Decision #129/02 - Type: Workers Compensation

Preamble

An Appeal Panel hearing was held on October 8, 2002, at the request of the employer. The Panel discussed this appeal on October 8, 2002.

Issue

Whether or not the employer must pay the late filing penalty of $1,951.37; and

Whether or not the employer must pay the late payment penalty of $375.50.

Decision

That the employer must pay the late filing penalty of $1,951.37; and

That the employer must pay the late payment penalty of $375.50.

Decision: Unanimous

Background

File information revealed that the employer was late in submitting its quarterly earnings report to the Employer Services branch of the Workers Compensation Board for the 2nd, 3rd and 4th quarter of 2000 and the 1st quarter of 2001. As a result, the WCB charged the employer $1,951.37 in late filing penalties and $375.50 in late payment penalties.

On December 13, 2001, the employer sent a memo to the Assessment Committee via facsimile requesting a review of its account. The memo stated:
“The company believes in the name of fairness late filing penalties should be reduced as they were assessed on a basis that does not correspond to the actual payroll. Please see attached schedule.

[Company’s name] over reported the payroll for 2000, and we were given a credit of $6335.32. This is significant as the actual WCB fees owing for 2000 were $7558.82. To be fair, as we did not owe these funds a credit should be issued to reduce the related late charges for amounts not owing.”
The Assessment Committee, in a decision dated January 25, 2002, noted that an arbitrary assessment had been calculated in each of the quarters that the firm was late, by taking one quarter of the previous years total assessable earnings and multiplying the result by 120%. It was the WCB’s procedure to adjust late filing penalties based on arbitrary assessments when the actual earnings are not reported. No adjustments can be made to the original late filing penalties, or the associated late payment penalties.

The Assessment Committee determined that the company was required to pay the late filing penalties and associated late payment penalties. In rendering its decision, the Assessment Committee referred to Section 86 of The Workers Compensation Act (the Act) along with regulation 242/92 and section 6(2) of the Act. The late filing penalty assessed against the firm was based on 10% of the assessment as was determined by the board. The Assessment Committee further stated:
“Also the board allows for relief of penalties and/or interest changes under policy 35.40.10. Enclosed you’ll find a copy of this policy. In order to quality for relief under this policy, your firm would have had to co-operate fully with the WCB. Our collection officer discussed the “payment and trust” method of resolving the issue with you. In response to this opportunity, the information on file indicates that you wished to challenge the WCB’s position and take us to court if need be. Therefore Assessment Committee has concluded that you did not co-operate fully with the WCB and therefore do not qualify for relief of penalties or interest charged.”
The employer subsequently appealed the Assessment Committee’s decision and an oral hearing was held on October 8, 2002.

Reasons

Section 86 of the Act authorizes the WCB to exact late filing penalties and late payment penalties. The amount of the penalty has been prescribed by the WCB in that portion of regulation 242/92, which deals with interest and penalties for failure to furnish statements. Specifically section 6(2) of the said regulation reads as follows:

“Subject to subsection (4), for the purpose of subsection 86(1) of the Act, the penalty under clause 81(1)(a), where the payroll return or other statement referred to in subsections 5(1) and (2) is not furnished to the board is 10% of the employer’s assessment, as determined by the board, for the years in which the estimate of the statement is required or requested by the board.”

The WCB can, in accordance with section 86(3) of the Act, relieve the employer in whole or in part from liability under section 86 where the WCB is “satisfied that the default was excusable.” WCB policy 35.40.10 outlines the criteria under which all or a portion of the penalties and/or interest charges may be relieved.

The employer admitted that the late filing and late payment penalties owed but questioned the amount of the penalties. The employer advanced the argument that in the name of fairness the late filing penalties should be reduced as it was assessed on the basis that does not correspond to the actual payroll. The payroll in 2000 was over reported and in fairness as these funds were not owing a credit should be granted to reduce the related late charges.

The employer’s senior corporate officer urged the Panel to “apply some common sense” because “sometimes the rules don’t make sense and don’t apply to every situation.” In his opening remarks, he stated:

“I think you will find that we probably were a reasonably good customer of WCB, and we’ve had some problems, which I can clearly understand that money is money and you have to pay interest. But the part I don’t understand is why there would be a penalty assessed when there isn’t anything that was done purposeful or that the track record showed is something that is a continuing problem, or there was a purposeful or continuing negligence.

I will say it to you again, you want to work just with the particulars here, but I don’t think that we have got a long history of not paying our bills and I ask you again to take that into consideration.”

A thorough review of the file clearly reveals that the employer has a very long history of either non-payment of premiums and/or late filing occurrences. The Act provides that we are bound by the policies of the Board of Directors. We find that the employer does not qualify for relief as provided for in the provisions of policy 35.40.10. Therefore, the employer must pay the late filing penalty of $1,951.37 and must pay the late payment penalty of $375.50. Accordingly, the employer’s appeal is hereby dismissed.

Panel Members

R. W. MacNeil, Presiding Officer
P. Challoner, Commissioner
M. Day, Commissioner

Recording Secretary, B. Miller

R.W. MacNeil - Presiding Officer
(on behalf of the panel)

Signed at Winnipeg this 13th day of November, 2002

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