Tuesday, July 25, 2017

"Culture of denial": Alberta's workers' compensation review

In early July, the government released the final report of Alberta’s Workers’ Compensation Review Panel. The central message of the review is that the Alberta WCB has drifted away from doing right by workers. For example, the panel notes:
…the WCB can be overly efficient, and tends to manage the claim in aggressive accordance with strict rules, even when the resulting decisions fly in the face of common sense. This raises frustration among workers and employers alike and it contributes to a perception that the WCB has a “culture of denial” (p.8).
The panelists don’t explain what has motivated the WCB to act this way. My belief is that the WCB has been trying to navigate both political pressure and its legal obligations.

Beginning in the early 2000s, employers and the former Tory government pressured the WCB to minimize the cost of injury to employers. The WCB was then compelled to find to legally defensible mechanism by which to achieve employer premium reductions. The result is a system of policies and practices that seek to minimize benefits to workers and manifests itself as a culture of denial. This is most visible in the experiences of injured workers.

The panel makes a number of recommendations designed to increase the perceived and actual fairness of the WCB. Recommendations of particular interest to injured workers include:

The panel recommends establishing an independent ombudsperson office (Fair Practices Office) to monitor and address the procedural fairness of the WCB system to address concerns that the WCB treats workers unfairly. In addition, the existing appeals advisor office would be carved out of the WCB and located in the Fair Practices Office and would provide assistance to workers and employers.

The panel recommends that, while a worker is appealing a claims decision, the worker should be entitled to apply for relief of any benefit loss. This recommendation is designed to reduce the negative impact of erroneous decisions on workers’ lives.

The panel also recommends implementing a roster system for independent medical examinations (IMEs) here the worker chooses the IME (not the WCB). This should reduce the sense that the fix is in when the WCB sends workers for an examination to resolve a medical question about a claim. And the panel recommends changing the role of WCB-employed medical consultants to attenuate conflicts between treating physicians and the consultants.

The panel also recommends the WCB educate doctors and other medical professionals about the WCB in the hope that this will reduce the reluctance of medical professionals to engage with the system. This recommendation seems a bit Pollyanna because it assumes the root problem is ignorance by medical professionals, not their consistently poor treatment by the WCB.

The panel recommends workers be allowed to select their own treatment providers (beyond their own physician). The panel also recommends the WCB stop its cookie-cutter approach to treatment limits. For example, the WCB limits physiotherapy to six weeks based on medical literature that suggests most patients make a maximum recovery after six weeks. This limit means that: (1) workers who require more than six weeks of treatment are refused necessary treatment while (2) other workers are pushed through treatment too quickly, creating the potential for additional injury.

The panel recommends creating an obligation on employers to assist injured workers to return to work. This is intended to address the moral hazard faced by employers who may wish to evade their duty to accommodate injured workers. This recommendation contains some notable carve outs around employer size, employee tenure, and duration of the obligation.

The panel recommends that when the WCB deems a worker to be employed for the purposes of determining the workers’ wage-loss entitlement, that the WCB should use data that reflects the jobs a worker can realistic acquire and perform give the labour market and the worker’s skills and restrictions. That the panel would make such a recommendation gives weight to concerns that deeming decisions are often illegitimate and designed to reduce employer claim costs. The new deeming process will also contain a way for workers to better understand and contest the WCB’s deeming order.

The panel recommends the development of an ongoing process by which certain diseases can be granted presumptive status. The current process (which sets these out in Regulation) has meant that the list of diseases with presumptive status reflects the state of medical knowledge in about 1982 (with some recent legislative exceptions won for workers in more “heroic” occupations).

The panel also recommended that the WCB review the threshold test for compensability for some injuries (e.g., chronic onset stress) to determine if requiring work being the predominant cause is too high a bar (effectively creating two classes of injured workers).

The panel made a number of other recommendations about the WCB system. It declined to address the wage-loss replacement rate (currently set at 90% of net earnings). The panel did recommend temporary (and tapering off) increases in compensation for workers earning above the maximum insurable earnings of $98,700 (in 2016).

This is a strange saw-off in that it benefits the highest-earning injured workers (by giving them additional wage-loss compensation, albeit for a fixed term on a tapering system) while continuing to penalize the lowest-earning injured workers (who only get 90% of their net earnings as benefits). This might be a recommendation for the government to amend when it issues a response this fall.

The panel also recommended the WCB stops its practice of distributing surpluses from the accident fund to employers. The panel helpfully clarifies that these distributions are not “over-paid premiums” but rather reflect investment earnings. The panel suggests this money should be retained by WCB and used to fund things that make workplaces safer and compensation more just.

The panel kicked the issue of premiums and rate-setting down the road, recommending further study (perhaps along the lines of the principles set out in Ontario’s Stanley Report). The panel declined to recommend dispensing with experience rating altogether, but suggested that the current process may too heavily weight firms’ individual claims records.

The panel’s decision to not recommend the elimination of experience rating boils down to (1) many factors beyond experience rating contribute to claims suppression behaviours and (2) experience rating creates an incentive for employers to reduce injury rates.

While the panel’s first assertion is true, it should also be noted that experience-rating intensifies employers’ incentive to suppress claims and thereby externalize injury costs. Maintaining this arrangement is bad public policy (“Well, they’re gonna dump mercury in the river anyhow, so what can you do?”).

The panel’s second assertion assumes that experience rating results (at least to some degree) in a reduction in injury numbers and safer workplaces. There is little evidence to support this putative effect, which seems to be the only argument for retaining experience rating. Perhaps the limited utility of (and significant downside to) experience rating will become clearer in further study.

An interesting omission here is the absence of any gender analysis around the functioning of WCB or its outcomes. Perhaps such an analysis awaits the government's response to the report in the fall. For example, the government might examine whether pregnant and nursing mothers ought to have access to workers' compensation if their employer declines to reassign them when their work poses a hazard to their pregnancy or child (as Quebec does).

Overall, this report offers a much-needed review of the system and makes sensible recommendations. I expect the senior leadership of the WCB will find the report discomforting since it suggests (however diplomatically) that management decisions have given rise to many of the WCB’s current shortcomings. Many of the current executives are long serving and I wonder if we’ll see some change at the top over the next year or so.

-- Bob Barnetson

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