Alberta Health Services v. Alberta Union of Provincial Employees, 2012 ABQB 197

Court of Queen ’ s Bench of Alberta Citation: Alberta Health Services v. Alberta Union of Provincial Employees, 2012 ABQB 197 Date: 20120402 Docket: 1103 11208 Registry: Edmonton Between: Alberta Health Services Applicant - and - Alberta Union of Provincial Employees Respondent _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice B.A.

Browne _______________________________________________________ Introduction [ 1 ] Alberta Health Services (AHS) applies for judicial review of a June 17, 2011 arbitration decision on a preliminary objection to the arbitrability of an Alberta Union of Provincial Employees (AUPE) grievance. The Arbitration Board (the Board) decided that an employee’s claim for short-term (STD) and long-term disability (LTD) benefits (30 months) was subject to the grievance procedure.

Under the Collective Agreement between AHS and AUPE (the Agreement), the STD and LTD benefits are paid by AHS, but the eligibility determination is made by Great West Life, an insurance company that administers some benefits under the Agreement. Great West denied the employee’s application. AUPE grieved on behalf of the employee. AHS argues that the decision is not grieveable, and that if the employee wishes to pursue their STD and LTD benefits, they must sue the insurance company, and possibly AHS, outside the parameters of the Agreement.

Standard of Review [ 2 ] The leading case on the standard of review is Dunsmuir v New Brunswick, 2008 SCC 9 . In that decision the Supreme Court set out the following general principles: 1. Judicial review involves two steps; first ascertain whether the jurisprudence has already satisfactorily determined the degree of deference owed on a particular category of question, and second, if the first is unfruitful, analyze the relevant factors: the nature of the question, the presence of a privative clause, the purpose of the tribunal as determined by the

interpretation of the enabling legislation, and the tribunal’s expertise; 2. The standard of reasonableness will apply to: i. questions of fact, discretion and policy; ii. questions where the legal issues cannot be easily separated from the factual issues; and iii. Questions involving the

interpretation and application of the tribunal’s home statute and often encountered related legislation (para 51); 3. The correctness standard will apply to: i. true questions of jurisdiction or vires , ii. constitutional issues, iii. questions of general law that are “both of central importance to the legal system and outside the adjudicator’s specialised expertise”; and iv. the drawing of jurisdictional lines between two or more competing specialized tribunals. See also Smith v.

Alliance Pipeline Ltd. , 2011 SCC 7 at para 26 . [ 3 ] In regards to questions of jurisdiction, the court in Dunsmuir cautioned (at para 59 ): We mention true questions of vires to distance ourselves from the extended

definitions adopted before CUPE . It is important here to take a robust view of jurisdiction. We neither wish nor intend to return to the jurisdiction/preliminary question doctrine that plagued the jurisprudence in this area for many years. ‘Jurisdiction’ is intended in the narrow sense of whether or not the tribunal had the authority to make the inquiry. In other words, true jurisdiction questions arise where the tribunal must explicitly determine whether its statutory grant of power gives it the authority to decide a particular matter.

The tribunal must interpret the grant of authority correctly or its action will be found to be ultra vires or to constitute a wrongful decline of jurisdiction ... These questions will be narrow . We reiterate the caution of Dickson J in CUPE that reviewing judges must not brand as jurisdictional issues that are doubtfully so. [Emphasis added] [ 4 ] The Supreme Court returned to the question of jurisdiction and standard of review in Alberta (Information and Privacy Commissioner) v Alberta Teachers' Association , 2011 SCC 61 , a decision released after this matter was argued before me.

The majority concluded that true questions of jurisdiction will be rare (Rothstein J doubted that they exist at all, but left room for the possibility), and indicated that where a tribunal is interpreting its home statute, it should be presumed to be a question of law subject to deference and the standard of reasonableness (at para 34): The direction that the category of true questions of jurisdiction should be interpreted narrowly takes on particular importance when the

tribunal is interpreting its home statute. In one sense, anything a tribunal does that involves the

interpretation of its home statute involvesthe determination of whether it has the authority or jurisdiction to do what is being challenged on judicial review. However, sinceDunsmuir, this Court has departed from that definition of jurisdiction. Indeed, in view of recent jurisprudence, it may be that the timehas come to reconsider whether, for purposes of judicial review, the category of true questions of jurisdiction exists and is necessary toidentifying the appropriate standard of review. However, in the absence of argument on the point in this case, it is sufficient in thesereasons to say that, unless the situation is exceptional, and we have not seen such a situation since Dunsmuir, the

interpretation by thetribunal of "its own statute or statutes closely connected to its function, with which it will have particular familiarity" should bepresumed to be a question of statutory

interpretation subject to deference on judicial review. [5] AHS argues the appropriate standard of review in this case is correctness because the question to be determined is a truequestion of jurisdiction, and further that because the dispute does not arise under the Agreement, the Board does not have jurisdiction.Either the tribunal has jurisdiction, or it does not, but that decision must be correct. [6] AHS cites a number of portions of the Agreement in support of this

interpretation: a. The jurisdiction of arbitrators is confined to dealing with matters that arise from the Collective Agreement (ie. “differences ...regarding the

interpretation, application, operation or alleged violation of this Collective Agreement”). b.

Labour arbitrators can only assert jurisdiction over parties bound by a Collective Agreement (ie. the grievance arbitration processin the contract is available to resolve differences “between the employer and one or more of its employees”). [7] AUPE argues that the standard of review is reasonableness, relying on the Supreme Court of Canada decision in Dayco(Canada) Ltd. v National Automobile Aerospace and Agricultural Implement Workers Union of Canada, (SCC),[1993] 2 SCR 230 (at para 19): This Court has stated in previous cases that courts should, as a matter of policy, defer to the expertise of the arbitrator relating to theinterpretation of collective agreements [...] It is clear that an arbitrator has jurisdiction strict sensu to interpret the provisions of acollective agreement in the course of determining the arbitrability of matter under that agreement.

In that case the arbitrator is actingwithin his or her “home territory”, and any judicial review of that

interpretation must only be to a standard of patent unreasonableness. [8] Interestingly, AHS also relies on Dayco citing paras 17-41 and 97-99. However, in Dayco the issue was whether thecollective agreement, and the benefits under it, continued after expiry of the collective agreement for the purposes of the arbitrator’sjurisdiction. Here there is no question that the Board is interpreting an agreement under which it was appointed (para 30), and thus noquestion of “true jurisdiction”.

Further, Art. 9.03 provides expressly that questions of arbitrability are left to the arbitrator: “includingany question as to whether the difference can be subject to arbitration”. [9] AUPE argues further that in the Parry Sound case, the Supreme Court of Canada affirmed that arbitrability under acollective agreement demands deference between an employer and an employee, even if the grievance comes from an external document(at paras 16-17): Where an arbitration board is called upon to determine whether a matter is arbitrable, it is well established that a reviewing court canonly intervene in the case of a patently unreasonable error.

This high degree of curial deference to the decision of arbitration boards is necessary to maintain the integrity of the grievance arbitrationprocess. As Cory J wrote in Toronto Board of Education, supra, at para 36, "the whole purpose of a system of grievance arbitration is tosecure prompt, final and binding settlement of disputes arising out of the

interpretation or application of collective agreements and thedisciplinary actions taken by an employer". This is a basic requirement for peace and harmony in industrial relations, which is importantboth to the parties and to society as a whole. [10] The Alberta Court of Appeal has confirmed the standard of review for a labour arbitrator acting under a collective agreementas reasonableness. In Alberta v Alberta Union of Provincial Employees (Davis Grievance), 2008 ABCA 258, the Court of Appeal stated(at para 29):

The Board was not required to determine it had the power to decide whether the grievance was arbitrable. The Collective Agreement specifically gave that power to the Board. Rather, the Board exercised its core jurisdiction in interpreting its own statute, the Collective Agreement and labour law cases . This contextual factor suggests deference. Moreover the Board has developed particular expertise on such interpretive issues. This factor also suggests deference.

In the result, we conclude that the appropriate standard of review of the Board’s decision is reasonableness. [Emphasis added] [ 11 ] In Alberta Union of Provincial Employees v Alberta (Guay Grievance) , 2010 ABCA 147 , the Court of Appeal stated (at para 6): The decision of an arbitration board operating under a collective agreement (with the wording present in this case) on whether a dispute is arbitrable, is reasonableness. The issue is therefore whether it was reasonable for the Board to decide that the dispute over the alleged noncompliance with the Public Service Act fell within

Article 29.01(c) [and was therefore inarbitrable]. [ 12 ] In Dunsmuir , the court held (at para 47 ): A court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process.

But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law. [ 13 ] Reasonableness was further defined in Newfoundland and Labrador Nurses' Union v Newfoundland and Labrador (Treasury Board) , 2011 SCC 62 , relying on Dunsmuir (at paras 14-15 ): ... the reasons must be read together with the outcome and serve the purpose of showing whether the result falls within a range of possible outcomes.

This, it seems to me, is what the Court was saying in Dunsmuir when it told reviewing courts to look at "the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes" (para 47). In assessing whether the decision is reasonable in light of the outcome and the reasons, courts must show "respect for the decision-making process of adjudicative bodies with regard to both the facts and the law" ( Dunsmuir , at para 48 ).

This means that courts should not substitute their own reasons, but they may, if they find it necessary, look to the record for the purpose of assessing the reasonableness of the outcome. [ 14 ] There is a clear and ongoing recognition in all of the above noted cases that disputes arising within the context of the relationship between employer and employee should be dealt with expeditiously and efficiently. When that relationship is governed by a collective agreement, then arbitration is the process the parties have chosen to resolve their differences.

Whether the subject matter of a dispute is within the parameters of the collective agreement requires the

interpretation of the collective agreement, the Labour Relations Code , RSA 2000, c L-1, and relevant labour law. This falls within the expertise of the Board, whose decisions are protected by a privative clause. As noted by Rothstein J, true questions of jurisdiction are rare and where a tribunal is interpreting its home statute and related documents, it should be presumed that the standard of review is reasonableness.

I conclude that this is not a true question of jurisdiction and the standard of review is therefore reasonableness. [ 15 ] Thus a court reviewing a decision for reasonableness will look to both the outcome and whether it falls within a range of possible outcomes, and to the process of articulating the reasons to ensure that they are of justifiable, transparent, and intelligible. Facts

[ 16 ] The facts are not in dispute. The grievor, Kim Davin stopped work on October 2006 for medical reasons, described as persistent shoulder and elbow pain and reduced limb movement. She has not returned to work since that date. She exhausted her sick leave entitlements as the Collective Agreement and benefit plan requires. By letter of September 11, 2007, Great-West Life ("Great-West"), the claims administrator for short term disability benefits, denied STD benefits. She then pursued appeals available to her under the Plan without success. [ 17 ] With the passage of time, Ms.

Davin reached her maximum STD eligibility and her claim became one for long term disability. Her LTD claim was also denied. On June 24, 2009, AUPE grieved on Ms. Davin's behalf. Ultimately the grievance was referred to arbitration. The Employer argued before the Board that the dispute was not grievable and that Ms. Davin must instead sue the carrier in the ordinary courts. AUPE argued that the dispute was grievable. The Board ’s Decision [ 18 ] The Board’s decision must now be examined to determine whether it is reasonable.

The Board concluded that the grievance was arbitrable to the extent that it claimed benefits within the scope of the ASO Agreement, approximately 30 months. [ 19 ] In an early portion of its decision, the Board sets out the general arbitral framework for resolving these kinds of disputes, which arise often in the labour arbitration setting.

In doing so, the board quoted extensively from Labour Arbitration in Canada , by Mitchnick and Etherington, pp 55 ff, (Toronto: Lancaster House: 2006): [para 10 of the Board decision] The widespread involvement of insurance companies in the administration of employee benefit programs has been the source of considerable controversy relating to the employer’s liability for a disputed claim as well as the availability of arbitration as a forum for adjudicating the dispute. Without the consent of all interested parties, an arbitrator’s jurisdiction is invariably limited by statute to disputes which arise from the

interpretation, application, administration or alleged violation of the collective agreement. The intermediacy of an insurance carrier in the processing of claims for sick leave payments, health and welfare benefits, or short-term or long-term disability support may put the dispute beyond an arbitrator’s jurisdiction for two interrelated reasons. First, whereas the employer is a party to the collective agreement, against whom the arbitrator has authority to make a remedial order, the insurer is not. Second, the dispute as to an employee’s entitlement may derive from the proper application of an insurance policy.

Unless the policy bears a sufficiently proximate relationship to the collective agreement, the employer bears no contractual responsibility for denial of the claim. Again, the authority of the arbitrator is restricted to enforcing a bargain struck by the employer and the union, the parties that are signatories to the agreement. Where an arbitrator concludes that the collective agreement does not furnish a sufficient foundation to justify inquiring into an employee’s claim, and that any liability which may exist is solely that of the insurer, the employee’s only recourse is to sue the insurer in the courts. ...

And at page 56: As a guideline to assist in resolving challenges to their jurisdiction, arbitrators had by the 1980s widely accepted the so-called Brown and Beatty “four categories” approach. Derived from the text by D.J.M. Brown and D.M. Beatty, Canadian Labour Arbitration , the “four categories” approach attempts to schematize the various situations in which a grievance can or cannot be brought directly against the employer for payment of a benefit. The categories are:

(1) A benefit plan or policy exists, but it is not mentioned in the collective agreement.

(2) The collective agreement specifically provides for the payment of a benefit in certain circumstances.

(3) The collective agreement stipulates that the employer must provide a particular type of benefit plan, and that the employer willpay the requisite premiums.

(4) An insurance policy or benefit plan is incorporated by reference into the collective agreement. In the first category, there is no basis for employer liability under the agreement and the matter is inarbitrable. In category two, agrievance can be brought against the employer for failing to provide the benefit, whether or not the employer has taken out an insurancepolicy to cover the cost of the benefit.

Similarly, under the fourth category, because the terms of the plan form part of the collectiveagreement, a dispute concerning an employee’s entitlement can be heard at arbitration, and the employer is liable for any breaches of theplan. A conclusion that the policy falls within the third category, however, has the effect of limiting arbitrable claims to those in which itis alleged that the employer has failed to provide the specific insurance policy or plan contemplated by the agreement.

In such cases, ithas been held that the employer did not intend to assume the obligations of an insurer, and therefore that a grievance does not lie againstthe employer for a denial of benefits under the policy. (...) The “four categories” are, however, only a guideline, and it is not always easy to fit the dispute into one of them.

In the leading case of Coca-Cola Bottling Ltd. v U.F.C.W. (Boud), (1994) (ON LA), 44 L.A.C. (4th) 151 (Swan), the arbitratoremphasized that, while the categories may be of assistance, the fundamental task is to determine what the parties actually intended.Was it within their contemplation that the employer would bear primary liability for the payment of benefits, whether or not itchose to reduce its risk by taking out a policy of insurance, or did they intend that the employer could fully meet its obligation bypurchasing a specified type of plan, which would be administered by an outside carrier? [Emphasis added by the Court] [20] It is unusual to use such a lengthy quotation but the principles and the law are well expressed in that quotation and it is thoseprinciples and that law that must be applied in this case. [21] The Board describes important portions of the STD plan as follows: 21 The

Definitions

section of the Plan defines "Employer" as "the Contractholder". It describes the "Contractholder" as "Calgary Health Region[1] in its capacity as the Purchaser of Administrative Services Agreement Nos. 55549 and 55550". It defines the "Contract"as "Administrative Services Agreement Nos. 55549 and 55550". And unsurprisingly in light of those

definitions, its first full page of text,under the bold-face heading "Important", says that it is not a plan of insurance: The Weekly Indemnity Coverage described in this group benefit plan is not insured but is administered on behalf of theContractholder by Great-West Life pursuant to Administrative Services Agreement (ASO) No. 55549 between the Contractholderand Great-West Life. (...) (...) This type of policy is not protected by the Canadian Life and Health Insurance Compensation Corporation. [Emphasis added] [22] Further, important relevant portions of the LTD Plan are as follows:

22 ... The

Definitions

section again defines "Employer" as the "Contractholder", which is in turn, however, defined as "The Policyholder of Group Insurance Policy No. []"; and "Contract" in turn is "Group Insurance Policy No. []. ... 25 The long term disability plan contains on its first full text page a notice that indicates that it is provided by a combination of an Administrative Services Only contract and an insurance policy, the dividing line between them being at 24 months of LTD benefits: IMPORTANT The Long Term Disability Coverage described in this group benefit plan is administered for the first 24 months of benefits on behalf of Calgary Health Region by Great-West Life pursuant to Adminstrative Services Agreement (ASO ) No. 55549 between the Calgary Health Region and Great-West Life.

Thereafter, benefits will be insured under Group Policy No. [] issued to the Contractholder by Great-West Life. (...) An ASO type of policy is not protected by the Canadian Life and Health Insurance Compensation Corporation. [Emphasis added] [ 23 ] Thus, for the first 30 months of an employee’s disability, Great-West Life was not the insurer, but the Administrative Services provider (ASO) under contract with AHS, who self-insured the benefits payable.

After 30 months, Great-West Life was the insurer. [ 24 ] The ASO agreement provided: This Agreement provides for the provision of certain administrative services by Great-West. It is understood that Administrative Services Only (ASO), by the very nature of the product, means that claim payments issued by Great-West under this Agreement are the financial liability of the Contractholder, for which sufficient funding must always be available to Great-West by the Contractholder.

It is understood that the ASO arrangement under the Long Term Disability (LTD) coverage applies only to the first 24 months of claim payments and thereafter will be insured under Group Policy No. [] It is further understood that the ASO arrangement under the Short Term Disability (SD) coverage applies to the entire benefit period. [ 25 ]

Article 3 of

Schedule A to the ASO agreement provides: 3. Litigation -- If litigation is brought by a claimant or other party against the Contractholder or Great-West in connection with the Services, Great-West may: (

a) seek to remove itself from the action, due to the ASO nature of this Agreement; and (

b) provide appropriate support and assistance to the Contractholder in defending the action, at Great-West's discretion. Liability for claim payment within the ASO period is the exclusive responsibility of the Contractholder. Legal expenses are recovered as outlined in

Schedule B. [ 26 ] Further,

Article 3.4 required AHS to inform the participants covered under the Benefit Plan of the ASO nature of the coverage in order to ensure they have a clear understanding that liability for claims payment is the responsibility of AHS and that the benefits are

not insured by an insurance company. [ 27 ] The Board noted that the collective agreement committed the employer to implement group plans, and further noted that AHS had settled on self-insuring STD coverage and the first 24 months of LTD coverage. It did so through the common mechanism of an ASO contract with Great-West. Although Great-West had significant duties and discretion in administering claims, the documentation indicated that Great-West was not an insurer for the first 30 months of coverage. Therefore, the employer, and not Great-West, was liable for benefit claims for the first 30 months.

This lead the Board to the conclusion that the benefit claim arose from the collective agreement rather than from an insurance policy. [ 28 ] The Board noted that Art. 30 of the Agreement commits AHS to implement a number of Group Plans, some of which are industry standard, like “Alberta Blue Cross Supplementary Benefits Plan or equivalent”, while others are described more generically. The Board concluded that this

Article was intended to give AHS discretion to implement plans that were equivalent, rather than specific. Strikingly, of the descriptions of the more generic plans, only the STD benefits do not use the term insurance, from which the Board inferred that the absence of such language indicates that AHS had the freedom to implement any sort of STD coverage delivering the stated minimum of benefits, either a true contract of insurance, by self-administering and self-insuring, or some combination. In this case, AHS opted to contract with Great West to administer and it self-insured the STD benefits.

In regards to the first 24 months of LTD coverage, the Board determined that AHS had decided to self-insure and contract with Great West for an ASO. It noted that this is clear from the ASO agreement. [ 29 ] In discussing the first 30 months of the claim, the Board notes that Art. 30.01 does not require AHS to implement this coverage through insurance, and therefore it is not a Type 3 Brown and Beatty obligation, nor is it a Type 1 category. The Agreement, according to the Board, specifically provides for a short term disability plan to a stated income level and imposes the obligation on AHS to provide it.

The Board further concludes that the STD benefits are not a Type 4 situation (incorporation by reference), as the Agreement does not refer to a particular or inferred document that could be incorporated. [ 30 ] The Board therefore concludes that STD benefits under Art. 30 of the Agreement are a hybrid Type2/Type 3 obligation and in the circumstances of this case are arbitrable. In particular, the Board notes it is not a classic Type 2 because the

Article does not expressly impose the duty on AHS to provide “benefits”, but obliges it to provide several “plans”, including an STD plan to a certain income level. This means, according to the Board, that AHS could meet this obligation by entering into a contract of insurance and paying premiums, or it could implement the Plan in another way, by self-insuring through an ASO contract. The Board says that whether the benefits are arbitrable depends upon how AHS chose to implement the Plan.

If it delivers the benefits through self-insurance in which it is the ultimate Payor of the Claims and the Administrator has no such legal responsibility, then it is effectively a Type 2. [ 31 ] The Board concludes that under such a plan, disputes are arbitrable as arising out of the collective agreement and not out of an insurance policy. The Board notes (at para 54): By entering into an ASO arrangement with a plan administrator, by which the administrator can properly disclaim ultimate responsibility for a denied claim, we consider that the only reasonable

interpretation of that choice and of the Collective Agreement is that the Employer has accepted that responsibility, that the Agreement allows it to do so, but with the consequence of making claims arbitrable . [Emphasis added] [ 32 ] The Board goes on to note that the relationship between AHS and Great West is not one of insurer and insured, even though Great West has a pervasive role in setting the details of the policy, assessing and adjudicating claims, processing appeals and assisting in defence of claims. [ 33 ] In regards to the first 24 months of the LTD benefits, the Board concluded that to the extent that Art. 30.01 required AHS to provide LTD insurance, and instead AHS entered into an ASO relationship with Great West, AHS is in breach of its obligations.

If AHS had insured the first 24 months, this would be a classic Type 3 situation and the matter would have had to proceed by suing Great West. Therefore, the first 24 months of benefits are also arbitrable. [ 34 ] The Board rejected AHS’s argument that the claim for LTD benefits could not be severable and that to the extent that the

claim was for LTD benefits, the grievor must sue both AHS and Great West; AHS for the first 24 months and Great West for theremainder. The Board noted that there are separate defendants, separate contracts and separate obligations; AHS’s obligations fall underthe Agreement. The Supreme Court of Canada decision in Weber v. Ontario Hydro, (SCC), [1995] 2 SCR 929 heldthat grievance arbitrators have exclusive jurisdiction over disputes arising out of a collective agreement. [35] As a result, the Board concluded that the grievance for the first 30 months of STD and LTD was arbitrable.

The Collective Agreement [36] The relevant provisions of the Agreement are: 3.01 The Employer reserves all rights not specifically restricted or abrogated by the provisions of this Collective Agreement. 17 The Grievance Procedure

article contains language permitting a grievance on behalf of an employee in the bargaining unit over"differences": 9.03 If a difference arises between the Employer and one (1) or more of its Employees(

s) regarding the

interpretation, application,operation, alleged violation of this Collective Agreement or disciplinary action (...), including any question as to whether thedifference can be subject to arbitration, the following sequence of steps shall be followed. 30.01 (

a) When the enrollment and other requirements of the insurer(

s) have been met, the Employer shall implement the followingGroup Plans: Alberta Blue Cross Supplementary Benefits Plan, or equivalent; Alberta Blue Cross, Dental Plan, or equivalent, which provides for the reimbursement of at least eighty percent (80%) of eligible BasicServices; fifty percent (50%) of eligible Extensive Services and fifty percent (50%) of eligible Orthodontic Services, in accordance withthe current Alberta Blue Cross Dental Schedule. A maximum annual reimbursement of fifteen hundred dollars ($1,500) per insuredperson per benefit shall apply to Extensive Services.

Orthodontic Services shall be subject to a lifetime maximum reimbursement of twothousand dollars ($2,000) per insured person.

Alberta Health Care Insurance Plan; Group Life Insurance of one times (1X) basic annual earnings rounded up to the next higher one thousand ($1,000) dollars; Accidental Death and Dismemberment Insurance with amount equal to Group Life Insurance; Short Term Disability equal to sixty-six and two thirds percent (66 2/3%) of basic weekly earnings; Long Term Disability Insurance equal to sixty-six and two thirds percent (66 2/3%) of basic regular monthly earnings following atwenty-four week elimination period.

30.02 The Premiums for the Plans outlined in

Article 30.01 will be cost shared, seventy-five percent (75%) by the Employer and twenty-five percent (25%) by the Employee. 30.03 The implementation and operation of the Benefit Plan, or the equivalent, herein before referred to, shall, at all times, be subject to and governed by the terms and conditions of the policies and contracts entered into with the underwriters of the Plans. [Emphasis added] The Parties ’ submissions [ 37 ] AHS argues in this forum that the Board’s decision was unreasonable because instead of focussing on the wording of the Agreement, it looked at the particular configuration of the Benefit Plans.

It argues that whether the benefit plan was established by contract with a third party for an actual policy of insurance or for the provision of administrative services, as here, is immaterial to the application of the Brown and Beatty categories.

The determination of the category and of arbitrability depends on the language of the Agreement, not on who pays for the benefits. [ 38 ] AHS argues that the Brown and Beatty categories do not require that the contract with the third party be an insurance contract, and that the Board’s focus on the use of terms in Art. 30 like “insurance”, “plans”, “policies”, and “contracts” was misplaced and overly technical.

The Board should have instead looked at the language of the Agreement to determine whether an employee could grieve denial of benefits. [ 39 ] AHS also notes a number of arbitral decisions in which the arbitrators concluded it was immaterial how the benefits are paid for or whether the benefits were administered under an ASO or under a contract of insurance: Extra Foods #8566, Squamish (563769 B.C. Ltd.) v. United Food & Commercial Workers Union, Local 1518 (Lyon Grievance), [2008] BCCAAA No. 26 (at para 55) and Pacific National Exhibition v.

Canadian Union of Public Employees, Local 1004 (Black Grievance ), [2008] BCCAAA No. 202 (at para 24). According to AHS, what is important is that the collective agreement be interpreted to determine whether the parties intended an employer to assume direct responsibility to pay and administer employee benefit claims (Type 2 and arbitrable under Brown and Beatty) or whether the collective agreement language provides that the employer will pay a share of the costs of a plan with defined features and with a third party who undertakes the administration and adjudication of claims (a Type 3 scenario).

AHS says that a Type 3 scenario is one in which the collective agreement is only concerned with establishing and paying for a Plan. [ 40 ] AHS submits that Art. 30 bears all the hallmarks of a Type 3 benefit plan arrangement; it speaks only to the employer’s commitment to arrange for benefits and through “plans”, “insurance”, “policies” and “contracts”, and it specified that the separate terms of those benefit plans would govern the implementation and operation of the plans. [ 41 ] AHS further argues that the Board’s decision is unreasonable when it concludes that if the grievor’s claim was inarbitrable, she would be without a remedy.

AHS insists that she could bring a civil claim against both AHS and Great West, but AHS does not address the implications of the Weber decision. AHS further argues that it would be inefficient to divide the claims, one in arbitration for the first 30 months and one for the subsequent time.

Moreover, AHS argues if Great West was a party, it would be amenable to the Court’s jurisdiction, and it would not be a party in an arbitration. [ 42 ] AUPE argues that, while the categories established in the Brown and Beattie textbook may be of assistance in the analysis, the fundamental task is to determine what the parties actually intended. Or put another way, did the parties intend the employer to be liable for the payment of the actual benefits or merely the payment of the insurance premiums?

The conclusion from putting the question in that fashion would be, if the parties intended the employer to be liable for the payment of the benefits then the matter is arbitrable. [ 43 ] AUPE cites a number of arbitration decisions in which employers who self-insure and contract with a third party to provide administrative services, have been found to be subject to arbitration: Consumers Glass (Milton, Ontario) v. Aluminum, Brick and Glass Workers International Union, Local 269G (Hutchinson Grievance) , [1997] OLAA No 500 ; ADM Milling Co. v.

United Food & Commercial Workers International Union, Local 175 (Shaubel Grievance), [2004] CLAD No 171 ; Windsor (City) v. Canadian Union of Public Employees, Local 82 (McNeil Grievance) , [2001] OLAA No 332; Canadian Union of Public Employees, Local 966 v.

Caledon (Town) (Deforest Grievance), [2008] OLAA No 388; Duke v. Toronto District School Board (2006), 148 A.C.W.S. (3d) 405(Ont. SCJ); Francis v. Canada Life Assurance Co., 2003 NBQB 165; Communications, Energy and Paperworkers Union of Canada,Local 104 v. Grand Lake Timber Ltd. (2000), (NB CA), 189 D.L.R. (4th) 493 (NBCA); Seborro v. Pidvalnyy,[2004] OJ No 6272 (Ont SCJ); Consumers Glass v.

National Automobile, Aerospace Transportation and General Workers' Union ofCanada (C.A.W. - Canada), Local 29 (Pace Grievance), [1998] OLAA No 537. [44] AUPE argues further that in a situation where the employer self insures, it is liable for the payment of benefits and any denialof those benefits is arbitrable. The next extension of self- insurance occurs when the employer handles the benefits through a third party“administrative services only” contract.

In many cases, similar to the case at bar, administrative services of assessment of claimsrejection or acceptance of claims is done by the insurance company, but the employer takes on responsibility for payment of theapproved claims. Privity of contracts requires that the employer is responsible for the payments approved through the ASO and thereforethose disputes arise under the collective agreement are arbitrable. Decision [45] Before addressing the reasonableness of the Board’s decision, I would like to discuss the nature of arbitration in contrast to acivil action in the labour relations context.

One of the fundamental reasons for a collective agreement is to establish an effective methodof problem solving in an efficient and time-effective manner; this maintains a healthy and co-operative work environment. In the labourrelations context, unlike many other litigation contexts, the parties will continue to work, bargain, and deal together during and after theresolution of the dispute. [46] The Board provided an eloquent and thorough explanation of the history of disability benefits and the wide range in whichthese benefits are provided.

The benefit plans regarding STD and LTD benefits between the AUPE and AHS are required under Art.30.01 of the Collective Agreement. [47] In determining reasonableness of the Board decision, careful consideration must be given to the wording of the CollectiveAgreement, the Administrative Services Agreement, and the STD and LTD plans. [48] Under the Agreement, AHS entered into an ASO with Great West to provide administration for the disability plans. Onceeligibility for benefits was determined by Great West, then AHS would pay in accordance with the decision made by Great West.

Whatis not as clear is what happens when eligibility is declined. In the legal context, if eligibility is declined, where does AUPE, or theindividual employee, seek recourse - through the Collective Agreement by way of a grievance or by suing Great West through theCourt? The Board hald that the employee/union remedy is by way of a grievance. [49] If the Courts are the appropriate forum when liability is declined, then the employee (or AUPE) must issue a Statement ofClaim in the name of the employee and AHS and Great West would be named as Defendants.

But the Statement of Claim would becomplex and perhaps beyond the self-represented skills of the employee. The process would involve filing Statements of Defence,Affidavits of Documents, Questioning and possibly a trial - a complicated and lengthy lawsuit replacing the efficient and expeditiousprocess of arbitration under the terms of the Collective Agreement. [50] Moreover, there is no privity between AUPE or the grievor and Great West; there is only privity between AUPE and AHS,and between AHS and Great West.

Further, to the extent that the breach of the Agreement forms the basis of the cause of action, Webermakes arbitration the exclusive forum for disputes arising from a collective agreement. [51] I conclude that the Board’s decision was reasonable. In the language of Dunsmuir, it reached a reasonable outcome, one ofseveral possible

interpretations of the collective agreement and the documents surrounding it. Further, its reasons were intelligible,justifiable, and transparent. [52] AHS argues that the benefits clearly fall within the Type 3 Brown and Beatty categorization and that the Board erred when it

conflated the different categories of collective agreement approaches in the Brown and Beatty approach with the different modalities inwhich benefits would be delivered. I disagree. That is not what the Board did. Rather, the Board looked at the language of the Agreementto determine what the parties intended. It concluded that Art. 30.01 was a hybrid of the Brown and Beatty Types 2 and 3, and based onhow AHS chose to implement the obligation, it concluded that the parties intended that AHS would be primarily liable for the provisionof the benefits. That was a reasonable approach.

I repeat AUPE’s submission in this regard, because they illustrate the reasonableness ofthe Board’s decision: The fact that the Employer relies on Great West to make decisions regarding eligibility does not remove its liability to pay for the ASOBenefits nor make the Grievance inarbitrable. As stated by Justice Penny in Dzehverovic v.

Great-West Life Assurance Co., [2010ONSC 2387]: If the collective agreement required Air Canada to supply safety boots to its employees and Air Canada chose to delegate that obligationto an agent, it would be no answer to an employee's grievance for violation of the collective agreement for failure to supply safety boots,for Air Canada to say 'but we have delegated that obligation to someone else. I do not see this case as being materially different.

Likewise, if an employer were to hire a third party Human Resources company and it dismissed one of the employees in breach of thecollective agreement, the fact that the HR company made the decision would not insulate the employer from arbitration. [53] The New Brunswick Court of Appeal in Communications, Energy and Paperworkers Union of Canada, Local 104 v.

GrandLake Timber Ltd. (2000), (NB CA), 189 D.L.R. (4th) 493 (NBCA); held that where a collective agreement requiresthe employer to maintain a disability benefits plan and under the plan, the employer assumes liability for payment of claims, a disputeover the benefits is arbitrable. The Court granted the grievor’s judicial review of an arbitrator’s dismissal of her claim on the basis ofjurisdiction.

That is also the conclusion of the many decisions cited by AUPE, listed in para 46 of this decision. [54] Moreover, I reject AHS’s submission that the Board was unduly technical in interpreting the language of Art. 30 and shouldnot have assigned significance to the fact that the STD Plan made no reference to the provision of “insurance”. When interpreting theAgreement, the Board is entitled to deference, but in any event it was not overly technical to note that all but one reference in Art. 30.01referred to insurance.

That was not only a reasonable distinction to draw, but a correct one. [55] I also reject the Employer’s assertion that a civil action is the appropriate forum, for the reasons referred to above, but alsobecause, as noted by AUPE, Great West can participate in the arbitration as a witness and could be compelled to appear by the Boardunder s. 143(2) of the Labour Relations Code.

Further, the grievor would have an action against Great West for non-payment of herinsurance benefits (after the first 30 months) under s. 689 of the Insurance Act, RSA 2000, c I-3, but those benefits arise from a differentcontract than the ASO, and therefore the actions are severable. Any rights the grievor may have regarding the ASO benefits arise fromArt. 30.01 and are against the employer, and Weber requires that any rights that arise expressly or inferentially under the collectiveagreement must be enforced through the arbitration process. See also Duke v.

Toronto District School Board (2006), 148 A.C.W.S. (3d)405 (Ont. SCJ); Francis v. Canada Life Assurance Co., 2003 NBQB 165; Seborro v. Pidvalnyy, [2004] OJ No 6272 (Ont SCJ) . Conclusion [56] The standard of review in this case is reasonableness. The decision of the arbitration board finding that the grievance isproperly filed and therefore arbitrable is reasonable and therefore upheld. [57] The Board properly and thoroughly considered the arguments raised. The decision made by the Board and the reasons givenfor that decision are reasonable and within the options available to the Board.

Therefore, the application for review is dismissed and thedispute raised in the original grievance is arbitrable. [58] The parties may speak to costs within 30 days of this decision.

Heard on the 15 th day of November, 2011. Dated at the City of Edmonton, Alberta this 2 nd day of April, 2012. B.A. Browne J.C.Q.B.A. Appearances: Craig W. Newman, Q.C. for the Applicant Micah J. Field for the Respondent [1] AHS is the successor to the Calgary Health Region in the relevant contracts and agreements.