Home Featured Court rejects employer’s bid to hold its insurance provider, Sun Life, responsible for disability benefits for worker claiming wrongful dismissal

Court rejects employer’s bid to hold its insurance provider, Sun Life, responsible for disability benefits for worker claiming wrongful dismissal

by HR Law Canada

In a recent decision by the Ontario Superior Court of Justice, a wrongful termination lawsuit took an interesting turn involving the question of disability benefits and third-party liability.

The plaintiff, a former employee of Enertech Sheet Metal, alleged wrongful termination by her employer, claiming it was due to intolerance of her medical issues that necessitated occasional medical appointments during work hours.

Additionally, she sought damages for the loss of group benefits, including disability insurance, which she was entitled to while employed.

The plaintiff’s employment was terminated on June 15, 2020. In her amended statement, dated Dec. 9, 2021, she claimed to have become disabled and unable to work since her termination. She argued that her former employer failed to maintain her benefits, thus entitling her to damages equivalent to the value of those benefits.

Employer points finger at Sun Life

In response, Enertech Sheet Metal denied the allegations of wrongful termination and the plaintiff’s disability. However, they filed a third-party claim against Sun Life, the benefits provider, stating that if the plaintiff was indeed entitled to disability benefits under the policy, Sun Life should be liable for them.

Sun Life, in turn, moved to strike this claim, arguing that it disclosed no reasonable cause of action. They contended that neither the plaintiff nor the defendants had accused them of any wrongdoing or breach of contract. According to Sun Life, they were never asked to provide disability benefits to the plaintiff during the coverage period.

Court’s ruling

The court agreed with Sun Life, finding that their involvement was not reasonably established in the case.

The Ontario Superior Court of Justice noted that if the plaintiff did become disabled after her benefits lapsed, then the liability would solely lie with Enertech.

The court further clarified that if the plaintiff’s disability occurred while she was still covered, she should have directly claimed disability benefits from Sun Life. In either scenario, Sun Life was not responsible for the alleged wrongful termination or the cessation of the plaintiff’s coverage.

“As the statement of claim is limited to the damages which can be attributed to the fault of Enertech, Enertech can have no claim-over against Sun Life with respect to these damages,” it said.

As a result, the court dismissed the Enertech’s third-party claim and ordered them to pay costs of $3,833 to Sun Life.

For more information, see Mitchell v. Enertech Sheet Metal Inc. v. Sun Life Financial, 2023 ONSC 6447 (CanLII)

You may also like

About Us

HR Law Canada is dedicated to covering labour and employment news for lawyers, HR professionals and employers. Published by North Wall Media.