Overview of Workers Compensation in Ontario 1980 to Present

Transcription

1 Overview of Workers Compensation in Ontario 1980 to Present Workplace Safety and Insurance Board Commission de la sécurité professionnelle et de l assurance contre les accidents du travail Prepared January 2011

2 Overview of Workers Compensation in Ontario 1980 to Present 1

3 Overview of Workers' Compensation in Ontario 1980 to Present INTRODUCTION Sir William Meredith, the architect of the Ontario workers' compensation system, wrote in 1914 that, the true aim of compensation law is to provide for the injured workman and his dependents and to prevent their becoming a charge upon their relatives or friends, or upon the community at large. At the time, workers and employers were forced to resort to lawsuits to determine rights to compensation for work-related injuries. It was a process that proved to be costly and time-consuming and often resulted in inadequate compensation. With the establishment of the workers' compensation system, Meredith facilitated a historic compromise whereby workers would receive adequate and guaranteed benefits under a no-fault work injury plan that was paid for by employers in return for protection against lawsuits. Under his system, workers were covered through two types of insurance -- collective liability, which created a pool of employers responsible for the injuries of all workers in that pool (Schedule 1), and self-insurance, which was provided on a more limited basis to certain large employers for their employees (Schedule 2). Key Eras Since 1980 For present day purposes there are essentially four relevant eras: 1. Pre-Weiler 2. Pre-Wage Loss Weiler ( ) 3. Wage Loss Weiler ( ) 4. Wage Loss Jackson (1998 present) Paul Weiler was appointed by the Minister of Labour in January 1980 to review virtually all aspects of the Ontario workers' compensation system. He issued two reports: Reshaping Workers' Compensation for Ontario, November 1980 Reviewed all aspects of the system and made recommendations for complete overhaul of benefit scheme and changes to the overall structure of the workers' compensation system Protecting the Worker from Disability: Challenges for the Eighties, April 1983 Focused on occupational disease, reduction of injuries, and issues surrounding the creation of a general disability insurance program Much of the first report was implemented, with modifications, in two phases 1985 and 1990 resulting in sweeping changes to Ontario s workers' compensation system. Many comments from the second report regarding occupational diseases have influenced the system and can be seen in WSIAT decisions and WSIB practices. Draft policies to introduce certain concepts for adjudicating occupational diseases have been circulated for consultation but never received final approval. Overview of Workers Compensation in Ontario 1980 to Present 2

4 PRE-WEILER (BEFORE 1985) Temporary disability: Workers with temporary total disability received compensation equal to 75% of gross pre-injury earnings (colloquially known as "TT"). Workers with temporary partial disability who had not returned to work were also entitled to 75% of gross pre-injury earnings UNLESS they: - failed to co-operate in a vocational or medical rehabilitation program, or - failed to accept or were not available for employment that was suitable and available. Workers with a temporary partial disability who returned to work at an earnings loss were entitled to compensation equal to 75% of the difference between their pre-injury earnings and what they could earn in suitable employment or business after the injury (colloquially known as "TP diff"). Permanent Disability Where a worker had a permanent disability, "the impairment of earning capacity" of the worker was "estimated from the nature and degree of injury". The worker was entitled to a life-time permanent disability benefit, proportionate to the degree of the impairment, up to a 75% of the worker's pre-injury gross average earnings (colloquially known as a PD pension). The Board maintained a Rating Schedule of percentage of impairment of earning capacity for specified injuries (colloquially referred to as the 'meat chart'). The Schedule served as a guide for WSIB doctors when they 'rated' injured workers for PD pensions. There were no time limits under the Workers Compensation Act (WCA) specifying when the worker was to be assessed for a permanent disability pension. Workers were rated for a permanent disability pensions when their condition had stabilized, active treatment had concluded and they had reached maximum medical recovery. There was a chart that showed what were to be considered normal recovery times for different types of injuries. If a worker had a partial permanent disability and the impairment of earnings capacity of the worker was significantly greater than was usual for the nature and degree of the injury, the Board could pay a pension supplement to the worker if: - the worker co-operated in a vocational or medical rehabilitation program, or - the worker accepted or was available for employment that was suitable and available. These supplements were temporary discretionary benefits, normally paid for periods of six months to two years. Indexing No automatic annual indexing. Each year the WCA was amended to allow for ad hoc indexing for that year. Each year, fixed amounts were legislated for maximum and minimum benefits. Survivors Benefits Quite limited, they did not accommodate a variety of family arrangements. Fixed amounts were not tied to worker s earnings. Overview of Workers Compensation in Ontario 1980 to Present 3

5 Weiler s Review Weiler described the pre-1985 system as a "system of average 'rough justice'". For the most part, it did not reflect the actual impact of the injury on the worker: He noted that the majority of permanent partial disability pensions were paid to workers who had experienced no loss of earnings. There was, however, a group of workers, often older or with more serious injuries, who had experienced much more significant personal and financial loss resulting in significant hardship because of the inadequacy of their PD pensions. Weiler also noted that part of the underlying rationale of the pension system was to compensate for impact of the injury on the workers' non-work life, that is, for its effect on their enjoyment of life but that it failed to do this in many cases. He proposed a more complex benefit structure for workers with permanent impairments that was designed to recognize and compensate the worker's actual loss more accurately. The cornerstone of his new benefit scheme was the dual award system where one benefit was paid to compensate for pain, suffering and loss of enjoyment of life and another benefit was paid to compensate for actual loss of earnings. The income replacement component of workers' compensation benefits should mirror what would normally be expected to occur in the worker's life had the worker not been injured. Weiler therefore recommended that at a certain point, either age 65 or some other age, the worker's compensation should start to compensate for loss of expected retirement income. Weiler also made a wide variety of other recommendations for improving the benefit scheme. His recommendations were implemented in two stages: - Pre-Wage Loss Weiler ( ) - Wage Loss Weiler ( ) Overview of Workers Compensation in Ontario 1980 to Present 4

6 PRE WAGE LOSS WEILER (1985 TO 1990) The first group of Weiler recommendations, modified to some extent, were implemented under Bill 101 and Bill 81. Bill 101 had two implementation dates April 1, 1985 for benefit changes and October 1, 1985 for administrative changes. Bill 101 changed the method of calculating benefits from 75% of gross to 90% of net average earnings. This more closely approximated the actual financial loss to the worker. The PD supplementary pension provisions were expanded to permit payment of a supplement to an older worker where: the impairment of the worker's earnings capacity was significantly greater than usual for the nature and degree of the injury, and in the opinion of the WSIB, the worker could not return to work and was unlikely to benefit from vocational rehabilitation The supplement brought the worker's benefits up to the amount that the worker would receive under the Old Age Security Act (colloquially known as the "OAS supplement"). The Board was authorized to 'have regard to' any CPP payments the worker might have been receiving. Substantial reform of survivor benefits so that they were tied to worker s income. Provided both lump sum and periodic payments. Greater recognition of various family relationships and responsibilities. Benefits for surviving spouses were no longer terminated if the spouse remarried or was found to be a common prostitute. Creation of the Workers Compensation Appeals Tribunal (WCAT), Office of the Employer Advisor (OEA) and Office of the Worker Advisor (OWA). Current governance structure for WCB introduced with true corporate board of directors. Bill 81 introduced automatic indexing based on 100% of CPI, beginning January 1, Overview of Workers Compensation in Ontario 1980 to Present 5

7 WAGE LOSS WEILER ( ) The first group of Weiler recommendations were implemented under Bill 162, effective January 2, The changes were made to compensation benefits and there were major reforms to vocational rehabilitation as well as the addition of the re-employment obligation. Compensation Benefits Terms "disability" and "impairment" were defined. "Disability" meant loss of earning capacity. "Impairment" was the physical or functional abnormality or loss resulting for the accident. Temporary disability benefits remained essentially the same. Workers received 90% of pre-injury net average earnings while totally disabled or while partially disabled as long as they did not fail to co-operate in a medical or vocational rehabilitation program or fail to accept suitable and available employment. Introduced the dual benefit system for workers with longer term disabilities and /or permanent impairments: - pain, suffering and loss of enjoyment were compensated through the noneconomic loss ("NEL") benefit, and - income replacement was provided through future loss of earnings ("FEL") benefits followed by loss of retirement income ("LRI" benefits) NEL Benefit: Payable only to workers with permanent impairments ("PI") Variable benefit calculated by multiplying the percentage of worker's PI, as determined using the prescribed rating schedule (the AMA Guides) by $45,000 (indexed annually) adjusted according to the worker's age. Guiding principle the younger the worker, the higher the NEL should be for the same impairment. Degree of PI determined when worker reached maximum medical rehabilitation ("MMR"). Roster physician had to conduct medical assessment in all cases. Benefit payable as lump sum if under $10,000 (indexed annually); if over $10,000, payable as monthly payment for life unless worker elected to receive as lump sum. Worker, employer or Board could request 2nd assessment. Where worker experienced significant deterioration in condition, worker could apply for reconsideration of benefit. FEL Benefit Worker entitled to FEL benefits if had PI or if had been receiving temporary disability benefits for 12 continuous months. Benefit was 90% of the difference between pre-injury net average earnings and what worker was likely to be able to earn in suitable and available employment after injury. Amount of compensation to be reviewed in 24th and 60th months and within 24 months of a NEL redetermination, could not be reviewed after 60th month. If worker co-operating in vocational or medical rehabilitation program, worker could be paid a FEL supplement which equalled the difference between the pre-injury earnings and the actual amount of the FEL (which was what he/she was deemed able to earn in suitable and available employment). Overview of Workers Compensation in Ontario 1980 to Present 6

8 Availability of FEL supplements also permitted payment of benefits if worker suffered a recurrence after the final FEL lock-in at 60th month. LRI Benefit At age 65, worker ceased to receive FEL benefits and begins to receive LRI benefits. WSIB required to prefund benefit. WSIB required to set aside an amount equal to 10% of every FEL benefit in a separate fund (called the "LRI Fund") and invest the money. The amount of the LRI benefit was calculated on the amount set aside plus the accumulated investment income. At age 65, LRI benefit payable as lump sum if fund would not provide annual pension annuity payments of more than $1,000 (indexed). Otherwise, payable as an annuity as prescribed by regulation. Regulation provides that if worker cohabiting with spouse at age 65 must receive joint and survivor annuity unless worker and spouse jointly elect otherwise. If joint and survivor annuity not payable, 4 other options. If worker dies before age 65, pre-retirement death benefit paid according to following hierarchy: spouse, dependent children, other dependants, worker's estate. Benefits for workers injured prior to 1990 continued to be governed by legislation in place at the time of their injury. Therefore, pre-1989 and pre-1985 workers continued receiving permanent partial disability pensions. Supplements to Pensions Serious concerns that some workers were undercompensated by their permanent partial disability pensions led to revisions in entitlement to supplements. S.147(2) supplements where the WSIB is of the opinion that worker could benefit from Vocational Rehabilitation (VR) services, to the extent that his or her earnings after VR plus the amount of his/her pension would approximate his/her pre-injury earnings, the supplement payable while worker participates in VR plan. S. 147(4) supplements payable in 2 circumstances: - where WSIB of the opinion that worker would not benefit from VR services to restore to pre-injury earnings, or - where worker's pre-injury earnings capacity not restored after participation in VR services under s.147(2). S.147(4) supplements payable until worker becomes eligible for Old Age Security (OAS). Vocational Rehabilitation and Re-employment Major reforms to VR occurred under Bill 162. VR and compensation became inextricably linked. The aim was to return injured worker to work as soon as possible with no income loss. Re-employment obligation introduced where employer had more than 20 employees and worker had been employed with the employer for 12 continuous months. Within 45 days of injury, WSIB required to contact worker who has not returned to work to determine if VR services required. WSIB had statutory obligation to provide VR assessment to workers who had not returned to work within 6 months. Extensive VR programs could be provided with objective of returning worker to work with no earnings loss. Overview of Workers Compensation in Ontario 1980 to Present 7

9 Additional legislative changes were made to supplementary benefits, indexing and to prevent fraud. Top Up to Supplements and Indexing Bill 165, effective January 1, Introduced special top-up payment of $200 for workers who were receiving s.147(4) supplements payable for life (s.147 (14)). Introduced Friedland formula for indexing benefits = 75% of CPI, with maximum increase of 4%. Certain benefits survivor benefits and PD pensions - continued to be indexed at 100% of CPI. Non-Compliance Bill 15, effective December 14, Non-compliance addressed through offences and penalties provisions. Introduced material change provisions. Overview of Workers Compensation in Ontario 1980 to Present 8

10 WAGE LOSS JACKSON (JANUARY 1, 1998 to PRESENT) In New Direction for Workers Compensation Reform - Report of June 1996, Jackson s findings included: - Need to refocus the system on worker and employer self-reliance - Permit workers and employers to assume responsibility for short duration claims - The vocational rehabilitation model has failed - Appropriate incentives must be given to employers to re-employ Bill 162 introduced a number of changes to compensation benefits and vocational rehabilitation. Compensation Benefits Benefit levels reduced to 85% of net average earnings which was said to more accurately reflect loss actually experienced. Major reform of income replacement benefits. Instead of separate short-term and longterm income replacement benefits, one benefit introduced for loss of earnings ("LOE benefit"). Continued to reflect FEL structure of periodic reviews until final review 72 months later. However, WSIB has power to review as necessary without fixed review dates. One significant difference was the abolition of FEL supplements. Where the worker was participating in early and safe return to work (ESRTW), labour market re-entry (LMR) or medical rehabilitation, the worker is paid full LOE (85% of pre-injury earnings) if not working at all or LOE based on the difference of pre- and post-injury earnings if working at less that pre-injury. One effect of the abolition of supplements was that it was impossible to pay LOE benefits to a worker who suffered a recurrence after the 72-month lock-in. The inflexibility of the lock-in period also resulted in over-compensation where worker was still participating in an LMR program at 72 months. NEL Benefit: Benefit and method of calculation remained unchanged. Various administrative reforms introduced. Where amount over threshold ($11,456.30), worker has 30 days as per legislation after notification of NEL decision to elect to receive as lump sum. Otherwise, benefit must be paid as monthly payment (this change intended to eliminate anti-selection problem and to streamline administration). Process for determining NEL benefit streamlined. Board may determine degree of PI from information in claim file. New medical assessment no longer necessarily required. Only board can request second medical assessment. Worker can apply for redetermination if suffers significant deterioration in pi, but no authority to go back and adjust LOE after 72 months. This was changed in 2002 to permit LOE adjustments after 72 months in such cases. LRI Benefit Continues to be payable at age 65. Overview of Workers Compensation in Ontario 1980 to Present 9

11 Remains a pre-funded benefit. When worker has been receiving LOE benefits for 12 continuous months, WSIB must set aside an amount equal to 5% of every LOE payment. Worker has option to contribute 5% of every LOE payment to the LRI fund to increase benefit at age 65. Mandatory and voluntary contributions invested by WSIB; worker has no say in how funds are invested and no vested right in them until he/she reaches age 65 or dies prior to age 65. Age 65, if account balance would provide annual pension over threshold, must receive benefit as an annuity. Number of alternatives to joint and survivor pension reduced to 2. Where the amount is under the threshold, benefit payable as a lump sum. Where worker dies before age 65, pre-retirement death benefit payable for mandatory contributions and supplementary pre-retirement death benefits payable for voluntary contributions. Indexing Benefits and statutory amounts still indexed every January 1. Modified Friedland introduced as the general indexing factor for indexing most benefits and statutory amounts. It is 50% of CPI minus 1. Alternate indexing factor of 100% of CPI applies to survivor benefits and full (100%) LOE benefits. Vocational Rehabilitation with Return to Work and Labour Market Re-Entry Re-employment obligation continued. Instead of WSIB providing VR, shift to self-reliance by workers and employers after which WSIB can arrange for Labour Market Re-entry. Workers and employers required to co-operate re workers return to work. WSIB only to be involved where disputes arose. In certain circumstances, WSIB may provide worker with labour market re-entry (LMR) assessment. Based on this, WSIB will determine whether worker requires an LMR plan to assist worker in re-entering the workforce. As part of this determination, Board determines what constitutes a suitable employment or business (SEB) for the worker. If worker requires an LMR plan, Board arranges for plan for worker s re-entry into workforce to be prepared. Provision of LMR services has been outsourced to independent third party providers. Shift in focus at LMR from employment of worker to having worker market-ready WSIAT WSIAT required to follow WSIB policy or request review by BOD. Additional legislative changes were made to LOE, LRI, indexing, coverage for construction workers and entitlement for fire fighters. LOE, LRI, Indexing (Bill 187, effective July 1, 2007) Gave WSIB authority to re-open LOE lock-ins after 72 months where worker s condition deteriorated. Created authority for temporary indexing factor to be adjusted by regulation 3 adjustments of 2.5% instituted. Overview of Workers Compensation in Ontario 1980 to Present 10

12 Increased threshold for payment of Lump Sum LRI. The replacement of the concept of deeming with determining and introducing the concept of availability to allow for better determination of injured workers postinjury earnings and paid benefits based on realistic job opportunities that are both suitable and available. Coverage for Construction Workers (Bill 119, 2012 implementation) Makes coverage compulsory for most construction workers. Entitlement for Fire Fighters (Bill 221) Allows Government to make Regulations specific to Ontario Firefighters. Two regulations with respect to presumptive diseases have followed May 2007 for full-time firefighters and October 2009 for part-time firefighters. Sufficient Funding (Bill 135) In November 2010, the Ministry of Labour introduced legislation that would require the WSIB to be sufficiently funded. Bill 135 Helping Ontario Families and Managing Accountability Act received Royal Assent on December 8th, 2010, and requires sufficient funding for the WSIB to make payments for current benefits as they come due and to provide for future benefits. Overview of Workers Compensation in Ontario 1980 to Present 11