Executive Summary: Key Legal and Evidentiary Issues

• Jurisdictional conflict over whether the plaintiff’s resignation-related claim against CHEO must proceed exclusively by labour arbitration under the collective agreement rather than through the courts.
• Characterization of the dispute against CHEO as, in substance, a resignation/termination (constructive dismissal-type) issue rather than a pure benefits or enrolment case.
• Contested factual allegation that a CHEO HR representative told the plaintiff her only options were to return to her former position or resign, raising a credibility issue unsuitable for summary determination if jurisdiction existed.
• Core dispute with Sun Life over whether its administration of the LTD policy, and focus on a return-to-work plan to the same workplace that allegedly caused the disability, complied with the policy’s definition of “total disability” and its obligations of good faith.
• Evidentiary record showing the plaintiff’s pre-resignation plans to quit, cash out her pension, and travel abroad, weighed against her later claim that she was wrongfully induced to resign.
• Policy-based issues concerning termination of LTD benefits where a claimant does not complete a gradual return-to-work program and remains outside Canada for more than four months without prior written approval.

Factual background

The plaintiff, Tara Jessica Price Fawcett, worked for the Children’s Hospital of Eastern Ontario (CHEO) for approximately 17 years until October 15, 2018, when she submitted a written resignation effective immediately. She thanked CHEO for the opportunity to be part of the team for that period. Before resigning, she had gone off work and, effective March 7, 2018, was approved for long-term disability (LTD) benefits under a Sun Life Assurance Company of Canada group policy available through her employment. Her disability was accepted as anxiety and depression arising from her workplace atmosphere and environment. Sun Life, the group insurer, paid LTD benefits and arranged a gradual return-to-work program to her same position at CHEO. During 2018, Ms. Fawcett repeatedly told her treating physician, kinesiologist, occupational therapist, and Sun Life representatives that she intended to quit her job and pursue other options, including extended travel to Thailand. She ultimately purchased a ticket for a trip from January 22, 2019, to June 14, 2019. At discovery, she admitted that she understood going to Thailand would mean her LTD benefits would end. According to the plaintiff, on October 15, 2018, just before sending her resignation, she phoned CHEO’s HR department to confirm whether her only choices were to return to her previous position or resign. She says HR confirmed that Sun Life was correct and that she had to do one or the other. There is no corroborating evidence of this call or its contents. That same day, she saw her family physician, reported that she had cashed in her pension, resigned, and planned to backpack through several countries in Southeast Asia, possibly without returning. The physician recorded that she felt “like a million bucks,” appeared very positive, showed no signs of mania or psychosis, and planned to wean off medication. The next day, she contacted Sun Life but made no mention of the alleged CHEO call. On November 15, 2018, Sun Life wrote to advise that her LTD benefits were terminated effective October 31, 2018, with a final payment on October 15, 2018. The record shows little or no treatment for anxiety or depression between the resignation and her departure for Thailand, nor for several months after her return, until a renewed depressive episode noted in early 2020.

Claims against CHEO

The plaintiff sued CHEO alleging that, during the October 15, 2018 phone call, CHEO negligently (and fraudulently) misrepresented her options, telling her she had to either return to her former job or resign. She says she was thereby wrongfully induced to resign from a secure, long-term unionized position, losing her employment, seniority, and access to benefits. In her pleading she sought declarations that she had been induced to resign, that the resignation be revoked, that her employment continued uninterrupted or that she be reinstated, and that she remained “insured” for the purposes of group disability and extended health and dental coverage. CHEO responded that the court lacked jurisdiction because the plaintiff was a unionized employee subject to a collective agreement. Under that agreement, management retained the right to hire, discipline and discharge, a “grievance” was defined broadly as any dispute relating to the interpretation, application, administration or alleged violation of the agreement, and an employee lost seniority and employment status if they resigned. The Labour Relations Act requires such disputes to be finally resolved by arbitration. CHEO argued that the “essential character” of the plaintiff’s complaint was a termination/resignation dispute (akin to constructive dismissal), which must go through the grievance/arbitration process rather than the courts. In the alternative, CHEO sought summary judgment on the evidentiary record, pointing to the numerous statements the plaintiff made to her treatment providers and to Sun Life about her plans to resign and travel, the absence of any contemporaneous mention of the alleged HR call, and the fact that she raised the inducement allegation only when she filed her statement of claim in November 2020. On this basis, CHEO asked the court to find that there was no genuine issue requiring a trial.

Claims against Sun Life

Against Sun Life, the plaintiff alleged breach of the LTD policy by terminating her benefits and negligent misrepresentation about her options. She claimed Sun Life represented or acted as though her only alternatives were to comply with the gradual return-to-work plan (to the same job that allegedly caused her psychological injury) or effectively forgo benefits. She further alleged Sun Life failed to advise her of her right to appeal the imposition of a return-to-work program, even though she had previously appealed an initial denial of LTD benefits successfully. Sun Life defended on the basis that it approved benefits for generalized anxiety disorder and major depressive disorder, arranged rehabilitation, and proposed an eight-week gradual return to work starting October 22, 2018. It wrote to the treating physician on September 21, 2018, enclosing the proposed schedule and asking him to advise by October 12, 2018 if there were any medical contraindications or restrictions requiring accommodation. In the absence of any response, Sun Life treated silence as implied approval of the plan. Sun Life’s evidence showed that, on October 10 and October 11, 2018, the plaintiff told both the rehabilitation consultant and disability case manager that she did not intend to return to work, planned to resign, and would travel to Thailand. According to Sun Life, she confirmed she had thought about this carefully and felt good about her decision. Sun Life said it terminated benefits because she did not participate in the return-to-work plan and did not return to any work, not simply because she resigned. It emphasized that resignation did not by itself automatically end an ongoing LTD claim, but did affect eligibility for any new claims going forward.

Key policy terms and disability issues

The case also turns on how the LTD policy defines “total disability” and on specific exclusions. Under the policy, an employee is considered totally disabled during the elimination period and the following 24 months if they are continuously unable, due to illness, to perform the essential duties of their own occupation “in any workplace, including in a different department or location with the same employer or with another employer.” This wording underpins the dispute over whether Sun Life could legitimately insist on a gradual return-to-work plan focused on the same job and environment at CHEO when those were said to be the very source of the plaintiff’s mental health disability. The plaintiff argued that, because Sun Life knew the CHEO workplace triggered and aggravated her symptoms, it owed a duty of good faith to explore the actual content of her duties, possible accommodations, and alternative positions at CHEO or with other employers, within the “own occupation” framework of the policy. She pointed to a sequence of reports and communications from CBI Health and Sun Life throughout 2018 that, in her view, showed a “singular focus” on returning her to the same position rather than considering broader options. Sun Life, in turn, relied on two assessment reports in June and August 2018 that suggested improvement and supported a structured return to work. The policy also contained a clause stating that no benefits would be payable if the employee was outside Canada for more than four months for any reason, unless Sun Life agreed in writing in advance. The plaintiff stayed in Thailand for nearly five months. This absence-from-Canada restriction formed part of Sun Life’s argument that her entitlement to ongoing LTD payments could not continue while she was abroad without pre-approval.

Procedural posture and summary judgment motions

Both defendants brought motions for summary judgment to have the action dismissed without a full trial. The plaintiff responded with “boomerang” motions, seeking summary judgment in her favour on liability. As to CHEO, the central preliminary issue was jurisdiction: whether the court could hear the claim at all, given the unionized context, collective agreement provisions, and the Labour Relations Act requirement that “all differences” arising from the interpretation, application, administration or alleged violation of a collective agreement be resolved by arbitration. The court reviewed leading Supreme Court of Canada cases on the “essential character” test and Ontario authorities emphasizing the broad, exclusive jurisdiction of labour arbitrators over employment termination disputes within a unionized setting. While the plaintiff characterized her case as one of negligent misrepresentation about LTD benefits administration rather than dismissal, the court examined the relief claimed and concluded that the real substance of the dispute was her resignation and the resulting termination of employment—matters squarely within the collective agreement framework. Issues about loss of benefits were secondary and flowed from the employment status question. As against Sun Life, the focus of the summary judgment motion was different. There, the question was whether the evidentiary record conclusively showed that Sun Life had properly applied the policy in terminating benefits and had made no negligent misrepresentations, or whether factual and credibility issues remained that required a full trial. The plaintiff contended that the documentation and communications from Sun Life and its rehabilitation provider showed a persistent insistence on returning her to the same job despite awareness that the environment was the source of her mental disability. She said this supported her case that Sun Life failed to properly interpret or apply the “own occupation” definition and its good-faith obligations. The court also had to consider an expert opinion submitted on the plaintiff’s behalf (asserting continuous disability since October 2018), which Sun Life criticized procedurally and substantively, and the treating physician’s later narrative report that, at some points, described her as emotionally well.

Court’s decision and outcome

On the CHEO motion, the court held that the essential character of the plaintiff’s dispute with her employer concerned her resignation and the termination of her employment, not entitlement to enrolment in or administration of benefits. As such, any claim arising from that termination fell within the ambit of the collective agreement and the exclusive jurisdiction of labour arbitration mandated by the Labour Relations Act. The court therefore concluded it had no jurisdiction over the claim against CHEO. It granted CHEO’s motion for summary judgment and dismissed the action against CHEO. The judge added that, if this jurisdictional conclusion were wrong, he would not have granted summary judgment on the merits: the alleged October 15, 2018 phone call and the plaintiff’s credibility about what was said would still require a trial. However, this alternative analysis did not alter the jurisdictional ruling that ended the court proceeding against CHEO. On the Sun Life motion, the court found that there remained a genuine issue for trial regarding whether Sun Life’s administration of the LTD policy was unduly and impermissibly fixated on returning the plaintiff to the particular CHEO workplace that allegedly caused her disability, and whether that approach was consistent with the policy’s definition of total disability and its good-faith obligations. Given these unresolved factual and interpretive questions, and potential credibility issues if Sun Life disputed the alleged “singular focus,” the court refused to grant summary judgment either for Sun Life or for the plaintiff. Sun Life’s motion to dismiss the claim was therefore denied, and the plaintiff’s action against Sun Life will proceed to trial, while her own attempt to obtain summary judgment in her favour was also rejected. In terms of overall outcome, CHEO was successful in having the court action against it dismissed on jurisdictional grounds, while Sun Life was unsuccessful in its attempt to defeat the claim at the summary judgment stage, and the plaintiff succeeded only to the extent of keeping her case alive against Sun Life. The decision does not award any damages or quantified costs; instead, the judge invited brief written submissions on costs from CHEO and the plaintiff (regarding Sun Life’s motion) and from the responding parties, with no oral hearing, so the total monetary amount in favour of any successful party cannot be determined from this judgment.