Decision #83/22 - Type: Workers Compensation
The worker is appealing the decision made by the Workers Compensation Board ("WCB") that the established earning capacity was correctly calculated, and that there was no entitlement to further wage loss benefits. A hearing was held on May 18, 2022 to consider the worker's appeal.
1. Whether or not the worker's earning capacity has been correctly calculated; and
2. Whether or not the worker is entitled to further wage loss benefits.
1. The worker's earning capacity has been correctly calculated; and
2. The worker is not entitled to further wage loss benefits.
The worker has an accepted WCB claim for a right shoulder injury that occurred on February 1, 2013, when he slipped and fell, landing on his right elbow. An MRI performed July 26, 2013 indicated a "Full thickness tear involving the supraspinatus tendon and the majority of the infraspinatus tendon" along with tendinosis and mild osteoarthritis. On November 28, 2013, the worker underwent right rotator cuff repair surgery and returned to work by March 25, 2014 with modified duties. The treating orthopedic surgeon cleared the worker to return to his full duties on May 6, 2014. As the worker was self-employed, the WCB calculated the worker's average earnings based on his reported business income, and on October 6, 2014, the worker was paid partial wage loss based on being able to perform 10% of his job duties from the November 28, 2013 date of surgery to May 5, 2014.
On December 15, 2014, the WCB received a Doctor First Report from the worker's appointment with his treating family physician on November 22, 2014. The physician reported that the worker had "…new acute swelling and tednerenss (sic) r (right) shoulder ? re injury" and recommended an MRI of the right shoulder. The MRI was performed on January 31, 2015 and indicated "Postsurgical changes with re-tear of the supraspinatus infraspinatus tendons…"
At a follow-up appointment with the treating orthopedic surgeon on March 25, 2015, the surgeon opined that the tear shown on the recent MRI was not repairable with surgery and recommended conservative treatment, including physiotherapy. A second opinion was requested with respect to the worker's shoulder, and on July 6, 2015, the worker was seen by a second orthopedic surgeon, who agreed that the re-tear of the worker's right rotator cuff was likely not repairable.
On November 24, 2015, the worker's file was reviewed by a WCB medical advisor with respect to permanent restrictions for the worker's right shoulder. The WCB medical advisor recommended a functional capacity evaluation for the worker to determine appropriate restrictions. The functional capacity evaluation took place on December 10, 2015, and was reviewed by the WCB medical advisor on December 17, 2015. On February 19, 2016, the WCB advised the worker that he had permanent restrictions of: may occasionally lift up to 10 lbs from waist to chest; may occasionally lift up to 35 lbs from knees to waist; may occasionally lift up to 35 lbs from floor to knees; may lift/push/pull up to 15 lbs occasionally, and 5 lbs frequently, with the affected right arm alone; and limit activity requiring sustained or repetitive forceful gripping/grasping with the right hand. On March 14, 2016, the worker was provided with partial wage loss benefits from November 22, 2014, being the date the worker first sought medical treatment for the re-tear of his rotator cuff, based on the worker being able to perform only 35% of his job duties.
On March 29, 2016, at the request of the WCB, an external occupational therapist attended at the worker's job site to review the job duties the worker was performing. On April 14, 2016, the occupational therapist provided a worksite assessment report to the WCB, in which she noted that the worker was working within his physical restrictions and had adapted much of his workload to offset his impairments. The therapist reported that the worker was currently able to perform 38 hours of job duties per week, as compared to 48 hours per week prior to his injury. It was therefore determined the worker was performing 79% of his job duties post injury. On May 12, 2016, the WCB advised the worker that based on the worksite assessment, he was entitled to partial wage loss benefits based on his 21% loss of earnings.
On June 8, 2016, the WCB met with the worker to discuss the worksite assessment. The worker noted that the day the occupational therapist had conducted the assessment was not a busy day and did not reflect a fair assessment of the duties he was performing, and asked that the WCB reconsider their decision. The WCB met with the worker again on September 15, 2016 to gather further information. The worker advised that since he returned to work, he had to hire another worker to perform the heavy duties he was unable to do as a result of the workplace accident and the permanent restrictions. The worker advised he was performing approximately 45% of the duties he used to do prior to the February 1, 2013 workplace accident. On September 27, 2016, based on the information provided by the worker, the WCB determined that the worker he was capable of performing 45% of his pre-accident duties, and was therefore entitled to 55% partial wage loss benefits effective November 22, 2014.
On May 1, 2018, the worker contacted the WCB to advise he continued to experience difficulties with his right shoulder, which he felt was deteriorating. He noted that his business partner felt his contribution to the business was not cost-effective due to the worker's limited abilities to perform his job duties and wanted to buy him out. On October 12, 2018, the worker advised the WCB that he had closed down his former business at the end of April 2018 and was opening a smaller business doing similar job duties.
During a long term wage loss status update on February 26, 2020, the worker advised the WCB that he had purchased a new business and would be shutting down his previous business at the end of March 2020. On March 16, 2020, the WCB contacted the worker to gather information regarding his new business. On May 1, 2020, the worker provided the WCB with a list of the job duties he would be performing in the new business he purchased. In a discussion with a new WCB case manager on May 26, 2020, the worker confirmed that due to the Covid-19 pandemic, he had put his new business on hold and would be continuing his previous business until the fall of 2020. The worker noted he would be operating both businesses simultaneously for a short period of time. The worker further confirmed he did not have any paid employees and his current job duties were similar to what he had been doing previously. The WCB advised the worker that further investigation would be required to establish his average earning capacity and determine his continued entitlement to wage loss benefits.
On June 16, 2020, the worker's family physician provided the WCB with updated medical information, including a copy of a December 14, 2018 report from another treating orthopedic surgeon. The surgeon confirmed the worker's right shoulder rotator cuff tears and agreed with the previous opinions that they were not repairable. Also provided were reports of MRIs on both the worker's right and left shoulders, performed July 10, 2018, which indicated the worker also had a "Large rotator cuff tear with full-thickness full width tearing of the supraspinatus and infraspinatus tendons" on his left shoulder.
Additional financial information was received from the worker and the worker's representative, and on October 21, 2020, the WCB advised the worker that based on a review of the information on file, including the financial information provided, his job responsibilities at both of his businesses, and medical information which supported that the condition of his left shoulder was worse than his right shoulder, they had determined the compensable workplace injury was not impacting the worker's earning capacity and he was not entitled to further wage loss benefits. On December 31, 2020, the worker provided further financial information to the WCB. Additional information was requested and provided to the WCB on May 3, 2021, and a further review of the worker's earnings was conducted on June 16, 2021. On June 23, 2021, the WCB advised the worker that the additional information had been reviewed, but there would be no change to their earlier decision.
On October 4, 2021, the worker's representative requested that Review Office reconsider the WCB's decision. The representative argued that as the worker was self-employed, his entitlement to benefits should be based on the net profit or loss generated by his business and not on a comparison of gross earnings from self-employment to a salaried position. The representative noted that the worker had experienced "significant losses" from his business ventures, which the worker related to his continuing physical impairment impairing his ability to generate a profit. The representative submitted that the worker was being unfairly penalized for becoming self-employed and should be entitled to further wage loss benefits.
On December 9, 2021, Review Office determined that the worker's established earning capacity was correctly calculated and there was no entitlement to further wage loss benefits. Review Office agreed with the assessment conducted by the WCB and found that the file evidence supported the worker had demonstrated a capability to generate greater earnings than his pre-accident earnings, despite his compensable restrictions. Further, Review Office did not find that there were provisions in the Act to provide for occasions where a worker earned less than their pre-accident earnings due to non-compensable factors such as a change in business, or economic slowdowns due to issues such as the Covid-19 pandemic.
On February 25, 2022, the worker appealed the Review Office decision to the Appeal Commission and a hearing was arranged.
Applicable Legislation and Policy
The Appeal Commission and its panels are bound by The Workers Compensation Act (the "Act"), regulations under the Act, and policies of the WCB's Board of Directors. The provisions of the Act in effect as of the date of the February 1, 2013 workplace accident are applicable.
Subsection 4(1) of the Act provides that where a worker suffers personal injury by accident arising out of and in the course of employment, compensation shall be paid.
Subsection 4(2) provides that a worker who is injured in an accident is entitled to wage loss benefits for the loss of earning capacity resulting from 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.
Subsection 39(2) of the Act provides that the WCB will pay wage loss benefits until such time as the worker's loss of earning capacity ends, or the worker attains the age of 65 years.
Subsection 40(1) of the Act provides that a worker's loss of earning capacity is the difference between the worker's net average earnings before the accident, and the net average amount the board determines the worker is capable of earning after the accident.
The Board of Directors has established WCB Policy 220.127.116.11, Establishing Post-Accident Earning Capacity (the "Policy"), which sets out guidelines or principles to be used to establish a worker's post-accident earning capacity. The version of the Policy which was in effect and applied prior to and at the time of the Review Office decision was stated to be effective January 1, 2006. The Policy has since been amended, and the current version of the Policy is stated to be effective "For all decisions on or after January 1, 2022."
The worker was self-represented and was accompanied by his spouse at the hearing. The worker made a presentation to the panel, with assistance from his spouse, and both the worker and his spouse responded to questions from members of the panel.
The worker's position was that the WCB's decision was made on incorrect information and was wrong, and his appeal should be allowed.
With respect to the first issue, being whether his earning capacity was correctly calculated, the worker submitted that there was a major discrepancy in the wages as calculated by the WCB and his accountant. The worker submitted that the information and calculations which his accountant provided should have been applied and the WCB's calculations should have been corrected.
With respect to the second issue, being whether the worker is entitled to further wage loss benefits, the worker stated that he sold his shares in the accident employer in 2018, and used that money to start a similar business. He then acquired a rental business at the beginning of January 2020, which he continues to operate.
The worker submitted that his wage loss benefits were cut off by the WCB because he was collecting money from two businesses, but he only had one business. He said that he is still only able to do 45% of what he was normally able to do prior to his workplace injury. He said it takes twice as long for him to do things by himself. He needs help to get a lot of things done or ready, and has to rely on his family for help, when necessary, as he cannot afford to hire anyone else.
The worker further noted that the WCB had advised him in their letter of February 6, 2017 that his wage loss benefits would continue until he retired or reached the age of 65.
There are two questions before the panel in this case. First, whether the worker's earning capacity has been correctly calculated, and second, whether the worker is entitled to further wage loss benefits. For the worker's appeal to be successful, the panel must find, on a balance of probabilities, that the worker's earning capacity was not calculated in accordance with the Act and WCB policy, and further, that the worker continued to experience a loss of earning capacity as a result of his compensable injury after wage loss benefits were discontinued. As outlined in the reasons that follow, the panel is satisfied that the worker's earning capacity has been correctly calculated and that the worker is not entitled to further wage loss benefits.
With respect to the first issue, relating to the worker's earning capacity, the panel has carefully reviewed and considered the information on file as well as the worker's evidence at the hearing, and is satisfied that the worker's earning capacity was correctly calculated. The panel acknowledges that determining the earnings or income of an owner is complex and involves much more than looking at the worker's employment income or salary.
Information on file shows that the WCB calculated the worker's average earnings and income based on information and records requested and received from the worker's accountant and Canada Revenue Agency with respect to the worker's personal and business income. The WCB reviewed the calculations on numerous occasions, and adjustments and corrections were made over time.
In the circumstances, the panel finds that the worker's earning capacity was correctly calculated in accordance with the Act and the Policy as it read at the time the previous decisions were made. The panel is also of the view that the calculation of the worker's earning capacity is consistent with the current Policy.
The panel notes that the concerns raised by the worker and his accountant relate to the calculations for the years 2018 through 2020 in particular, being the periods of time where the worker was in the process of leaving or had left the accident employer. Given our finding, as outlined in more detail below, that the worker was no longer entitled to benefits in those years, having voluntarily ended his employment with the accident employer, the panel is of the view that such concerns as to the calculations themselves would no longer be relevant.
With respect to the second issue, being whether the worker is entitled to further wage loss benefits, the panel notes that following his right rotator cuff surgery on November 28, 2013, the worker returned to work with modified duties on March 25, 2014 and on full duties on May 6, 2014, and was able to continue his job regular duties, with restrictions, through to the end of April 2018, when he sold his shares in the business to his business partner. The worker was paid wage loss benefits during this period of time, based on his ability to perform his job duties as compared to before the workplace accident.
In response to questions at the hearing, the worker referred to a number of factors which led or contributed to his decision to sell his interest in that accident employer. While the worker indicated that there was some element of not being able to contribute sufficiently to the business or do all of the jobs that he was able to do prior to his injury, the panel notes that he had been able to continue working at that business for more than four years following the accident and surgery. The worker indicated at the hearing that he was the president and manager of the accident employer. Based on our review of all of the evidence, the panel is satisfied that the worker voluntarily left the business to pursue other business opportunities.
The evidence indicates that there was continuity in the worker's employment, with no apparent gaps between the time the worker left the business and the time he started a similar business on his own. The panel notes that the worker did not have any employees in this new business, and that while he indicated family members and others would help him from time to time due to his ongoing restrictions or limitations, overall he was able to continue performing his job duties for at least two more years, following which he shut down that business. The worker stated at the hearing that when he left the accident employer, he believed he could do much more than he could. The evidence shows there was very little contact between the worker and the WCB for approximately two years, between 2018 and 2020.
On January 1, 2020, the worker also purchased a rental business. The worker acknowledged at the hearing that this was a very different business and job, but said that there were still a lot of things he could not do. The worker said he had very little income from that business in 2020, due to the Covid-19 pandemic.
The panel is of the view that a worker's entitlement to wage loss benefits generally ceases when a worker chooses to sever the employment relationship with the accident employer, as their loss of earning capacity is no longer due to the compensable injury but is instead the result of the worker ceasing their employment. While there may be extenuating circumstances in which an injured worker would be entitled to ongoing wage loss benefits after terminating their employment, the panel is not satisfied that any such circumstances existed in this case. Accordingly, as a result of the worker's decision to voluntarily end his employment relationship with the accident employer as of the end of April 2018, the panel is satisfied that the worker was not entitled to wage loss benefits after that date.
The panel notes that while the evidence indicates the worker sold his shares and ceased working with the accident employer on April 30, 2018, the WCB advised in their October 20, 2020 letter to the worker that they would not apply the change in his loss of earning capacity "retroactively prior to January 1, 2000" (should read 2020).
The worker referred in his presentation to the panel to the letter from the WCB dated February 6, 2017, which also indicated that the WCB was unable to identify an alternative occupational goal and earning capacity, and that they would therefore continue to pay the worker's wage loss benefits of $313.01 per week until he retired or reached the age of 65. The panel notes that the letter also stated that this was "unless your earning capacity changes." Asked if he thought the letter meant he would be receiving this amount until age 65, the worker said "If I did well. Otherwise, I would not expect it."
The panel noted some concern that while there was some reference to the vocational rehabilitation process in the February 6, 2017 letter, and the worker not being able to find an alternative occupational goal and earning capacity, the matter of vocational rehabilitation does not really appear to have been discussed or pursued any further. In a Memorandum to File dated May 1, 2018, the case manager indicated she had confirmed to the worker that if the employer was no longer able to accommodate him, he would be placed on full wage loss and referred to vocational rehabilitation assessment to determine his employability, but that the WCB would need something in writing from the employer confirming this. There is no indication on the file that anything was received from the employer in this regard. In any event, the entitlement to wage loss benefits under the Act would only continue up until such time as the loss of earning capacity ended and, as indicated above, the panel is satisfied that the worker's entitlement to wage loss benefits ended when he voluntarily left his employment with the accident employer.
In summary, the panel finds, on a balance of probabilities, that the worker's earning capacity was calculated in accordance with the Act and Policy, and further, that the worker did not continue to experience a loss of earning capacity as a result of his compensable injury after wage loss benefits were discontinued. The panel therefore concludes that the worker's earning capacity has been correctly calculated, and that the worker is not entitled to further wage loss benefits. The worker's appeal is dismissed.
M. L. Harrison, Presiding Officer
J. Peterson, Commissioner
M. Kernaghan, Commissioner
Recording Secretary, J. Lee
M. L. Harrison - Presiding Officer
(on behalf of the panel)
Signed at Winnipeg this 15th day of July, 2022