Court declines jurisdiction

Dispute clearly fell within the provisions of the collective agreement

Catherine LeMoine was employed by the Province of British Columbia’s Liquor Distribution Branch (LDB) in June 2001 when she applied for long-term disability benefits. Ms. LeMoine alleged that she was permanently disabled as a result of the operation of glass crushing machines and possible environmental exposure to mould. Great West Life Assurance Company, which had been retained by LDB as its claims-paying agent, denied her application for benefits.

Ms. LeMoine brought an action against Great West Life for damages, charging that Great West Life acted arbitrarily, unfairly and unreasonably in denying her claim and breached its duty to act in good faith. She further argued that the decision of Great West Life was made to provide an economic benefit for her employer and was made jointly with the province as a policy decision in an attempt to lessen losses by denying valid claims.

Great West Life applied to the Court to have the claim dismissed on the basis that the Court had no jurisdiction. Great West Life argued that the matter should be dealt with under the terms of the collective agreement made between the government of British Columbia and the B.C. Government and Service Employees Union to which Ms. LeMoine was a member.

In deciding whether it had jurisdiction over Ms. LeMoine’s claim, the Court first considered the statutory framework. As an employee of LBD, Ms. LeMoine was covered by insurance. The contract of insurance was authorized by the Public Service Benefit Plan Act. Regulations under this Act stipulate that long-term disability claims would be adjudicated and paid by a claims-paying agent (Great West Life) appointed by the employer. The regulation provided that, when an employee disputes the decision of the claims-paying agent, the employee may have the claim reviewed by a Claims Review Committee. The collective agreement incorporates the provisions of the regulation for long-term disability coverage.

Once her claim was reviewed, adjudicated and denied by Great West Life, Ms. LeMoine applied for a review of that decision by a claims review committee (CRC) but did not pursue that review. She chose instead to bring her action against Great West Life.

The collective agreement further set out a grievance procedure under which Ms. Lemoine could have grieved a decision of the CRC. If that grievance had not been addressed, she would have recourse to arbitration.

Ms. LeMoine acknowledged that if there had been a dispute between her and her employer, she was bound to pursue her remedies under the grievance and arbitration procedures provided for in the collective agreement. However she argued that the provisions of the collective agreement only apply to differences arising between the parties to the agreement. Great West Life was not a party to the agreement. Her claim against Great West Life was based on the independent duty of good faith that it owed to insured claimants.

The Court then considered the nature of the role of the Great West Life. Under the terms of the Public Service Benefit Plan Act, the provide assumes the risk of the insurance contract. Great West Life disburses benefits and manages the scheme of insurance on the province’s behalf. Great West Life assumes no risk; it has no obligation to pay benefits. It is the agent of the province. As the agent of the employer, it was not a stranger to the collective agreement.

Having determined that Great West Life is the agent of the province and that the dispute is essentially between Ms. LeMoine and the province, the clear language of the collective agreement dictates that the Court decline jurisdiction. The Court held that it was without jurisdiction to hear Ms. LeMoine’s claim.

For more information:

LeMoine v. Great West Life Assurance Co., 2002 BCSC 520.

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