WorkSafeNB is digging deep into its pockets to pay back nearly $4 million to workers’ compensation claimants following a recent ruling from the Court of Appeal of New Brunswick, which found that the board had improperly clawed back injury benefit payments from recipients of the Canada Pension Plan (CPP).
After the decision came to light in September, WorkSafeNB says the ruling that dealt with CPP and loss of earning benefits has been acted upon. “The Canada Pension Plan retirement benefits can no longer be offset against benefits paid by WorkSafeNB to our claimants,” says WorkSafeNB’s manager of communications, Mary Tucker. “We’re working diligently to ensure that all affected claimants are fully reimbursed — many have already received payments and others are in the process of being paid.” The ruling is expected to affect less than 1,000 potential claims over a 20-year period, she adds.
The court case revolves around Wayne Douthwright, who started receiving long-term disability benefits after he was injured in October of 2002 while employed at J.D. Irving Ltd’s sawmill in Sussex. After he turned 60, Douthwright opted to collect retirement benefits at a diminished rate as is his right under the CPP, writes Justice J.C. Marc Richard in the decision.
Those benefits, totalling nearly $550 a month, began in September of 2009. By the following June, WorkSafeNB informed him that his long-term disability compensation benefits would be reduced by the amount of his retirement benefits and that he would have to reimburse WorkSafeNB for overpayments.
In an unanimous decision, the Appeals Tribunal of WorkSafeNB allowed Douthwright’s appeal, concluding that CPP retirement benefits do not qualify as supplemental benefits and the deduction was improper as the pension is paid for a period not related to the time of the compensable injury.
“CPP retirement benefits are available at age 60, independent of whether one receives compensation or not and independent of whether one stops working or not,” Richard writes. “I simply cannot conceive how it might have been the intent of the Legislature in enacting s. 38.11(9) to reduce compensation payments when a worker draws on his or her savings, whether it is in the form of money in savings account, funds held in an RRSP, a vested pension or CPP retirement benefits,” he says, referring to an interpretation of the section of the Workers’ Compensation Act (WCA).
WorkSafeNB maintained its position even though the Appeals Tribunal had consistently rejected the board’s interpretation and overturned its decisions. “In my view, the Appeals Tribunal has been correct all along,” Richard concludes.
“It is a complicated case in the sense that it was a statutory interpretation case,” says Dan Leger, a lawyer with Pink Larkin in Fredericton, who represented Douthwright in the appeal.
Leger, who notes that the WCA has seven or eight different sections dealing with situations related to clawbacks of CPP disability pensions, argued that benefits received after an injury are not considered a source of income because they were being held in a vehicle, such as a pension plan, and inaccessible until a certain point in time. “It is not meant to be replacement income like workers’ comp is,” he explains. “It is intended to be savings, a pension in effect.”
Leger says it is hard to determine what effect this decision will have on other jurisdictions. If there are incidents involving clawing back benefits based on similar language, the appeal decision would likely be a compelling case. However, he notes that every provincial statute is different and some already have the statutory authority to claw back benefits.
Take Ontario for example. Daniel Pugen, a lawyer with McCarthy Tétrault LLP in Toronto, says although detailed policies from the province’s Workplace Safety and Insurance Board do not have the force of law, the board uses them to interpret and apply the Workplace Safety and Insurance Act.
Policy 18-01-13 of the Act says when a worker receives CPP or Quebec Pension Plan disability benefits and WSIB future economic loss or loss of earnings benefits, the WSIB offsets 100 per cent of the disability paid in relation to the work-related injury or disease from the future economic loss or loss of earnings benefits. In New Brunswick, the WCA makes specific provisions for offsetting CPP disability benefits, but no reference to deducting CPP retirement benefits.
Pugen points to a principle called double recovery, citing the example of a wrongfully dismissed employee who finds a new job the following day, but still wants to receive both wrongful dismissal awards and money from their new employment. “You don’t get the court damages and the money from your new employment because then you’re in a better position than if you weren’t fired in the first place,” he explains.
Tom Barron, a labour consultant and chief executive officer of Barron T. Labour Relations in Moncton, says the decision is only the tip of the iceberg. “There are thousands and thousands of appeal decisions that are going through the revolving door,” he contends. Although WorkSafeNB has changed its practice regarding CPP retirement benefits, “they are still going right down that same road with other deductions they consider to be earnings.”
Jason Contant is managing editor of ohs canada.