The Appeal CommissionThe Workers Compensation Act of Manitoba

Applicable Legislation and Policy

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

The first issue before the panel is whether the worker’s claim is acceptable. Subsection 4(1) of the Act provides:

4(1) Where, in any industry within the scope of this Part, personal injury by accident arising out of and in the course of the employment is caused to a worker, compensation as provided by this Part shall be paid by the board out of the accident fund, subject to the following subsections. (emphasis added)

The key question to be determined is whether the worker’s personal injury was caused by an accident which arose both “out of” and “in the course of” the worker's employment. WCB Policy 44.05, Adjudication and Compensation, Arising Out of and in the Course of Employment (the “Policy”) provides guidance on the issue and states, in part, as follows:

Generally, an injury or illness is said to have “arisen out of employment” if the activity giving rise to it is causally connected to the employment – that is, if it is caused by some hazard which results from the nature, conditions or obligations of the employment. To have occurred “in the course of employment,” an injury or illness must have occurred within the time of employment, at a location where the worker may reasonably be, and while performing work duties or an activity incidental to employment.

…

Accidents arising out of purely personal sources over which the employer has no control are generally not compensable. Even if an accident occurs in the course of the worker’s employment, where a worker is engaged in personal activities not related to or required by his/her employment, the resultant injury would not be compensable. However, if the obligations or conditions of that employment contribute substantially to an accident or aggravate a situation, then any resultant injury may be compensable.

WCB Board Policy 35.40.50 (the “Overpayments Policy”) deals with recovery of overpayments of benefits. The Overpayments Policy sets out the principles established by the WCB Board of Directors to guide the WCB in its recovery of overpayments to claimants. The principles attempt to strike a fair balance between the WCB’s fiscal responsibilities and the interests of injured workers.

The relevant portions of the Overpayments Policy are as follows:

Overpayment Recovery Criteria

3. All overpayments receivable 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;

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4. Despite the provisions in Part 3, overpayments will be pursued for recovery where the following circumstances apply:

(i) there was fraud, deliberate misrepresentation or withholding of key information affecting benefits entitlement; or

(ii) the overpayment represents a duplication of benefits paid from another source for the same injury, for example Long Term Disability or CPP Disability benefits.

Overpayments Not Pursued for Recovery

5. Overpayments not pursued for recovery, as described in Part 3, will remain overpayments receivable for up to six years (except for 3(i), 3(iii) and 3(vii), which will be written-off immediately). During that time, recovery action may be initiated if the circumstances contributing to non-recovery change….

6. If no recovery action has been initiated within six years after the establishment of the overpayment, it will be written-off as described in Part 12.

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Write-off of Overpayments

12. Unrecovered overpayments will usually be written-off either immediately, or six years after being established, or three years after the date of the most recent recovery. Exceptions to this approach include:

(i) overpayments arising from fraud, deliberate misrepresentation or withholding of key information,

(ii) overpayments arising from a duplication of benefits paid from another source.

These overpayments will not be written-off until the WCB determines there is no longer a reasonable probability of any further cost-effective recovery.

The worker’s position:

The worker was assisted by legal counsel at the hearing. It was noted that the claim was first filed back in October 1995, which was eighteen years ago. The worker had thought that he had finished dealing with the matters relating to this claim in 2001 when he voluntarily pled guilty to a charge under the Act for failing to inform the WCB that he was starting his own business. At that point, he paid a penalty of $1,123.93 to the WCB representing wage loss amounts paid from May 24 to June 17, 1996.

Subsequent to that repayment, the worker received notice that the WCB filed a certificate of Judgment on October 12, 2006 for $14,168.47. It was at that point that the worker realized that the WCB considered that there were still amounts owing in relation to the wage loss benefit payments made to him for the June 14, 1995 injury he sustained.

The worker's position was that his injury arose out of and in the course of his employment with the accident employer and therefore, the WCB had properly accepted the claim as coming within the definition of a compensable event under subsection 4(1) of the Act. In the written submission, the following evidence was identified as demonstrating a causal connection between the activity undertaken on June 14, 1995 and the worker's employment:

• The customer routinely dealt with the accident employer through the worker purchasing a series of products before and after the accident. The accident employer benefitted financially from the level of service the worker provided to its customers;
• The accident employer was aware of and supported salespersons carrying and delivering products purchased from the accident employer to the homes of customers;
• The accident employer expected its salespersons to attend the homes of customers, particularly when an installation was proceeding;
• The customer was the one to contact the worker, asking him for advice on the heater he had purchased through the accident employer;
• The worker attended at the home of the customer to give advice on the product purchased, as requested, not to undertake the installation of the heater unit or for some personal purpose;
• "But for" the need to service the needs of the customer, the worker would not have been attending at the home of the customer;
• The decision to bolt the heater for additional stability was made on "the fly" and was incidental to the worker's attendance at the customer's home to give advice on the products purchased; and
• The fact that the customer paid for the installation directly is not relevant, as the accident employer acknowledged that in some cases it arranged for installation, and in other cases the customers made those arrangements. The worker was expected to answer questions related to the products purchased through the accident employer regardless of whether the customers paid the accident employer or the installer directly.

The worker's submission was that when he attended at the residence of the customer to provide advice on the heater purchased through the accident employer, the worker was performing a core employment activity. Holding up the heater, while he was on-site, in order to solve a stability issue identified on-site, was causally connected to his employment. Therefore, the injury he suffered was causally connected to the employment and "arose out of his employment."

With respect to being "in the course of employment," the written submission noted that the worker attended at the customer's residence in light of the concerns that the customer had raised. It was not relevant that the worker was not a repair technician or that a work order was not in place, as the worker was responsible for customer satisfaction, as part of his sales duties. Even if the worker exercised bad judgment by assisting the customer in holding up the heater pad while he was on-site for customer service purposes, this should not be enough to take him outside the course of his employment duties. The worker's attendance at the customer's residence during working hours was at a location and time that would properly be characterized as being "in the course of his employment" with the employer. Therefore, the worker had met both elements of the phrase "arising out of and in the course of employment" and his injury ought to be covered under the Act.

On the issue of repayment of the overpayment, it was submitted that even if it were determined that the event causing the injury was not an accident for which compensation is payable under subsection 4(1) of the Act, the evidence showed that the worker filed his WCB claim in good faith and there was no evidence that the claim was filed with an intention to commit fraud or deceive the WCB. As such, any overpayment amounts relating to the WCB's initial acceptance of the claim were not subject to recovery, as per WCB Policy 35.40.50 which states that recovery of overpayments will not be pursed if they result from an adjudicative reversal or a reconsideration decision by the WCB. Further, it was submitted that the time for recovery of any overpayment was spent, as WCB Policy 35.40.50, paragraph 6 provides: "If no recovery action has been initiated within six years after establishment of the overpayment, it will be written-off as described in Part 12." The recovery action was initiated on October 12, 2006 when a certificate was filed in the Court of Queen's Bench. As such, the action was outside the six year time frame for recovery action.

Analysis:

There are two issues being appealed. We will address each separately.

1. Whether or not the claim is acceptable

In order for the worker's appeal on the first issue to succeed, the panel must find that the disc herniation suffered by the worker arose out of and in the course of his employment. On a balance of probabilities, we are not able to make that finding.

This was not an easy case. Legal counsel for the worker made a very persuasive argument which sought to link the worker's activities to the performance of his job duties as a sales representative. She argued that he was providing "customer service" to a customer who purchased equipment from the accident employer and that this activity was related to the worker's employment. The accident employer benefitted from the high level of service which the worker provided to the customer in this case. Performing physical activity (i.e. holding up the platform) was not substantially different from the activities the worker routinely performed as a reasonable component of his job.

In some circumstances, the panel would agree with this submission as we acknowledge that there is a wide range of activity which may be considered reasonably incidental to an individual's employment. There were, however, a number of factors present in this case which lead us to conclude that the activity of holding up the heater platform did not arise out of the worker's employment with the accident employer. They are as follows:

• There was no work order for installation or repair services from the accident employer. The sale was purely a purchase of equipment.
• Although the employer did not initially challenge the acceptance of the claim, it would appear that this was due to the fact that they did not realize that there was no work order for installation until a later date. The accident employer was a small five-person business operation and the panel accepts that the employer was not aware of the particulars of the transaction at the time the worker's claim was filed.
• The evidence given by the worker at the hearing confirmed that the three sources of income for the accident employer would be sales, installations and service repairs. When performing installations, the accident employer would subcontract work such as excavation, concrete, gas fitting and electrical work and would typically realize a 20 to 25% mark-up profit on the subcontracted work.
• The installer of the equipment for the customer in this case was a subcontractor used by the accident employer for gas hook-ups. When the installer got the work and charged it to the customer, sometimes he would give a kick-back for the job.
• The worker's job duties included attending at customers' residences and providing customer service by showing them how to use the purchased equipment on-site after it was installed. In the panel's opinion, however, at the time of the injury, the worker was not providing instruction to the customer. He was assisting the customer in remediating the work done by the installer.
• The customer was a neighbor of the worker who lived in the house formerly owned by a relative of the worker. The worker described his relationship with the customer as "a neighbor becoming a friend" at the time, and at the present time they are friends. The panel feels that the relationship would suggest that the sale of the equipment was not entirely an arm's length transaction.
• The worker's evidence was that the customer was a retail manager by occupation and that he was not a hands-on or "Mr. Fix-It" type of person. "He would be the kind of guy that would rely on whoever he would be buying product from. For instance, if he, you know, bought a washer or dryer or something like that, he'd be relying on them to install it. It's not the kind of thing he would go and pick up and install himself, as it wasn't with the pool equipment, too."
• When the customer purchased the equipment from the accident employer, he asked the worker whether he knew someone who could install the heater for him. The worker said that he did and he provided the customer with the installer's contact information.
• By contracting the installer directly instead of having the installation done by work order through the accident employer, the customer saved money. The accident employer would normally charge a mark-up of approximately 20 to 25%.
• The worker's evidence was that in some circumstances with subcontracting gas-fitters, the company would not want to take the job as it did not want to assume any responsibility for the work performed. The worker was aware that the customer had an odd installation with a shed and basement window in close proximity. It would not be worthwhile for the company to become involved with the transaction for the limited amount of potential profit.
• On the day of the accident, the customer called the worker on his cell phone and asked him to come over to show him how to use the new equipment. When he arrived, the installer was just finishing up. A wood platform had been constructed and the heater was placed on top of the platform with the pump and filter underneath. While he was going to show the customer how the filter worked, one of the platform braces was in the way and the customer did not like how it was placed. They decided to move the brace, so the worker went underneath the platform and held it up while the customer unthreaded the brace and screwed it back in at another location. It was then that the worker felt the injury to his back.
• The worker felt discomfort in his back but he still continued to show the customer how to use the equipment.
• It is now over sixteen years since the accident occurred and the worker has gone on to establish his own successful business in the same industry as the accident employer. The panel believes the worker to be a very competent businessman with the sophistication to be aware of the implications of the manner in which he structured the sale of the heater to the customer.

At the hearing, the worker's evidence was that with a new gas installation, if the job was simple, the company would take it on but if it was in any way complicated, the company would not want to become involved for liability reasons. The panel accepts that this may be a consideration, but we feel that the primary motivation in this case was more likely that the worker was trying to secure a better price for his neighbor by cutting out the middleman, i.e. the accident employer. We note that when the WCB claim was initially filed, the accident employer did not appear to have any issue with the fact that the transaction involved the installation of a gas heater. It was only later when they realized there was no work order that they expressed concerns. We do not get the impression that limiting liability on this gas installation was of great concern to the accident employer.

What the panel concludes from the foregoing is that the installation of the equipment was a sale which was diverted by the worker from the accident employer to the gas fitter. By doing so, the worker was able to reduce the cost of the installation for his neighbor, the customer. Ultimately, the installation was not performed to the satisfaction of the customer and the worker personally assisted the customer in rectifying the installation. In the circumstances, the panel does not feel that it would be correct to find that the worker's injury arose out of his employment with the accident employer. The accident employer had been specifically excluded from this portion of the transaction by a deliberate decision made by the worker for a customer who was relying on him. While the reason for the worker's attendance at the residence was to show the customer how to use the heater, this was not the activity the worker was performing when he injured himself. The activity he was performing was related to fixing the work of the installer, who himself had no contractual tie to the employer.

We therefore find that the worker's disc herniation did not arise out of his employment with the accident employer. The worker's appeal on this issue is dismissed.

2. Whether or not the worker is required to repay the overpayment.

In order to determine the worker's appeal on the second issue, the panel must refer to the terms of the Overpayment Policy to determine whether or not the worker's overpayment must be pursed for recovery.

As a starting point, Part 3(i) of the Overpayments Policy provides that an overpayment will not be pursued for recovery if it results from an adjudicative reversal or reconsideration decision by the WCB or from a decision of the Appeal Commission. The worker's overpayment did arise from a change in adjudication, and so initially, the overpayment would not be one which the WCB would seek to recover.

The panel must next consider whether or not Part 4(i) applies, namely, whether there has been fraud, deliberate misrepresentation or withholding of key information affecting benefits entitlement. If we find that any of these factors are present, then the overpayment should be pursued for recovery. After carefully considering the facts of this case, the panel finds on a balance of probabilities that the worker did withhold key information affecting benefits entitlement, and therefore the overpayment should be recovered.

The facts to which the panel gave significant weight were as follows:

• When making his WCB claim, the worker did not reveal any information regarding the fact that there was no contractual relationship between the accident employer and the customer with respect to installation of the equipment.
• The letter faxed from the accident employer dated May 30, 1996 makes it evident that the employer did not realize until late 1995 that there was no work order or appointment on their service calendar for the work performed at the customer's residence on the day of the injury. It would appear that the worker never brought attention to the fact that the transaction was for sale of equipment only.
• In a sworn statement dated November 1, 1995, the worker attested that:
• "I was helping the gas installer install a heater at a home."
• "We had to build the platform and put a concrete pad on it. In order to facilitate the building of the platform I had to hold the platform up while they (other workers) built the braces."
• Statements from both the gas fitter and the homeowner confirm that:
• The worker did not help the gas fitter install the heater or build the stand.
• When the worker suffered his injury, only the customer and the worker were present.
• There were no "other workers" involved with building the braces. It was the customer who worked on the braces.