The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The worker is appealing two decisions made by Review Office of the Workers Compensation Board ("WCB") which determined that his psychological difficulties were not compensable insofar as they related to matters resulting from the administration of his claim and that the method used to calculate his gross average earnings was correct. A hearing was held on June 28, 2011 to consider the two issues.

Issue

Whether or not psychological difficulties resulting from matters related to the administration of the claim are compensable; and

Whether or not the worker's gross average earnings have been correctly calculated.

Decision

That psychological difficulties resulting from matters related to the administration of the claim are not compensable; and

That the worker's gross average earnings have been correctly calculated.

Decision: Unanimous

Background

On April 10, 2008, the worker suffered a heart attack while moving boxes at work. His claim for compensation was accepted by the WCB and compensation benefits were paid to the worker while he underwent treatment for his heart condition.

On April 29, 2009, a WCB medical advisor reviewed the file information at the request of primary adjudication. The medical advisor noted that the worker was taking two medications that were related to depressive symptoms. The medical advisor stated that there was some medical evidence that depressive symptoms were common following a myocardial infarction [MI].

In a report to the family physician dated May 22, 2009, a psychologist noted that he initially assessed the worker in August 2008 and that his diagnostic impression was that the worker suffered from a mild adjustment disorder with depressed and anxious mood that was precipitated by the April 2008 MI. Following cognitive-behavioural therapy seminars, the worker was seen in November 2008 and his adjustment disorder was in full remission. At a follow up assessment on April 20, 2009, the psychologist reported that the worker started feeling depressed, irritable and anxious again in January 2009 because he felt his cardiac condition was deteriorating rather than improving. The worker reported that his main current stressors were finances and his cardiac concerns. The worker reported that he had been terminated by his employer and that the WCB was addressing the situation. The psychologist summarized his report by stating that: "[the worker] appears to have had a reoccurrence of his adjustment disorder with depressed and anxious mood precipitated by a lack of improvement and perhaps deterioration in his physical status and poorer stress test results. His anxiety and depressive symptoms are at mild-moderate levels and are presently being managed by antidepressants prescribed by his family doctor."

The file was again reviewed by a WCB medical advisor on August 12, 2009 in relation to reports from the treating physician and an internal medicine/cardiology specialist. The medical advisor indicated that the worker's depressive symptoms appeared to be related to the MI and therefore the antidepressant medication prescribed was appropriate.

On December 1, 2009, the internal medicine/cardiology specialist reported that the worker had his head in his hands with a severe headache and was hyperventilating while waiting in the examination room. The worker commented that "the stress is killing me." The consultant noted that the worker's depression was obviously disabling him. The consultant opined that the worker was not able to return to his previous occupation as a courier.

On January 20, 2010, the worker met with a WCB case manager to discuss his claim and current personal situation. The worker noted that he had information that may affect his benefit rate and was told to submit the information to the WCB. The worker also indicated that he had significant stress due to his health and financial situation.

On January 24, 2010, the worker provided the WCB with calculations which he felt produced a different weekly benefit entitlement than what the WCB was providing to him.

A WCB medical advisor reviewed the file on February 9, 2010. He indicated that a great deal of the worker's symptoms may be related to mood disorder.

In a February 1, 2010 report, the treating psychologist noted that as of mid-December, the worker was experiencing significant symptoms of anxiety and depression, rekindled cardiac-related fears, and hence a relapse in his adjustment disorder. It was recommended that issues surrounding the worker's employment status be resolved as soon as possible.

In a memorandum dated February 16, 2010, the WCB case manager called the worker to discuss his claim. The worker advised the case manager that his stress levels were increasing, and he was experiencing increased angina attacks. He attributed this to the WCB not being willing to designate him as totally disabled and not willing to rate him for a permanent partial impairment at this time. He felt that the PPI award would help with his financial situation.

Primary adjudication referred the case to a WCB psychological advisor to comment on the worker's psychological status. The advisor indicated on February 23, 2010 that based on the psychologist's report, the recent recurrence of the worker's depressed and anxious mood was related to his disagreement with the decision that he could return to work. The advisor stated: "…I would not consider a specific reaction to a claim-related decision to be medically accounted for by the workplace injury. As such, I would opine that his most recent episode of Adjustment Disorder is not medically accounted for by the workplace injury…Adjustment Disorder in general does not result in total disability and is not associated with total disability. It involves a relatively mild symptom profile in response to an identifiable stressor. In this claimant's case, the recent stressor appears to have been the WCB decision that he is employable, with which he does not concur."

In a note to file dated March 31, 2010, the case manager noted that according to the worker, his treating psychologist concluded that his adjustment disorder was not an ongoing issue.

The worker was interviewed by a WCB psychiatric consultant on June 16, 2010. The diagnosis outlined was an Adjustment Disorder with Mixed Anxiety and Depressed Mood, chronic, in partial remission; versus Anxiety Disorder-Not Otherwise Specified." The consultant noted that the worker continued to be agitated and upset, in some significant part by factors related to his concerns about WCB management of his file.

On June 21, 2010, the WCB's psychological advisor noted that the diagnosis outlined on June 16, 2010 was not related to the compensable diagnosis which was myocardial infarction. The symptoms were present in relation to the worker's financial stressors, psychosocial stressors in regard to his home life, finances and perceived stressors with the WCB.

On July 12, 2010, the treating psychologist outlined the view that the worker continued to suffer from substantial stress/anxiety and an undercurrent of depression/mood disorder that would benefit from ongoing counselling.

On August 10, 2010, a WCB sector services manager wrote the worker to advise that it was the WCB's position that he was not totally disabled and was able to participate in vocational rehabilitation and that no responsibility would be accepted for stress or other psychological conditions as related to the claim. This last decision was based on the opinion expressed by the WCB psychological consultant dated June 16, 2010.

The worker spoke with Review Office on August 16, 2010. He stated that he was appealing the WCB's decision to not accept responsibility for his stress or psychological condition. The worker noted that his stress/psychological status was due to multiple reasons which included the errors on his file, his financial status and the delays in decisions being made on his claim. The worker noted that he did not have any psychological issues prior to his heart attack.

On September 14, 2010, Review Office determined that the worker's psychological condition initially diagnosed in August 2008 was acceptable as it related to the worker's compensable myocardial infarction. Any psychological problems related to matters such as the worker's perception of his treatment by the WCB or related to the administration of his claim were not compensable. The decision was based on the reports on file from the psychologist dated February 1, 2010 and the WCB psychiatric advisor of June 16, 2010.

On September 15, 2010, a WCB case manager advised the worker that his average earnings were established based on his gross earnings for the year 2007 and were calculated at $1,126.65 per week (gross earnings $90,132.29 x 65% labour percentage = $58,585.99/52 weeks = $1,126.65/week). On September 19, 2010, the worker appealed the decision to Review Office stating that his wage loss benefits should have been calculated based on WCB Policy 35.10.50, Status of Workers, Independent Contractors and Employers.

On November 4, 2010, Review Office agreed with the calculation of the worker's gross average earnings rate as being $1,126.65 per week. Review Office indicated that the worker was considered a worker under the legislation and had coverage paid for by his employer in accordance with the Assessment Schedule for Contract Labour. The use of a labour percentage of 65% was correct. It noted that the worker's income tax documentation did not support that his labour percentage should be higher than 65%.

On November 9, 2010, the worker asked Review Office to reconsider its decision in regard to his average earnings calculation. On December 21, 2010, Review Office determined that the worker's correspondence did not contain new information that would warrant a change to its decision of November 4, 2010.

The worker appealed the decisions made by Review Office in September and November 2010 to the Appeal Commission and a hearing was arranged. The worker was self-represented at the hearing. Legal counsel appeared on behalf of the employer.

Reasons

Applicable Legislation:

The Appeal Commission and its panels are bound by The Workers Compensation Act (the “Act”), regulations and policies of the Board of Directors.

Under subsection 4(1) of the Act, where a worker suffers personal injury by accident arising out of and in the course of employment, compensation shall be paid to the worker by the WCB.

WCB Policy 44.10.80.40, Further Injuries Subsequent to a Compensable Injury (the “Further Injuries Policy”) applies to circumstances where a worker suffers a separate injury which is not a recurrence of the original compensable injury, but where there may be a causal relationship between the further injury and the original compensable injury. The Further Injuries Policy provides:

A further injury occurring subsequent to a compensable injury is compensable:

(i) where the cause of the further injury is predominantly attributable to the compensable injury; or

(ii) where the further injury arises out of a situation over which the WCB exercises direct specific control; or

(iii) where the further injury arises out of the delivery of treatment for the original compensable injury.

A further injury which occurs as a result of actions (for example, medical treatment) known by the worker not to be acceptable to the WCB is not compensable.

Section 45 of the Act deals with the calculation of average earnings. Subsection 45(1) of the Act provides:

Calculation of average earnings
45(1) 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, but the amount of average earnings shall not exceed the maximum annual earnings established under section 46.

WCB Policy 44.80.10.10 Average Earnings (the “Average Earnings Policy”) sets out the method by which the WCB initially establishes average earnings. The wage loss benefits which are paid to injured workers are based on the average earnings figure. The Average Earnings Policy sets out a number of different methods which may be used to calculate a worker’s average earnings, depending on the circumstances and states that: “The method used will always be the one that best reflects the worker’s actual loss of earnings.”

Subsection 60(2.1) of the Act gives the WCB the authority to deem workers and employers:

Deemed worker and employer
60(2.1) Notwithstanding the other provisions of this Act, where a person who is not a worker under this Part performs work for the benefit of another person, the board may deem the first person to be a worker, and the second person to be the employer of the first person, within the meaning of this Act; and the board may determine an amount that shall be deemed to be the earnings of the first person, for the purpose of this Part.

WCB Policy 35.10.50, Status of Workers, Independent Contractors and Employers, (the "Independent Contractor Policy") explains how the WCB determines a person's status as a worker, employer or independent contractor for the purposes of the Act. It also describes the circumstances in which the WCB will deem one person to be the worker of another.

Analysis:

Compensability of Psychological Condition

The first issue before the panel is whether or not psychological difficulties resulting from matters related to the administration of the claim are compensable.

In order for the worker’s appeal on this issue to succeed, the panel must find his psychological condition qualifies as a “further injury” under one of the three tests set out in the Further Injuries Policy.

The worker submitted that subparagraph (ii) of the Further Injuries Policy was applicable to his situation. As noted above, subparagraph (ii) provides that where the further injury arises out of a situation over which the WCB exercises direct specific control, the subsequent injury is compensable. The worker's position was that the WCB made multiple errors in the adjudication of his claim. While these errors were brought to the attention of the WCB, they were not rectified. It was submitted that as the WCB allowed the errors to remain in his file, the WCB should be held responsible for any repercussions that resulted from this action or non-action. The worker cited a report from his treating internal medicine specialist dated January 19, 2011 which stated: "Finally, I would also comment that I believe that the ongoing stress related to the lack of reconciliation pertaining to his claim, is undoubtedly adding to his ongoing coronary risk. His appeal deserves our respect and our attention."

The employer's position was that psychological difficulties arising from the administration of a claim is not something for which the Act provides compensation.

After considering the Act and the Further Injuries Policy, the panel finds on a balance of probabilities that the psychological difficulties resulting from matters related to the administration of the claim are not compensable.

The panel has given consideration to the argument put forward by the worker but we are unable to accept his interpretation of the Further Injuries Policy. In our opinion, the intent of subparagraph (ii) was to provide coverage for situations where the worker suffers a further injury as a result of engaging in an activity that the WCB had requested the worker to do. We refer to the administrative guidelines to the Further Injuries Policy which provide, in part, as follows:

ADMINISTRATIVE GUIDELINES

A subsequent accident or injury may be compensable if a relationship between the original compensable injury and the subsequent injury is established where:

2. The subsequent injury arises out of a situation over which the WCB exercises direct control. For example, the subsequent injury occurs while the worker is participating in a WCB sponsored activity or service (e.g., a work assessment or on-the-job training); or the subsequent injury occurs when the worker is travelling on transportation arranged and paid for by the WCB (e.g., to attend the WCB offices or a medical appointment arranged by the WCB).

All of the examples contemplate situations where the worker is acting at the request of the WCB. We do not feel that the circumstances of the present case are similar to the examples given in the administrative guidelines, as the worker's psychological condition has not resulted from his participation in a situation at the request of the WCB. We therefore find that subparagraph (ii) has no application in this case.

We have also given consideration to subparagraphs (i) and (iii) of the Further Injuries Policy, but find that they also do not apply to the worker's fact situation.

For the foregoing reasons, we find that the psychological difficulties resulting from matters related to the administration of the claim are not compensable. The worker's appeal on this issue is dismissed.

Calculation of Gross Average Earnings

The second issue before the panel is whether or not the worker's gross average earnings have been correctly calculated.

The worker's primary position was essentially that he should have been classified as an employee when determining his entitlement to wage loss benefits pursuant to the Act. The worker's request of the panel was:

2. If his status remained the same, then the amount of Income Tax and CPP payments be adjusted to reflect the actual percentage shown in his 2006 and 2007 Income Tax Returns retroactively.

The employer's position was that there was no basis in fact or law for the worker to be granted statutory wage loss benefits beyond the 65% standard labour portion of his contract. The worker was never an employee of the accident employer; he was an independent contractor who entered into an agreement for service with the accident employer. The WCB had no statutory authority to deem the worker an "employee" of the accident employer. The WCB had only the right to deem him to be a "worker" and provide the benefits flowing from that designation.

After reviewing the evidence as a whole and considering the submissions made by the worker and on behalf of the employer, the panel finds as follows:

• We do not accept the worker's submission that the nature of his working relationship with the accident employer was akin to being an "employee" and should have been classified as such. In the panel's opinion, the worker was not a person operating under a contract of service. We are of the view that the operating agreement between the worker and the employer was a contract for service, not a contract of service.

• We agree with the WCB's application of the Independent Contractor Policy to the worker's case. Paragraph 2(d) of the Independent Contractor Policy states:

The WCB also has the authority, pursuant to subsection 60(2.1) of the Act to deem someone who is not otherwise a worker under the Act - for the purposes of this policy someone who is an independent contractor - to be the worker of the principal who is then deemed to be the employer. The WCB may use this authority when the person performing the work exhibits some, but not necessarily all, of the characteristics of a worker and/or where there is a close economic and business relationship between the service provided and the principal.

Paragraph 4 of the Independent Contractor Policy further states:

In some cases, the relationship between the service provider and the principal exhibit some of the characteristics of a worker and some of the characteristics of an independent contractor. In those circumstances, if the service provider does not have voluntary coverage, the WCB will deem the service provider to be the worker of the principal and will deem the principal to be the employer. The following are examples of situations in which the service provider will ordinarily be deemed to be the worker of the principal, who will be deemed to be the employer:

- Owner/operators such as truckers and couriers will generally be deemed to be the worker of the principal if the equipment owned and operated or hauled by the service provider bears the logo of the principal.

- Service providers will be deemed to be the workers of the principal for whom they work exclusively or primarily.

In the present case, the worker is a courier who worked exclusively for the accident employer and who was required to have the employer's logo on his truck. The panel finds that the worker was properly classified by the WCB as a deemed worker of the accident employer, pursuant to subsection 60(2.1).

As an aside, the panel acknowledges the employer's submission that the panel's deliberations in this case ought to be constrained to the narrow issue before it, namely, whether or not the WCB, was correct in deeming this one unregistered independent contractor to be the worker of the employer, and we ought not to address the more general determination of the status of other individuals/ businesses providing services under the employer's operating agreements. We agree with this submission and confirm that the within decision is limited to the specific facts of this worker's case.

• With respect to the proper labour percentage to apply, the WCB applied 65% which is the rate applicable to couriers in the Labour Percentage Schedule established by the WCB. The worker submitted that the rate of 90% be applied. He derived this percentage from s.39(1) which provides that workers are entitled to wage loss benefits equal to 90% of the loss of earning capacity. This percentage is not applicable as it is meant to apply to wages paid to an employee. The worker did not earn wages, rather he earned business income, from which expenses must be deducted. The 90% rate therefore has no application to this worker's circumstances.
  

The employer submitted that its industry was classified as cartage trucking, not courier, and that the worker should be classified in the industry in which the employer was engaged. As the Labour Percentage Schedule set the labour portion for cartage trucking at 50%, it was submitted that this should be the rate applicable to the worker.

The panel has considered the worker's evidence given at the hearing as to the nature of the work he was performing. It would appear that at the time of his injury, he was performing pick-up and delivery work within designated areas of the city. Much of his designated area was residential. In the circumstances, the panel does not see any compelling reasons to depart from the WCB's assessment that the worker should be classified in the courier industry at the rate of 65%.

• The final finding regarding the calculation of the worker's gross average earnings concerns the figures to be used. As set out in the Average Earnings Policy, there may be a number of methods which may be utilized to establish a worker's average earnings. The method to be used will always be the one that best reflects the worker’s actual loss of earnings. In the present case, income tax information for 2006 and 2007 was obtained and the WCB used the worker's reported gross earnings for 2007 in calculating the worker's average earnings. The rationale was that the worker did not hire any additional drivers during this period. The panel agrees that the earnings from 2007 are the most accurate indication of the income which could be earned solely by the worker and therefore we feel that 2007 best reflects the worker's actual loss of earnings and should be used in the calculation of the gross average earnings.

It follows from the foregoing that the worker's gross average earnings have been correctly calculated and the worker's appeal on this issue is therefore dismissed.

Panel Members

L. Choy, Presiding Officer
A. Finkel, Commissioner
P. Walker, Commissioner

Recording Secretary, B. Kosc

L. Choy - Presiding Officer

Signed at Winnipeg this 26th day of August, 2011