The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The worker is appealing the decision made by Review Office of the Workers Compensation Board ("WCB") which determined that he was responsible for an overpayment made on his compensation claim based on WCB policy. A hearing was held on September 17, 2012 to consider the matter.

Issue

Whether or not the worker is responsible for repayment of the $5616.65 overpayment.

Decision

That the worker is responsible for repayment of the $5616.65 overpayment.

Background

The worker has a compensable claim with the WCB for a low back injury that occurred in the workplace on September 13, 2000. The worker has been paid benefits in the form of long term partial wage loss benefits based on his post-accident earning capacity.

By letter dated January 20, 2012, the WCB advised the worker that he was overpaid WCB benefits in the amount of $5,616.65. The letter stated:

"This overpayment occurred because your actual gross weekly earnings for the period of January 1, 2011 to December 12, 2011 exceeded the earning capacity that WCB was using to provide your partial wage loss benefits. A recent review of your actual earnings shows that you earned $945.82 gross per week during the period of January 1, 2011 to December 12, 2011 and WCB provided partial wage loss benefits based on an earning capacity of $805.04 from January 1, 2011 to September 30, 2011 and based on an earning capacity of $823.43 for the period of October 1, 2011 to December 12, 2011.

This means that based on your actual earning capacity of $945.82, you were actually due $3,027.87 from WCB. However, you were provided $8,644.52 for the periods noted above. The resultant overpayment is $5,616.65."

On February 13, 2012, the worker appealed the above decision to Review Office and stated:

"In the fall of 2010, I made it aware to my case manager…that I would be getting a forced promotion at work and my wages would increase by $8,000.00 to $10,000.00 per year. The final amount of my increase was $8,000.00. On September 16 I was told to submit a new paystub when the raise took effect, which I did. I did not cash the first 4 checks after submitting my paystub. Eight weeks should have been sufficient to process the recalculation. On January 13 I called my case manager a second time because my benefits had not yet been recalculated. I sent in my T4 statement as soon as it was ready in early February 2011 without it being requested. No changes had been made to my benefits other than the yearly adjustment for cost of living. I received a letter to confirm other income dated March 15, 2011. It was faxed back to WCB on March 28, 2011 and showed the $8,000.00 wage increase effective October 1, 2010. I also made a comment at the bottom of the page stating "I had faxed a pay stub as requested last year after my raise came into effect". No response was ever received.

It is only last fall that something has finally been done when I re-stated to my new case manager…that I had a raise last year and I was due to another increase this year….The overpayment has been calculated back to the original wage increase of 2010, when I have made several attempts to minimize the chances of WCB overpayments. I do not feel that I should be penalized for the lack of follow-up by my former case manager. I agree to re-pay the overpayment that may be associated with my last pay increase from the fall of 2011, but not from the fall of 2010. If the case manager had done his work properly, this could have been taken care of early last year."

On April 16, 2012, Review Office determined that the worker was responsible for repayment of the $5,616.65 overpayment. Review Office noted in the decision that Board Policy 35.40.50 dealing with overpayment of benefits, states in part, that where an administrative error by the WCB resulted in an overpayment, that the overpayment will be pursued if the WCB considers the error or incorrect information was so material or obvious that the worker should have recognized it and reported it to the WCB.

Review Office indicated that the worker did report his wage increases in a timely manner but he was fully aware that he was in an overpayment situation given his evidence that he held the first four cheques for eight weeks before cashing them rather than returning them to the WCB requesting a re-calculation. As the worker was fully aware of the overpayment and recognized the administrative error made by the WCB, full repayment of the overpayment was required. On July 12, 2012, the worker appealed Review Office's decision to the Appeal Commission and a hearing was held on September 17, 2012.

Reasons

Chairperson Scramstad and Commissioner Koslowsky:

Applicable Legislation

The Appeal Commission and its panels are bound by The Workers Compensation Act (the "WCA"). Subsection 109.2 of the WCA provides that where a worker receives an overpayment of compensation, the WCB may recover the overpayment as a debt due to the board. The Board of Directors made WCB Policy 35.40.50, Overpayments of Benefits, which sets out the principles established to guide the WCB in recovery of overpayments to workers.

WCB Policy 35.40.50, Overpayments of Benefits deals with situations where the WCB may and will seek recovery of overpayments. Part C, 3 of that policy provides that all overpayments will be pursued for recovery unless:

“(i.) they resulted from an adjudicative reversal or a reconsideration decision by the WCB, or from a decision of the Appeal Commission; or

(ii.) they resulted from either an administrative error by the WCB, or the receipt of incorrect information from an employer that affected eligibility or the amount payable. The exception to this provision is that the overpayment will be pursued if the WCB considers that the error or incorrect information was so material or obvious that the worker should have recognized it and reported it to the WCB; or

(iii.) new information relevant to entitlement was known to the worker and was not provided to the WCB, but it resulted in an overpayment of less than $50; or

(iv.) the amount receivable is not cost-effective to pursue; or

(v.) recovery of the overpayment, in whole or in part, would create financial hardship for the worker and/or the worker’s dependants; or

(vi.) the worker has died, unless it is clear that the estate has sufficient funds available to repay the overpayment; or

(vii.) the overpayment occurred more than three years prior to its discovery by the WCB.”

Worker's Position

The worker explained his reasons for appealing the WCB decision. The worker has successfully returned to work and was in receipt of partial wage loss benefits. He told the panel that in 2010 he received a promotion, which included a raise. He said that he advised his case manager on September 16, 2010 that he was getting a raise. The case manager asked that he forward a paystub when the raise became effective so that WCB could make adjustments. On October 25, 2010, the raise finally came into effect and he sent in a paystub to the case manager. He said he withheld cashing four biweekly cheques waiting for an adjustment to be made, but no adjustment was made. He contacted his case manager again in January, leaving a message, but never heard back from the case manager. In February he sent in a copy of his T4 for the prior year to the case manager but again never heard from him.

In March 2011 he received an annual income information sheet from WCB. He completed it noting that he had received an $8,000.00 wage increase. He made a handwritten note at the bottom of the page saying that he already provided this information. He did not hear from WCB until fall of 2011, when a new case manager requested a current paystub for the yearly review. It was then determined that he had been overpaid from the fall of 2010 up to that point.

Analysis

The Overpayments of Benefits Policy sets out limited circumstances where overpayments will not be pursued. For the worker's appeal to be successful, the panel must find that the circumstances of his case fall within the limited circumstances where an overpayment is not recoverable.

The worker argued that the overpayment he received is not recoverable as it fell within Part C, 3 (ii) of the policy. This section provides that overpayments resulting from an administrative error by the WCB are not pursued for recovery in certain cases. The panel notes this section is limited and does not apply to cases where the WCB considers that the error or incorrect information was so material or obvious that the worker should have recognized it and reported it to the WCB.

The panel is satisfied that the overpayment resulted from the administrative errors of the WCB. We found the worker to be forthright and honest in his presentation and responses to the panel's questions and accept his evidence that he notified the WCB of an increase in his salary on more than one occasion. We note the WCB did not respond to this information and apparently took no action.

The majority find that the circumstances of this overpayment do not fall within the limited exception provided under subsection 3 (ii) and that the worker is responsible to repay the overpayment on his claim.

In making our decision, the panel notes the worker's evidence at the hearing. The worker advised the panel that he held and did not cash four bi-weekly WCB cheques expecting that the WCB would make an adjustment. When the WCB did not make an adjustment he cashed the cheques. In response to a question about why he cashed the cheques he responded:

A. I needed to buy groceries. That was basically what these cheques were to me -- were my grocery money.

Q. Okay. So...

A. And for four paystubs, I skimped a bit on groceries.

Q. Yeah. So what you’re telling me then is you cashed those cheques simply because you needed them?

A. Out of necessity, yes.

The worker told the panel that he would not have cashed the cheques if he could have afforded not to. The worker was asked whether he knew there was an error. He responded "I assumed there was." He advised that he did not know the extent of the overpayment but expected an adjustment.

The majority finds that the overpayment, which continued for almost a year, was material and obvious and that the worker recognized that he was being overpaid and, in fact, expected the WCB to make an adjustment. When an adjustment was not made, he cashed the cheques out of necessity and continued to cash the cheques when received.

While the WCB did not competently deal with the information which the worker provided and continued to make payments that were in excess of entitlement, the panel finds that under the policy, the worker had a responsibility to notify the WCB that he was being overpaid. This obligation extends beyond providing the income information that he provided. The panel finds that the overpayment is collectable under the Overpayments policy.

The majority is reluctant to reach this decision given that the overpayment could have and should have easily been prevented by the WCB acting upon the information provided by the worker. However, the panel is bound by the policy and finds that the worker knew he was being overpaid. The panel recommends that any collection of the overpayment be done in a compassionate manner and not impose a burden on the worker for its unnecessary administrative error.

The worker's appeal is dismissed.

Panel Members

A. Scramstad, Presiding Officer
R. Koslowsky, Commissioner

Recording Secretary, B. Kosc

A. Scramstad - Presiding Officer

Signed at Winnipeg this 10th day of October, 2012

Commissioner's Dissent

Commissioner Ogonowski's dissent:

Decision of the majority: That the worker is responsible for the repayment of $5,616.65 overpayment.

With respect, I decline to agree with the majority.
I am in agreement with the facts and do not intend to re-iterate all of them here. I am, however, of a differing opinion as to how the facts, evidence, and policy ought to be applied.

Policy:

Policy 35.40.50 states in part:

"The WCB strives to prevent overpayments of benefits,"

…

"All overpayments receivable will be pursued for recovery, unless:

…

3(ii) they result from an administrative error by the WCB… the exception to this provision is that the overpayment will be pursued if the WCB considers that the error or incorrect information was so material or obvious that the worker should have recognized it and reported it to the WCB; or." (underlining mine)

Administrative error by WCB is defined in Appendix A as "unreasonable delays in acting upon available information". (underlining mine)

Policy 44.80.80.20, Loss of Earning Capacity Reviews provides that loss of earning capacity reviews will be conducted:

2(ii) "During the average earnings review." [which for the worker was the month of October]

2(iii) "At any time there is a significant change in circumstances which may affect the worker's actual or potential earnings;" (underlining mine)

The policies are clear in respect of the responsibilities placed on both the worker and the WCB.

The worker, pursuant to policy 44.80.80.20, point 7 "is responsible for informing the WCB of any significant changes in circumstances which may affect the worker's actual or potential earnings." (underlining mine)

The worker's actions:

The WCB's actions:

1. In October 2010, the WCB reviewed his salary and benefits but only took into account the indexing factor, not the increase in pay which created the overpayment.
2. The WCB failed to act on the relevant information provided to them by the worker not once, but three times successively.
3. One year later, the WCB finally acted in October 2011 and determined an error had been made resulting in an overpayment of $5,616.65 and terminated benefits in December 2011.
4. WCB notified the worker by letter of January 20, 2012.

The actions of both parties lead me to the opinion that the worker maintained all responsibilities required of him while the WCB failed to "prevent an overpayment" inasmuch as they failed to conduct appropriate reviews in accordance with policy each time they were informed and/or reminded of "significant change" that may affect the worker's earnings.

This constitutes "Administrative Error" and their later actions/inactions constitute "unreasonable delay" which further exacerbated the problem.

The question remains whether or not this situation was "so material or obvious" to the worker.

Clearly, at the outset, the worker thought this may be material resulting in his reporting it to WCB. Further, the worker did not cash the first four cheques considering yet it may be material.

Given that his family budget was now suffering in spite of the raise due to the facts that he was being deprived of any funds from WCB by not cashing the cheques and with three dependant children and Christmas on its way coupled with a significant lack of action from WCB, the worker was compelled to cash the cheques. To test the "material" waters again the worker sent a copy of his 2010 T4 slip which again was met with no reaction.

The worker stated in evidence that he "did not fully understand the WCB behaviour and processes." He acknowledged that he received documents showing calculations and he understood how to add, subtract, multiply and divide. He generally trusted that the WCB knew what they were doing even though he didn't comprehend everything.

The worker believed eight weeks should have been sufficient time to correct any problems as he had experienced issues in the past and they had been dealt with somewhat expedicously. As the cheques continued the worker began to assume everything was in order. In March, on a WCB income report sheet, he again noted the previous year's increase. No action was forthcoming from the WCB.

I am therefore of the opinion that the worker was entitled to have doubts. While the worker had concerns that his raise was material, it is clear that nothing was obvious to him. Nothing in evidence is conclusive that he knew anything for certain.

Conclusion:

The worker met all responsibilities required of him by the WCB policy.

Regrettably, the WCB failed to meet their stated purpose of the policy. By their inactions, the WCB, in my view, created "unreasonable delays" in acting, on available information. While the worker suspected his benefits may be affected by the raise in pay, and not fully understanding the WCB process coupled with the lack of action by the WCB, he was entitled and did have doubts. In other words, things were not that "obvious" to him at all.

It was proposed by the worker that he would be willing to repay any overpayment from October 2011 to December 2011 when his benefits were stopped as the WCB eventually reviewed his benefits, taking into account the information from the previous year. With respect, I could agree with his position.

I would therefore agree with the appellant that he should not be held responsible for the full amount caused by the administrative error.

I would find for the appellant, in part.

G. Ogonowski

Appeal Commissioner

Signed at Winnipeg, this 12^th day of October, 2012.