Decision #106/12 - Type: Workers Compensation

Preamble

The employer is appealing a decision of the Assessment Committee of the Workers Compensation Board ("WCB") which determined that it was not entitled to 100% cost relief. A file review was held at the Appeal Commission on October 1, 2012 to consider the matter.

Issue

Whether or not the employer is entitled to cost relief.

Decision

That the employer is not entitled to cost relief.

Decision: Unanimous

Background

On August 1, 2008, the worker filed a claim with the WCB for "trauma" that occurred on July 30, 2008 when he witnessed a criminal act by a third party. The claim for compensation was accepted by the WCB and benefits and services were paid.

On November 14, 2011, the employer requested that the claim be transferred to the WCB's legal department for consideration of cost relief. The employer outlined the position that a third party was 100% negligent in the incident and that 100% of the claim costs should be removed from their firm's experience rating based on WCB policy 31.05.10 Schedule G(2).

On February 9, 2012, it was determined by the WCB's Legal Services branch that the criteria for cost relief had not been met after its review of WCB policy 31.05.10, Cost Relief/Cost Transfers ("the Policy") and the law relating to negligent infliction of mental shock. The decision stated:

"In criminal proceedings, the Manitoba Court of Queen's Bench determined that the third party was, at the time of the injury, suffering from a serious mental disorder which rendered him unable to appreciate the nature, quality and consequences of his actions.

The ability to appreciate that one's actions are wrong and to foresee the harm they may cause to others is an essential element of a negligence action. As the third party did not have the requisite intention, there was no cause of action in tort."

On March 2, 2012, the employer appealed the above decision to the Assessment Committee.

Prior to deciding the employer's appeal, the Assessment Committee asked the WCB's legal branch to comment on whether there was any other third party in respect of a cause of action. Legal Services responded as follows:

"The other possible parties were not mentioned at all (in the Legal Services decision of February 9, 2012) because their connection to the event (notwithstanding the fact that they have been sued) is so tenuous that they do not warrant mention."

On March 21, 2012 and April 3, 2012, the Assessment Committee determined that the employer was not entitled to cost relief in respect of the Legal Services decision of February 9, 2012 and that cost relief should not be granted to the employer with regards to other possible third parties as alluded to in the employer's appeal. The decision stated:

"…the appellant has made assertions in regards to board policy on cost transfers/cost relief, and its intent. The Assessment Committee does take exception to one of their statements, wherein the appellant writes: (verbatim)

"The simple situation is that a cause of action must exist for Cost Relief to be granted, and such an action most certainly and clearly exists. The likelihood of ultimate success of any of the three available causes of action is not relevant…" (emphasis added)

In cases involving third-parties the policy allows that, once a statement of claim has been filed, the costs of the claim will be transferred away from the accident employer pending recovery by the WCB. Upon satisfaction of any recovery, any costs over and above the amount of the recovery will be transferred back to the accident employer, and considered part of that employer's experience. Clearly, the success of the action is important since any shortage in the recovery would remain the responsibility of the accident employer.

The cost relief section of Schedule G only applies in circumstances where third-party action has not been pursued by the board. The WCB applies precise reasoning to decisions made pursuant to the policy, in particular the following excerpt, and specifically the basis for not pursuing a third-party action and, subsequently, why cost relief is not granted.

"…an action against an uncovered third party exists, but the WCB determines that no action will be taken because the third party cannot be identified or has no assets; and…"

The policy clearly specifies the circumstances under which cost relief would be considered, when an action has not been pursued. In this matter the WCB determined that no action would be taken because:

i) The ability to appreciate that one's actions are wrong, and to foresee the harm that may be caused to others, is an essential element of a negligence action; in this case the initial third party has been deemed incapable of forming the requisite intention.

ii) The other possible third parties, alluded to in the appellant's submission, were not pursued as their connection to the event was too tenuous, and the possibility of any cost recovery too unlikely to justify an action.

The decision not to pursue the third parties was not because they were unidentified or had no assets but for the reasons explained herein. Accordingly, cost relief is not available."

On May 14, 2012, the employer appealed the above decision to the Appeal Commission and a hearing was arranged.

Reasons

Applicable Legislation

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

The employer is asking that certain claim costs be removed from its experience. The Act sets out the authority of the WCB to determine the record and experience of an employer. Subsection 82(4) provides that:

Determination of Experience

82(4) In determining the record and experience of an employer, the board may:

(d) exclude that portion of the cost of compensation awarded to the workers of the employer that, in the board's opinion, would unfairly burden a particular employer.

The WCB Board of Directors enacted WCB Policy 31.05.10 Cost Relief/Cost Transfers (the “Cost Relief Policy”) which describes certain specific circumstances when claim costs may be transferred from an accident employer to a shared cost pool. This process is called “cost relief ". Schedule G to the policy deals with eligibility for cost relief in cases of third party actions. Section 2 of Schedule G provides:

2. Cost relief:

Cost relief may be provided to the Class E accident employer when:

(i) an action against an uncovered third party exists, but the WCB determines that no action will be taken because the uncovered third party cannot be identified or has no assets; and

(ii) the injury results in costs of $5,000 or more.

Subsection 9(1) of the Act provides that a worker who is injured due to the actions of a third party is entitled to choose whether to take action or to receive compensation.

Employer's Submission

The employer provided a written submission to the Appeal Commission dated May 14, 2012. The employer submitted, in part, that:

· The WCB erred in failing to apply a policy of fairness both within the meaning of the Act, and within its meaning on our juridical and social traditions as a society.

· The WCB erred in finding that the incident in question was an accident and that the employer was attempting to avoid all financial burdens from the incident. If the costs under appeal were transferred to the Class, the employer would pay its proportionate share as required by the Act.

· The third party entered a contract with the employer and through his conduct breached the contract, regardless of any other legal questions of insanity or criminal responsibility. The law of breach of contract confirms there was no "workplace accident" as claimed by the WCB.

· The third party demonstrated the undeniable capacity to do what he did even though he may be excused by reason of insanity in a criminal prosecution.

· There was a criminal act but no workplace accident.

· The only fair approach in the case of a horrendous criminal act or terrorism is that the expense of the victim employer be spread over the class of employers.

In a submission made to Assessment Committee, dated March 2, 2012, the employer submitted that:

"The Employer and our employees were the innocent victims of horrific wrongdoing and were entirely blameless in the events that ensued. There was and is no workplace practice, safety steps or other Employer or worker conduct that could foresee or prevent the events that occurred. The employer ought not to be further burdened, virtually punished, by the operation of WCB rulings that charge to the individual Employer responsibility for the financial consequences of this type to tragedy."

Analysis

The employer has requested cost relief under WCB Cost Relief Policy for costs which resulted from the act of a third party. For the appeal to be successful, the panel must find that the facts of this case meet the requirements of the Policy as set out in Schedule G. The panel was not able to make this finding. In considering this appeal, the panel has considered the Act, the Cost Relief Policy and Canadian law relating to the tort of negligent infliction of mental shock. The panel finds that the requirements of the policy have not been met and that the appeal is dismissed.

There are 4 essential requirements that must be met for claim costs to be eligible for cost relief under Subsection 2 of Schedule G:

i. the employer must be a member of Class E

ii. an action against an uncovered third party must exist

iii. the WCB must decide not to take action

iv. the injury must result in costs of $5000.00 or more.

This case meets the first requirement as the employer is a member of Class E. The third requirement is met as the WCB has decided not to pursue recovery in this case. The fourth requirement is met as the costs arising from the injury exceed $5000.00. However, the panel finds that the facts of this case do not meet the second requirement that "an action against an uncovered third party exists".

In reaching our conclusion, the panel accepts that Canadian law currently provides that a person who is not able to understand and appreciate the nature or quality of their actions is not able to commit a tort. This is because intention is an essential element of a tort. In other words, a person is not civilly liable for actions where the person is not capable of understanding the nature, quality and consequence of their actions. This principle was stated by the Ontario Court of Appeal in Wellesley Hospital v. Lawson (1975 CanLII 41 (ONCA)).

The panel notes and relies upon the findings of the Manitoba Court of Queen's Bench in a criminal prosecution arising from the event that occurred in the presence of the worker while in the course of his employment. The Court determined, in accordance with the Criminal Code of Canada, that the third party was, at the time of the event, suffering from a serious mental disorder which rendered him unable to appreciate the nature, quality and consequences of his actions. The third party could not be found criminally responsible for his actions as he did not appreciate that the actions were wrong and could not appreciate that his actions could cause injury to others.

Applying the law to this case, the panel finds that while the third party inflicted an injury upon the worker and others, he was not capable of appreciating the nature and quality of his actions at the time and did not have the necessary intent to commit the tort. As a result the panel finds that no action against an uncovered third party exists and that the requirements of the policy have not been met.

In its submission, the employer indicates that no workplace accident occurred. It also referred to a contract and breach of contract. The panel notes that the worker's claim for a workplace injury has been accepted and that the acceptance is not before the panel. The panel also notes that the employer's reference to a contract appears to be a contract between the third party and the employer. Neither the worker nor the WCB have any right of action relating to such a contract.

The employer also argued that failure to grant cost relief is unfair to the employer. The panel notes that pursuant to the WCB assessment system and Cost Relief Policy there are some costs that are eligible for cost transfer, some that are eligible for cost relief and some that are borne by the employer. It is a policy decision for the WCB Board of Directors to determine the criteria for cost transfer and relief. The panel is bound by WCB Policy and, in this case, the schedules attached to the policy.

Given our conclusion that there is no action, the panel is unable to make the decision sought by the employer.

The employer's appeal is dismissed.

Panel Members

A. Scramstad, Presiding Officer
A. Finkel, Commissioner
P. Walker, Commissioner

Recording Secretary, B. Kosc

A. Scramstad - Presiding Officer

Signed at Winnipeg this 10th day of October, 2012

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