Decision #28/17 - Type: Workers Compensation
Preamble
The worker is appealing the decision made by the Workers Compensation Board ("WCB") that the WCB's recovery of his overpayment from the annuity fund did not result in a financial hardship to the worker. A file review was held on March 8, 2017 to consider the worker's appeal.
Issue
Whether or not recovery of the overpayment would result in financial hardship.
Decision
That it was inappropriate for the WCB to remove funds from the worker's annuity; and
That the panel makes no further findings as to whether the overpayment would result in financial hardship as this issue has not been fully addressed by the WCB.
Background
The worker has an accepted claim with the WCB for a right wrist injury that occurred in October 2009 during the course of his employment as a machine operator.
On June 6, 2016, the worker's case was considered by the Appeal Commission to determine whether or not he was required to repay an overpayment on his claim which amounted to $3881.78. On June 9, 2016, the Appeal Commission confirmed that the worker was required to repay the overpayment. The appeal panel further clarified:
"…the panel is only deciding whether the worker is required to repay the overpayment of benefits that he received. The panel is not addressing the issue of the worker's financial capacity to make repayment. This aspect of the overpayment has not been considered or adjudicated, therefore it remains open to the worker to raise this issue with the WCB."
In e-mail correspondence dated June 10, 2016, a worker advisor referred to the appeal panel's decision and stated the worker was a sole income earner and had 4 dependents. It was suggested that "recovery of the overpayment, in whole or in part, would create financial hardship for the worker or the worker's dependents."
On June 15, 2016, the WCB asked the worker to complete a Monthly Financial Statement form in order to determine whether hardship existed. On June 24, 2016, the worker complied with the WCB's request.
On June 28, 2016, a WCB collections supervisor noted to the file that she reviewed the hardship report and found that a hardship did not exist. She noted that the annuity on file could retire the debt in full and still would leave some annuity in the fund.
On June 29, 2016, the WCB advised the worker that the overpayment of $3,281.78 would be taken out of his annuity fund. On October 6, 2016, the worker advisor appealed the decision to Review Office.
In a decision dated November 8, 2016, Review Office determined that there was no financial hardship created by the recovery of the overpayment.
Review Office noted that the worker was in a structured vocational rehabilitation setting and was considered employable. In this instance, the worker's economic standing does not come into play as he has a WCB annuity. When the whole of the criteria for financial hardship is considered, Review Office was not able to substantiate the worker advisor's claim that the repayment of the overpayment, from the worker's annuity account, created a situation of financial hardship. On November 18, 2016, the worker advisor appealed Review Office's decision to the Appeal Commission and a file review was arranged.
Reasons
Applicable Legislation and Policy
The Appeal Commission and its panels are bound by The Workers Compensation Act (the "Act") and the policies established by the WCB's Board of Directors.
Subsection 109.2 of the Act provides that where a worker receives an overpayment of compensation, the WCB may recover the overpayment from the worker.
Pursuant to the above provision, the WCB Board of Directors established WCB Policy 35.40.50, Overpayment of Benefits (the "Overpayment Policy") which sets out principles with respect to recovery of overpayments to workers.
The policy provides, in part, that:
3. All overpayments will be pursued for recovery, unless:
(v.) recovery of the overpayment, in whole or in part, would create financial hardship for the worker or the worker's dependents;
Worker's Position
The worker was represented by a worker advisor who provided a written submission on the worker's appeal.
The worker's representative submitted that overpayment should not have been pursued for recovery because recovery will create a financial hardship for the worker. She noted that the worker's benefits are the sole form of income for his family.
The worker's representative disagreed with the WCB's decision to recover the balance of the overpayment from the worker's annuity which was established in accordance with section 42 of the Act.
The worker's representative submitted that:
It is our position that funds in the annuity account are not recently received benefits, as the WCB are not to release these funds to [the worker] as benefits. In fact, he is not entitled to any of these funds until the year that the benefits become payable (retirement age).
The worker's representative noted subsection 2(h) of WCB Board of Director's Policy No. 44.100.20, Annuities ("Annuity Policy"), provides:
2. RETIREMENT ANNUNITIES
h) in general, the retirement amount will become payable, either as an annuity or a lump sum payment, at the earlier of:
(i) age 65, or
(ii) when the WCB has determined that the worker has retired from the workforce, but not before age 55…"
The worker's representative submitted that the reduction of any amount of the annuity for any worker violates subsections 42(2), 42(4) and 42(6) of the Act.
Employer's Position
The employer did not participate in the appeal.
Analysis
The issue before the panel was noted as "whether or not the recovery of the overpayment would result in financial hardship."
The panel finds that the WCB's action, in recovering the overpayment from the worker's annuity fund, is inconsistent with the Act. Specifically the panel is of the view that the language of the act and the overpayment policy do not permit recovery from an annuity until the annuity is payable to the worker.
In this regards, the panel notes that the provisions of the Act dealing with the establishment of an annuity fund and the investments into the fund are expressed with mandatory terminology and provide:
Board's contribution to annuity
42(2) Where wage loss benefits are paid to a worker after the qualifying period, the board must invest on the worker's behalf an amount equal to the following percentage of future wage loss benefits payable to the worker under this Part: (underlining added)
Establishment of annuity for retirement
42(4) The amounts referred to in subsections (2) and (3), together with accrued interest, must be used to provide an annuity for the worker at retirement. (underlining added)
The panel further notes that by virtue of the Annuity Policy, benefits from the fund are not payable to the worker until age 65, or earlier date of retirement.
The panel finds that the Overpayment Policy does not directly address the issue of recovery of an overpayment from an annuity. Guidance is provided by section 8 of the policy which provides that "Repayment methods may include a single payment or series of regular payments by the worker or deductions from ongoing or future WCB benefits." In the panel's view, this section contemplates deductions from ongoing or future WCB benefits when payable to the worker. The panel finds this provision of the Overpayment Policy does not override the express wording of subsection 42(4) of the Act which addresses investments and accumulation of an annuity fund for later payment to the worker. The panel makes no findings at this time with respect to an annuity which has matured and is later payable to the worker, given the various provisions of the Overpayment Policy that might apply at that time.
The panel directs that the WCB repay to the worker's annuity account the sum deducted from the worker's annuity account as payment for the overpayment. The panel notes that the WCB's decisions to date had focused only on the issue of financial hardship relative to the use of the annuity contributions. Similarly, our decision is limited to that narrow component of the Policy's financial hardship provisions. The worker advisor has asked the panel to consider and make a financial hardship decision based on the worker's current financial condition. The panel finds, however, that although the worker did provide a Monthly Financial Statement, there has been no consideration by primary adjudication and Review Office of the worker's current financial circumstances and the panel is therefore precluded from making that decision. This issue remains open.
The worker's appeal is allowed in part.
Panel Members
A. Scramstad, Presiding Officer
A. Finkel, Commissioner
M. Kernaghan, Commissioner
Recording Secretary, B. Kosc
A. Scramstad - Presiding Officer
(on behalf of the panel)
Signed at Winnipeg this 14th day of March, 2017