‘Employer has underinsured for agreed benefit’: Arbitrator
An employee at a heavy equipment dealership tried to claim the customary 80 per cent coverage for 14 Viagra prescriptions between August 2017 and November 2018, but he was told the company’s insurance plan did not cover the drug.
Jason Gibson, who worked for SMS Equipment in Elkford, B.C., paid $1,170.41 for the prescriptions.
In May 2008, three former companies merged to create SMS so three separate collective agreements had to be consolidated into one by May 1, 2009.
The benefits part of the agreement called for coverage for prescription drugs “which legally require a written prescription.” The company also offered a health spending account to make up for some of the drugs that weren’t covered via the regular benefits process, and it specified that it could be used for certain “drugs not covered under certain plans such as fertility drugs.”
The benefits plan took longer to finalize and the employer intended for it to be done by December 2009.
During collective bargaining, the employer indicated it wanted ways to cover “lifestyle drugs” for employees, testified Adrien Graci, HR director.
Eventually, in April 2010, the collective agreement was signed and it included all existing benefits levels and a $750-per-year health spending account.
However, the Sun Life booklet for the plan said it would not cover “drugs for the treatment of sexual dysfunction,” but the health account would cover the costs.
Rob Foskett, welder and a member of the union bargaining team, testified that he knew of previous employees being covered for Viagra under the former plan and he believed it was still covered under the current agreement.
In August 2017, Gibson received a note from the benefit provider after he submitted the Viagra claim: “We are unable to pay this expense because it is not covered under your plan.”
Gibson used his health-spending money to cover the costs, but said he would rather not use that money on coverage for Viagra.
On Dec. 19, 2017, Gibson and the International Union of Operating Engineers (IUOE), Local 115 filed a grievance.
“A number of employees have been denied prescriptions due to the drug not being included in the company’s insurance package; however, the CBA clearly states that the only prescriptions not covered are for oral contraceptives and that drugs which legally require a written prescription are covered to 80 per cent,” wrote Gibson.
The union argued the employer broke the collective agreement, according to article 19(a): “At no time will coverage be less than that currently in place as indicated in appendix C.”
SMS argued that because of the talk regarding lifestyle drugs during collective bargaining, it was clear that certain drugs would not be covered if they fell under that rubric.
But arbitrator James Dorsey disagreed: “The employer is ordered to reimburse Gibson for 80 per cent of the cost of all his Viagra prescriptions.”
“Whether the denial of Gibson’s claim was because Viagra is a drug for the treatment of sexual dysfunction or because Viagra is not considered medically necessary for the treatment of an illness or for any other reason, the employer has underinsured for an agreed benefit and is liable to provide the benefit,” said Dorsey.
The employer’s argument about lifestyle drugs was given little credence by Dorsey.
“The agreed benefit in place as indicated in Appendix C is clear and specific. It is all ‘drugs which legally require a written prescription’ except oral contraceptives. It is not a limited subset of all legally prescribed drugs that are ‘medically necessary’ or ‘medically necessary for the treatment of an illness’ or that are not ‘lifestyle’ drugs.”
“There is express agreement the employer may provide coverage for benefits through an insurance policy. It is implicit that policy must provide the benefits agreed in the collective agreement,” said Dorsey.
“Although it is expressly agreed the insurance coverage may contain ‘restrictions, exceptions, qualifications, and other terms affecting entitlement,’ questions of ‘entitlement and eligibility’ are to be determined first by the terms of the collective agreement and only secondly by the terms of the insurance contract,” said Dorsey.
Reference: SMS Equipment and International Union of Operating Engineers, Local 115. James Dorsey — arbitrator. Vincent Johnston for the employer. John MacTavish for the employee. Jan. 11, 2019. 2019 CarswellBC 55
Jason Gibson, who worked for SMS Equipment in Elkford, B.C., paid $1,170.41 for the prescriptions.
In May 2008, three former companies merged to create SMS so three separate collective agreements had to be consolidated into one by May 1, 2009.
The benefits part of the agreement called for coverage for prescription drugs “which legally require a written prescription.” The company also offered a health spending account to make up for some of the drugs that weren’t covered via the regular benefits process, and it specified that it could be used for certain “drugs not covered under certain plans such as fertility drugs.”
The benefits plan took longer to finalize and the employer intended for it to be done by December 2009.
During collective bargaining, the employer indicated it wanted ways to cover “lifestyle drugs” for employees, testified Adrien Graci, HR director.
Eventually, in April 2010, the collective agreement was signed and it included all existing benefits levels and a $750-per-year health spending account.
However, the Sun Life booklet for the plan said it would not cover “drugs for the treatment of sexual dysfunction,” but the health account would cover the costs.
Rob Foskett, welder and a member of the union bargaining team, testified that he knew of previous employees being covered for Viagra under the former plan and he believed it was still covered under the current agreement.
In August 2017, Gibson received a note from the benefit provider after he submitted the Viagra claim: “We are unable to pay this expense because it is not covered under your plan.”
Gibson used his health-spending money to cover the costs, but said he would rather not use that money on coverage for Viagra.
On Dec. 19, 2017, Gibson and the International Union of Operating Engineers (IUOE), Local 115 filed a grievance.
“A number of employees have been denied prescriptions due to the drug not being included in the company’s insurance package; however, the CBA clearly states that the only prescriptions not covered are for oral contraceptives and that drugs which legally require a written prescription are covered to 80 per cent,” wrote Gibson.
The union argued the employer broke the collective agreement, according to article 19(a): “At no time will coverage be less than that currently in place as indicated in appendix C.”
SMS argued that because of the talk regarding lifestyle drugs during collective bargaining, it was clear that certain drugs would not be covered if they fell under that rubric.
But arbitrator James Dorsey disagreed: “The employer is ordered to reimburse Gibson for 80 per cent of the cost of all his Viagra prescriptions.”
“Whether the denial of Gibson’s claim was because Viagra is a drug for the treatment of sexual dysfunction or because Viagra is not considered medically necessary for the treatment of an illness or for any other reason, the employer has underinsured for an agreed benefit and is liable to provide the benefit,” said Dorsey.
The employer’s argument about lifestyle drugs was given little credence by Dorsey.
“The agreed benefit in place as indicated in Appendix C is clear and specific. It is all ‘drugs which legally require a written prescription’ except oral contraceptives. It is not a limited subset of all legally prescribed drugs that are ‘medically necessary’ or ‘medically necessary for the treatment of an illness’ or that are not ‘lifestyle’ drugs.”
“There is express agreement the employer may provide coverage for benefits through an insurance policy. It is implicit that policy must provide the benefits agreed in the collective agreement,” said Dorsey.
“Although it is expressly agreed the insurance coverage may contain ‘restrictions, exceptions, qualifications, and other terms affecting entitlement,’ questions of ‘entitlement and eligibility’ are to be determined first by the terms of the collective agreement and only secondly by the terms of the insurance contract,” said Dorsey.
Reference: SMS Equipment and International Union of Operating Engineers, Local 115. James Dorsey — arbitrator. Vincent Johnston for the employer. John MacTavish for the employee. Jan. 11, 2019. 2019 CarswellBC 55
