http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/143108/index.do
Ilijoic v. M.N.R. (March 22, 2016 – 2016 TCC 74, V. Miller J.).
Précis: Ms. Ilijoic received disability payments from Sun Life Assurance Company under a plan arranged by her employer, Dow Chemical Canada ULC:
[3] The Appellant is an employee of Dow Chemical Canada ULC (“Dow”). She started to work for Dow in 1990 as a chemical technologist and in 1993 she became a research technologist. In September 2003, the Appellant became ill. During the period September 2004 until March 21, 2005, she was unable to work and she received benefits pursuant to a Short-Term Disability Plan. In 2005, Sun Life Assurance Company (“Sun Life”) approved her application to receive payments from the Long-Term Disability (“LTD”) Plan retroactively to March 22, 2005. Sun Life was the plan administrator.
[4] The Appellant has not worked since 2004. However, she continues to be an employee at Dow and she participates in their insurance, dental and medical plan.
The sole issue before the Tax Court was whether these payments were income from insurable employment for EI purposes.
The Tax Court held that the payments were made by Sun Life as agent for Dow and were therefore subject to EI.
Decision: The decision was somewhat predictable since the Plan had all of the indicia of an agency relationship and Sun Life bore no financial risk in connection with the payments:
[29] The WLRP is a group plan and is referred to in the ASO Contract as the Plan. The ASO Contract contains the following provisions:
a) Clause 2: Sun Life performed its obligations under the ASO Contract as agent for Dow and not as an insurer;
b) Clause 7: Sun Life did not insure or underwrite the Plan. Dow retained the legal and financial liability to pay benefits under the Plan and all expenses incurred in administering the Plan except those expenses which Sun Life assumed. Sun Life had no duty to defend any action against the Plan or Dow. Dow indemnified Sun Life against any damage, liability and expenses which resulted from claims or lawsuits brought against Sun Life in connection with the Plan or the ASO Contract;
c) Clause 10: Sun Life opened a bank account in its name which was used solely in connection with the Plan and the ASO Contract. The bank account was funded by Dow;
d) Appendix “B”: Sun Life performed administrative and claims services for Dow. They consisted of:
Administrative Services
i. maintain the necessary records for experience analysis, reserve calculation purposes, payment of benefits, projection of future costs, and cost estimates for plan modifications;
ii. provide a monthly accounting of payments with sufficient detail to allow for the control and audit of the Plan's funds;
iii. prepare an annual financial report reviewing activity in the Plan during the year;
iv. assist in the preparation of communication material for employees concerning the benefits provided under the Plan;
v. prepare and print claim forms;
vi. prepare the Plan documents and any proposed modifications for review and approval by Dow;
Claims Services
i. advise as to the entitlement of covered persons to receive benefits in accordance with the Plan documents;
ii. investigate any claim which required investigation and obtain the opinion of experts, including medical experts, where necessary;
iii. refer to Dow for consideration and final determination:
(a) any dispute concerning a person's eligibility or coverage under the Plan, or his right to receive benefits;
(b) any situation where a person has disputed the amount due;
(c) generally any controversial matter or non-routine matter arising out of the administration of the Plan where such matters cannot be satisfactorily resolved by following the claims administration procedures and practices established;
[30] It is clear that Sun Life merely acted as agent for Dow who entirely funded the WLRP and bore all financial risks of the Plan. Sun Life was not an insurer but the administrator of the Plan. Dow had the final determination with respect to a person’s eligibility or coverage under the Plan.
[31] I have concluded that the WLRP payments received by the Appellant in 2013 were paid to her by Dow in respect of her employment and the WLRP payments are insurable earnings. The appeal is dismissed.