Return to Work Reforms for the Construction Sector By Caryn Hirshhorn
Regulation O. 35/08, which comes into effect on September 1, 2008, will require all construction employers, regardless of size, to find suitable re-employment for their injured workers. This will be the first time employers with 20 workers or less have had workers’ compensation return-to-work obligations applied to them. For many, this will come as a surprise and the reasons behind the changes are not entirely clear or warranted, particularly as it applies to small employers.
Risk Exposure, Evaluation, and Response By Luke T. Petrykowski A comprehensive discussion of factors to consider in the development of a risk management approach to WSIB claims, which would necessarily include incident investigation, claims/disability management, cost analysis and job placement strategies, as well as a multi-disciplinary team effort. WSIB cost considerations such as SIEF and Experience Rating are also explained.
Experience Rating Traumatic Death Penalty By Michael Zacks
WSIB Chair Mahoney recently announced a review of the Board’s Experience Rating programs, and an immediate change to eligibility for rebate. His announcement comes in the midst of pressure from the OFL and a recent series of articles in the Toronto Star on the topic. Whether his declaration that no rebate will be paid out to a company whose worker dies as a result of traumatic injury is possible, based on the legislative provisions of the Workplace Safety and Insurance Act (WSIA), remains to be seen.
Decision of Note: WSIAT Decision 1581/06 By Robert A. Boswell
The case is the first of its kind decided by the Appeals Tribunal and involves an important analysis of the application of section 43(1)(c) and the quantum of a surviving spouse’s pension under section 48. It is of particular interest to cases involving long latency occupational diseases, which sometimes arise in circumstances where the onset of disease follows well after the worker’s retirement from the workforce. It should be noted that the decision does not support the WSIB’s ‘practise’ of awarding benefits as it did in this case and perhaps many others of similar fact basis.
Workers' Compensation is published by the Workers' Compensation Section of the Ontario Bar Association. Members are encouraged to submit articles or suggest story ideas.
The articles that appear in this publication represent the opinions of the authors. They do not represent or embody any official position of, or statement by, the OBA except where this may be specifically indicated; nor do they attempt to set forth definitive practice standards or to provide legal advice. Precedents and other material contained herein are intended to be used thoughtfully, as nothing in the work relieves readers of their responsibility to consider it in the light of their own professional skill and judgment.
Return to Work Reforms for the Construction Sector
Filling in a Necessary Gap or Placing an Undue Burden on the Province’s Construction SMEs?
Caryn Hirshhorn*
Under the new reforms to the Workplace Safety and Insurance Act, all construction employers, regardless of size, will be responsible for finding suitable re-employment for their injured workers. The new regulations will require that construction employers provide “suitable” re-employment to their injured workers for up to two years after the date of injury and for a duration of one year after the worker is medically able to perform the essential duties of his/her pre-injury position. The regulation, to come into effect this September, marks the first time employers with 20 workers or less have had return-to-work regulations applied to them. For many small construction employers, this inevitably beckons the question, why now?
Was There a Need to Respond?
This is not the province’s first time at singling out the construction sector in legislation. The Labour Relations Act, Employment Standards Act and Occupational Health and Safety Act all include distinct provisions regarding construction.
The high potential for injury, the number of work locations per employer and the transient workforce, are some factors that have contributed to the industry’s unique nature. In addition, the Construction Sector Council notes that the industry can be characterized by a number of challenges, such as: high rates of staff turnover; ever-changing new technologies; weaknesses in training, college programs and apprenticeships; inconsistent enforcement of regulation; conflicting systems of certification and licenses; and inconsistent standards among provinces.
Ontario has the highest share of national construction employment. According to Statistics Canada, in 2007, Ontario’s construction employment was at over 412,000. This is a drastic difference from Canada’s second highest construction employer, British Columbia, whose 2007 employment figure was at just under 197,000.
Province
2007 Distribution of Construction Employment in Thousands
Ontario
412.6
British Columbia
196.9
Quebec
195.5
Alberta
193.1
Manitoba
33.8
National Construction Employment Total
1,133.5
Source: Statistics Canada, CANSIM, 282-008, Catalogue no 71F0004XCB
While Ontario is by far the largest construction employer in Canada, its injury rate is the lowest. According to the Construction Safety Association of Ontario (CSAO), Ontario enjoys the best construction safety record in Canada. The CSAO reports that Ontario has seen a “75 per cent reduction in lost-time injuries, medical aid injuries and all injuries” over the past 35 years. In its 2006 Annual Report, the CSAO further reported that despite a 4.7 per cent increase in the number of hours worked, the number of lost-time injuries (LTIs) in 2005 decreased by 4.3 per cent.
The CSAO estimates that 90 per cent of Ontario’s construction employers have seven or fewer workers, while roughly one per cent has more than 50 workers. Therefore, the number of employers that stand to be impacted by the new legislation is staggering. Despite the overwhelming number of small construction companies, it doesn’t necessarily follow that workplace injuries occur more frequent in these firms. In its 2005 submission to the Workplace Safety and Insurance Board (WSIB) regarding the then proposed return-to-work regulations, the Canadian Federation of Independent Business (CFIB) stated that the LTI frequency rate translated to less than one injury every 10 years for employers of five workers. It should be noted that the submission rebutted the findings of an article published in 1997 in Safety Science, which reviewed data from 1988 to 1993 and argued that injury frequency in construction firms increased as the firm size decreased. While recent data comparing injury frequency between large and small construction companies was unavailable at the time of publication, the Council of Ontario Construction Associations (COCA) recently reported that Ontario’s overall LTI rate is at only 2.15 per cent.
The Potential Burden
In its submissions, the CFIB noted a number of challenges construction small and medium-sized enterprises (SMEs) would face with the new return-to-work regulations. The major issue to be considered is the fact that small firms generally have fewer resources and less working capital. Though many owners of SMEs typically engage in the same daily activities as their workers, they do not usually have a separate staff to deal with other firm demands, such as: human resources, accounting and safety. This may be, in part, due to the fact that many SMEs are underfinanced, making it unrealistic for them to obtain a specialized staff. This is in contrast to the situation in large companies, where there are typically different specialized departments to meet the firm’s many different needs. If owners of construction SMEs are forced to devote further time and resources to ensuring compliance with government requirements, this could translate to a loss of profits. Furthermore, with fewer projects and less capital, SMEs could have an especially difficult time finding both suitable and useful modified duties for an injured worker.
The new return-to-work regulations come as the cost per claim continues to climb. For 2007, COCA reported that the cost per claim was expected to increase 16 per cent and 13 per cent for 2008. COCA further reported that average costs per claim are projected to reach $67,725 – an overwhelming figure for a small business.
In addition to the potential financial burden small construction companies may bear, the Canadian Injured Workers Society (CIWS) is concerned that the new regulations may transfer costs onto taxpayers and families of injured workers. The CIWS agues that the focus on a fast return to work increases the risk of re-injury due to insufficient medical recovery, which could have the effect of only shifting the social and medical costs associated with these injuries.
The WSIB states that it consulted with industry stakeholders regarding the new regulations over a 10-year period. The WSIB is currently working on draft policies and plans to have a focused consultation with stakeholders in June. Representatives of small construction businesses will be included in this consultation process.
* Caryn Hirshhorn, LL.B. is a consultant with CompClaim Management Inc.
The Necessity of Integrated Risk Management for Employers
Luke T. Petrykowski*
Introduction
While in the course of carrying on their business activities, employers often find themselves in circumstances where liabilities take on surprising and significant dimensions. One such category of employer liability, among the myriad of potentialities, gravitates around the axis of WSIB-related disability. It is often the case that employers fail to methodically measure and manage the risk (possibility and scope of loss or detriment related to a potential event) associated with occupationally-induced injury or disease in the province of Ontario. This is usually the consequence of a multi-factorial deficiency that demands a philosophical and technical reorientation on the part of employers toward an integrated risk management approach to WSIB-related events.
Precipitation of Risk Exposure
When faced with the reality that one of their employees has suffered an accident or disablement as a result of their employment, employers often find themselves in situations where the initial reaction to this precipitating event is to merely fulfill basic investigatory and reporting requirements without properly assessing the risk exposure associated with the event. Such a minimalist attitude can be best illustrated as a damaged link in the chain of an employer’s risk management processes, and is usually prognosticative that future deficits will likely exist in the employer’s assessment and response to the highly-variable risk associated with WSIB-related disability. The weakest link in this chain is usually an employer’s inability to precisely assess or proactively respond to burgeoning risk exposure.
The Spectrum of Risk
Within 24 hours of any alleged accident or disablement, an attentive employer should already have a reasonable and integrated appraisal of the legitimacy, nature, and severity of any work-related injury, in addition to actuating a calculated disability management response. This would optimally include offering modified work to an employee within identified or anticipated[1] functional limitations, when and if necessary. This process requires an employer to collect and review all available and relevant information from multiple sources (i.e. safety personnel, local management, other employees, third parties, health care providers) in addition to understanding and anticipating the medico-legal realities of the alleged work-related injury. An employer should also undertake an initial risk assessment in appropriately categorizing the event along a spectrum where the lowest risk exposure is associated with an injury that will not require medical attention being sought by an employee, while the highest risk exposure is associated with an employee fatality.[2]
While the great majority of injuries lean toward the low-risk end of this spectrum, employers need qualified and dedicated risk management personnel who are capable of discerning the initial and ongoing risk associated with WSIB-related events. This needs to include their ability to evaluate the probability that risk-related events will occur in the future (i.e. WSIB’s recognition of an employee’s permanent impairment). This is especially the case for any and all injuries that result in an employee’s lost-time from work, as these cases automatically attract higher risk in the form of potential entitlement to WSIB loss of earnings (LOE) benefits.[3] In any event, employers ought to appropriately marshal their finite internal/external resources according to a prioritization scheme where the amount of resources being concentrated towards work-related injuries and risk management activities is proportional to the legitimacy, nature, and severity of those injuries. Standardized criteria for prioritization and risk exposure assessment should be used in this regard, as they provide a metric for both risk evaluation and systemic risk response evaluation.
Understanding the True Costs Associated with WSIB Claims
Each reported WSIB-related injury leads to the establishment of a WSIB claim, which in itself becomes a potent source of financial liability for employers, flowing from the existence of an employer’s experience-rated firm account with the WSIB. According to the actuarial design parameters of the WSIB’s experience-rated incentive program, such as NEER, larger employers bear considerably larger actual financial risk exposure than smaller employers for work-related injuries that would otherwise be deemed as similar or identical in magnitude. On this basis, one component of an integrated risk management approach to WSIB-related disability, especially for large employers, ought to be a thorough and formulaic understanding of WSIB claim-costing in their applicable experience-rated environment.
Unless an employer can precisely comprehend the actual and/or estimated point-in-time WSIB claim costs associated with a work-related injury, it would be virtually impossible to implement a cogent risk management strategy to counter a WSIB claim’s activity. Various WSIB claim cost containment/avoidance strategies exist for employers in an experience-rated environment, but they are all predicated upon an employer’s ability to measure and estimate the financial risk exposure associated with a WSIB claim’s activity. Once the numerical parameters are established for the identified risk of an ongoing WSIB claim, a precise cost-benefit analysis can and should be undertaken by employers in deciding if an instrument from their claim cost containment/avoidance armamentarium should be used, and when it should be used for maximum effect. This becomes most salient for employers when evaluating the issue of an employee’s work-related permanent impairment and potential permanent accommodation.
Permanent Impairments and Accommodations
For example, if an employee’s rehabilitation from a work-related injury has been inexplicably prolonged and a full recovery is not expected (with or without a surgical intervention) within six months of the date of accident, the probability of a permanent impairment being recognized by the WSIB would be inordinately high. In this case, where the employer had solid grounds to believe its employee was malingering or attempting to facilitate a secondary gain related to the work-related injury,[4] an independent medical assessment and/or surveillance activity could be a correct and timely tool for the employer to utilize, but only after undertaking the prerequisite cost-benefit analysis for any such proposed action. The information obtained from either of these risk management tools could interdict the possibility of ongoing claim and/or permanent impairment entitlement, and hence their value cannot be underestimated.[5]
To further this same example along, if a permanent impairment was indeed recognized by the WSIB and a decision whether to permanently accommodate the employee had to be made, new risk management considerations would need to be undertaken by an employer. These too would require a thorough cost-benefit analysis approach. At this point, the primary question that employers would need to ask is what the consequences would be in accommodating or not accommodating the employee on a permanent basis. This is a very complex and challenging situation that employers deal with on a regular basis, and is akin to walking in a minefield of further risk.[6] One of the major sub-considerations involved in such a decision would be estimating the employer’s projected WSIB claim costs if the employee was not permanently accommodated, keeping in mind that costly labour market re-entry (LMR) services would be granted to an employee if such a decision were made by the employer. Arguably, the most important factor in this cost quantification process is the level of SIEF (Second Injury and Enhancement Fund) claim cost relief that may or may not have been achieved to date, which for some employers is determinative in making a decision concerning the possibility of permanently accommodating an employee.[7]
While SIEF cost relief may be applicable in providing variable degrees of insulation from risk exposure in such circumstances, in most cases, it is not applicable and this requires other risk management considerations to be undertaken by employers. One of the difficulties in assessing the risk of WSIB claim costs associated with permanent accommodation scenarios is the great degree of variability that these situations receive from the WSIB’s operating level. It is often the case that shortly after a permanent impairment is recognized by a WSIB Sector Medical Consultant, a WSIB Claims Adjudicator informs the employer of the employee’s identified permanent limitations/restrictions and asks, in written correspondence, whether the employer will accommodate them on a permanent basis. This WSIB notice and inquiry phase may or may not have an explicit deadline attached to it, and this can afford employers with the tactical opportunity to stall; in essence, to not make a decision about the employee’s permanent accommodation status. This is a strategically valuable position for many employers, particularly if they understand the precise nexus between WSIB claim costs and the implications associated with the timing of various experience-rating program-related occurrences.
In this vein, it is advantageous for an employer to not make a decision on permanent accommodation (particularly where the ultimate decision is that a permanent accommodation for the employee is not possible) and draw ever so closer to the end of the applicable experience-rating window.[8] This risk management approach decreases the financial risk associated with not being willing or not being able to permanently accommodate an employee. For example, if the year of the WSIB-related accident was 2005, and a permanent impairment was recognized by the WSIB in October 2007, the applicable experience-rating window in the NEER program (and consequently the WSIB-related financial risk) would end as of September 30, 2008. Under this timeline, if the employer was providing suitable ad hoc (temporary) modified duties within the employee’s permanent limitations/restrictions from October 2007 onwards, there is the real possibility that the following year’s NEER experience-rating liability window would close without the employer having made a decision concerning the outstanding issue of permanent accommodation, so long as the employee does not protest to the WSIB about the delay in the permanent accommodation process. This would also be likely contingent on the employee’s pre-injury earnings being appropriately restored by the employer during this permanent accommodation deliberation stage.[9] The problem with this approach is that some WSIB industry sectors and respective Claims Adjudicators are stricter than others in the manner in which these matters are processed and monitored, thus underlining the great degree of variability in how these situations may be treated by employers, employees, and the WSIB.
Risk Assessment: Obtaining and Reviewing the WSIB Claim File
In weighing the advantages and disadvantages of any particular risk management approach to WSIB-related disability, employers have to rely on the information that is available to them, which in many cases may be limited to a handful of Functional Abilities Forms spanning several months in time. This necessitates that employers select a particular demarcation point in the life of a WSIB-claim where an objection can be launched on a legitimate or contrived basis so as to gain documentary access to the WSIB claim file. This eventually allows for the employer to undertake a more comprehensive risk review. Some employers select a monetary or chronological threshold as a trigger for their objection to the WSIB, such as when the WSIB claim’s costs reach a certain monetary value (i.e., $5,000), or on the basis of an employee’s particular duration of lost-time from work (i.e., four weeks).
In any event, it is clear that employers ought to register objections to WSIB decisions (i.e., initial entitlement, ongoing entitlement, availability/suitability of work) sooner than later so as to facilitate a timely review of the WSIB claim file, particularly where there are contentious issues, and considerable financial risk exposure is or will be at stake. This allows an employer to assess whether the WSIB adjudication of the entitlement was correct to date, to participate more coherently in the ongoing management of the claim, to provide modified work which may be more rehabilitative for the employee, and to further assess the risk exposure associated with the employee’s injury. Employers too often find themselves in situations where they first review documentary access to the WSIB claim file months or years after the claim was initiated, too late to mitigate against certain deficiencies that may have taken place during the life of the WSIB claim. These deficiencies could include such issues as an employee’s non-compliance with health care measures or the WSIB’s miscomprehension/adjudication of a particular issue such as aggravation basis entitlement.
Integrated Risk Management
Therefore, an integrated risk management approach is required for employers in the WSIB-arena so as to draw on the expertise that is available to them, whether internally or externally, to effectively implement their risk containment/mitigation efforts. For larger employers, this would be a multi-disciplinary effort where representatives from safety, human resources, finance, legal, senior management, health services and disability management would come together to asses the risk associated with WSIB-related events and ongoing disabilities. This would also be an opportune time to not only discuss the individual WSIB claims and their corresponding risk, but to also assess and discuss the aggregate risk of new and old WSIB claims and how they form part of the employer’s financial risk profile, in general. This would also be the appropriate forum for assessing the aggregate risk flowing from the management of individual WSIB claims, and making strategic decisions on the basis of the wide-ranging perspectives proffered by the employer’s integrated risk management team. Without such an approach, employers are often exposed to unnecessary and excessive risk exposure and ensuing liability.
Conclusion
A great need exists for employers to develop effective risk management practices in relation to WSIB-related disabilities sustained by their employees. Optimally, this would take on an integrated risk management approach where true risk would be precisely identified, assessed, and responded to in a proactive and sensible fashion. Any other or lesser approach would invariably lead to an increase in risk exposure for employers, thus contributing to a deficient corporate risk profile and undermining business competitiveness.
* Luke T. Petrykowski, B.Sc., LL.B., D.O.H.S. is a member of the Ontario Bar. [1] Where identified limitations do not exist following a work-related injury, such as the case where an employee does not provide a completed Functional Abilities Form to the employer in a timely manner, anticipated functional limitations (based on standard medical restrictions) should be used in the employer’s offer of modified work to an employee. For example, after a back-related injury occurs, the employer could and should immediately offer modified work to an employee within the following standard back restrictions: no heavy lifting, no prolonged sitting/standing/walking, no repetitive movement/bending/twisting of the back. This process would assist in mitigating against loss of earnings (LOE) benefits being paid under the WSIB claim, in the event that the modified work was found to be suitable by the WSIB and the employee declined to participate in this modified work program. [2] As of March 2008, the WSIB announced that the employers of employees who sustain work-related fatalities will not be eligible for experience-rating rebates. As such, the risk exposure for employers experiencing fatalities has now been considerably amplified, since it appears they will not only be charged the regular and already onerous WSIB claim costs associated with a fatality, but also experience the elimination of their experience-rating rebate, if they were otherwise eligible to receive it. This will have a disproportionate impact on employers in the construction industry, large-sized employers, and employers who have been in historically experience-rated rebate positions. The actual structure and mode of implementation of this change has yet to be explained by the WSIB. [3] In both the NEER and CAD-7 experience-rating programs, lost-time WSIB claims attract more onerous claim costs and financially deleterious impact for employers than WSIB claims classified as no lost-time (health care only). [4] This could include a situation where an employee is interested in not making a full recovery following a work-related injury so as to increase the probability that the WSIB will recognize a permanent impairment. In most respects, this opens the door to the employee receiving labour market re-entry (job retraining and other benefits) in the event that the employer can no longer provide suitable work to the employee. The criteria for LMR eligibility is prescribed in section 42 of the Workplace Safety and Insurance Act. [5] Such evidence could be used to limit ongoing entitlement at the WSIB, and/or reverse previous entitlement at the WSIB reconsideration level, WSIB Appeals Branch, or WSIAT. [6] This includes the significant potential for an employee to pursue a human rights complaint, and/or grievances or other actions if the employee was subsequently terminated from the employer’s employ. This may also include the involvement of the WSIB’s Re-Employment Obligations, which may or may not be applicable depending on the criteria explained in section 41 of the Workplace Safety and Insurance Act. [7] The correctness of SIEF’s application or non-application in a WSIB claim, and its quantum (ranging from 0% to 100%) should be closely reviewed by the employer as soon as feasible in the life of a WSIB claim and before any decision on permanent accommodation is made. This should afford the employer with a timely opportunity to pursue the issue of SEIF on a reconsideration or appeals basis, if and when necessary. [8] It should be pointed out that these considerations specifically apply to Schedule 1 employers whose applicable experience-rating program is NEER. Schedule 2 employers are individually liable for the costs of WSIB claims (often until an employee is 65 years of age in permanent impairment scenarios) and are not insulated by a finite window of risk liability related to experience-rating. Hence, unique risk management considerations apply to Schedule 2 employers. [9] Optimally, an employer would restore the employee’s pre-injury earnings basis under such circumstances so as to deny the possibility that the employee would be entitled to a WSIB LOE top-up. This is particularly important in the final year of a WSIB claim under NEER, as it would potentially result in the claim being “inactive” and prevent it from being coded as “active”. For many employers, this would result in a significant cost mitigation as compared to a situation where a partial LOE top-up was being paid during this final year. The exact cost consequences of the presence or absence of a partial LOE top-up is highly variable and multi-factorial and hence needs to be assessed on a case-by-case basis. This further underlines the importance of thoroughly understanding the mechanics of the applicable WSIB experience-rating program.
The Workplace Safety and Insurance Board (WSIB) recently announced a modification to its two experience rating programs that have a rebate and surcharge feature. These are CAD 7 for construction employers, and NEER for all other employers.[1]
Effective March 10, 2008, if a company is responsible for a workplace fatality, they won’t be eligible for a rebate from the WSIB in that year.
It goes on to state:
Employers are considered responsible for the health and safety of their employees, including in the event of a fatality. Exceptions may be considered on an individual basis. All decisions made by the WSIB are appealable.
The modification was made in the context of an experience rating review that will take place over the next 12 months.
Experience rating programs have been in place in various versions since the 1980s. They are designed to recognize an employer’s accident performance in terms of cost and frequency of injuries. This is reflected by s. 83 of the Workplace Safety and Insurance Act, 1997 which authorizes experience rating, and describes its purpose, and the two criteria on which the programs must be based:
83. (1) The Board may establish experience and merit rating programs to encourage employers to reduce injuries and occupational diseases and to encourage workers' return to work.
(2) The Board may establish the method for determining the frequency of work injuries and accident costs of an employer.
(3) The Board shall increase or decrease the amount of an employer's premiums based upon the frequency of work injuries or the accident costs or both.
As part of a no fault insurance system, experience rating has not been concerned with why the accident happened, or what type of accident it was, only that it occurred, and its cost to the WSIB. It is a typical insurance industry concept.
There are two kinds of experience rating models. The first is prospective illustrated by the MAP program. Premiums in MAP are modified prospectively based primarily on frequency. An employer, who has taken steps to reduce accidents, has its premiums for the following year lowered by a specified percentage. Employers, who have accidents, have their premiums increased for the following year. There are no surcharges or rebates.
The other model is retrospective experience rating illustrated by NEER and CAD 7. In this model, employers are charged a premium that is adjusted based on the accident frequency and costs of previous years. In NEER, an employer carries the costs of an accident for three years. If an employer has no accidents or if an employer reduces their costs by providing an effective early and safe return to work program, the employer receives a rebate based on a complex formula established by the WSIB. The rebate is not a bonus or a reward; it is, in effect, the actual, adjusted premium that should have been paid in the year prior to which the rebate was received. If an employer has high accident costs in a year, his premium is retroactively adjusted by being assessed a surcharge in the following year.
In other words, a surcharge levied this year means the employer paid too low a premium last year, and a rebate means it paid too high a premium. A rebate of $100,000 to an employer means the employer was assessed $100,000 too much by the WSIB in the previous year, and reflects a return of the employer’s own money by the WSIB. The traumatic death penalty will thus deny an employer a rebate of its previous year’s premium overpayment for a period when the employer had a good accident cost record.
The penalty or forfeiture announcement is unclear in how it will be applied. Although it states exceptions will be considered, it is silent on what these exceptions will be. For example, will an employer forfeit a rebate if the worker was killed by another employer’s negligence, and there is a transfer of costs? Will the negligent employer forfeit its rebate? Will both employers forfeit their respective rebates? What if the worker was killed by a third party as a result of a motor vehicle accident?
The announcement also talks in terms of employer responsibility. It is unclear how responsibility or fault will be determined in what historically has been a no fault system, and an insurance system that has only been concerned with the entitlement to benefits and the payment of premiums without concern for traditional notions of fault. Fault issues were left to other regulatory systems, such as occupational health and safety enforcement and prosecutions, and more recently the criminal justice system.
The WSIB indicates that decisions about a rebate forfeiture can be appealed. However, the WSIAT has no jurisdiction over the experience rating formula:
183(2) For greater certainty, the jurisdiction of the Appeals Tribunal under subsection (1) does not include the jurisdiction to hear and decide an appeal from decisions made under the following Parts or provisions:
4. Subsections … 83(1) and (2) and …
The WSIB states that the forfeiture of a rebate is a new design feature for experience rating. As such it would seem to be part of the method for determining the frequency of work injuries and accident costs of an employer, and therefore not appealable to the WSIB. However, if an employer can successfully argue that the forfeiture is a decision that results in a decrease [of] the amount of an employer's premium, then it may be appealable as a s. 83(3) decision.
This newest change to experience rating will hopefully be fleshed out in the months to come, perhaps as part of the overall experience rating review. All employers should carefully watch this process, and any developments that flow from it.
* Michael Zacks is Acting Director and General Counsel at the Office of the Employer Adviser, (416) 314-8735. The opinions expressed in this article are solely his, and not to be attributed to the Ministry of Labour, or any other agent of the Government of Ontario.
[i] The other program is called the merit adjusted premium or MAP program, which does not have rebates or surcharges.
Robert A. Boswell* The Workplace Safety and Insurance Appeals Tribunal recently released Decision No. 1581/06. The decision was preceded by an interim decision, No. 1581/06I. The decision was rendered by sole Vice Chair Ryan, who conducted the entire appeal by way of written submissions.
The case involved a retired carpenter of a school board. The worker was diagnosed with mesothelioma on August 6, 2003. He died due to this illness on October 27, 2004. Initial entitlement to benefits under the Workplace Safety and Insurance Act, 1997 was allowed by the Workplace Safety and Insurance Board (“WSIB”) as causally related to exposure to friable asbestos fibres in the course of his employment. The initial entitlement was not in issue before the Appeals Tribunal.
At the time of diagnosis, the worker was 81 years of age. He had retired from his employment at the age of 65. No evidence was presented that the worker had been employed since his retirement from the school board, and no evidence or submission was made on the worker’s behalf that he intended to continue to work following his retirement. As a result, at the time of the onset of his illness, he was not earning wages as a result of employment.
On the allowance of his claim, the WSIB adjudicator granted the worker full loss of earnings benefits from the date of his diagnosis until the date of his death. The WSIB concluded that the worker was entitled to these benefits, as a result of the application of section 43(1)(c) which states:
43. (1) A worker who has a loss of earnings as a result of the injury is entitled to payments under this section beginning when the loss of earnings begins. The payments continue until the earliest of…
(c) two years after the date of the injury, if the worker was 63 years of age or older on the date of the injury.
The Employer objected to the decision on the basis that while the worker was older than 63 on the date of the injury and while he was indisputably disabled as a result of his illness from August 6, 2003 until October 27, 2004, he did not have a loss of earnings. The Employer’s position was that because the worker was long retired and had no employment earnings at the time of the “date of injury”, then it could not be said that he was entitled to loss of earnings benefits under s. 43(1)(c).
As the worker did not have wages at the date of injury, for the purpose of the loss of earnings benefit the WSIB adjudicator established “average earnings” on the basis of the annual earnings of a “fully qualified worker” in the same occupation as the worker. That is, the adjudicator looked to the wage rate of a carpenter for the same employer as at August 6, 2003. On that basis, the adjudicator determined the loss of earnings should be payable to the worker as though he had been employed on a full-time basis in his former occupation prior to the date of injury, and that he was earning income as any other fully qualified worker.
In support of the approach to set the level of average earnings, the adjudicator relied upon WSIB Operational Policy Manual, Document No. 18-02-02, which provides that, for long-latency occupational disease claims, average earnings are based on the greater of annual earnings of a fully qualified worker at the time of diagnosis or the worker’s annual earnings in the 12 months prior to the accident.
The Employer argued that this policy document did not apply to the specific circumstances of the present case. In particular, the Employer argued that the policy could not be taken to apply to long-retired workers who had no earnings for many years and had no demonstrated intention to return to the workforce prior to the onset of the illness. The Employer also argued that, in any event, the policy document was inconsistent with section 43 of the Act as it purported to compensate a worker for a loss of earnings when the worker, in fact, had no earnings prior to the date of injury.
The WSIB adjudicator also granted periodic death benefits to the worker’s surviving spouse pursuant to section 48 of the Act. The fact that such benefits were allowed under the Act was not in dispute. In setting the quantum of the periodic payments to the spouse, the adjudicator again relied on the average earnings of another fully qualified worker employed by the employer at the date of injury (i.e. in August 2003).
The Employer also objected to this decision. The Employer relied upon section 48(3) of the Act which states that if the worker’s earnings are lower than the minimum insurable earnings, then for the purpose of calculating the periodic benefit under section 48 they shall be deemed to be set as the minimum insurable earnings. Since the worker had no earnings on the date of injury, the Employer argued that the monthly pension to the surviving spouse should be based on the minimum insurable earnings on the date of injury.
The Employer’s appeal was rejected by the Appeals Resolution Officer who followed the same reasoning as the claims adjudicator, and interpreted section 43(1)(c) and OPM 18-02-02 in a manner consistent with allowance of loss of earnings benefits and payment of the spousal pension as though the worker’s earnings were those of another actively employed worker in the same occupation as at August 2003.
The Employer appealed further to the Appeals Tribunal. In view of the fact that the worker was no longer living, then with the consent of all parties the appeal proceeded on the basis of written submissions only. In addition to the submissions of counsel for the employer (Rob Boswell) and counsel for the Estate (former Appeals Tribunal Vice Chair Michael Farago), Vice Chair Ryan invited submissions from the WSIB and from Tribunal Counsel. These were provided respectively by WSIB Senior Legal Counsel Elizabeth Brown and Tribunal Counsel Gillian Shaw.
Ms. Brown, on behalf of the WSIB, noted that OPM 18-02-02 did not, in fact, apply to the circumstances of the appeal. Most particularly, she noted that the policy document did not apply to circumstances involving a retired employee who had, as in the present case, been retired for a lengthy period of time prior to the onset of his disease. She noted, however, that the practice of the WSIB had been to allow loss of earnings benefits in similar claims in the manner in which the worker’s benefits had been allowed. She stated, further, that there was currently no operational policy which addressed the question of whether a retired worker who had no earnings at the date of injury is entitled to loss of earnings benefits. Ms. Brown submitted that a decision respecting entitlement should therefore be made on a case by case basis, considering the specific facts and circumstances of each case.
Ms. Shaw, on behalf of Tribunal Counsel, noted the submissions of Ms. Brown and agreed that each case should be assessed on its own particular set of facts. She submitted, through a number of examples, that a worker who had been long retired with no income since the date of retirement would not meet the threshold for entitlement under section 43 in that the worker would not have suffered a loss of earnings as a result of the injury or illness. She did suggest, however, that there may be circumstances where the worker was able to demonstrate an intention or expectation to return to the workforce, but for the illness or injury, and in such a case, benefits under section 43 may be justified depending on the facts of the case. She also submitted that in the absence of earnings on the date of injury, section 48(3) required that the surviving spousal pension should be based on the minimum insurable earnings.
Mr. Farago, in reply to all submissions, argued that the practice of the WSIB (as noted by Ms. Brown) should be followed. He noted that the impact of a ruling adverse to the Estate would materially affect the surviving spouse of the worker, as she had come to rely on that income from the time of the initial adjudication. He also argued that allowance of the employer’s appeal could have a very adverse effect on other workers in similar circumstances, including those who had come to expect that benefits would be allowed in the same manner that the worker received benefits in this case.
Employer’s counsel argued that the Appeals Tribunal was bound to interpret the Act properly and in accordance with the law, and not to make a decision based on the potential adverse impact on the estate of the worker or on other workers in other cases. He argued that the question of whether the Act was or was not fair in these circumstances was a matter for the Legislature and not the Appeals Tribunal. In his main submissions, he argued that the situation of a worker in the circumstances of the worker in this appeal were different than those of a worker who was not retired at the time of the onset of a disease. The worker in this case was in receipt of a retirement pension that included survivor benefits for his spouse, that he was in receipt of Canada Pension Plan benefits and that these also included survivor benefits for his spouse. The Employer’s counsel argued that even on a policy basis, there was good reason to consider that a long retired worker was in a different position and that entitlement to loss of earnings benefits should therefore be interpreted strictly in accordance with section 43(1)(c).
Vice Chair Ryan allowed the Employer’s appeal, adopting the reasoning set out in the various submissions of the Employer, the WSIB’s Senior Legal Counsel and Tribunal Counsel. Vice Chair Ryan noted that as a result of the policy of the WSIB regarding overpayments arising out of appeal decisions, it is expected that the overpayment of benefits paid to the worker’s Estate and to the surviving spouse during the period from initial allowance until the decision of the Appeals Tribunal were to be forgiven.
The case is the first of its kind decided by the Appeals Tribunal. It involves an important analysis of the application of section 43(1)(c) and the quantum of a surviving spouse’s pension under section 48. It is of particular interest to cases involving long latency occupational diseases, which sometimes arise in circumstances where the onset of disease follows well after the worker’s retirement from the workforce.
The case also includes a useful discussion of the general application of section 43(1)(c) in circumstances involving retired workers.
* Robert A. Boswell is a partner of Craig Boswell McDermot and acted as counsel for the Employer in this appeal, (705) 734-2911.
Editor's note: Due to the nature of this decision, we invite comments on the context and substance of this case for possible inclusion in a future issue.
Volume 12, No. 2 - April/Avril 2008 
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