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Putting fault back into a no-fault system

On June 13, 2008, the

Workplace Safety and Insurance Board

of Ontarioissued the “Fatal Claim Premium Adjustment” policy that

cancels rebatesearned

by employers in the case of a workplace fatality.

The WSIB’s new policy is anti-employer and arguably puts fault backinto a workers’ compensation system that has been based on a no-faultprinciple since its inception in 1914 under the Meredith principle. TheWSIB offered little explanation for this dramatic policy change, whichappears to have been implemented further to avoid media scrutiny and tofurther punish employers.

[Watch: Steve Mahoney discusses Experience Rating System]

The September 23, 2008 front page headline in the Toronto Star proclaimed “No cash for killer firms”. The Star went on to state, “the Workplace Safety and Insurance Board made the [policy] change after a Star investigation found the agency paid out millions of dollars in rebates, prompting a sweeping year-long review of the incentive program at the centre of the controversy.”

Despite the Star’s series of articles on the WSIB, one might hope that the agency would have a more principled basis for the policy than responding to media scrutiny as the basis for this dramatic and punitive policy change.

Although the Toronto Star was several months late in acknowledging the passage of the June 9, 2008 policy by the board of directors of the WSIB, for which it took credit, their inflammatory use of the phrase “killer firms” clearly encourages a fault-finding mentality.  

The new WSIB policy has injected fault into the longstanding, no-fault workers’ compensation system of Ontario. If this can happen in Ontario, which has a workers’ compensation system similar to every Canadian jurisdiction, then it can happen anywhere in Canada.

The policy reads as follows:

“In the year of a traumatic fatality claim, a premium increase, equivalent to the NEER or CAD 7 refund an employer is entitled to receive, is applied to the employer of the deceased worker.”

In other words, even though experience rating systems are designed and managed by the WSIB to encourage employers to reduce accident and injuries on the job, rebates will be revoked the year that a workplace fatality occurs. This new policy applies even though rebates are based on a three-year “rolling coverage” of the employer’s health and safety performance to the employer’s rate groups as determined by the WSIB experience rating.

This new policy, euphemistically titled the Fatal Claim Premium Adjustment, is a punitive intervention and departure from the long-established Experience Rating System by the WSIB. The Toronto Star article makes the point that “the WSIB will claw back the rebate regardless of whether the firm broke a safety law”. This is another disturbing part of the new policy. This aspect of the new policy is clearly contrary to s. 82 of the Workplace Safety and Insurance Act, which states:

82.  The Board may increase or decrease the premiums otherwise payable by a particular employer in such circumstances as the Board considers appropriate including the following:

1. If, in the opinion of the Board, the employer has not taken sufficient precautions to prevent accidents to workers or the working conditions are not safe for workers.

2. If the employer’s accident record has been consistently good and the employer’s ways, works, machinery and appliances conform to modern standards so as to reduce the hazard of accidents to a minimum.

3. If the employer has complied with the regulations made under this Act or the Occupational Health and Safety Act respecting first aid.

4. If the frequency of work injuries among the employer’s workers and the accident cost of those injuries is consistently higher than that of the average in the industry in which the employer is engaged. (1997, c. 16, Sched. A, s. 82)

The Act, empowering the conduct and policy making decision of the WSIB, specifically addresses compliance with the Occupational Health and Safety Act only in paragraph 3 regarding “first aid”. That provision does not appear to provide legislative authority for the new policy.  

Therefore, there is a serious question as to whether or not the WSIB overstepped its legislative authority in passing policy clearly designed to punish an employer the year that a traumatic fatality occurs even if there is no legal violation.

The policy will be imposed even though a Ministry of Labour investigation may conclude that the employer was not responsible for the cause of the accident and not in contravention of the provisions of the OHSA.  

Further, even if an employer is charged with a breach of the OHSA, relating to the fatality, guilt or innocence will likely not be determined in court for several years after the event and well after the earned rebate is revoked.

What happens if the employer is found not guilty? This may also result in the legal anomaly that when found “not guilty” of an alleged offence under the OHSA, the WSIB will apply a “premium adjustment” to the equivalent of the lawful refund that the employer has earned and the WSIB established. This result is arbitrary and inconsistent with the purpose of experience rating systems.

This new policy is clearly an attempt to punish employers that have workplace fatalities by imposing blame or fault in an otherwise no-fault compensation system.  

In my opinion, there is an argument that this punitive policy takes away an earned experience rating rebate from the WSIB due to a traumatic workplace fatality, that may clearly not be the fault of the employer, as a deprivation of fundamental justice.

In post-Charter cases where workers sought to have workers’ compensation legislation declared unconstitutional because it took away their right to sue, appeal courts in Canada have consistently held that workers’ compensation system is a no-fault compromise that is reasonably justified in a free and democratic society.  

The historic trade-off involved workers receiving compensation, regardless of the cause or fault relating to their workplace injuries that prevented them from working. Employers gave up the right to blame a worker for the cause of their injury or death, in exchange for a legal bar against personal injury lawsuits arising from workplace injuries. This was the law and practice up until this new policy was adopted by the WSIB.

If the WSIB wishes to introduce fault into the workers’ compensation system, to be fair to all sides, then it puts at risk workers’ entitlement to benefits. If fault for accidents is relevant in the workers’ compensation system, the entitlement to benefits needs to be tied to worker negligence.  Workers who are negligent, and are injured or cause injury to others, would have to accept responsibility for their actions. Fairness requires a rethinking of this new WSIB policy.

Norm Keith is a partner at Gowling Lafleur Henderson LLP and leads its Occupational Health and Safety Worker’s Compensation practice. He is the only practising lawyer in Canada to achieve CRSP designation. You can reach him at Norm.Keith@gowlings.com

Mari-Len De Guzman

Mari-Len De Guzman is the former editor of Canadian Occupational Safety magazine and www.cos-mag.com.
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