When Is An LTD Claim Not An Insurance Claim? When It's A Labour Dispute

Overview

The Ontario Court of Appeal recently confirmed that a dispute about the termination of long-term disability ("LTD") benefits could not proceed by way of an action. The plaintiff's employment was subject to a Collective Agreement between the plaintiff's employer and her union. The Collective Agreement contained wording that was interpreted to grant exclusive jurisdiction over the dispute of a benefit entitlement to the labour arbitration grievance process involving the employer and the plaintiff through her union.

Barber v. Manufacturers Life Insurance Co.[1]

The plaintiff, Adrian Barber, became disabled from her employment as a police officer in 2009. The Collective Agreement governing Barber's employment required her employer, the Police Services Board, to offer disability insurance coverage to the members of the local police association. Barber applied for and received LTD benefits under a group Policy issued by Manulife. Barber's benefits were subsequently terminated in 2013. Barber started a lawsuit against Manulife in connection with the termination of her LTD benefits. Among other things, she claimed entitlement to ongoing LTD benefits.

Manulife brought a motion to dismiss the action on the basis that the court had no jurisdiction over the subject matter in dispute. Manulife was successful on its motion. In a four sentence endorsement, Justice Belobaba concluded that the court lacked jurisdiction to determine the dispute about the termination of Barber's LTD benefits. Justice Belobaba's decision was based primarily on the (undisclosed) language of provisions of the Collective Agreement referable to the employer's provision of benefit coverage, which he determined made the dispute "arbitrable". Barber appealed.

The Court of Appeal determined that Justice Belobaba's decision is correct and dismissed the appeal. Jurisdiction over the dispute belongs to an arbitrator. While neither the motion decision nor the Court of Appeal decision set out the wording of the Collective Agreement, the decision is based on well-established labour jurisprudence on point. At paragraph 9 of its reasons, the Court of Appeal states:

[9] Arbitration jurisprudence has developed a well understood method of deciding the arbitrability of benefit entitlement claims, which is to consider the four... categories [of Collective Agreement language] considered by the motion judge. ... The four categories are:

(1) where the Collective Agreement does not set out...