Sunday, 18 November 2012

Lying to Obtain Insurance Benefits Just Cause for Dismissal

Is fabricating claims for certain health benefits and then lying about their fabrication “just cause” for dismissal from employment? In the case of Mykki Cavic v. Costco wholesale Canada Limited, 2012 ONSC 5307 (CanLII) the Honourable Justice Carole Brown of the Ontario Superior Court of Justice, answered “yes” to that question.


The Plaintiff’s Employment with Costco

The plaintiff employee, Ms. Mykki Cavic had been employed with the defendant employer, Costco for 19 years in various positions. On April 15, 2011, her employment with Costco was terminated for just cause. At the time of her termination, the employee held the position of Night Floor Merchandise Supervisor, a first level management position which she had held since April 14, 2008. She was responsible for supervising 20 to 25 employees. She received an annual salary of $65,000, plus employment benefits, including health, dental, life, dependent life, accidental death and dismemberment and short and long-term disability insurance, all of which were fully paid by the defendant.

Costco maintained that Ms. Cavic was terminated for just cause as the result of falsification of health benefit claims provided through her employment and filed with the benefits insurer, and her failure to provide a truthful explanation of the circumstances of her conduct when given the opportunity on three separate occasions, one by Manulife and two by Costco.

The benefits program offered to all Costco employees was managed by Manulife. As found by Justice Carole Brown, the evidence indicates that Costco is a self-insurer, that it retained Manulife Financial to process and analyze all claims submitted by employees and to provide reimbursement for claims in the amount of 80%. Manulife thereafter would invoice Costco for all claims paid out by Manulife, and Costco would provide full reimbursement to Manulife as invoiced. Where Manulife found claims that it judged to be dubious or fraudulent, it would conduct an initial investigation and would then advise Costco of the potential dubious or fraudulent claim. Costco would thereafter conduct its own additional investigation, without the further involvement of Manulife.

The “Phantom Dependant”

Ms. Cavic testified that, in or about 2004, she noted that on her benefits profile a phantom dependent was listed, named Sara-Eve Dore, identified as her daughter. She contacted Manulife to have the phantom dependent removed from her profile. Approximately two years later, in 2006, she discovered that the dependent had not been removed from her plan and again contacted Manulife and was directed to speak with her employer, Costco. An Enrollment Confirmation form signed by the plaintiff and dated April 13, 2006 indicates that she attempted to delete Sara-Eve Dore from her plan. Her efforts were not successful and, in May of 2010, she went online, found that Sara-Eve Dore was still on her file and attempted to delete her name from the plan. She testified that in June of 2010, she discovered that Sara-Eve Dore remained on her benefits profile. She testified that she did not follow up in the intervals to verify that the phantom dependent had been removed.

She testified that, when she discovered in 2010 that Sara-Eve Dore remained on her benefits profile, she was upset and frustrated, and decided to take matters into her own hands. She testified that, in an effort to gain the attention of Manulife with respect to this phantom dependent which she had unsuccessfully tried to remove from her profile, she decided to falsify documents and submit false claims in the name of Sara-Eve Dore. The parties agree that prior to this time, no claims were made in the name of Sara-Eve Dore. She admitted that she took receipts received from medical providers for paramedical treatments that she had received, including massage, chiropractic, and acupuncture treatments, falsified documents by typing the name Sara-Eve Dore on a separate piece of paper and superimposing it over her name on the receipt, thus replacing her name with that of the phantom dependent, photocopying the documents and submitting them. She submitted claims in the name of Sara-Eve Dore for massage therapy which she had received on June 9, 2010 in the amount of $75 and June 15, 2010 in the amount of $75, for chiropractic treatment on June 9 in the amount of $38, and an initial acupuncture treatment on June 9 in the amount of $34, in total $170.00. She admitted that she received reimbursement in the name of Sara-Eve Dore for the falsified claims submitted. It was her testimony that she did all of this to gain the attention of Manulife in order to finally have this phantom dependent removed from her benefits profile.

However, she admitted at trial that when she subsequently received a telephone call from Manulife, inquiring about Sara-Eve Dore and whether this claimant was her daughter, she stated to Manulife that it was her daughter. Although she had now obtained the attention of Manulife, which she testified was her sole rationale for submitting false documents, she did not respond that she was pleased to have finally gained their attention and did not explain the situation to them or request that they remove Sara-Eve Dore from her benefits profile. Rather, she advised them that Sara-Eve Dore was in fact her daughter. She testified that she was afraid to tell the truth.


In reaching the decision that Ms. Cavic had been terminated for just cause, Justice Brown began her analysis by noting that:

[37] The onus is on the employer to show cause for dismissal: Hill v. Dow Chemical Canada Ltd., 1993, CarswellAlta 46 (Alta Q.B.) at para. 11. There is no catalogue of those actions that would constitute cause for termination, as each case is dependent on and must be judged on its own facts.

Justice Brown then set out a number of cases in which Ontario courts have consistently taken the position that:

[40] Dishonesty, falsification of documents, misappropriation of benefits and forgery… individually and in conjunction with one another… [are] a justifiable cause for dismissal with cause…Trust and honesty are fundamental to the employment relationship, particularly in a retail business and/or of a supervisor. A breach of trust or dishonest conduct by an employee will constitute cause for termination.

In the result Justice Brown found that:

[45] The conduct of the Plaintiff in falsifying and submitting medical benefits claims forms, in lying to Manulife about Sara-Eve Dore being her daughter when asked, and in failing to forthrightly tell her employer when asked during the investigation that she had falsified the documents and her justification therefore, constituted conduct so fundamental to the employer-employee relationship and to her managerial position that it constituted cause for termination without reasonable notice or pay in lieu thereof.

The plaintiff’s claims for wrongful dismissal were therefore dismissed.


As I have mentioned in other posts, defining “Just Cause” is a lot like trying to define obscenity: one knows it when it is seen, but it can be difficult to describe.

I am of the opinion that most would agree that Ms. Cavic’s actions did provide her employer just cause for termination. If her objective was to have her ‘daughter’ removed from the profile, then when Manulife called the first time her response should have been to tell them that no such daughter existed. To lie to Manulife, then repeat that lie twice to Costco, in my opinion, doomed Ms. Cavic.

I have often taken the position in this blog, based upon my reading of McKinley v. BC Tel, 2001 SCC 38, that a single, isolated incident of wrongful conduct will rarely be sufficient grounds for just cause for dismissal. However, Ms. Cavic’s case is not an example of a single incident; she submitted a false claim, and then lied about it – three times. My sense is that had she been honest and forthright with Manulife the first time that they called, she may not have been fired, or a different result at trial may have occurred.

The effect of just cause is serious. As I explain in my overview to wrongful dismissal when an Ontario worker is dismissed from his or her employment, s/he is entitled to “notice” of that dismissal, and in certain enumerated cases a severance payment. Where an employer has just cause to terminate the employment relationship the employee is not entitled to notice of the termination, nor payment in lieu thereof. The difference can be staggering.

Although not assessed by the court in this case, in my opinion, had Justice Brown found that Costco did not have just cause to terminate Ms. Cavic’s employment, Ms. Cavic would have been entitled to at least one year’s pay in lieu of notice. Instead she got nothing – except saddled with a bill from her own lawyers, plus whatever contribution towards Costco’s lawyers fees the court awarded.

Takeaways for those with Labour Pains

The takeaway for employees is that there can be cases where a single incident will be sufficient grounds to warrant just cause. Employers are not always obligated to provide warnings or second chances.

If you have been dismissed and your employer has taken the position of “just cause,” then before doing anything it is prudent to first seek professional legal advice. The employment lawyers for employees at Kelly Santini LLP would be happy to speak to you.

For more cases and commentary on "Just Cause" see here: cases and commentary on just cause.

Contact Us

To reach the author of this blog, Sean Bawden, email or call 613.238.6321 x260. You may also use the contact box at the top of this page.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Sean Bawden, publisher of Labour Pains, can be reached by email at or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is also a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.


  1. ".. single incident will be sufficient grounds to warrant just cause."

    I feel this was more than one single event. The employee created a falsified document, submitted it, lied when questioned about it by Manulife, and continued to claim it was all to get the attention of Manulife.

  2. Similarly, fraudulent sick notes (multiple events): Air Canada v CUPE (Air Canada Component), 2012 CanLII 67137 (ON LA)

    I'd like know, can 1 solitary, isolated event warrant just cause.

    1. It can. See my post earlier this week, where the PSLRB recognized just cause, notwithstanding a finding of an isolated incident.