The benefits buck stops with the employer

By Jeffrey R. Smith ([email protected])

Employers who offer benefits to their employees usually do so through group plans with insurance providers. By having all the employees together on group plans, the employer gets a special rate which makes it more affordable. However, as with private insurance plans individuals can purchase, claims usually have to be filed with the insurance provider, who then evaluates them on their legitimacy and whether it will pay out the benefits.

Employers may be tempted to just leave everything to the “experts” in these circumstances, but this could lead to problems if an employee is denied what she thinks she is rightfully entitled to. Even if a benefits plan is administered by an outside company, the employer should still be involved in how those benefits are administered and how claims are evaluated. If there is a whiff of discrimination or another problem, the employer can be held responsible because the benefits are a part of employment.

An Ontario arbitrator recently found a Hamilton hospital was responsible for the unfair treatment an employee received from its independent attendance management consultant. The consultant felt the employee’s claims for short- and long-term disability benefits were false and it used flimsy evidence to deny her claim. The hospital removed itself entirely from the evaluation process, but it should have been more involved in its employee’s circumstances, the arbitrator said. By not acting at all, it accepted the consultant’s unfair treatment and was responsible for the emotional and financial difficulties the employee suffered from and failed to live up to its duty to accommodate the employee.

Having an expert outside entity provide things like health benefits, pension plans and attendance management for employees can be beneficial to both employers and employees. However, employers shouldn’t forget their ultimate responsibility to the treatment of employees and the management of the employer-employee relationship. This means input into the decisions by outside providers that affect their employees, ensuring those providers don’t have free rein to make unilateral decisions that might affect aspects of employment.

How much co-operation and co-ordination should there be between employers and their benefits and insurance provider? Usually, employers recruit outside companies to handle these areas because they know what they’re doing, but should employers be responsible if a provider’s denial of an employee’s claim leads to hardship for the employee? How much should an employer be expected to know about the business of its benefits providers?

What do you think? Join the conversation by adding a comment.

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a newsletter that looks at employment law from a business perspective. For more information, visit

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