Jackson Report on WCB: Targeting the Unfunded Liability

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Minister Cam Jackson has recently delivered his report outlining recommendations for the second phase of the Ontario government’s planned overhaul of the Workers’ Compensation Board. The report, released in June, cites the WCB’s unfunded liability of $10.9 billion as the principal reason for revamping the system.

Greater Responsibility of Workplace Parties

The report seeks to place greater responsibility on workplace parties to control the claims process. Workers would be required to apply for benefits personally within six months of injury, and the WCB would have only a limited discretion to waive the six-month limitation.

In preference to the option of a three-day waiting period for compensation, the report recommends that the WCB be given the authority to require larger employers to `direct pay’ compensation for lost-time injuries for up to a six-week period following the date of injury. Employers would be free to seek private insurance coverage for the direct-payment period.

Hastening the Return to Work

To increase the rate of return to work, the report recommends trimming benefits from 90 to 85 per cent of an injured worker’s net average earnings. This would apply only to new claimants. Other measures would require employers to develop return-to-work plans for injured workers, and call for the WCB to draw up a labour market re-entry plan for workers unable to return to their previous jobs. Workers would be obliged to co-operate with both plans.

Chronic Stress, Chronic Pain, Multiple Cause and Gradual Process Injuries

The report deals with the thorny problems of chronic stress, chronic pain, multiple cause and gradual process injuries. It recommends excluding chronic stress from compensation because it is difficult to determine the role of the workplace in contributing to such a disability.

Chronic pain would be compensated in accordance with guidelines set out in regulations. The guidelines would specify the conditions under which chronic pain is compensable for a limited period of time, based on the usual healing time of the injury.

The report shies away from urging a resolution of the contentious issues of multiple cause and gradual process injuries, confining itself to recommending that further research be conducted into the prevention, management and compensation of these disabilities.

Consultations Towards Expanded Coverage under the Act

Only 70 per cent of the province’s workforce is covered under the Workers’ Compensation Act, and that number is predicted to decline. This, the report notes, deprives the WCB of a revenue base adequate to ensure its financial viability, gives employers an incentive to evade their statutory obligations, and denies coverage to workers in the excluded sectors.

As a result, the report recommends that the WCB undertake consultations on extension of coverage. These are intended to ensure that complex issues, such as the share of the unfunded liability to be assumed by new entrants and the assessment rate they would be assigned, are addressed before implementation of the expansion.

Streamlining the WCB Administration

Citing problems of “skyrocketing appeal volumes, rising administrative costs … and the rise of an advocacy industry”, the report suggests a number of measures to streamline administration. The roles of the Workers’ Compensation Board, the Occupational Disease Panel and the Offices of the Worker and Employer Advisors will be either altered or eliminated. Particular aim is taken at the Workers’ Compensation Appeals Tribunal, which is said to be the cause of much delay, litigiousness, and uncertainty in the system. The report urges limiting appeal rights to the Tribunal, and requiring it to adhere to WCB policy when adjudicating appeals.

Financial Viability of the WCB

While the report opts for further reductions in the indexation of benefits for most recipients, workers who are 100 per cent disabled and survivors would retain full indexing status.

On the revenue side, the report confirms the government’s commitment to reduce employer average assessment by five per cent, along with the principle that all employers should pay their fair share of costs. It recommends that, by July 1, 1997, the WCB develop strategies to expedite the process of moving firms to their proper target assessment rates, to modify the assessment rate-setting model, and to improve experience rating to minimize the problem of an off-balance in net refunds. It further advocates strengthening the WCB’s powers to collect outstanding assessment debts.

In Our View

The Jackson report’s recommendations are broadreaching, driven by the government’s goal of retiring the unfunded liability of the Workers’ Compensation Board by the year 2014. This objective is generally supported by employers who, the report states, see the liability as a competitiveness issue, since the charge needed to retire it is a large component of WCB assessment rates.

The government plans to introduce a Bill to the Legislature in the Fall. We will keep readers informed of any developments. (For a description of more recent developments see “Emphasis on early return to work in new workers’ compensation legislation” on our What’s New page and “New amendments to Workers’ Compensation Act announced” and “New workers’ compensation legislation in effect” on our Publications page; see also “Less government involvement, more flexibility urged for Ontario’s health and safety system” on our Publications page).

For more information on this subject, please contact Colleen Dunlop (613) 563-7660, Extension 222.