Decision #30/22 - Type: Workers Compensation
The worker is appealing the decision made by the Workers Compensation Board ("WCB") that:
1. They have been overpaid benefits in the amount of $16,859.24; and
2. The overpayment must be repaid.
A file review was held on January 26, 2022 to consider the worker's appeal.
1. Whether or not the worker has been overpaid benefits in the amount of $16,859.24; and
2. Whether or not the overpayment must be repaid.
1. The worker has been overpaid benefits in the amount of $16,859.24; and
2. The overpayment must be repaid.
The WCB accepted the worker’s claim for injury to their lower back that occurred at work on December 19, 2003. The worker’s injury was diagnosed as a left L4-L5 disc herniation and ultimately treated by microdiscectomy on February 4, 2006. Upon recovery, the employer accommodated the worker’s restrictions until January 2011 when they were laid off.
On May 9, 2011, the WCB confirmed the worker’s permanent restrictions and referred the worker for vocational rehabilitation services. Through that process, the WCB identified National Occupational Classification (NOC) 1453 – Service Advisors for the worker and provided training and job search supports.
On February 6, 2013, the WCB reduced the worker’s wage loss benefits based on the worker’s deemed earning capacity in NOC 1453. The worker requested reconsideration of the vocational rehabilitation plan developed by the WCB and on November 27, 2013, Review Office determined NOC 1453 was not appropriate, but found the worker to be capable of working 40 hours per week at minimum wage.
The worker subsequently obtained employment with various employers and the WCB reviewed the worker’s long term wage loss benefits annually. The worker’s wage loss benefits were adjusted to reflect the worker’s actual earnings as compared to their deemed earning capacity. As a result of a review conducted on January 9, 2020, the WCB determined the worker’s deemed weekly earning capacity in 2019 was $798.30. After receiving a copy of the worker’s income tax return for 2019, the worker’s established post-injury earning capacity was adjusted upwards to $902.27 in August 2020. On August 27, 2020, the WCB advised the worker that wage loss benefits were overpaid due to the worker’s 2019 actual earnings exceeding their established earning capacity. As a result, the WCB arranged an overpayment recovery plan.
On April 1, 2021, the worker provided the WCB with a copy of their 2020 T-4 received from their employer, noting it did not correctly reflect their income in 2020 as they had received holiday pay for 2019 and 2020, as well as a federal government wage subsidy related to the Covid-19 pandemic. On April 13, 2021, a WCB payment assessor reviewed the information from the worker and determined the worker’s actual post-injury earnings in 2020 were $1,278.03 per week and that the WCB overpaid the worker $11,887.01 in 2020. The WCB advised the worker of the overpayment on April 16, 2021.
The worker provided additional information regarding their earnings to the WCB on May 23, 2021. At that time, the worker stated that due to the Covid-19 pandemic, their hours were cut so that they only worked three days per week, instead of five as of March 29, 2020. Further, the worker advised their employer received a wage subsidy offered by the federal government to help pay wages and the worker noted their belief that the subsidized wages for the two days they could not work each week were related to severance pay and as such, should not be considered earnings. Accordingly, the worker argued they had not been overpaid.
On June 2, 2021, the WCB advised the worker the information had been reviewed however, there would be no change to the earlier decision the worker was overpaid. On June 24, 2021, the worker provided a June 13, 2021 letter from their employer confirming the subsidy from the federal government which allowed them to top up the worker’s wages beyond the hours actually worked and that this program would end on July 4, 2021.
The WCB received the worker’s complete income tax information for 2020 on July 15, 2021 and on July 20, 2021, the overpayment was recalculated as $16,859.24. The WCB advised the worker of the new overpayment amount on July 23, 2021.
On August 3, 2021, the worker requested reconsideration of the WCB’s decision to Review Office. The worker again submitted that the top-up to their wages was from a federal government subsidy program paid to their employer and as they had not worked those two days per week, the amount they were paid for those days should not be counted as part of their income. Review Office determined on September 28, 2021 that the worker was overpaid $16,859.24 and was required to repay the overpayment. Review Office agreed the top-up amount paid to the worker by their employer was a subsidy but noted that information provided on the federal government’s website regarding the wage subsidy indicated workers should include income received from the subsidy program on their income tax returns and therefore found the wages received were taxable income. Accordingly, as the income received was taxable, it was to be included when calculating the worker’s earnings.
The worker filed an appeal with the Appeal Commission on October 8, 2021 and a file review was arranged for January 26, 2022.
Following the hearing, the appeal panel requested additional information prior to discussing the case further. The requested information was later received and forwarded to the interested parties for comment. On March 15, 2022, the appeal panel met further to discuss the case and render its final decision on the issues under appeal.
Applicable Legislation and Policy
The issues for determination in this appeal relate to whether the worker has been overpaid benefits and if so, whether the overpayment must be repaid. In determining the worker’s appeal, the panel is bound to apply the provisions of The Workers Compensation Act (the “Act”) and regulations under that Act as well as the policies established by the Workers Compensation Board.
The Act provides in s 4(1) that when a worker sustains personal injury by accident arising out of and in the course of the employment, they are entitled to compensation for their loss of earnings resulting from that accident. Section 4(2) provides that:
Payment of wage loss benefits
4(2) Where a worker is injured in an accident, wage loss benefits are payable for his or her loss of earning capacity resulting from the accident on any working day after the day of the accident, but no wage loss benefits are payable where the injury does not result in a loss of earning capacity during any period after the day on which the accident happens.
The Act further provides that overpayment of compensation can be recovered from the recipient, as follows:
Recovery of overpayments
109.2 Where a person receives an overpayment of compensation, being an amount that the board determines is in excess of that to which the person is entitled, the board may recover the overpayment from the person, or from the executors or administrators of the person, as a debt due to the board.
Right of set off
109.3 Notwithstanding section 23 and without limiting the board's remedies for recovery, any money due the board under this Act may be set off against compensation that is or may become payable to the person who is indebted to the board.
The WCB has established Policy 22.214.171.124, Establishing Post-Accident Earning Capacity (the “Earning Capacity Policy”) to provide a framework for how it will determine a worker’s post-accident earnings. This policy provides in part that:
A complete list of the components of post-accident earnings is not realistic because of the variety of ways that a worker is compensated in today’s workplace. The guiding principles to be used in any situation when the specific item is not described later in the policy include:
• The worker’s earning capacity will be based on earnings that best represent the amount the worker is capable of earning after the accident.
• Post-accident earnings may include either actual or estimated earnings.
• When a worker has actual earnings, the actual earnings will be used unless the WCB demonstrates that the worker is capable of earning more than the amount actually earned.
• The types of income used to calculate post-accident earnings should be consistent with the types of income that may be used to calculate pre-accident earnings.
• Except where they are excluded below, employment benefits earned or accrued while receiving WCB benefits will be included in post-accident earnings.
• Employment benefits earned or accrued prior to receiving WCB benefits will not be included in post-accident earnings.
2. Sources included in Actual Post-Accident Earnings for workers with accidents on or after January 1, 1992
A wage-loss policy that deals with a loss of earning capacity must calculate post-accident earnings more comprehensively than a lay definition of earnings. The WCB may use either actual or estimated earnings. For the purpose of this policy, actual earnings will include
a) Earnings from employment
i) Any income, less CRA probable deductions for business expenses, which the worker earns from employment.
4. Specific exclusions from Actual Post-Accident Earnings regardless of the Date of Accident:
An average earnings review occurs whenever the WCB recalculates a worker's average earnings. The principles described earlier in this policy are generally used when determining whether to include a source of income in the worker’s post-accident earnings. However, some income sources are excluded. These exclusions apply regardless of the date of accident. They are listed below:
a) Any type of income, such as foster parents’ payments, which is specifically excluded from average earning calculations.
b) Retirement pension benefits.
c) An annuity or pension payment from the WCB that the worker receives as a result of a previous compensable injury.
d) CPP Disability Child benefits.
e) Vacation pay cash-out or severance pay.
f) Insurance benefits that are designated for mortgage or loan payments.
The WCB has also established Policy 35.40.50, Overpayment of Benefits (the “Overpayment Policy”) to outline when the WCB will recover overpayments from an injured worker or their dependant. This Policy sets out that the WCB strives to prevent overpayments of benefits; however, the payment of benefits in as timely a manner as possible means that some overpayments will inevitably occur. The Policy provides, in part, that:
II. Recovery of overpayments:
All overpayments will be pursued for recovery when:
1. the overpayment is a result of an administrative error that the injured worker or worker's dependant is notified of within 30 days of it occurring. Administrative errors noted after 30 days will be pursued if the injured worker or /injured worker's dependant could or should have been aware of the error. These are not adjudicative or entitlement decision errors. These are errors made by the WCB in implementing a decision, i.e. adjustments made to earnings to correct clerical or mathematical errors;
IV. Decision not to proceed with recovery of an overpayment:
The WCB will not pursue an overpayment when:
1. the overpayment is less than $50; or
2. the overpayment resulted from an adjudicative or entitlement decision reversal at the primary level, Review Office or Appeal Commission.
With the exception of those overpayments resulting from fraud, deliberate misrepresentation, withholding of key information by the worker or dependant or duplication of benefits paid from another source for the same injury, the WCB may decide not to pursue an overpayment when:
1. the receivable amount is not cost-effective to pursue;
2. recovery of the overpayment, in whole or in part, would create financial hardship for the injured worker or the worker’s dependant;
3. the individual who received the overpayment has died without sufficient funds in the estate to cover the overpayment; or
4. the overpayment occurred more than three years prior to its discovery by the WCB.
VI. Reconsideration and appeal of an overpayment:
Decisions about the establishment, amount or requirement to pay back an overpayment are subject to reconsideration and appeal. Anytime a reconsideration or appeal is formally received and actively being pursued on an overpayment, recovery attempts will be suspended pending the outcome of the decision. Recovery action may be reinstated before the reconsideration or appeal decision is issued if the WCB has evidence that the primary purpose of the appeal is to defer the recovery process.
The Administrative Guidelines to the Overpayment Policy provide in part that administrative errors will be collected if the worker or their dependant is notified of the error within 30 days of the overpayment. Administrative errors more than 30 days old will only be pursued if the error could or should have been obvious to the worker or dependant. The Administrative Guidelines define administrative errors to include, but are not limited to:
• incorrect use of available information provided by the worker or employer
• incorrect information provided by the employer
• available information was not collected or used when establishing the amount payable
• key stroke errors, etc.
The worker represented themselves in the appeal and provided written submissions for the panel’s consideration.
The worker’s position, as outlined in their October 8, 2021 Appeal of Claims Decision form provided to the Appeal Commission, is that the overpayment amount is not correctly calculated as the worker’s 2020 T4 income includes amounts that ought not to be included. Specifically, the worker submits that the portion of their wages from the primary source of income that were paid by the employer using the Canada Emergency Wage Subsidy (“CEWS”) from March 29, 2020 through to July 10, 2021 and further, that the T4 income statements include vacation payout and severance pay, which should not be included in calculating the worker’s actual post-accident earning capacity.
In response to the appeal panel’s request for further information as to the nature of the worker’s T4 income reported for 2020, the worker provided a document confirming receipt of severance pay from one employer on July 24, 2020 in the amount of $720.00 as well as a document confirming receipt of payment of $2,996.06 for 150 hours of banked time on March 26, 2020. With respect to the latter payment, the worker explained that this was received as lump sum vacation pay payout and overtime for the period from June 2019 to March 13, 2020 but noted that they were unable to obtain or provide any confirmation of that statement and therefore, would be “withdrawing the claim for the holiday pay.”
The worker’s position with respect to the income received from their employer in 2020 in conjunction with the CEWS is further described in their submission to Review Office dated August 3, 2021 in which the worker stated:
“There has been a significant amount of money paid to me from the CEWS govt program and because I didn’t work for it, it must be considered as a subsidy just as the name says…this was never worked for so it is not a wage. This is a severance paid to workers by the Canadian Govt so the economy would not collapse. The amount I was paid through this Subsidy Program was $482 per week starting March 29, 2020 and ended July 10, 2021….I have enclosed a fact sheet from WCB Alberta, I assume the facts and regulations for WCB are similar, I could not find one for WCB Manitoba, and highlighted the section that applies here. If WCB does not consider this money as wages for premiums, how can it consider this income. It should be regarded as a “Subsidy.”
The employer did not participate in the appeal.
There are two questions for the panel to determine in this appeal. Firstly, has the worker been overpaid benefits in the amount of $16,859.24 and secondly, if so, whether the overpayment must be repaid. For the worker’s appeal to succeed, the panel would have to determine that the WCB incorrectly calculated the overpayment or that there was not any overpayment of benefits, and further that in the circumstances, the worker should not be required to repay any overpayment amount to the WCB. As outlined in the reasons that follow, the panel determined that the overpayment amount was correctly calculated, and that the worker must repay correct overpayment amount to the WCB.
The question of overpayment in this case relates to the WCB’s determination on July 23, 2021 that based upon the worker’s actual 2020 earnings, as established by the T4 statements provided to the WCB, the worker’s actual post-accident earning capacity was in excess of the worker’s 2020 deemed post-accident earning capacity. In January 2020, the WCB established that the worker’s deemed post-accident earning capacity was $798.30 per week. Based upon the worker’s 2019 actual earnings, on August 17, 2020 the WCB determined that the worker’s deemed post-accident earning capacity was $902.27 weekly. The WCB provided partial wage loss benefits to the worker in 2020 based upon the difference between the worker’s pre-accident gross average earnings (as indexed) of $1,465.97 weekly and the deemed post-accident earning capacity in effect at the relevant time. The WCB continued to pay partial wage loss benefits to the worker through 2020, totaling $16,859.24.
As detailed in the worker’s claim file, the WCB recalculated the worker’s 2020 post-accident earning capacity on April 13, 2021 based upon the T4 statement provided by the worker for their primary source of employment in 2020. On the basis of this information, the WCB determined that the worker’s actual post-accident earning capacity in 2020 was $1,278.03 per week and advised the worker on April 16, 2021 that, taking this amount into account, the worker was overpaid wage loss benefits in 2020 by $11,887.01. Then, on July 20, 2021, the WCB again recalculated the worker’s 2020 post-accident earning capacity, based upon T4 statements for the worker provided by the Canada Revenue Agency to the WCB on that date. The T4 statements confirmed that the worker, in 2020, earned a total of $76,529.90, or $1,471.73 weekly from three sources. Based upon the worker’s actual 2020 earnings, the WCB determined that the worker earned more than their deemed post-accident earning capacity in 2020 and calculated that the worker therefore received excess partial wage loss benefits of $16,859.24. On July 23, 2021, the WCB advised the worker of the requirement to repay this amount.
The worker’s position as outlined in their October 8, 2021 Appeal of Claims Decision form provided to the Appeal Commission, is that the overpayment amount is not correctly calculated as the worker’s 2020 T4 income includes amounts that ought not to be included. Specifically, the worker submits that the portion of their wages from the primary source of income that were paid by the employer using the Canada Emergency Wage Subsidy from March 29, 2020 through to July 10, 2021. The employer confirmed, in a letter dated June 13, 2021 addressed “To whom it may concern” that the worker’s earned wages were reduced beginning March 29, 2020 from $1206.40 weekly to $723.84 weekly due to the pandemic, but that the employer was able to “top up” the worker’s wages to the full amount as a result of the federal subsidy program. The worker submits that this top-up amount is effectively a “severance package paid for by” Canada. In their August 3, 2021 submission to Review Office, the worker argued that because they did not work for this top up, it is not a wage, and that this was the position taken by the WCB in Alberta, referencing an Employer Fact Sheet with respect to how the subsidy impacts employer premiums in that jurisdiction. The worker further argued that a portion of their 2020 T4 income from a different employer was severance pay and vacation pay payout.
The panel requested the WCB to provide further information with respect to the details of the worker’s 2020 income and received information from the WCB on February 11, 2022 indicating that the worker’s 2020 T4 income included $720 in severance paid on July 24, 2020 as well as $2996.06 in relation to 150 banked hours on March 26, 2020. The worker subsequently confirmed to the panel by letter dated February 19, 2022 that they are not pursuing the recalculation of their 2020 income on the basis it includes holiday pay but do maintain that the severance pay should not be included and that the top-up amount paid using the CEWS is severance pay rather than wages.
The panel noted that the provisions of the Earning Capacity Policy specifically exclude income from vacation pay cash-out or severance pay in the determination of a worker’s post-accident earnings. In this case, there is T4 evidence that the worker received the sum of $720 as a retiring allowance, described as a “separation payment” in a letter to the worker dated July 24, 2020 terminating that employment. The panel is satisfied that this amount meets the definition of severance pay and finds that it ought to have been excluded in the calculation of the worker’s actual 2020 post-accident earnings.
As outlined above, the worker initially submitted that there was a further payout of vacation pay from another employer included in the 2020 T4 income statements, but was not able to provide evidence to confirm this and withdrew that submission. There is no evidence before the panel to confirm that any amount included in any of the worker’s three T4 income statements for 2020 related to a vacation payout and we therefore make no findings in this regard.
The worker further submitted that their 2020 post-accident earnings should not include the top-up amounts received from the employer of some $482.56 per week beginning March 29, 2020 and continuing to the end of the year. The worker’s position is that this is not income, but equivalent to severance pay as the worker’s hours were reduced due to the Covid-19 pandemic and they only “earned” $723.84 weekly from March 29, 2020 through to the end of 2020 with the balance received as a top-up from the employer. The file evidence confirms that the employer was in receipt of a CEWS that they passed on to the worker so as to maintain the worker’s income level despite the reduction in hours worked due to the pandemic.
The panel considered whether there should be any adjustment to the worker’s T4 income from this employer on the basis that the Earning Capacity Policy excludes severance pay from the total income in calculation actual post-accident earnings. The WCB position on this question, as provided to the Review Office on September 21, 2021 is that any amounts paid by an employer to a worker as earnings, regardless whether the funds used to make that payment come from a subsidy program, would be considered employment income and would be used in calculating wage loss benefits. The worker’s asserts that the top-up amounts are effectively severance pay, but the panel does not agree with this position, noting that the worker continued in this employment beyond March 29, 2020 and there was no severance of the employment relationship, only a reduction in hours of work. While the panel notes that the employer was able to continue to top up the worker’s wages to their pre-pandemic income amount due to the employer’s receipt of the federal subsidy from CEWS, we do not find that the nature of the payment to the worker is transformed by the fact the employer chose to use the subsidy received to pay a top-up to the worker whose hours were reduced because of the pandemic. We further note that there is no distinction on the worker’s T4 record relating to this income, which is wholly reported to CRA as employment income received in 2020. The Earning Capacity Policy clearly sets out that actual earnings includes earnings from employment, defined as “[a]ny income, less CRA probable deductions for business expenses, which the worker earns from employment.” The approach taken by the WCB in this case is consistent with the provisions of the Earning Capacity Policy. As such, the panel is satisfied that the whole of the worker’s T4 income from this particular source has correctly been included in the calculation of the worker’s actual post-accident earnings for 2020.
In sum, the panel finds that the worker’s 2020 actual post-accident earnings should be adjusted to exclude the gross payment of $720 as severance pay received by the worker, but otherwise should include all T4 employment income amounts recorded. The panel is satisfied that the exclusion of the $720 severance pay amount from the worker’s 2020 post-accident earnings would not have any impact upon the calculation of the 2020 overpayment of benefits. This is because the worker’s recalculated actual earnings in 2020 remain well in excess of their pre-accident earning capacity such that the worker did not have any loss of earning capacity in 2020 and therefore no entitlement to wage loss benefits in that year.
Finally, the panel considered whether the Overpayment Policy requires that the worker repay the amount of the overpayment. The claim file documents that when the WCB confirmed in April 2021 that the worker’s actual 2020 income was in excess of their deemed post-accident earning capacity, it notified the worker of an overpayment within 30 days as required by the Overpayment Policy. When the WCB received confirmation on July 15, 2021 of additional employment income received by the worker in 2020, the worker’s actual post-accident earnings were again recalculated and on July 23, 2021, the worker was notified of the recalculated overpayment amount of $16,859.24 which is at issue in this claim.
The Overpayment Policy sets out that all overpayments will be pursued for recovery when the overpayment is a result of an administrative error that the worker is notified of within 30 days of it occurring. The Policy speaks to administrative errors as including any errors made in calculating the amount payable relating to the entitlement decision, such as incorrect information for wages such as rate of pay, hours worked, shift premium, vacation or overtime pay, earnings from prior years, and other examples. In such cases the Overpayment Policy sets out that the WCB will pursue the amount owing unless it determines not to pursue it because: “…the receivable amount is not cost-effective to pursue; recovery of the overpayment, in whole or in part, would create financial hardship for the injured worker or the worker’s dependant; the individual who received the overpayment has died without sufficient funds in the estate to cover the overpayment; or the overpayment occurred more than three years prior to its discovery by the WCB.” There is no evidence before the panel to support that any of these circumstances are applicable in the present case and therefore the panel is satisfied that the worker is responsible for the overpayment and the overpayment must be repaid by the worker.
The panel therefore concludes, on the basis of the evidence before us and on the standard of a balance of probabilities, that the worker has been overpaid benefits in the amount of $16,859.24 and that the overpayment must be repaid. The worker’s appeal is denied.
K. Dyck, Presiding Officer
J. Peterson, Commissioner
M. Kernaghan, Commissioner
Recording Secretary, J. Lee
K. Dyck - Presiding Officer
(on behalf of the panel)
Signed at Winnipeg this 28th day of March, 2022