When is an LTD Claim Not an Insurance Claim? When it’s a Labour Dispute

March 20, 2017 | Patricia J. Forte


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 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 makes 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 is arbitrable.

These four categories were originally identified in the loose-leaf resource Brown and Beatty, Canadian Labour Arbitration. Canadian courts have adopted the “four categories” in previous cases.[2]

Neither Barber nor Manulife denied that the essential character of the dispute concerned LTD benefits. Instead, the issue was whether the essential character of the claim arose from the interpretation, application, administration or violation of the Collective Agreement or the LTD Policy. If the essential character of the claim arose from the Collective Agreement, an arbitrator, not a court, had exclusive jurisdiction to decide the issue.

Barber argued that her dispute fell within “category 3”, which characterizes the dispute as “not arbitrable”. The only obligations of her employer, Barber argued, were to offer long term disability coverage and remit premiums. The Police Service Board had fulfilled its obligations under the Collective Agreement and therefore there was no dispute arising under the Collective Agreement. Further, Barber argued that Manulife paid and then terminated her LTD benefits pursuant to the terms and conditions of the Policy. As such, the dispute arose from the Policy, not the Collective Agreement. Since the dispute had nothing to do with the employer, it was not arbitrable.

The Court of Appeal examined the applicable provision of the Collective Agreement and determined that it did more than merely oblige the Police Service Board to pay premiums for insurance, as argued by Barber. The language of the Collective Agreement covered terms, the amount of the disability benefits, the definition of “total disability” and made specific reference to the Policy. The Police Service Board could change insurers as long as the benefits defined in the Collective Agreement were continued. The fact that the LTD benefits were paid under the Policy did not change the fact that Barber’s entitlement to the LTD benefits were “provided” by the Collective Agreement. In essence, Court of Appeal determined that because of the level of specificity about the employer’s provision of the LTD benefit coverage in the Collective Agreement, the language demonstrated that the Collective Agreement was the “root of the contractual entitlement” to the relevant disability insurance.


This case has tentacles in both labour law and insurance law. In most cases dealing with a dispute about the cessation of an insurance benefit, it is natural to assume that the dispute is with the insurer that pays the benefit and makes determinations about entitlement. That is not always the case in a unionized workplace. When a disability insurance plan forms part of a Collective Agreement, disputes about entitlement to LTD benefits could be determined by the dispute resolution process under the Collective Agreement.

A necessary step in the litigation of disability claims is to determine whether the group member (the employee) is a member of a union. If so, the wording of the Collective Agreement about the employer’s provision of LTD benefit coverage should be reviewed. In general, if the language of a Collective Agreement suggests that the employer must pay for the LTD benefits, the claim will likely have to proceed through grievance arbitration because the employer has mandated or contractually agreed to “provide the benefit”. On the other hand, if the language of the Collective Agreement suggests that the employer bears no responsibility to pay the insurance benefits, but merely sets out the obligation to pay the premiums of an underlying policy, or if no specific plan is referenced in the Collective Agreement at all, it is more likely that a dispute about LTD benefits will not involve the employer. In the latter case, the claim would proceed in the court.


[1] [2016] O.J. No. 4006 (S.C.J.), affirmed 2017 ONCA 164 (CanLII).

[2] See: Weber v. Ontario Hydro, [1995] 2 S.C.R. 929, at paras. 11, 52, 54; London Life Insurance Company v. Dubreuil Brothers Employees Association, 2000 CanLII 5757 (ON CA), at para. 10, leave to appeal to S.C.C. dismissed.


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