Fixes needed for WSIB rebate program: Report

Consultations needed with employer, employee groups before making changes
By Shannon Klie
|Canadian HR Reporter|Last Updated: 04/15/2009

A review of a program designed to reward Ontario employers for good safety practices has found a small percentage of employers take advantage of the program to receive insurance rebates without actually improving health and safety in the workplace.

“The vast majority of employers do care about their workers and want them to go home safely at the end of the day,” said Steve Mahoney, chair of the Workplace Safety and Insurance Board (WSIB) of Ontario. “Having said that, we have to have zero tolerance for anybody that breaks the law, hides injuries, intimidates workers. We have to stamp any amount of that behaviour out of the system.”

Mahoney initially voiced his concerns to the Ontario government in 2007 and the WSIB hired consulting firm Morneau Sobeco last June to review its rebate program, known as the experience rating system. The program, introduced in 1984, rewards employers that have lower than expected injury claims with a rebate on workers’ compensation insurance premiums. It punishes those employers with higher than expected claims by enforcing a premium surcharge.

“We wanted to make sure that in fact it was doing what it was intended to do, which was to provide incentives to cut down on the number of injuries, illnesses and fatalities in the workplace,” said Mahoney.

His main concern is that the program is strictly a “numbers game,” where claims numbers are entered into a computer and either a rebate or a surcharge is levied, he said.

“There’s no human element there. There’s no discussion about whether or not the company or union did certain specific things to improve the safety of their workplace and at the end of the day that’s what we want to do,” said Mahoney.

The review found that, from 1998 to 2007, refunds to employers exceeded surcharges by about $880 million, or three per cent of total premiums in that time. It also found about eight per cent of organizations don’t always report injuries, which in 2007 would have amounted to about 25,000 claims.

It also found between 2005 and 2007, 73 employers that received refunds through the program were convicted of offences under the Occupational Health and Safety Act or Workplace Safety and Insurance Act. While this represents a very small proportion of the 230,000 employers registered with the WSIB, it shows a lack of alignment between performance measures (claims) and behavioural measures (legislative compliance), stated the report.

After a series in the Toronto Star last June reported some companies received a rebate after a worker died on the job, Mahoney instituted a policy that prevents any employer with a workplace fatality from receiving a rebate, even if the employer is not at fault.

This is something the WSIB had been planning to do but the instances uncovered by the Star sped up the process, said Mahoney.

Employers have also been taking advantage of a fund that encourages them to hire disabled workers by covering a portion or all of the costs of a subsequent injury claim, found the report. The number of claims receiving Second Injury and Enhancement Fund (SIEF) treatment more than doubled in the past 10 years and some employers try to receive coverage through SIEF even when the injured worker has no pre-existing condition or disability. Despite the increase in SIEF claims, there is no proof SIEF has a positive impact on return to work, stated the report.

The report also found some employers are improving their experience rating by paying employees for time not worked and not applying for reimbursement through WSIB, effectively making a lost-time injury a no-lost-time injury.

To improve reporting, the CEO, chief financial officer or other senior executive should sign off on an annual declaration of compliance with health and safety laws, recommended the report.

It also recommended any convictions under the health and safety acts trigger an automatic audit and a certain score must be attained before a rebate is issued. Long term, the WSIB could consider withholding any refunds for the year of the conviction.

The WSIB should also eliminate SIEF relief for pre-existing disabilities that are the result of an injury with the same employer and limit relief to a maximum of 50 per cent, stated the report. And the WSIB should only allow employers to pay injured workers for non-work when they attend medical appointments.

Another possible change for which Mahoney has heard support would be to follow British Columbia’s lead and reduce premiums going forward instead of issuing a rebate cheque. This would put less stress on the system, he said.

“It makes our system financially more viable but at the same time it does reward good behaviour,” said Mahoney.

Changes might not be approved

However, the WSIB needs to consult with its stakeholders, including employer and worker groups, and attempt to reach a consensus before any changes are made, he said.

Reaching a consensus could be difficult. The Ontario Federation of Labour wants to scrap the program altogether, said Mahoney, while employer groups such as the Canadian Federation of Independent Business (CFIB) like it just the way it is.

“In surveys that we’ve done with members in the past on experience rating, what we’ve found is they’re generally satisfied with the way the programs are being delivered,” said Satinder Chera, director of provincial affairs with CFIB in Ontario.

And the decrease in workplace injuries backs up the program’s effectiveness, he said. For example, the report found Ontario’s construction sector had 10.92 incidents per 200,000 hours worked in 1985 and that rate was down to 2.15 by 2006.

However, there’s still room for improvement, said Chera.

“We’re not against looking at the system, looking at opportunities to make it even better,” he said, but that doesn’t mean starting from scratch.

“The system works. Yes, there are certain bad apples but there are bad apples everywhere. But that’s no reason to go and blow up the system,” he said.

Garry Gray, vice-president of Canadian Auto Workers Local 636, representing workers in Woodstock, Ont., and Brantford, Ont., is pleased with the review and happy the WSIB has committed to taking a serious look at the issues it raised.

While some groups might want to do away with the program, it can be a powerful tool to encourage employers to improve workplace safety if properly applied, said Gray.

“I don’t want to see something that jeopardizes the efforts of good employers out there. Good employers that are doing an excellent job in prevention of injury and disease should be compensated in some form or fashion. Sometimes a carrot does a good job as long as you see that the effort is being put forth by the employer,” he said.

While the rebates aren’t the only reasons employers work to improve workplace safety, for small businesses, “every little bit helps,” said Chera.

Gray would like to see the program tied to legislative compliance, which most employers wouldn’t want, he said.

“If there had been a regulatory format there would be a lot less injuries in the province today,” he said.