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Change in policy violated benefits language in collective agreement

March 11, 2019

Employer can’t force employees to purchase compression stockings from its own pharmacy

A board of arbitration has determined that a hospital’s restriction on where employees can purchase compression stockings under their extended health care benefit plan violates the benefits language of its collective agreement.


Hamilton Health Science Corporation’s benefit plan, currently provided by Green Shield, reimburses employees for a maximum six pairs of compression stockings per calendar year when prescribed by a physician. The reimbursements are based on the “reasonable and customary” cost of the stockings.

However, in 2016, the Hospital noticed that the cost of compression stockings had been increasing year over year, and that two particular suppliers were responsible for a significant percentage of these rising costs. On November 1, 2017, the Hospital informed employees that it would only reimburse employees for compression stockings purchased through the Hospital’s own pharmacies.

The Ontario Council of Hospital Unions (“OCHU”) and CUPE, Local 7800 challenged this decision on behalf of its two bargaining units: the Service Office and Clerical Unit, and the Trades and Maintenance Unit. The Union argued that this unilateral change violated the benefits language in the collective agreement.

Under Article 18.01 of the central language of the collective agreement, the Hospital is required to contribute 75% of the billed premium towards coverage of eligible employees under the Blue Cross Extended Health Care Benefits Plan in effect as of September 28, 1993 (the “Blue Cross Plan”) “or comparable coverage with another carrier.”

The Blue Cross Plan provided a benefit of 6 pairs of compression stockings per year, but also contained a general provision stating that benefits “apply anywhere in the world.” The Union argued that denying all claims except those processed through the Hospital’s pharmacies was a clear and substantial change to the Green Shield Plan, rendering it non comparable to the Blue Cross Plan.

The Hospital argued that there were sound business reasons for its change, which had effectively contained costs, and that the term “comparable” did not mean “equivalent” coverage. The language of comparability, it argued, was meant to give the Hospital flexibility, and that there was no evidence of inconvenience. It also relied on further unilateral changes that were made post-grievance, including the elimination of a need for a prescription for compression stockings, which arguably improved the plan.

The board of arbitration’s decision

The majority of the arbitration board, chaired by Christine Schmidt, rejected the Hospital’s arguments. While the board of arbitration accepted that there was a sound business reason for the Hospital’s decision, it concluded, based on the benefits language, that the change rendered the existing Plan no longer comparable to the Blue Cross Plan.

The board of arbitration stated that while comparability implies some level of flexibility in fashioning of coverage, the changed plan must be “at least as beneficial as the comparator plan in addressing the needs of the local employee population.” In this case, the change did not meet that test.

The board ordered the Hospital to immediately instruct Green Shield to amend the extended health care plan to rescind the appointment of the Hospital’s pharmacies (and mobile clinics) as the sole supplier of compression stockings.


Nadine Blum

Practice Areas

Labour Law