Benefits Administration and Employee Privacy Rights

By Cynthia Lazar on 2016/09/28

In Rocktenn Co. of Canada Inc. and USW, Local 1-830, 2015 CarswellMan 547 (Peltz), the employer, in order to fulfill its obligations under the collective agreement, contracted with an insurer to provide weekly indemnity benefits to its employees. The benefits were fully insured and as such it was a true insurance contract in which the insurer charges premiums, administers the plan and pays all benefits, although it would have been open to the employer to make other arrangements, e.g. contract for administrative services only or self-insure.

The insurer had a practice of requiring all WI applicants to submit documentation, including an attending physician statement in a standard form created by the insurer. The APS required the employee to disclose his or her diagnosis, history, symptoms, test results, clinical notes and other information to the insurer. Such information would not be shared with the employer. Neither the collective agreement nor the insurance policy itself provided for this level of disclosure by the employees. The union filed a grievance alleging that union members’ privacy was being infringed by the insurer’s routine requirement to provide the information in the standard forms, including the APS.

The parties agreed that there was no absolute right to privacy unless negotiated, and as there was no such provision in the collective agreement, any requirement for disclosure of personal information by the union members had to be “reasonably necessary” under all of the circumstances. The test for “reasonably necessary” is an objective one.

The arbitrator found at paragraph 291:

… an employee’s physician will provide care during the employee’s absence and certify the illness or injury in order to support the claim. … if the Company prefers a different approach with routine full disclosure of the employee’s confidential medical information, such a requirement must be collectively bargained. Failing such an agreement, diagnostic and related information will remain confidential unless proven to be reasonably necessary in the particular circumstances.

The arbitrator ordered that the employer had to “ensure that the forms and authorizations used in the administration of the WI plan comply with the determinations made in this award for the protection of employee privacy.” Practically speaking, the employer would have to demand that the insurer change its standard forms and APS, or, if the insurer refused, make other arrangements for insurance, either by way of an ASO policy, self-insurance, or another carrier which would comply with the arbitrator’s award.

The arbitrator ordered that several changes be made to the APS and other forms including:

  1. The form should indicate to the employee that the insurer is not entitled to contact the employee’s doctor directly.
  2. The employee should not be asked for a description of how and where the accident occurred.
  3. The authorization should only allow for the exchange of information for the purposes of discussing fitness for return to work or workplace accommodation issues with the employer.
  4. “History” must be limited to when the symptoms first appeared or the accident happened. The employee should not be asked at the outset whether she or he had been diagnosed with the same condition in the past or
  5. The existing questions regarding diagnosis were unduly intrusive and should be replaced with an inquiry as to the nature of the illness or disability.
  6. Current height and weight are unnecessary as a routine question at the outset of an initial application.
  7. Questions regarding treatment must be limited to whether a treatment plan has been recommended or prescribed and whether it is being followed. Where the collective agreement requires the regular care of a physician, a full list of visits is reasonably necessary. Otherwise, the date of the first and last visit is sufficient.
  8. Questions regarding pregnancy are unnecessary in the normal course, but in this case, the collective agreement provided that benefits are not available during a maternity leave so the question was necessary for purposes of determining eligibility.
  9. Names of other physicians are unnecessary. Surgical information must be limited to whether or not there was a surgery and the date. The surgeon’s name is unnecessary.
  10. An invitation for additional comments is unnecessary.
  11. The attending physician’s specialty is unnecessary.

The takeaway from this is that employers should carefully scrutinize the standard forms used by their insurers to ensure that employee’s privacy rights are not unduly infringed. Alternatively, a requirement to share such information could be negotiated into the collective agreement.

Cynthia Lazar is an associate at Taylor McCaffrey LLP.

This Article was originally published September 15, 2016 on The Canadian Bar Association’s website in Sections & Community here.  

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