The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The director of the firm is appealing the decision made by the Workers Compensation Board ("WCB") that he did not have personal coverage for accidents that occurred in the workplace. A file review was held on July 31, 2013 to consider the matter.

Issue

Whether or not the Director of the firm has personal coverage for accidents occurring in the workplace.

Decision

That the Director of the firm does not have personal coverage for accidents occurring in the workplace.

Decision: Unanimous

Background

The director of the firm filed two claims with the WCB for injuries he incurred at his place of employment in 2012 and 2013. His claims for compensation were denied by the WCB as it was determined that the director of the firm did not have personal coverage. On April 25, 2013, the director submitted an appeal to the WCB's Assessment Committee claiming that he did apply for coverage with the WCB but that the WCB did not respond to his request. He therefore assumed that his application had been approved and therefore he had coverage for his two accidents under The Workers Compensation Act (the "Act").

On May 6, 2013, the Assessment Committee denied the director's appeal by stating that without approved personal coverage, the WCB was unable to accept the director's compensation claims. In making its determination, the Assessment Committee referred to WCB Policy 35.10.120 Terms and Conditions of Optional and Personal Coverage. It stated that the WCB had sole jurisdiction in approving personal coverage for any firm that requested it. It further stated:

"As your firm's account was not in "good standing" (your firm had an outstanding account balance owing) at the time personal coverage was requested, the WCB did not approve personal coverage for [name] or [name]. It should be noted that because your firm has owed assessment premiums to the WCB from the time your firm had registered with the WCB, your firm was never in "good standing." Consequently, personal coverage would never have been approved.

A review of your firm's electronic account information determined that it does not appear that any communication was provided to you that would explain that the personal coverage you requested was denied. For that oversight, we apologize. It should be noted, however, that at no time was your account charged for personal coverage…"

On May 24, 2013, the director of the firm appealed the Assessment Committee's decision to the Appeal Commission and a file review was held on July 31, 2013.

Reasons

Applicable Legislation and Policy

In considering appeals, the Appeal Commission and its panels are bound by the Act, regulations and policies of the Board of Directors.

The firm is appealing the WCB decision that coverage was not in place for the director of the firm.

Subsection 1(3) provides that the definition of worker does not include a director of a corporation unless an application is received by the WCB. Subsection 74(3) provides that a director of a corporation may be admitted by the WCB to coverage as if the director were a worker. Subsection 74(4) provides that unless an application for coverage is approved by the WCB, compensation is not payable to a director.

The WCB Board of Directors enacted WCB Policy 35.10.120, Terms and Conditions of Optional and Personal Coverage, which sets out the terms and conditions applicable to a director when optional coverage is extended.

Employer's Position

The employer provided a written submission for consideration by the panel which was signed by the director who is seeking personal coverage for workplace accidents he sustained.

As background, the employer advised that the WCB was dealing with a director's claim for injuries which took place around January 15, 2013 as a result of a workplace accident. The employer noted that it had made an application to the WCB for optional coverage for directors in 2011. Having heard nothing from the WCB, the employer assumed that optional coverage for directors was in place and that directors were covered for work-related injury. The employer indicated that if there had been any doubt that coverage was in effect, it would have enquired further with the WCB or sought alternate coverage.

The employer advised that when the accident occurred on January15, 2013 a claim was made but was denied by the WCB as optional coverage for directors was not in force.

The employer noted that the WCB Assessment Committee acknowledged that the WCB failed to inform the employer that coverage was denied. It referred to the WCB's action as an "oversight."

The employer advised that it is requesting the Appeal Commission to remedy the "oversight" by reversing the decision and allowing coverage for the personal injury suffered on January 15, 2013. It referenced subsection 74(3) and submitted that in the interest of fairness, the board ought to exercise its discretion in order to extend coverage to the director "in this unique situation."

The employer submitted "…that under Subsection 74(3), it is open to the board to extend coverage to myself as director. Any other disposition to my application would, in my submission, constitute an unfair result as I was never informed (by the Assessment Committee's own admission) of the decision not to extend personal coverage to myself."

Analysis

The issue before the panel was whether the director of the firm had WCB coverage for accidents which occurred in the workplace. For the appeal to be successful, the panel must find that coverage was in place at the time of the accidents. The panel notes there are 2 accidents referenced in the file information but the employer's submission only references an accident on January 15, 2013. The panel decision applies to both accidents. The panel finds that the optional coverage for directors was not in place at the time of the injuries and accordingly the director had no coverage for the injuries.

The panel reviewed the legislative and policy provisions which govern the extension of coverage to directors who otherwise are not covered. The panel notes subsection 1(3) and 74 provides that

Restriction on definition of "worker"

1(3) The definition of "worker" in subsection (1) does not include

(a) a director of a corporation, unless an application to have the director brought within the scope of Part I is received and approved by the board;

Optional coverage for employers and directors

74(3) Any employer or director of a corporation in an industry within the scope of this Part may be admitted by the board as being entitled for himself or herself, and his or her dependants, to the same compensation as if the employer or director were a worker within the scope of this Part.

Compensation to employer, director of corporation

74(4) Unless an application to come within the scope of this Part is approved by the board, compensation is not payable under this Part to

(a) an employer; or

(b) a director of a corporation that is the employer;

(c) repealed, S.M. 2005, c. 17, s. 53.

The panel also considered WCB Policy 35.10.120, Terms and Conditions of Optional and Personal Coverage. Paragraph 2 of the policy provides the WCB may sell coverage for a director but is not required to do so. Paragraph 3 of the policy provides that the WCB will ordinarily sell optional coverage upon request, but recognizes that there are instances where an application for coverage will be denied. It provides examples of situations where coverage may be denied and states that "the WCB may refuse to sell optional …coverage in order to maintain the financial integrity of the accident fund."

The panel finds that these provisions make it very clear that an employer may apply for optional coverage for directors, but that coverage is not in place unless the application is approved by the WCB. In this case, the application was not approved by the WCB and accordingly no coverage was in place. In contractual terms, there must be an offer and an acceptance. In this case there was an offer to buy the coverage but there was not an acceptance.

The employer argued that it was unfair for the WCB to deny coverage when it failed to advise the employer that its application for coverage was denied. The panel finds that it is unfortunate that the WCB did not address the application and advise the employer of its decision on a timely basis. However, the panel notes that neither the employer nor director followed up with the WCB on the status of the application. As well, the panel notes that the employer was in arrears in payment of its assessment, apparently having never paid its assessment. The WCB practice of denying coverage to firms in arrears appear to be consistent with Paragraph 3 of the policy which provides that the "WCB may refuse to sell optional or personal coverage in order to maintain the financial integrity of the accident fund."

In conclusion, the panel finds that optional coverage for directors was not in force at any time for this employer, and as such the director of the employer does not have personal coverage for accidents occurring in the workplace.

The employer's appeal is dismissed.

Panel Members

A. Scramstad, Presiding Officer
A. Finkel, Commissioner
M. Day, Commissioner

Recording Secretary, B. Kosc

A. Scramstad - Presiding Officer

Signed at Winnipeg this 13th day of August, 2013