance — they cover terms, the amount of the disability benefits and even the definition of total disability, and it makes specific reference to the Policy. The employer may change insurers as long as the benefits defined in the CA are continued.

[15]        The fact that LTD benefits are paid under the Policy does not change the fact that Barber’s entitlement to LTD benefits is provided by the CA. Indeed, the degree of detail Article 18 provides on the terms of the relevant insurance plan supports the correctness of the motion judge’s decision. 

 

In our view

This Court of Appeal decision highlights that, even where a collective agreement does not expressly incorporate an insurance policy, a disagreement regarding LTD benefits may still be arbitrable as between the union and the employer, especially if the collective agreement contains a detailed obligation on the employer to provide certain benefits. Employers in unionized workforces are thus well advised to review their collective agreements in order to determine whether benefit-related disputes may be arbitrable or not.

For further information please contact André Champagne at 613-940-2735 or J.D. Sharp at 613-940-2739.