The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

This appeal deals with a worker’s alleged fraudulent misrepresentation to the Workers Compensation Board (“WCB”) about his level of functioning and receipt of income.

On August 11, 2004 the worker suffered an injury to his lower back that was accepted by the WCB. The worker complained of continuing symptomotolgy and remained off work. He was eventually put into a work hardening program in 2005 with the aim of returning him to his pre-accident employment. At about this time, the WCB special investigations unit (“SIU”) investigated the worker and came to the conclusion that the worker was surreptitiously working at his own construction business. Based on this investigation, the WCB terminated the worker’s benefits on October 31, 2005, retroactive to June 4, 2005 (the date of the first surveillance), and demanded repayment of the overpayment. These decisions were upheld at Review Office in a decision dated April 21, 2006. It is this decision that the worker appealed to the Appeal Commission.

A hearing was held on October 17, 2006. The worker appeared and provided evidence. He was assisted by an interpreter and his daughter. After the hearing, the panel requested the recording secretary to write to the Provincial Companies’ Office and the worker’s family physician for further information. The information was obtained and provided to the worker. The worker provided comments on this additional information on November 30, 2006. The panel then met on December 18, 2006 to discuss the appeal.

Issue

Whether or not the worker is entitled to wage loss benefits after June 4, 2005;

Whether or not the worker is overpaid wage loss benefits; and

Whether or not the worker must repay the overpayment.

Decision

That the worker is not entitled to wage loss benefits after June 4, 2005;

That the worker is overpaid wage loss benefits; and

That the worker is not required to repay the overpayment.

Decision: Unanimous

Background

Reasons

The worker is an immigrant whose third language is English. He has worked in the construction industry most of his life and had formed his own company (the “Company”) with his brother who is also in the construction business. His brother also owns his own family business with his son who the worker was working for when he injured his lower back on August 11, 2004.

As stated in the preamble, this appeal deals with the nature of the worker’s dealings with the WCB. The WCB has essentially characterized them as fraudulent. It considered that contrary to the worker’s assertions that he had not recovered from his compensable injury, he was surreptitiously working and earning money through the Company. There are therefore two essential points to this appeal: the worker’s physical condition as at June 4, 2005, and the worker’s business activities after his compensable injury.

Background

The Worker’s Physical Condition

On August 11, 2004, the worker suffered an acute L5 strain to his lower back when he was shovelling gravel.

At the time of this injury, the worker was suffering from pre-existing degenerative disc disease, as evidenced by lumbosacral spine x-rays taken August 17, 2004 that were compared with previous x-rays of August 1999:

“The previously noted spondylolysis of L5 is partially obscured by degenerative changes in the facet joints at this site. There is now slight anterior displacement of L5 on S1. There is slight disc space narrowing at L3-L4 with subchondral sclerosis and osteophyte formation. Osteophytes are seen at other levels. The findings are consistent with degenerative disc disease.

IMPRESSION: Degenerative changes as described that have progressed since the previous x-ray. There is spondylolysis of L5. There is slight malalignment at L5-S1 as described.”

A CT scan taken on November 4, 2004 confirmed the extent of the degeneration:

“…At L4-5, there is shallow posterior disc bulging without focal herniation, spinal stenosis or nerve root compression. Degenerative changes are present involving the right facet, causing mild bony foraminal stenosis. The left exit foramina is patent.

There are bilateral pars interarticularis defects at L5, resulting in mild Gr. 1 anterolisthesis of L5 on S1. There is no evidence for disc herniation, central or foraminal stenosis at this level.”

This radiologic evidence was the basis for a WCB medical advisor’s opinion that the August 11, 2004 accident only caused the worker an aggravation to his pre-existing facet arthropathy.

As the worker continued to be symptomatic, his family physician referred him to a sports medicine specialist who saw him on January 7, 2005. The sports medicine specialist only noted mechanical back pain; there were no findings of radicular pain or muscle spasm. He concurred with the family physician that it was unlikely that the worker would be able to return to work in construction given his condition. He recommended sedentary work with restrictions of lifting less than 20 pounds with no lifting below the waist, and avoiding repetitive flexion and extension.

The WCB medical advisor examined the worker himself on January 10, 2005. He noted sacroiliac joint dysfunction but thought that some of the worker’s pain might be accounted for by his facet arthropathy. He outlined physical restrictions of no prolonged sitting, standing, or walking and no bending, stooping or crouching. He also referred the worker to a chiropractor who saw the worker on January 31, 2005. The chiropractor’s diagnosis was lumbosacral mechanical back pain and osteoarthrosis. He treated the worker with chiropractic manipulation for several weeks without any change in the worker’s condition.

The worker was then referred to a six week work hardening program. The file notes indicate that the worker attended daily and put in an excellent effort. However, although he made some progress, he plateaued relatively quickly and remained pain focussed. In June 2005, he told the physiotherapist that he had decided to retire in October 2005 when he was eligible for pension. He was discharged without having reached a point where he could return to his pre-accident employment.

The worker did apply for Canada Pension retirement benefits which he began receiving in October 2005.

Video surveillance was taken of the worker in May, June, July and August 2005. The video surveillance shows the worker driving and generally moving about. It also captures construction equipment stored in the worker’s garage, the worker driving to a construction site, and the worker unloading equipment from the back of his truck, including two wheelbarrows. A WCB medical advisor reviewed the video surveillance in October 2005. She concluded that on the basis of the worker’s recorded activities, he was fit to return to work. She added:

“The video clearly shows he is capable of lifting (wheelbarrows x2 – out of the back of his truck, boards, shovel, groceries etc…), maintaining a bent position (to sweep the back of his truck, cycling etc) & repetitive bending (to empty construction materials from the back of his truck).

At no time on the video were any pain behaviours observed (no grimacing, stretching, rubbing his back, etc). He demonstrated full, fluid [range of motion].

The claimant may have ongoing pain, but from the video it does not limit his function. It is also more likely to be related to his [pre-existing condition] than effects of the [compensable injury].”

At the hearing, the worker disputed that his activities recorded on surveillance proved that he could return to work. He explained that all of his activities were within the restrictions provided by his medical practitioners. He also explained that although the wheelbarrows look heavy, he never lifted them; rather he pulled them off the truck and lowered them to the ground.

The worker further says that he still has not recovered from his August 11, 2004 accident. His condition remains unchanged from 2005 and he continues to see his family physician.

At the hearing, the panel asked the worker’s family physician about his progress since 2005 and in particular diagnostic tests done since that date and the family physician’s opinion about the worker’s condition.

A copy of an October 10, 2006 CT scan of the worker’s lumbar spine was provided to the panel. This CT scan reveals, in particular, at the L4-5, a degenerative disc vacuum, disc narrowing, a shallow disc protrusion and mild facet osteoarthritis on the right and at the L5-S1, bilateral pars defects with grade 1 spondylolisthesis and minor facet osteoarthritis.

The family physician’s opinion about the worker’s condition was stated in his November 2006 reply to the Appeal Commission’s request for additional information:

“With respect to diagnosis and prognosis, I am of the opinion [the worker] is suffering from persisting mechanical low back pain, primarily related to degenerative disc and facet joint disease…”

At the hearing, the worker testified that he has never returned to employment in any capacity.

The Worker’s Business Activity

As stated above, the worker has been in the construction industry for most of his life. The same applies to the worker’s brother, his brother’s son, as well as the worker’s son.

When video surveillance was done on the worker, he was seen storing and moving construction equipment and visiting construction work sites. This footage apparently raised suspicion at the WCB as to the worker’s level of functioning and his involvement in the construction industry and the Company.

The WCB investigated the worker’s business involvement and found the following information:

• A computer site and the better business bureau listed the Company at the worker’s home address but at a different phone number;
• The yellow pages listed the Company at the worker’s home address but at a different phone number. The brother is listed as the principal of the Company;
• Company signage in front of a customer’s house listed the worker’s first name and the different phone number;

• An investigator posing as a potential customer received a call from the worker for an estimate. The worker did measurements for the work but advised the investigator that he no longer did the work himself; he hired other people. Interestingly, the estimate prepared by the worker indicates the address at his brother’s home address and not his own.

The SIU thought that this information provided a good basis to doubt the worker’s credibility with the WCB. It also suspected that the worker had received post accident earnings that he had not disclosed to the WCB. The case manager agreed and the worker was advised that his benefits were terminated retroactively and that he would have to repay the overpayment.

The worker attempted to explain the investigative findings to the WCB. This was done in several letters and a meeting with the SIU in March 2006.

The worker categorically denied that he was defrauding the WCB. He reiterated that he was no longer working. He had previously owned the Company but had transferred it to his brother in 2002. He was not sure why his brother had not taken off his name or address in the advertising but assumed that it was for cost reasons. Although he was no longer involved in the business, he did help his brother in several ways:

• he stored his brother’s construction equipment in his garage as his brother did not have one;
• he helped his brother with estimates as his brother had had throat cancer and it was difficult for clients to understand him; his English was not as good as the worker’s English.

He stated that he did not receive any payment for helping his brother and invited the WCB to verify that.

He also explained that his son also works in construction and on one day, as recorded on video, he took his tools to his son’s worksite where he watched for a bit.

Copies of the worker’s income tax returns for 2001 to 2005 were provided to the WCB. The returns did not show any business income for the 2005 tax year. Conversely, it did show WCB benefits and RRSP income.

A file summary of the Company was requested from the Companies Office by the panel. It showed that the worker is not listed as a principal; his brother is. The worker explained that although he turned the Company over to his brother in 2002, his brother only did the change in ownership in 2004.

Worker’s Position

The worker says that he has not deceived the WCB. He maintains that he continues to be unable to work at his regular duties and that nothing on the video surveillance contradicts that. He also says that his ‘business’ involvement is innocent; it is to help his brother.

Analysis

As stated, there are three issues on appeal before this panel.

1. Entitlement to Wage Loss Benefits after June 4, 2005: the worker’s physical condition

To find that the worker is entitled to wage loss benefits after June 4, 2005, we must find on a balance of probabilities that the worker continued to suffer a loss of earning capacity as a result of his compensable injury. We are unable to make that finding.

The medical evidence is clear that the worker suffered from a pre-existing degenerative back condition and that this condition was aggravated by his lumbar strain on August 11, 2004.

Though the worker has continued to complain of low back pain, there is no medical evidence that this low back pain continues to be causally related to his August 11, 2004 workplace injury. Indeed, the medical reports in January 2005 all suggest that the worker’s symptoms were due to his pre-existing degenerative back condition. In our opinion, this opinion was confirmed by the work hardening program that ended on June 3, 2005, which noted that his inability to return to his pre-accident duties was due, in part, to his pain focus. This medical evidence is also confirmed by the CT scan in October 2006 and the worker’s family physician in his November 2006 report, as well as the worker’s own evidence that his condition has not changed since 2005.

On the basis of this medical evidence we find that by June 4, 2005, the worker was no longer suffering a loss of earning capacity as a result of his compensable injury. For this reason, we find that the worker is not entitled to wage loss benefits after June 4, 2005.

To be clear, we have considered the worker’s activities recorded on video surveillance as well as the WCB medical advisor’s opinion that these activities demonstrated that the worker had returned to pre-accident status. We disagree with this opinion. As stated previously, the most recent CT scan and medical report from the family physician document a worsening degenerative back condition with a concurrent decrease in functional capacity. Further, we find that the activities demonstrated on surveillance do not, to our mind, prove a full functional recovery. Indeed, the worker’s recorded activities do not exceed his physical restrictions. For these reasons, we did not place any weight on the surveillance. While we have made our finding about the worker’s entitlement to wage loss benefits on the basis of medical evidence alone, our finding about the surveillance is important with respect to the allegations of fraud, as explained more fully below.

2. Overpayment and Repayment: the allegations of fraud

As stated previously, the worker was advised on October 31, 2005 that his benefits were terminated immediately, retroactive to June 4, 2005 (date of the first recorded video surveillance) as it was considered that the worker was fit to return to his pre-accident duties. As the worker had already been paid benefits until that date, the worker was overpaid. The WCB advised the worker that it would recover the overpayment and that he would be contacted by the SIU regarding potential fraud for continuing to operate the Company without advising the WCB of any post-accident earnings.

Given our finding above that the worker did not suffer a loss of earning capacity related to his compensable injury after June 4, 2005, we also find that the worker has been overpaid. The issue is however, whether that overpayment should be repaid.

WCB Policy 35.40.50 provides that all overpayments will be pursued for recovery unless for example, they result from an adjudicative reversal, a reconsideration decision by the WCB or from a decision of the Appeal Commission, or recovery would create a financial hardship to the worker. Recovery will nonetheless be pursued where there is fraud, deliberate misrepresentation or withholding of key information affecting benefits entitlement.

In the case before us, we arrived at the same decision as the WCB regarding the worker’s entitlement to wage loss benefits but for different reasons. Therefore, for the purposes of WCB policy 35.40.50, our decision is an adjudicative reversal of the WCB’s decision. In accordance with the Policy the overpayment must not be pursued unless there is a finding that the worker committed fraud or made deliberate misrepresentations or withheld key information.

On the facts of this particular case, the appeal panel is not prepared to make a finding of fraud, deliberate misrepresentation or withholding of key information.

While the SIU investigation did show activity that was suspicious and could reasonably have led to further investigation, there is insufficient evidence to find, even on a balance of probabilities, that the worker was actually engaged in fraudulent activity. In particular, there is no evidence that the worker was working or that he received any money for services. Further, the worker provided a reasonable explanation for his activities, which we accept. That explanation has been consistent and it generally makes sense when one considers the familial reasons for the worker’s activities, the transfer of his business, and his brother’s delay in changing the Company advertising. The worker’s explanation has also been validated to a large extent by the absence of reported income on the worker’s income tax returns and the notice of change of principal on the Companies Office summary sheet.

Further, the investigation did not reveal any evidence of hidden money. Rather it showed that the worker lived in a relatively modest dwelling and dressed in a modest manner. The evidence at the hearing is that the worker has not accumulated any wealth or income and is having a difficult time making ends meet with his Canada Pension.

For these reasons, we find that the overpayment should not be pursued for recovery.

In summary, we find:

1. That the worker is not entitled to wage loss benefits after June 4, 2005;

2. That the worker is overpaid wage loss benefits; and

3. That the worker is not required to repay the overpayment.

Panel Members

L. Martin - Presiding Officer

Signed at Winnipeg this 25th day of January, 2007