Union Members Face Hurdles In Litigating LTD Benefit Disputes

Union members seeking long-term disability benefits under a policy provided by an employer pursuant to a collective agreement may not be entitled to have any disputes as to the entitlement of such benefits litigated before the courts. 

The Ontario Court of Appeal in Hutton v. The Manufacturers Life Insurance Company (Manulife Financial), 2019 ONCA 975 addressed the issue whether the court has jurisdiction over a union member’s claim against her LTD insurer or whether the claim is subject to grievance and arbitration under the collective agreement with her employer.

The employee was a laboratory technician at the Quinte Healthcare Corporation (QHC) and a member of OPSEU. The hospital contracted with Manulife to provide group benefits, including life insurance and LTD benefits for all eligible employees. The hospital agreed to provide these benefits pursuant to a collective agreement with OPSEU.

The employee’s action was dismissed on a summary judgment motion on the basis that the court did not have jurisdiction and the employee’s remedy was through the grievance and arbitration provisions under the collective agreement.

Both the motions judge and the Court of Appeal determined that the employee’s dispute about LTD benefits “was within the exclusive arbitral jurisdiction under the collective agreement” and applied the tests set out by the Supreme Court of Canada in Weber v. Ontario Hydro [1995 2 S.C.R. 929, which requires the court to determine “whether the dispute, in its essential character, arises from the interpretation, application, administration or violation of the collective agreement”.

Chief Justice Strathy noted that the essential question was “to determine whether benefit plans that are ancillary to the collective agreement can be characterized as constituted or forming part of a collective agreement so as to be enforceable by arbitration?”

Strathy CJO noted that “this is primarily a question of interpretation of the collective agreement” and “it is necessary in every case to assess the particular provisions of the collective agreement which the parties themselves have negotiated, and to understand them in the general context of the collective agreement”.

In this case, the collective agreement noted that employees would be entitled to the level of coverage by HOODIP (Hospitals of Ontario Disability Income Program).

Since the employee had no right at all to benefits in the absence of the group insurance scheme established by the collective agreement and the collective agreement dispute resolution clause in the collective agreement specifically referred to disputes involving “an employee’s entitlement to short-term or long-term benefits under HOODIP,” the grievance and arbitration mechanism in the collective agreement governed the resolution of the dispute.

The Hutton decision is in keeping with a line of similar authorities. The general rule is that where LTD coverage is provided to an employee pursuant to a collective agreement, it is likely that the jurisdiction of the court has been ousted and disputes will need to be determined by grievance and arbitration.

Unfortunately, this takes the dispute out of the direct hands of the employee and his or her legal counsel.

However, in each case there is a need to undertake a careful review of the particular LTD coverage and policy and the collective agreement to determine whether the test outlined in Weber and most recently reaffirmed by the Court of Appeal in Hutton, has been met.