Prior to 1990, the health and medical benefits available to management retirees under the age of 65 were superior to the benefits available to management retirees aged 65 and over. In 1990, the former Municipality of Metropolitan Toronto enacted a by law which sought to equalize the provision of its health and medical benefits among its management retirees. It is the plaintiffs' position that the by law extended full prescription drug coverage and out of Canada health coverage, formerly available only to active employees and retirees under the age of 65, to management retirees aged 65 and over.
In 1997, the City's benefits administrator, Sun Life, published a booklet that was distributed to all Metro employees. According to the booklet, prescription drug coverage was available to all Metro employees, including retirees aged 65 and over, even for those retirees who lived in Ontario and had drug expenses that were not covered by the Ontario Drug Benefits Plan. Shortly after receiving the booklet, all Metro employees, including retirees aged 65 and over, received a drug card which allowed drug claims to be paid directly by the benefits administrator to their pharmacist.
The booklet also stated that retirees aged 65 and over would have to pay for any deductibles, co payments and prescription fees associated with their drugs. Furthermore, the booklet indicated that out of Canada health coverage would not be available to retirees aged 65 and over. These statements contradicted the retirees’ entitlements as provided in the 1990 by law.
In 2000, the City of Toronto changed its administrator for the benefit plans for management employees from Sun Life to Manulife. Immediately thereafter, the City terminated coverage for management employees aged 65 and over for drugs purchased in Ontario that were not covered by the Ontario Drug Plan, and cancelled the drug cards which had been issued to them.
The Metropolitan Toronto Pensioners' Association complained to the City about the sudden and unexplained termination of their prescription drug coverage. The City claimed that prescription drug coverage had never been available to Metro management employees aged 65 and over. To support that assertion, it pointed to an internal memorandum in which a staff member had cryptically suggested that drug coverage for retirees aged 65 and over applied only to drugs purchased outside of Ontario. The City was unable to explain the existence of the 1990 by law, the Sun Life booklet, and the issuance of drug cards to every retired management employee aged 65 and over.
On October 1, 2002, City Council adopted a resolution confirming that it would not pay for prescription drug coverage for drugs purchased within Ontario by management retirees aged 65 and over.
On August 6, 2003, John Markle and Jack Horsley filed a statement of claim in the Ontario Superior Court of Justice on behalf of retirees of the Metro Toronto alleging that the City breached its contract with the retirees by terminating in-province drug coverage for retirees aged 65 and over, refusing to reimburse them for the full costs of deductibles, co-payments and prescription fees, and refusing to provide them with out-of-Canada health coverage.
