Decision #100/05 - Type: Workers Compensation

Preamble

An Appeal Panel hearing was held on May 18, 2005, at the request of an advocate, acting on behalf of the worker. The Panel discussed this appeal on the same day.

Issue

Whether or not the worker's average earnings should be used when calculating her loss of earning capacity; and

Whether or not the worker's average earnings should be $299.30 per week.

Decision

That the worker's average earnings should be used when calculating her loss of earning capacity; and

That the worker's average earnings should be $299.30 per week.

Decision: Unanimous

Background

In August 2000, the worker submitted a claim to the Workers Compensation Board (WCB) for difficulties she experienced with her vocal chords/tonsils that she related to her employment activities as a swimming instructor/guard. The claim for compensation was accepted by the WCB and benefits were paid to the worker.

In January 2003, an Appeal Panel determined "The weight of medical evidence suggests that the claimant continued to suffer from vocal cord edema of a more or less chronic nature from September 2001 onward. This continuing condition has prevented her from returning to her full pre-accident duties of lifeguarding and instructing. As a further consequence of her condition, the claimant has experienced a loss of earning capacity since that time."

On July 11, 2003, primary adjudication determined that the worker was not entitled to partial wage loss (PWL) benefits for the periods September 4, 2001 to September 6, 2002 and September 9, 2002 to the end of August, 2003. However, the worker was advised that further information would be requested from her employer in September 2003, to recalculate her wage loss entitlement from September 9, 2002 to the end of August 2003. On September 23, 2003, the worker appealed the July 11, 2003 decision to Review Office.

On February 27, 2004, Review Office considered all the file information which included a submission from the employer dated January 30, 2004 and a further submission by the worker dated February 24, 2004. Review Office concluded that the worker's average earnings should be used in calculating her loss of earning capacity and that the worker's average earnings were $299.30 per week. Review Office also requested that primary adjudication revisit the worker's loss of earning capacity beginning September 4, 2001.

On May 31, 2004, primary adjudication informed the worker that she was entitled to a PWL for September 4, 2001 to December 31, 2001 of $228.30 which was based on 17 weeks at $13.34 bi-weekly (using average earnings of $299.30 per week as noted in the previous Review Office decision). The worker was advised that she was not entitled to PWL benefits for 2002.

On October 22, 2004, primary adjudication informed the worker that after reviewing income tax information from 2003, she was not eligible for PWL benefits.

In an application to appeal dated November 15, 2004, the worker appealed Review Office's decision of February 27, 2004.

Reasons

The Panel was asked to consider two issues. The issues involve the calculation of the worker's loss of earning capacity and average earnings.

The first issue was whether or not the worker's average earnings should be used when calculating her loss of earning capacity. The Panel found that the use of average earnings is consistent with The Workers Compensation Act (the Act) and fairly represents the worker's loss of earning capacity.

The second issue was whether the worker's average earnings should be $299.30 per week. We found that the worker's average earnings are properly calculated at $299.30 per week.

At the commencement of the hearing, the parties confirmed that the issues were correctly identified. The amount of the worker's earnings after the accident and the amount of wage loss benefits payable to the worker were not issues before the Panel.

Applicable Legislation and Policy

The Appeal Commission and its panels are bound by the Act, regulations and policies of the Board of Directors. Subsections 40(1) and 45(1) are directly applicable to the issues in this case. There are other provisions of the Act which affect the calculation of average earnings and loss of earnings capacity that are not directly at issue in this appeal, for example subsection 40(3) dealing with net average earnings. WCB Policy 44.80.10.10, Average Earnings, is directly applicable to this appeal.

Argument at the Hearing

The worker attended the hearing with an advocate who made a submission on her behalf. The employer was represented by its Compensation Coordinator who made a submission on behalf of the employer. Both representatives provided thoughtful and thorough submissions on the issues.

The worker's representative explained that when the worker returned to work, she was only able to work as a lifeguard and not a swimming instructor. This reduced the hours of work that were available to her. The worker claimed wage loss benefits and disagreed with the formula utilized by the WCB to calculate her loss of earnings. It is the worker's position that the formula used by the WCB does not properly reflect her loss of earnings. Her representative suggested the use of an alternate formula based upon the worker's "regular earnings" rather than average earnings which are based upon her past income. He referred to Board Policy 44.80.10.10 which directs the WCB to use the formula which best represents the worker's loss of earnings.

With respect to the calculation of "regular earnings", the worker's submission states
44. The Appeal Panel is respectfully urged to rule that [the worker's] actual regular earnings from her selection schedule(job bid) be used to determine her loss of earnings in accordance with Policy 44.80.10.10…
The worker testified that her regular earnings should have been calculated as 33.25 hours per week. When asked to explain this calculation she replied:

"It's not would have. When I went in to select my hours, could I have taught that's what I would have been working, but because I was medically restricted - like that's what being used in this yearly average now."

The employer's representative referred to subsection 40(1) of the Act which he submits compels the WCB to use average earnings in order to calculate the loss of earning capacity. He noted the reference in the Act to "earnings before the accident" and submitted that the WCB was required to calculate the worker's average earnings using her earnings before the accident. The employer submits that Review Office used the most beneficial employment period to determine the worker's average earnings. The representative urged the Panel to deny the appeal.

Analysis

The issues in this case revolve around the worker's wage loss benefits. Specifically around whether the worker's potential earnings from the shift selection process should be used to determine her loss of earning capacity or whether her average earnings based upon actual earnings before the accident should be used. We found that the worker's average earnings, based on her actual earnings before the accident, should be used when determining the worker's loss of earning capacity. We also found that the WCB used the formula that best represents the worker's loss of earnings as provided in WCB Policy 44.80.10.10.

We make this decision in accordance with subsection 40(1) of the Act which provides that a worker's loss of earning capacity is the difference between the worker's net average earnings before the accident and the net average amount the worker is capable of earning after the accident.

At the hearing the worker and her representative urged the Appeal Panel to use a formula based upon the hours that the worker could have selected through the shift selection process, if she was able to select both guarding and instructing duties. Although the worker's representative referred to this as "regular earnings" we note this would involve the use of future potential earnings in the formula or as it is referred to in the Act, probable earning capacity. There are provisions of the Act which permit the use of probable earning capacity in the wage loss formula but these are exceptions and are only applicable to specific cases. These are outlined in subsections 45(3) and (4) and apply to cases involving apprentices and youthful workers where age impacts average earnings. The Panel found that this case does not fall within subsections 45(3) or (4).

While we appreciate the worker's position that her future earnings would have grown beyond her recent earnings history, we find that the Act and policy are clear in how they look backward at historical earnings to establish average earnings, rather than a process that estimates future earning potential. This process is used for all workers in the system, except for the limited cases noted above.

Given the above, we find the workers average earnings should be used when calculating her loss of earning capacity.

The second issue before the Panel was whether the worker's average earnings have been properly calculated as $299.30 per week. We found that the average earnings were properly calculated and should be $299.30 per week.

Subsection 45(1) provides that "The board shall calculate a worker's average earnings before the accident on such income from employment and employment insurance benefits, and over such period of time, as the board considers fair and just…"

WCB Policy 44.80.10.10 incorporates this direction in the definition of "yearly average earnings" which provides that "To determine a worker's true loss of earnings, the WCB will generally use documentable employment data from any consecutive 12 month period during the one or two years before the compensable accident." However, a shorter period can be used where it is considered fair and just. In this case, Review Office found that a shorter period was appropriate and was the most advantageous to the worker. We agree with this determination which is outlined in the February 27, 2004 Review Office decision:
"Review Office obtained additional information regarding the claimant's earnings in the year prior to her surgery. It clearly showed an increase in her earnings beginning in March 2000 when she made herself available for more work. Given this, Review Office considers that the claimant's average earnings should have been calculated based on her earnings for the pay period ending March 11, 2000 to September 27, 2000. That amounts to $299.30. Review Office considers it to be the claimant's average earnings."
The worker's appeal is declined.

Panel Members

A. Scramstad, Presiding Officer
A. Finkel, Commissioner
M. Day, Commissioner

Recording Secretary, B. Miller

A. Scramstad - Presiding Officer
(on behalf of the panel)

Signed at Winnipeg this 23rd day of June, 2005

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