Reduce Premiums Through Cost Relief
This article originally appeared in the August/September 2015 issue of Canadian Occupational Safety Magazine.
Insurance tends to be the sort of thing that is great to have when you need it, but at all other times, it’s mostly an undesirable and expensive side-effect of doing business – similar, one would imagine, to how people view lawyers.
When you and your business are dealing with the WCB, you are, of course, dealing with an insurer. And as with most other types of insurance, the amount you pay for this insurance is directly tied to the risk that you represent. As a result, the premium cost attributed to your business is, in large part, a reflection of your business’ WCB claims experience.
A strong safety program working in conjunction with a comprehensive modified work program is therefore one of the best ways to maintain a relatively painless relationship with the WCB and a positive premium rate. However, accidents do happen and, depending on the nature and severity of the injury, even the most safety conscious employer might end up watching substantial claims costs accruing on its experience rating – resulting ultimately in increased premiums.
In such circumstances, a request for cost relief can sometimes be an additional avenue through which an employer can attempt to limit its claims cost in an attempt to reduce premium liability.
Generally speaking, all costs associated with a compensable injury are attributed (or “charged”) to an employers’ experience account where they ultimately play part in contributing to future premium assessments. However, in virtually all Canadian jurisdictions, the WCB maintains some discretion to relieve employers from claims costs in certain exceptional circumstances.
The general idea behind cost relief is that it allows for a transfer of costs away from the employer’s experience rating in circumstances where claims costs arise from circumstances that are not really within the employer’s control.
Once the costs have been relieved against (either by being charged against a reserve fund established by the responsible WCB, or by being applied as against the employer’s industry as a whole), the employer’s own experience rating will see a commensurate reduction in claims costs, resulting in sometimes dramatic positive effects on future premiums.
The WCB may relieve all or part of the costs of a compensable claim. A request for cost relief is therefore a potentially very effective way of challenging the impact that a particular compensable claim may have on the employer’s operations.
As noted, in most jurisdictions, cost relief is a discretionary remedy on part of the responsible WCB and will be determined in accordance with the applicable WCB policy. As a result, the essential first step in moving towards a request for cost relief is to familiarize yourself with the applicable policy and to understand the circumstances and scope in which the WCB in your jurisdiction can award such relief. In some jurisdictions, cost relief is restricted to only a few limited circumstances, whereas others can consider it in a multitude of circumstances. Because cost relief is based on policy, your request must ultimately fit into one of the recognized categories in your jurisdiction to be successful.
The most common type of cost relief available concerns claims costs associated with a pre-existing condition or pre-accident disability. Almost universally, WCBs will consider relieving costs for an employer where the compensable accident related disability is prolonged as a result of a separate and pre-existing condition or disability.
Generally speaking, the employer will need to be able to point to some medical evidence confirming the existence of a pre-existing condition in order for this avenue of cost relief to gain any traction at all. Reasonable inferences, anecdotal evidence, predispositions to injury or circumstantial evidence such as a family history of certain conditions will usually not suffice.
Further, in order for cost relief to be applied, the file materials usually have to disclose a causal link between the pre-existing condition and the prolonged period of disablement. The mere presence of a pre-accident disability is therefore not conclusive. The employer needs to be able to point to something that can support the view that increased costs are being incurred as a result of the pre-existing problem. As a result, this type of relief from costs is available most often in cases where a relatively minor accident or incident results in a more serious or substantial impairment. Back injuries are usually a prime example – pre-existing back conditions are relatively commonplace and workers with occupations requiring any amount of heavy lifting are at a high risk to aggravate these issues. Often, cost relief from otherwise costly lost-time injuries is available in such circumstances.
Another common category of cost relief relates to a category of compensable claims which are classified as “second injuries” in some jurisdictions.
Cost relief may be provided on the basis of a second injury where a compensable injury, or treatment for a compensable injury, results in a distinct additional injury occurring. Often, second injuries occur in the course of WCB approved treatment and may qualify for cost relief on that basis. As an example, a worker may receive some form of physiotherapy for a neck injury which ends up injuring his shoulder. This would be a common example of a type of scenario that lends itself to a request for cost relief.
Other examples of second injuries include cases where one type of work related injury leads to a second and distinct medical condition. For example, a worker might suffer from a prolapsed disc which progresses into impacts on the spinal canal leading to some degree of paralysis. In such a case, the substantial costs associated with paralysis might be properly relieved against.
Between the various jurisdictions, any number of additional grounds for cost relief may be available to you. Some jurisdictions, including Manitoba, relieve against the effects of a recurring previous injury in certain circumstances. The Alberta WCB will consider factors relating to the worker’s actions in dealing with his or her injury. If the employer can point to circumstances where the worker’s own actions and error in judgment have delayed, prolonged or otherwise stunted recovery, the WCB might consider relieving any such additional costs associated with the period of delay.
British Columbia allows for cost relief in cases where a disaster or other related circumstance lead to losses the WCB would consider to unfairly burden the employer’s rate group.
Saskatchewan’s WCB policy is interesting in that it contains provisions to relieve costs in the event of administrative errors in calculating claims costs.
Ontario’s WCB policy contains provisions that state employers are entitled to cost relief where the WSIB sues on behalf of the worker and receives a court award or settlement.
Additionally, in New Brunswick, WorkSafeNB allows for cost relief in situations where a non-compensable injury prolongs the recovery from injury.
As is evident, there are a number of ways in which an employer can challenge the claims costs that ultimately affect its premium assessment. In cases where an employer believes they have some grounds to be relieved from some of the costs of a claim, it therefore makes sense to make that request as soon as practicable. It should be noted that cost relief is generally not applied automatically and therefore the employer’s request for relief is a necessary first step in the process.
The request itself is relatively straightforward. In the majority of cases, it simply involves contacting the responsible claims manager on a compensable claim and outlining the reason for the request in writing.
Given that each request for cost relief must meet its policy requirements, a necessary first step is usually a request for the WCB file followed by a thorough review of same. Where relevant medical evidence is lacking – for example in cases where a pre-existing condition is suspected but not detailed in the records – a request for further medical documentation might be a prudent second step.
Once the grounds for cost relief have been identified, a letter pointing to the relevant file materials and medical evidence in support of the request is usually all that is required to trigger the review. In cases where cost relief is denied despite support for this outcome in the applicable policy, the employer may be in a position to appeal or have the decision reviewed.
Ultimately, seeking cost relief is a relatively risk free proposition. The worker is usually unaffected and will not have a stake in the outcome and as a result, lengthy stretches of litigation are usually avoided.
As such, the seeking of cost relief is simply an additional effective tool for the employer to manage claims costs and the resulting premiums.