Decision #62/22 - Type: Workers Compensation

Preamble

This appeal involves the calculation of the appellant firm's assessments. Specifically, the appellant firm argues their current and previous years assessments should be recalculated based on the combined value of cost relief granted on multiple claims and that cost relief credit from outside the experience period should be included when calculating the employer’s subsequent assessment rates.

A videoconference hearing was held March 15, 2022 to consider the employer's appeal.

Issue

1. Whether or not the WCA and WCB Policies allow the firm’s current and previous years assessments to be recalculated based on the combined value of cost relief granted on multiple claims; and 

2. Whether or not the WCA and WCB Policies permit the inclusion of cost relief credits from outside the experience period when calculating the employer’s subsequent assessment rates.

Decision

1. The WCA and WCB Policies do not allow the firm’s current and previous years assessments to be recalculated based on the combined value of cost relief granted on multiple claims; and 

2. The WCA and WCB Policies do not permit the inclusion of cost relief credits from outside the experience period when calculating the employer’s subsequent assessment rates.

Background

On January 7, 2021, the firm was provided with 50% cost relief in respect of claim costs for a 2018 WCB claim on the basis that the WCB determined the worker in that claim had a pre-existing medical condition that significantly prolonged the claim. The total cost relief granted for the 2018 claim was determined to be $11,771 for the 2020 rate setting year (experience period of January 1, 2016 to December 31, 2018) and $8,021 for the 2021 rate setting year (experience period of January 1, 2017 to December 31, 2019).

On May 7, 2021, the firm was granted 50% cost relief in respect of a 2016 WCB claim as Review Office determined the worker in that claim had a pre-existing medical condition that prolonged the claim. The WCB’s Assessment Services determined the cost relief to be $3,487 for the 2017 rate setting year (experience period of October 1, 2015 to September 30, 2016); $3,240 for the 2018 rate setting year (experience period of January 1, 2016 to December 31, 2016); $3,240 for the 2019 rate setting year (experience period of January 1, 2016 to December 31, 2017); and $3,240 for the 2020 rate setting year (experience period of January 1, 2016 to December 31, 2018).

The WCB’s Assessment Services received an email message from the firm’s representative dated June 8, 2021 requesting clarification of the rate readjustment and rebate calculations in respect of the 2016 and 2018 WCB claims where cost relief was granted. The representative noted their belief the readjustment and rebate should allow for a reduction in the firm’s 2020 assessment rate. As a result, a Cost Relief Review was conducted on June 15, 2021. The WCB determined: “The cost relief process is carried out on a per claim basis not on total claim costs of the firm.” The WCB found that the 50% claim costs relief provided in respect of the 2016 claim did not meet the threshold amounts as set out in the policy. The WCB advised the firm’s representative accordingly, by email of June 15, 2021 setting out the annual claim cost amounts for the 2016 claim advising of the WCB’s process of recalculating assessment rates on a per claim basis where the claim costs remaining after cost relief is provided exceed the threshold amount set out in WCB Policy 31.05.10, Cost Relief/Cost Transfer Policy – Class E.

On June 22, 2021, the firm’s representative requested further clarification from the WCB’s Assessment Services, noting their belief the firm’s total cost relief credit exceeded the WCB’s threshold amount and as such, the firm’s 2020 rate should be recalculated. On June 23, 2021, the WCB advised the firm’s representative that WCB Cost Relief Policy “…never contemplated adding up multiple claims to meet the threshold.” The WCB further advised that as the costs had been reviewed and it was found they did not meet the threshold for a recalculation to occur, the future rates would not be recalculated.

On June 28, 2021, the Review Office granted 50% cost relief to the firm on another 2016 claim based on a finding that the injured worker had a pre-existing medical condition that significantly prolonged the claim. On July 27, 2021, the WCB conducted a cost relief review of the firm’s costs in relation to that claim and determined that the remaining costs did not meet the threshold amounts to recalculate future assessment rates.

On August 25, 2021, the firm’s representative requested reconsideration of the WCB’s Assessment Services’ June 15, 2021 decision to the Reconsideration Committee. The representative agreed that the cost relief granted on the 2016 claim did not meet the threshold for a recalculation of the assessment rate; however, they noted that when the cumulative amounts from 2016 including the cost relief amounts granted to the firm on another claim from 2016, and a 2018 claim are considered, the total amount did meet the threshold and accordingly, the firm’s rate should be recalculated.

On October 14, 2021, the Reconsideration Committee upheld the decision of the WCB’s Assessment Services, confirming the cost relief amounts for the firm’s two 2016 WCB claims and the 2018 claim, and confirming that those amounts could not be combined to meet the threshold amount established under the WCB’s policies to qualify for a recalculation of the firm’s assessment rates. The Reconsideration Committee found the cost relief credits related to the firm’s 2016 WCB claims could not be included when calculating the firm’s 2022 assessment rate.

The firm filed an appeal with the Appeal Commission on October 26, 2021. A videoconference hearing was arranged and held on March 15, 2022.

Following the hearing, the appeal panel requested additional information prior to discussing the case further. The requested information was later received and was forwarded to the interested parties for comment. On April 26, 2022, the appeal panel met further to discuss the case and render its final decision on the issues under appeal.

Reasons

Applicable Legislation

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

The Act defines “accident fund” in s 1 as “…the fund provided for the payment of compensation, outlays, and expenses, under Part I of this Act”. Section 73 of the Act provides for the continuation of the accident fund and provides for establishment of classes of employer for the purpose of assessment. Class E Employers are defined in s 73(2)(e) as “Employers in all industries in Manitoba not included in the above classes and not excluded by regulation under section 2.1.”

Section 81(1) provides for annual assessments to be made to maintain the accident fund as follows:

Annual assessment for accident fund 81(1) For the purpose of creating and maintaining an adequate accident fund, the board shall every year assess and levy upon and collect from the employers in each class by an assessment or by assessments made from time to time rated upon the payroll, or in such other manner as the board considers advisable or necessary, sufficient funds, according to an estimate to be made by the board in each year

(a) to meet the costs for the year, including administrative expenses, the future cost of claims, and changes in liabilities, so as to prevent employers in future years from being unduly burdened with the costs arising from accidents in previous years;

(b) to provide a stabilization fund to meet the costs arising from extraordinary events that would otherwise unfairly burden the employers in a class, sub-class, group, or sub-group in the year of the events;

(c) to provide a fund to meet the part of the cost of claims of workers that, in the opinion of the board, results from

(i) pre-existing or underlying conditions, (ii) an occupational disease where the exposure to the probable cause of the injury occurs outside Manitoba, (iii) a loss of earnings from an employment other than that of a worker's employer at the time of the accident, (iv) an increase in benefits under subsection 40(5), 45(3) or 45(4), or (v) such other circumstances as the board determines would unfairly burden a particular class, sub-class, group or sub-group, or employer….

Section 81(3) provides discretion to the WCB to make assessments “…in such manner and form, and by such procedure, as the board may deem adequate and expedient….” The authority for the WCB to establish assessment rates is set out in s 82 of the Act which reads in part as follows:

Rates for kinds of employment in same class 82(1) The board may establish rates of assessment among sub-classes, groups or sub-groups in the same class with such differences in rates among them as the board considers fair and just…

Sections 82(2) and (3) permit the WCB to reduce or increase the amount of any assessment made upon an employer based upon the employer’s record and experience. To determine the record and experience of a firm, the WCB may, pursuant to s 82(4):

(a) exclude the cost of compensation awarded to the workers of the employer resulting from the negligence of another employer or the workers of another employer; (b) include the cost of compensation awarded to the workers of another employer resulting from the negligence of the employer or the workers of the employer; (c) deem the cost of any claim in which a worker dies in an accident to be an amount determined by the Board of Directors based on actuarial principles; or (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 also has authority under s 82(8) to “…limit the time within which an employer, in respect of determinations made in previous years, may be reclassified, reassessed or entitled to a transfer of costs from the employer's record and experience.”

The WCB has established Policy 31.05.05, Rate-Setting Model for Class E Employers (the “Rate-Setting Policy”) to calculate assessment rates for Class E employers. This Policy provides, in part, that:

The rate-setting model balances collective liability and individual liability in order to achieve the following goals: • Promote and enhance workplace safety and health; • Promote effective workplace disability management programs; • Allocate the costs of the compensation system among employers in a fair manner; • Balance rate stability with rate responsiveness; and • Maintain the financial integrity of the workers compensation system. The policy should be read in conjunction with the Administrative Guidelines (Guidelines). The Guidelines provide specifics on how rates are calculated and include a glossary of commonly used terms.

The Administrative Guidelines to the Rate-Setting Policy detail the steps used to determine assessment rates for employers with more than one full calendar year of payroll within the Experience Period. Step 2 of this process is relevant to this appeal and provides as follows:

Step 2 - Calculate the Rate-Setting Claim Costs in the Experience Period The Rate-Setting Claim Costs during the Experience Period must be determined for each employer. The Experience Period has two components: the Rate-Setting Claim Costs paid within the cost payment period and the accident years of the claims on which those costs are paid. For each employer, the actual, proxy and transferred claim costs (Claims Cost Experience) for all of the claims that occurred over the Experience Period are summarized.

The employer's Rate-Setting Claim Costs during the applicable Experience Period are: • Claims Cost Experience which includes: • Claim costs assigned to the individual employer; • Proxy costs which may be assigned as a result of an accepted fatality claim; and • Claim costs which are transferred to the employer under policy 31.05.10, Cost Relief/Cost Transfer - Class E, policy 31.05.15, Cost Transfer - Self Insured and policy 31.05.20, Transfer of Assessment Rates and Claim Costs Experience on Change of Ownership. • Less Costs Excluded from Rate Setting as defined in Appendix D of the Administrative Guidelines. … The Experience Period for the Rate-Setting Year is defined in Table B1 below (except for the 2018 and 2019 transition years which are displayed in Table B2):

Table B1 - Experience Period Rate-Setting Year Cost Payment Period Accident Years Year t January 1, Year t-4 to December 31, Year t-2 Year t-4 to Year t-2 Where "t" represents the rate-setting year. For example, if the rate-setting year is 2020, then the experience period covers costs paid from January 1, 2016 to December 31, 2018 for claims with accident dates from 2016 to 2018.

Table B2 - Experience Period for the 2018 and 2019 Transition Period Rate-Setting Year Cost Payment Period Accident Years 2018 January 1, 2016 to December 31, 2016 2012, 2013, 2014, 2015, 2016 2019 January 1, 2016 to December 31, 2017 2014, 2015, 2016, 2017

Appendix D of the Administrative Guidelines to the Rate-Setting Policy provides definitions applicable to Class E firm rate-setting, including the following:

4. Claim Costs Experience: For the applicable Experience Period, the employer's Claim Costs Experience includes: • Claim costs assigned to the individual employer; • Proxy costs which may be assigned as a result of an accepted fatality claim; and • Claim costs which are transferred to the employer under policy 31.05.10, Cost Relief/Cost Transfer - Class E, policy 31.05.15, Cost Transfer - Self Insured and policy 31.05.20, Transfer of Assessment Rates and Claim Costs Experience on Change of Ownership.

5. Costs Excluded from Rate Setting: The Costs Excluded from Rate Setting for an employer are as follows: • the costs incurred for claims with accident years outside the experience period; • ineligible (disallowed) claims; • translation or interpretation services; • courier or mail delivery expenses; • compliance investigative (surveillance) costs; • WCB medical advisor fees; • group life insurance benefits; • medical review panel expenses; • external legal counsel fees or expenses; • wages paid for the day of the accident; and • claim costs relieved or transferred as provided for in policy 31.05.10, Cost Relief/Cost Transfer - Class E, policy 35.40.50, Overpayment of Benefits, and policy 44.20.50.20, Noise-Induced Hearing Loss. The WCB has also established Policy 31.05.10, Cost Relief/Cost Transfer – Class E (the “Cost Relief Policy") to provide a framework for the removal of claim costs from a Class E Employer's Claim Costs Experience and assigning them to a collective cost pool (Cost Relief) and for the transfer of claim costs from a Class E Employer to another employer in Classes A to E (Cost Transfer). The Cost Relief Policy outlines that the goal of cost relief and cost transfer is to ensure fairness and accountability for employers, and to achieve that goal, the WCB may re-allocate claim costs to reflect collective or individual responsibility. This Policy sets out a process for addressing cost relief and cost transfer, and provides in part that:

…the basic process for Cost Relief and Cost Transfer is as follows:

• Initially, all claim costs are charged to the Claim Costs Experience of the Accident Employer. • Based on information provided, the WCB considers and processes Cost Relief and Cost Transfers when the Class E Employer is eligible under this policy. • If Cost Relief is provided, the removed costs are charged to the Cost Apportionment Fund or the Work Experience Program Fund, as applicable. • If Cost Transfer is provided, the removed costs are transferred from one employer to another employer. • If Cost Relief or Cost Transfer is provided, this alters the Claim Costs Experience used to calculate the employer's assessment rate(s). • When Cost Relief or Cost Transfer affects an employer's future year(s) assessment rate, the revised Claim Costs Experience is used to calculate the employer's assessment rate(s). • When Cost Relief or Cost Transfer affects the Claim Costs Experience used to calculate an employer's assessment rate in the current year and/or prior years, the process is subject to a threshold set out in Appendix B of this policy along with a limit to the number of years assessment rates will be retroactively recalculated. • If the total Cost Relief or Cost Transfer credit is less than the threshold amount, the revised Claim Costs Experience is used to calculate the employer's future year(s) assessment rate. • Once the total Cost Relief or Cost Transfer credit reaches or exceeds the threshold amount, the WCB applies the Cost Relief or Cost Transfer for any Rate-Setting Year within the current Experience Period. The WCB will retroactively recalculate any applicable year's assessment rate.

Appendix A to the Cost Relief Policy sets out the definitions applicable to the Policy, including the following:

Claim Costs Experience (Class E Employer): For the applicable Experience Period, the Class E Employer's Claim Costs Experience includes: • Claim costs assigned to the individual employer; • Proxy costs which may be assigned as a result of an accepted fatality claim; and • Claim costs which are transferred to the Class E Employer under policy 31.05.10, Cost Relief/Cost Transfer - Class E, policy 31.05.15, Cost Transfer - Self Insured and policy 31.05.20, Transfer of Assessment Rates and Claim Costs Experience on Change of Ownership.

Cost Relief: The process of moving claim costs from the Claim Costs Experience of the Class E Employer to collective cost pools. Costs will either be moved to the Cost Apportionment Fund or the Work Experience Program Fund, depending on the circumstances.

Cost Transfer: The process of moving claim costs from the Claim Costs Experience of the Accident Employer to another employer.

Costs Excluded from Rate Setting (Class E Employer): The Costs Excluded from Rate Setting for a Class E Employer are as follows: • the costs incurred for claims with accident years outside the experience period; • ineligible (disallowed) claims; • translation or interpretation services; • courier or mail delivery expenses; • compliance investigative (surveillance) costs; • WCB medical advisor fees; • group life insurance benefits; • medical review panel expenses; • external legal counsel fees or expenses; • wages paid for the day of the accident; and • claim costs relieved or transferred as provided for in policy 31.05.10, Cost Relief/Cost Transfer - Class E, policy 35.40.50, Overpayment of Benefits, and policy 44.20.50.20, Noise-Induced Hearing Loss.

Experience Period: The time period and claim accident years that will be included to determine a Class E Employer's Rate-Setting Claim Costs.

Appendix B to the Cost Relief Policy sets out the threshold amount for recalculation of current year and prior years assessment rates.

Appellant Firm’s Position

The appellant firm was represented by an advocate who made an oral submission on behalf of the appellant and provided a written copy of that submission to the panel following the hearing. The advocate provided a further written submission in response to the additional information obtained by the panel from the WCB subsequent to the hearing.

The appellant’s position with respect to the first question on appeal is that the WCB erred in its interpretation of the provisions of the Act and WCB Policies as relating to the application of the threshold set out in Appendix B to the Cost Relief Policy. The appellant firm states the Policy requires consideration of the combined value of cost relief granted on multiple claims in respect of any rate-setting year as against the threshold amounts, rather than based on the value of cost relief granted on any single claim as the WCB has determined. In respect of the second question on appeal, the appellant’s position is that the Act and WCB Policies further permit the inclusion of cost relief credit from outside the experience period in calculating the employer’s future assessment rate(s) when the value of cost relief granted to the employer is below the threshold amount for any given year.

The advocate for the appellant relied upon s 81(1) of the Act as providing a basis for its position that the WCB has failed to allocate the portion of the employer’s claim costs that would unfairly burden the employer (i.e. the cost relief granted) to the collective fund and is requiring the employer to remain responsible for those costs by not applying cost relief to the employer’s rate assessments, retrospectively or prospectively. The advocate argued this “results in overcharges to the employer where cost relief is not applied to the retroactive rate recalculations and where cost relief credit that does not meet the threshold is not applied to future year(s) rate calculations.”

The appellant’s position is that the thresholds established under the Cost Relief Policy, Appendix B should be applied to the total cost relief granted in respect of any rate setting year, noting the Policy wording “Once the total Cost Relief or Cost Transfer credit reaches or exceeds the threshold amount, the WCB applies the Cost Relief or Cost Transfer for any Rate-Setting Year within the current Experience Period. The WCB will retroactively recalculate any applicable year’s assessment rate.” The appellant noted that:

Based on the WCB’s interpretation of policy, the employer has gone through the appeal process to request cost relief on several claims, the WCB has granted cost relief and have calculated the exact value of the unfair burden, only to not apply the credit to the employer’s rate calculations and then charge for these costs again through a collective cost pool.

The appellant also submitted that the Cost Relief Policy clearly states that the when the total cost relief credit is less than the threshold amount, “the revised Claim Costs Experience is used to calculate the employer’s future year(s) assessment rate” and that “If Cost Relief…is provided, this alters the Claim Costs Experience used to calculate the employer’s assessment rate(s).” Noting that the WCB Reconsideration Committee acknowledged that a plain reading of these provisions supports the employer’s position that cost relief credits that do not meet the threshold in prior assessment years should be applied to future year(s) assessments, the appellant’s advocate argued that the lack of clarity in the Cost Relief Policy in terms of the process of applying cost relief credit to future year rate calculations should not mean the credit will not be applied. The appellant’s advocate stated that the Rate-Setting Policy provisions that limit application of the cost relief credit to specific claim years “precludes the application of cost relief credit to future year(s) rate calculations.”

The appellant’s advocate noted that the appellant is not suggesting that the Cost Relief Policy should be changed but that it should be interpreted differently so that the employer is not penalized and is reimbursed for costs deemed to be an unfair burden.

In sum, the appellant requests the application of cost relief to prior year rate recalculations where the combined value of the cost relief reaches or exceeds the threshold for a given year, and to future year rate calculations where the total value of cost relief is below the threshold for a given year, consistent with the appellant’s interpretation of the WCB policies and consistent with the Act. Any other interpretation is unfair to employers and in violation of the provisions of the Act.

Analysis:

The questions on appeal relate to whether the Act and WCB policies permit recalculation the appellant firm’s current and previous year assessments based on the combined value of cost relief granted on multiple claims and whether the Act and WCB policies permit inclusion of cost relief credits from outside the experience period when calculating the employer’s subsequent assessment rates. For the appeal to succeed, the panel would have to determine that the WCB did not properly apply the relevant provisions of the Act and the WCB policies established under that Act in relation to the appellant’s request for recalculation of current and prior year assessment or in relation to the subsequent assessments. As detailed in the reasons that follow, the panel was not able to make such findings and therefore the appeal is denied.

The panel first considered the requirements of the legislative provisions in relation to the calculation of firm assessments and how those relate to the policies established by the WCB in relation to the processes applicable to those assessments.

The legislative authority for the WCB to maintain an accident fund, as defined in s 1 of the Act, is set out in s 73 of the Act. Pursuant to s 81 of the Act, the WCB is permitted to annually assess, levy upon and collect sufficient funds from employers to maintain an adequate accident fund so as to meet the objectives set out in s 81(1).

For the purposes of this appeal, the provisions of s 81(1)(c)(i) in relation to pre-existing conditions and (v) in relation to other circumstances that the board determines would unfairly burden an employer are relevant to the issues raised by the appellant firm.

The panel noted that s 81(3) of the Act provides the WCB with a broad discretion to determine the manner and form of assessments and the procedure by which assessments are determined, on the basis that the board deems “adequate and expedient”.

In setting rates of assessment among employers within the same class under s 82 of the Act, the WCB may consider the record and experience of a firm and adjust that firm’s assessment accordingly, whether reducing or increasing the assessment, or refunding a portion of the assessment paid, or making a special additional assessment. The record and experience of a firm may, pursuant to s 82(4) 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.” Section 82(8) further permits the WCB to limit the time within which an employer may be reassessed, reclassified or entitled to a transfer of costs from the employer’s record and experience, in respect of prior assessment years.

In the context of these legislative provisions the panel considered the application of the Rate Setting Policy and Cost Relief Policy to each of the questions before the panel, in turn.

Do the WCA and WCB Policies allow the firm’s current and previous years assessments to be recalculated based on the combined value of cost relief granted on multiple claims?

The employer in this case sought and obtained 50% cost relief from the WCB in relation to two claims that originated from workplace accidents in 2016 and one claim that originated from a workplace accident in 2018. In each case, the WCB provided cost relief on the basis that the injured employee’s recovery was significantly prolonged as a result of a pre-existing non-compensable condition. Provision of such cost relief is permitted and provided for under the provisions of the Cost Relief Policy and is not at issue or in dispute here. Rather, the employer takes issue with what did, or did not, in this case, happen next in relation to the impact of those cost-relief decisions upon the employer’s current and prior year rate assessments.

The employer’s position is that the Cost Relief Policy provides that if cost relief is provided, those costs are to be removed from the employer’s record and experience and charged to another fund under the provisions of s 81(1) and further, that the Cost Relief Policy provides for this to occur when the total cost relief provided meets or exceeds the threshold amount set out in the Cost Relief Policy. The WCB however determined that the cost relief provided will only be removed from the employer’s record and experience in relation to past year assessments when it meets or exceeds the monetary threshold established in Cost Relief Policy and that this threshold is applied on a per claim basis, rather than on a combined basis as argued by the firm’s representative.

The WCB’s Cost Relief Policy outlines the process that the WCB will follow in making or revising assessments where cost relief and cost transfer has been provided and sets out a framework for removal of claim costs from the claims experience of a Class E employer to a collective cost pool, specifically the fund established under the provisions of s 81(1)(c) and for transfer of claim costs from a Class E employer to another employer.

The Cost Relief Policy provides that initially all claim costs are charged to the Claim Costs Experience of the accident employer, but where cost relief is provided, the removed costs are charged to the appropriate pooled fund. If cost relief is provided, this alters the Claim Costs Experience used to calculate the employer’s assessment rate. When cost relief affects the employer’s Claim Costs Experience used to calculate an employer’s assessment rate in the current or prior years, “…the process is subject to a threshold set out in Appendix B” of the Cost Relief Policy along with a limit to the number of years the assessment rates will be retroactively calculated.

How this threshold is applied is at issue in this appeal. The appellant believes that the Cost Relief Policy permits the inclusion of the combined total of all cost relief provided to an employer in respect of a relevant rate-setting year in relation to the threshold for recalculation of current or prior year assessments. The WCB’s position is that a plain reading of the Cost Relief Policy indicates the intention that cost relief is claim specific and combining cost relief credits from multiple claims is not permitted and that this is how the provisions are and have consistently been applied by the WCB.

The panel carefully reviewed the provisions of the Cost Relief Policy and noted that it consistently refers to the reallocation of claim, not claims, costs to reflect individual or collective responsibility. This is clear from the stated goal of the Policy and from the detail of the basic process for cost relief and cost transfer. The Policy references “Claim Costs Experience” which is defined in Appendix A to the Policy as including “…Claim costs assigned to the individual employer; Proxy costs which may be assigned as a result of an accepted fatality claim; and Claim costs which are transferred to the employer under policy 31.05.10…” and other policies relating to cost transfer. Further, the Policy defines “Costs Excluded from Rate Setting (Class E Employer) as including “claim costs relieved”. In each of these examples, the singular “claim” is used in reference to the costs relieved, whether included or excluded.

However, as noted by the appellant, the Policy also speaks to the “total Cost Relief or Cost Transfer credit” in reference to the threshold amount, indicating that where the total credit is less than the threshold, the revised Claim Costs Experience is used to calculate the future year(s) assessment rate and when the total credit reaches or exceeds the threshold amount, the WCB will apply the cost relief for any rate-setting year within the current experience period and will retroactively recalculate any applicable year’s assessment rate. The appellant argues that the inclusion of the word “total” implies multiple components are tallied to determine the Cost Relief or Cost Transfer credit that is subject to the threshold. The appellant further submits that if the threshold established under Appendix B of the Cost Relief Policy was meant to be specific to a single claim, then it would not be established for a rate setting year and would effectively function as a pre-condition for making a request for cost-relief.

The panel acknowledges that the language of the Cost Relief Policy is somewhat ambiguous in relation to what “total Cost Relief or Cost Transfer credit” means. The word “total” in this provision is not a defined term within the Policy’s Appendix A – Glossary of Terms and therefore the panel considered the wider context of the Policy in determining how this provision is to be applied. In this regard, the panel accepts that the WCB consistently applies this provision as including only the amount of cost relief credit provided in respect of any single claim. As noted in a July 16, 2021 email from the WCB Assessment Services to the employer’s representative: “This policy has been adapted many times over the years but since 2017 referencing the current threshold. Since that time our position has been that the policy is referencing an individual claim when referring to the threshold.” That interpretation is also evident from the decisions made by the WCB in respect of this employer’s recent cost relief decisions, which are the foundation of the employer’s appeal. The panel also considered that the language of the Cost Relief Policy refers to allocation or reallocation of “claim” costs, in the singular rather than plural and further, references the total Cost Relief or Cost Transfer “credit”, not “credits” as would be expected as the appropriate choice of language if the employer is correct in its interpretation of this provision.

The panel noted that in this case, the appellant employer was successful in claiming 50% cost relief in respect of three separate accident claims, but that in each case the cost relief credit or amount was less than the threshold provided under Appendix B of the Cost Relief Policy. In the result, the appellant argued that:

“…the employer has gone through the appeal process to request cost relief on several claims, the WCB has granted cost relief and have calculated the exact value of the unfair burden, only to not apply the credit to the employer’s rate calculations and then charge for these costs against through a collective cost pool….Clearly there is a problem with the current interpretation of the policy if the WCB recognizes a significant overpayment but will do nothing to reimburse the employer.”

The appellant firm’s position is that this interpretation of the provisions of the Cost Relief Policy, acts to create an unfair burden upon the employer, drawing upon s 82(4)(d) of the Act which permits the WCB, in determining an employer’s record and experience to “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 panel also considered the effect of this interpretation of the Cost Relief Policy where the cost relief credit of a particular claim does not meet the threshold set out in the Cost Relief Policy and noted that the Policy contemplates that this may be the case, setting out that “If the total Cost Relief or Cost Transfer credit is less than the threshold amount, the revised Claim Costs Experience is used to calculate the employer’s future year(s) assessment rate.” The panel finds that this provision of the Cost Relief Policy makes it plain that the WCB anticipated there would be circumstances where the cost relief granted in respect of a claim in any rate setting year will be less than the threshold amount, and therefore provided another option or approach to offering that relief in respect of future assessments. We also note that it is the effect of this future-focused provision that is the subject of the second question on appeal, as addressed below.

Taking into account the WCB’s application of the threshold as applying only to the cost relief credit in respect of any single claim, in the context of the single-claim focused language of the Cost Relief Policy and the fact that the Policy specifically contemplates and provides another approach where the cost relief credit in respect of a claim is less than the threshold amount, the panel finds that the term “total Cost Relief or Cost Transfer credit” is appropriately defined and applied in relation to the cost relief granted on any single claim. While the language used in the Policy is not without ambiguity, the panel is satisfied that this interpretation aligns with the Policy goal of ensuring fairness and accountability for employers by allocation of claim costs to reflect collective or individual responsibility.

Therefore, the panel is satisfied on the basis of the evidence before us and on the standard of a balance of probabilities that the Act and WCB Policies do not allow the firm’s current and previous years assessments to be recalculated based on the combined value of cost relief granted on multiple claims. The employer’s appeal on this question is denied.

Do the WCA and WCB Policies permit the inclusion of cost relief credits from outside the experience period when calculating the employer’s subsequent assessment rates?

Based upon the 50% cost relief provided to the employer in 2021 with respect to the three claims noted above, the employer submits that their future year assessment rate should reflect the firm’s revised claim cost experience without those costs included. The employer states that this is consistent with the provisions of the Cost Relief Policy, which provides that when cost relief is provided to an employer and the amount of that cost relief does not meet the threshold established in Schedule B to the Cost Relief Policy, the revised Claim Cost Experience is to be used to calculate the employer’s future year assessment rate. In considering the employer’s appeal on this question, the Reconsideration Committee stated that:

“While a plain reading of the above policy statement seems to support the employer representative’s position, WCB policy 31.05.10 does not speak to how the 2022 rate setting year should be calculated. We must turn to WCB policy 31.05.05 (Rate-Setting Model for Class E Employers) which sets out the rate setting framework in Manitoba.

Administrative guidelines pursuant to WCB policy 31.05.05 defines the experience period used to calculate the 2022 assessment rate….”

The employer’s representative submits that the Reconsideration Committee’s decision “…suggests that because cost relief policy 31.05.05 does not describe exactly how cost relief is applied to future year rate calculations, that cost relief will not be applied to their rate setting claim costs where the value of cost relief is below the threshold in a given year.”

The panel does not agree with this interpretation of the Reconsideration Committee’s decision. The details of the rate-setting impact of a cost relief decision need not be specifically addressed within the Cost Relief Policy as the rate-setting process is provided for in the Rate-Setting Policy. As set out in the Rate-Setting Policy, “In addition to this policy, a number of other WCB policies (including, but not limited to those listed in the References section) apply when determining a Class E employer’s assessment rate. The policies should be read, considered and applied as a whole” (emphasis added). The panel notes that the Cost Relief Policy is one of the numerous policies specifically listed in the Reference section of the Rate-Setting Policy. The panel finds no fault with this approach and agrees that the WCB policies should be read in whole when considering their application. As such, the fact that the Cost Relief Policy does not address the specific process by which a cost relief decision will be considered in setting an employer’s future assessment rates does not mean that the cost relief decision is of no consequence. As a plain reading of the Rate Setting Policy indicates, there is provision both for exclusion of cost relief granted to an employer and inclusion of cost relief charged to another employer within the relevant experience period as described in greater detail below.

As noted above, the Act provides the WCB with legislative authority and discretion in ss 81 and 82 to assess fees, determine how it will assess fees and to limit time within which an employer may be reassessed or entitled to a transfer of costs from the employer’s record and experience. Under this authority, the WCB has developed its rate-setting model and the Rate-Setting Policy explicitly defines the goals and framework of that model as applies to Class E Employers. The stated goals of the rate-setting model as set out in the Rate-Setting Policy include allocation of costs of the workers compensation system among employers in a fair manner, balancing rate stability with rate responsiveness and maintaining the financial integrity of the workers compensation system. In annually setting an assessment rate, the model considers not only an employer’s Rate-Setting Claim Costs, but also considers: the weight given to individual experience vs industry experience; the features of the rate-setting model that apply based on employer payroll; the amount an employer’s rate can change from year to year; the amount an employer’s rate can go below or above its Risk Category Base Rate; and the industries that are placed together based on claim costs.

In respect of Class E Employers, the WCB’s Rate-Setting Policy establishes that an employer’s assessment rate is determined on the basis of the employer’s Claim Costs Experience that occurred during the Experience Period. The Rate-Setting Policy Guidelines set out the detailed process used. In that process, the second step is calculating the Rate-Setting Claim Costs which are defined in Appendix D to the Policy as “The Claim Costs Experience for claims in the Experience Period less the Costs Excluded from Rate Setting.”

The Rate-Setting Policy defines the Experience Period as the “time period and claim accident years that will be included to determine Rate-Setting Claim Costs”. The panel notes the definition of Claim Costs Experience is based on the applicable Experience Period and includes claim costs assigned to the individual employer, proxy costs assigned to the employer and claim costs transferred to the employer. The definition of Costs Excluded from Rate Setting includes costs incurred for claims with accident years outside the experience period, ineligible claims, various specific expenses, wages paid for the day of accident and claim costs relieved or transferred as provided for in the Cost Relief Policy.

The Cost Relief Policy sets out that if cost relief or cost transfer is provided, “this alters the Claim Costs Experience used to calculate the employer’s assessment rate.” As outlined above, the employer’s claim costs experience is relevant to determining the employer’s Rate-Setting Claim Costs, but those costs also take into account the relevant Experience Period and exclude the Costs Excluded from Rate Setting.

The Reconsideration Committee decision outlines that the Experience Period relevant to determination of the employer’s 2022 assessment rate includes the claim costs stemming from workplace accidents that occurred in 2018, 2019 and 2020, as set out in Table B1 of the Administrative Guidelines to the Rate-Setting Model. For this reason, the WCB did not include the revised claim costs relating to the 2016 accident claims in calculating the employer’s 2022 assessment rate. The panel noted that the Rate-Setting Policy History indicates that this approach has been taken by the WCB since May 1, 2017 in respect of assessment rates for 2018 and onward. The change in the Policy at that time, as described in Note 1 of the History, indicates the WCB intentionally moved to “a calendar-based experience period of three years of claim costs on three claim accident years” which is consistent with the provisions contained in the Guidelines to the Rate-Setting Policy as outlined above.

The panel acknowledges that this aspect of the Rate-Setting Policy, when taken in conjunction with the threshold provisions of the Cost Relief Policy, effectively renders the cost relief obtained by the employer with respect to the 2016 accident claims of no effect in terms of impact on the employer’s prior, current or future assessment years, as the cost relief granted did not meet the threshold amount so that recalculation of prior and current assessment was not undertaken and related to accident years outside of the relevant Experience Period for future (i.e. 2022) rate assessment. The panel noted the employer’s position that the effect of the Reconsideration Committee’s decision is to render “the cost relief granted…meaningless to the employer.” The appellant argued convincingly that the operation of these policies in not applying the cost relief granted to the recalculation of the employer’s prior assessments where below the threshold and excluding the cost relief granted from consideration for future assessment where outside the experience period creates an unfair burden upon the employer.

The Act allows the WCB to exclude from the record and experience of a firm 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” and the panel notes that the Schedule H to the Cost Relief Policy offers another mechanism whereby a Class E Employer may seek reallocation of their claim cost experience from individual firm responsibility to collective responsibility where the costs are determined to unfairly burden the employer, as contemplated by s 82(4)(d). This may be a process that the employer firm will wish to explore further.

The panel finds that the “gap” the employer’s representative has identified in the combined application of the Cost Relief Policy and Rate-Setting Policy in this case neither invalidates the policies nor renders them unenforceable. We are satisfied that the provisions of the Rate-Setting Policy and the Cost Relief Policy considered here are consistent with and made in accordance with the legislative authority provided to the WCB to determine its own process for setting assessment rates as it considers “adequate and expedient”. The legislation is permissive in respect of excluding claim costs that “in the board’s opinion, would unfairly burden a particular employer” when determining the record and experience of an employer, and in permitting the imposition of time limits in respect of adjustments to prior year assessments. Further, the panel notes that the Reconsideration Committee decision acknowledges a need to review and enhance the Cost Relief Policy in response to the concerns raised by the employer and that the WCB has committed to review that policy in 2022. We agree that this is appropriate in the circumstances and further suggest that it should be undertaken in concert with a review of the related policies, including the Rate-Setting Policy in respect of its application to decisions made under the Cost Relief Policy.

Further, the panel is satisfied that the file evidence supports a finding that these policy provisions as outlined above have been appropriately applied by the WCB, resulting in the exclusion of the cost relief provided to the employer on the two 2016 accident claims where 50% cost relief was granted as these claims are outside the Experience Period for calculation of the employer’s 2022 assessment rate.

The panel finds on the basis of the evidence before us and on the standard of a balance of probabilities that the WCA and WCB Policies do not permit the inclusion of cost relief credits from outside the experience period when calculating the employer’s subsequent assessment rates. The appeal on this question is denied.

Panel Members

K. Dyck, Presiding Officer
J. Peterson, Commissioner
W. Skomoroh, Commissioner

Recording Secretary, J. Lee

K. Dyck - Presiding Officer
(on behalf of the panel)

Signed at Winnipeg this 9th day of June, 2022

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