Insured says her only two options were to resign or return to work in same role that caused anxiety
The Ontario Superior Court has dismissed Sun Life Assurance Company of Canada’s summary judgment motion against a woman who asserted that it breached its long-term disability (LTD) benefits policy by terminating payments of benefits in her favour.
In Fawcett v. Sun Life Assurance Company of Canada, 2026 ONSC 1855, a hospital employed the plaintiff for 17 years. On May 4, 2018, under an insurance policy available via her employment, she was approved for LTD benefits for anxiety and depression arising from her work environment.
Sun Life, which paid the plaintiff disability benefits, asked her to participate in a program to return gradually to her previous position at the hospital, which paid the insurance premiums for the disability benefits offered to its employees.
The plaintiff told her treating physician, her kinesiologist and occupational therapist, and a Sun Life representative that she intended to quit her job and pursue other options, including travelling to Thailand.
According to the plaintiff, on Oct. 15, 2018, the hospital’s HR department confirmed by telephone that Sun Life correctly stated that her only two options were resigning or returning to work in her prior role. The hospital allegedly wrongfully induced her to resign by negligently misrepresenting her situation.
That same day, the plaintiff sent the hospital her resignation letter. She told her family physician that she “felt like a million bucks” about her decision to cash in her pension, resign, and “backpack to Indonesia, Vietnam, Cambodia, Thailand and Bali.”
On Oct. 16, 2018, the plaintiff contacted Sun Life, but did not mention her phone conversation with the hospital representative the day before.
In a letter dated Nov. 15, 2018, Sun Life advised the plaintiff that it had terminated her benefits as of Oct. 31, 2018, with her final payment issued on Oct. 15, 2018. Again, she did not raise the phone conversation to Sun Life.
The plaintiff commenced claims against the defendants Sun Life and the hospital. She argued that Sun Life negligently misrepresented her limited options relating to the benefits and failed to inform her that she could appeal the decision placing her on the return-to-work program.
The defendants each moved for summary judgment to dismiss the plaintiff’s claims. Sun Life asserted that it stopped paying the plaintiff’s benefits because she breached its insurance policy by failing to complete the return-to-work program.
The plaintiff filed “boomerang” summary judgment motions against the defendants.
Summary judgment motions denied
The Ontario Superior Court of Justice dismissed the plaintiff’s action against the hospital and the hospital’s summary judgment motion against the plaintiff for lack of jurisdiction. The court also dismissed Sun Life’s summary judgment motion against the plaintiff.
First, the court ruled that it lacked jurisdiction over the claim against the hospital because a collective agreement covered the essential character of the dispute, specifically the plaintiff’s resignation and the consequent termination of her employment.
The court considered any issues regarding benefits clearly secondary to the determination of whether the plaintiff had resigned. The court explained that she would still be entitled to LTD benefits if not for her resignation.
Second, even if it erred in the jurisdictional issue, the court would have refused to grant summary judgment as between the plaintiff and the hospital. The court noted that a trial would have considered:
- the defendants’ evidence, which allegedly weighed decisively against the plaintiff’s credibility
- the plaintiff’s evidence, which supposedly established that the defendants purposefully pressured her into believing she only had the options to return to her same position or to quit, as confirmed via phone call
Third, the court saw a genuine issue for trial in the claim against Sun Life, which prevented it from issuing summary judgment.
The court noted that the plaintiff argued that Sun Life and its representatives had a singular focus on administering the policy provisions and the approved LTD benefits and on returning her to her old work position, which the defendants knew caused and exacerbated her disability.
The court deemed a trial necessary to determine whether that was indeed Sun Life’s singular purpose, why that was so, and whether the objective aligned with the policy. The court added that a trial would enable Sun Life to address this issue in full.
If Sun Life denied that this was its singular goal, the court pointed out that credibility issues could arise that a summary judgment motion could not adjudicate.
