The issue in this appeal was whether a long term disability insurer is entitled to deduct Canada Pension Plan Child Benefits from disability benefits paid out under disability policies. The trial judge held that the Child Benefits were deductible. The Court of Appeal agreed and dismissed the appeal.
Ruffolo v. Sun Life Assurance Co. of Canada,  O.J. No. 1322, Ontario Court of Appeal, April 2, 2009, M.J. Moldaver, J.M. Simmons and R.A. Blair JJ.A.
The Appellants are totally disabled and receive long term disability (“LTD”) benefits from SunLife under group insurance policies. The Appellants have minor children and receive disability benefits from the Canada Pension Plan (“CPP”). The CPP benefits are payable to the dependant children, although they are received by the parents in trust.
SunLife had deducted the CPP benefits from the LTD benefits. The Appellants commenced an action and argued that SunLife was not entitled to do so. The trial judge held that, pursuant to the terms of the policies, the CPP benefits were deductible. Both of the group insurances policies contained clauses about the coordination or integration of benefits from other sources.
The Court of Appeal upheld the trial judge’s decision. Even though the CPP benefits are not “disability income to which the disabled member is entitled”, the payments are made to the disabled parent in trust. This is sufficient to trigger the portions of the policy which speak to the integration or deduction of benefits from other sources.
The Court of Appeal also held that the off-setting of CPP benefits was not a violation of Canada Pension Plan. The Act contemplates a scheme whereby CPP and disability benefits are to be integrated.