Legal News

How to reduce claims costs under the workers compensation system

When someone asks what type of law you practice and you reply that you have a focus on workers compensation, you are invariably met with a blank stare followed by: “Ah, interesting”. After an awkward silence, the conversation turns to real estate prices.

For whatever reason, the workers compensation system is not something to which a lot of people turn their minds, yet it touches all employment relationships. For employers, the system is particularly important. Worker injuries not only affect morale and production, they entail direct costs to the employer, as well. Accordingly, it is important to understand ways in which those costs can be limited.

The workers compensation system in BC is a no-fault insurance system administered by a statutorily created agency – WorkSafeBC. WorkSafeBC is responsible for a vast array of activities under the Workers Compensation Act and associated regulations, but for present purposes, we are going to focus on the adjudication of claims. Employers pay insurance premiums called “assessments” as a percentage of their payroll. When a worker gets injured in the course of their employment and their claim is allowed, the costs associated with that claim may increase these assessments by increasing the employer’s “experience rating”, resulting in a financial impact on the operation. Accordingly, it is important to understand ways in which employers can limit the costs of claims. One way to limit costs is to understand the appeal structure under the Act and to participate in appeals. The statistics show a large number of front line decisions are varied as they wind their way through the Act’s appeal structure.

WorkSafeBC Officers are the front line adjudicators under the Act. But a decision by an Officer to accept a claim is not the end of the matter. Acceptance of a claim is but one decision among what can turn out to be many (including decisions on duration, permanency, vocational rehabilitation, etc.), each of which is appealable. Workers and employers have two levels of appeal under the Act. For most claims, an appeal can be brought within 90 days to WorkSafeBC’s internal Review Division via a “Request for Review”. This is done by executing a form which triggers the review process. Once triggered the Review Division provides the parties with file disclosure and sets dates for each party to make submissions. In many cases an employer will not know whether the claim has merit until it receives disclosure of the file, which will contain the relevant information upon which the decision was based. As such, a Request for Review can be an important step in evaluating whether an appeal should be pursued. In 2016 and 2017 the number of Requests for Review that resulted in the decision being cancelled, varied, or returned to WorkSafeBC was approximately 40%. Clearly, there is good reason to challenge WorkSafeBC decisions.

If your appeal to the Review Division is unsuccessful, you will have 30 days to bring an appeal to the Workers’ Compensation Appeal Tribunal. WCAT is, unlike the Review Division, independent of WorkSafeBC and is the last line of appeal under the Act.

Although the Review Division is typically the first avenue of appeal, two types of decisions must be appealed directly to WCAT within 90 days – discriminatory action complaints and re-openings of claims. Similar to the Review Division, the statistics suggest there is value in appealing to WCAT. In 2016, WCAT varied 44% of the compensation claims appealed to it.

Another way in which employers can reduce their costs is to understand the concept of cost relief. Under the Act, WorkSafeBC is required to provide and maintain a reserve for payment of that portion of a worker’s disability enhanced by reason of a pre-existing disease, condition, or disability. Where there is evidence of a pre-existing disease, condition, or disability that enhanced the worker’s compensable injury, WorkSafeBC will determine what percentage of the disability benefits should be attributed to that pre-existing disease, condition, or disability and thus paid out of the reserve fund, thereby limiting the impact on the employer’s experience rating and assessment costs.

Employers can be eligible for cost relief in two situations: (1) where 10 or more weeks of temporary disability benefits have been paid on a claim; and (2) where a permanent disability award has been granted. Because a cost relief decision on temporary disability benefits is distinct from a cost relief decision related to a permanent disability, employers should be alive to the opportunity for relief in both contexts. Where an employer disagrees with a cost relief decision, it can appeal that decision to the Review Division and, if necessary, to WCAT. Again, it may be necessary to bring a Request for Review to obtain the necessary disclosure to determine whether a cost relief decision should be contested.

While the appeal structure and the opportunity for cost relief can reduce the costs of claims, limiting or preventing claims can have an even greater impact on an employer’s bottom line. Over the course of the next few weeks we will look at two types of claims we are seeing with increasing frequency – discriminatory action complaints and bullying and harassment complaints – to provide some practical advice for avoiding such claims and their associated costs. While these topics barely scratch the surface of claims under the Act, the hope is they will provide you with some basic tools to reduce your workers compensation costs.