John Bowdren, Illustration Source
When longtime retail employee Karen chased down a brazen shoplifter in December of 2012, she never dreamed that her story would expose an illegal practice taking place across Manitoba and very likely across the country. The practice, commonly known as claim suppression, refers to employers’ concealment of or failure to report workplace injuries to the workers’ compensation board (WCB). The practice is widespread enough that the WCB of Manitoba commissioned an independent research report last May to examine the incidence of claim suppression.
The findings, released on March 28, found “significant” issues with employers misreporting, under-claiming and suppressing work-related injury claims to keep premiums in check.
On that chilly afternoon in December, the only concern that Karen (who requested that her last name be withheld for fear of reprisal) had was catching the thief and his female accomplice as they attempted to steal a 40-inch television. Karen confronted the pair as they loaded the television onto a van in the parking lot of the supermarket, where she worked as a customer service representative. Threatened by her line of questioning, the pair started yelling at her and pushed her around, knocking her to the ground before making off with their heist worth $500.
Karen sustained a swollen lip, bruising and soreness. Physical injuries aside, she was also at the receiving end of blatant employer intimidation when her assistant manager suggested that it would be in her best interest not to file an injury claim with the WCB.
Once the store manager got wind of the incident, he requested a meeting with Karen. Worried about the outcome, she requested a union steward to accompany her to the meeting. The store manager proceeded to berate Karen for violating store policy by following the customer outside and threatened that if she filed a WCB claim for her injuries, she could lose her job.
“They didn’t think they were violating the law, and they didn’t care to hide it in front of one of our stewards,” says Winnipeg-based Rob Hilliard, a WCB advocate with the United Food and Commercial Workers Union, Local 832, which represents about 15,000 workers in Manitoba. “I have to emphasize this is not a rare problem. It is a problem that is growing. My experience is that every year, it is worse than the year before.”
Long Time Coming
For many years, Manitoba’s labour movement has been highlighting the issue of claim suppression — a euphemism for employers gaming the system. In response to pressure from the province’s labour movement, the WCB of Manitoba has been taking a closer look at how it conducts its business by commissioning two reviews within the past year, both addressing claim suppression.
The first report, The Fair Compensation Review by Paul Petrie, an expert in workers’ compensation systems, looks at the effect that the WCB’s rate-assessment model has on fair compensation for workers and equitable assessments for employers. The report, submitted to the Minister of Family Services and Labour last January, addresses ways to encourage employers to embrace effective injury-prevention programs, while targeting the practice of claim suppression.
In March, the WCB of Manitoba released its second report, Claim Suppression in the Manitoba Workers’ Compensation System: Research Report, which gives credence to suspicions that some employers in the province suppress injury claims. The report notes that injury-claim suppression is tricky to pinpoint, because employers try to hide claims from the start. It reveals that six per cent of workplace injuries, representing about 1,000 workers yearly, are not reported due to overt claim-suppression tactics by employers. This type of suppression is especially malicious, as employers resort to threatening and bullying employees to deter them from filing time-loss claims or coerce them to withdraw such claims after they have been filed.
The report also details incidents of soft claim suppression at nearly 19 per cent, or 3,000 cases per year. This occurs when an employer continues to pay wages to an injured worker who is not working due to a job-related injury. Misreporting, which is reporting lost-time injuries as injuries for which no time was lost, accounts for an estimated 14 per cent of claims. The findings also indicate a significant amount of under-claiming of benefits and that more than 30 per cent of workers who suffered a work-related injury requiring more than five days of lost time may not have claimed lost earning benefits.
As a result of the review, the WCB of Manitoba has launched a multi-pronged education and awareness campaign to inform employers and employees about its workers’ compensation system — an initiative that could prove to be a rather steep learning curve.
“We are definitely concerned. That is why we are working hard and doing a robust awareness campaign this year,” says Warren Preece, director of communications with the WCB of Manitoba in Winnipeg. “We can make sure employers who are deliberately flouting the rules get punished and employers who are trying to learn the system get supported, and we can make sure employers and workers who don’t know about us are informed.”
However, identifying the black sheep among the herd can be a daunting task. “It is quite difficult to get a worker, a witness and everyone tied up tight enough to actually go and levy a penalty” against an offending employer, Preece says.
The WCB of Manitoba is engaging in public consultations to get feedback from stakeholders regarding its rate model. Improvements to the WCB of Manitoba, earmarked for this year, will target the organization’s compliance framework and are expected to include the following measures:
• Hiring a director of compliance;
• Allocating resources to the new compliance department;
• Identifying workers and employers who do not comply;
• Educating workers;
• Issuing fines to employers; and
• Increasing the current administrative penalty.
Labour leaders charge that the WCB of Manitoba runs a flawed system that does the opposite of what it was mandated to do, which is to prevent accidents and injuries in the workplace and help injured workers. Instead, the current rate model operates on an incentive system based on the number of claims submitted: the fewer claims, the cheaper the rate.
Consequently, a segment of employers suppress claims, even though the practice is illegal. Some do so through direct threats and coercion, while others adopt a lighter touch by offering gift cards and free pizza lunches to their staff if they meet established time periods in which no time is lost due to workplace injuries.
“Claim suppression is not a good culture to create, because it impacts workers who truly need time off and assistance, and they are more reluctant to seek medical treatment,” says Gail Cumming, an Edmonton-based consultant with Adorn Consulting Inc.
Suppressing injury claims has adverse repercussions on both injured workers and workplaces. A worker might experience a seemingly innocuous injury that has a delayed side effect, but if the initial injury was never reported, he or she runs the risk of not being eligible for compensation if the injury worsens and becomes critical.
Cumming notes that seasonal migrant workers and those in temporary job placements are particularly affected. “If they are not healed by the time they left that employer, another employer is going to be having to deal with a claim,” she says. If a worker has previously sustained an injury that was not attended to due to the failure to report, that increases the risk of that worker suffering another injury down the road.
As well, an unreported injury means that the underlying cause that triggered the incident resulting in the injury was never addressed and rectified, thereby putting other employees at risk. Finally, claim suppression is not fair to employers who play by the rules, but end up paying more than those who beat the system do.
The WCB of Manitoba has come under fire for not once fining an employer for claim suppression. At $450 for an administrative penalty, the amount is hardly a deterrent, says Kevin Rebeck, president of the Manitoba Federation of Labour (MFL) in Winnipeg. Rebeck believes that education may help fix the system. But before that can happen, changes need to be made to the WCB’s existing rate model, which encourages employers to sweep injury claims under the rug.
“It is not a matter of tweaking enforcement and upping fines; it is a matter of dealing with the root cause,” Rebeck says, adding that increasing penalties and issuing fines do not address the motivators behind claim suppression. “And the root cause is, we have a system that rewards people if they find ways to have claims not reported, and that is not right.”
Instead of the current claims-experience rate model that has been in place since 2001, Rebeck envisions a comprehensive workplace-injury prevention model, in which employers would be subject to periodic audits that would indicate whether employers have invested the time, effort and money into making their workplaces safe. He thinks that the historic no-fault concept of workers’ compensation is being compromised by employers and third-party claims administrators, many of whom are hired to challenge workers’ injury claims.
“When you get this kind of overly aggressive claims management, either directly by employers or third-party disability firms, it has a chilling effect on the workforce,” says John Doyle, research and communications manager with the MFL.
The federation views these claim challenges — subtle or aggressive — as a form of claim suppression that attempts to dissuade workers from doing what they are legally entitled to do. Doyle observes that over the past five to 10 years, the province has seen an emergence of third-party claim administrators.
Cumming observes a similar trend. “The employers hire because they do not want the claims to raise employer cost or time loss,” she says. “Workers hire these administrators because they do not trust the WCB and the employers to do the best thing for them.”
And that has to do primarily with managing the financial fallout stemming from workplace incidents. Preece reports that the WCB has nine different rate categories based on the level of risk. The average Manitoba employer currently pays $1.50 in premiums for every $100 in wages spent. For employers with a minimal risk rating, “you can pay as low as 14 cents for $100 payroll,” Preece says.
At the other end of the risk spectrum, an employer hit with many workplace injuries and accidents could pay as much as $36 for every $100 in payroll. High-risk employers include those in the logging and window-cleaning sectors. Medium-risk employers tend to be in health services and wholesale food products, while office jobs are pegged as low-risk.
The Petrie Report
The rate model is the topic of Petrie’s report, which concludes that the Assessment Rate Model — focused primarily on claims cost — provided a strong incentive for employers to control those costs wherever possible. By comparison, he found little persuasive evidence that the Assessment Rate Model provided a substantial direct incentive to develop and implement effective safety programs.
In 2012, there were 30,000 workplace injuries in Manitoba. But worker advocates believe that the number — high as it is — does not accurately reflect workplace injuries in the province, the number of which is likely higher, thanks to claim suppression.
“The issue exists because some employers are always looking for ways to beat the system, and it is a way to keep costs down and exercise more control over their employees,” says Winnipeg-based Lynne Fernandez, Errol Black chair in labour issues with the Canadian Centre for Policy Alternatives’ Manitoba office.
While Petrie’s report does not go as far as recommending that the WCB of Manitoba move away from its current rate model, Fernandez points to one of the report’s 27 recommendations as the most significant in terms of circumventing claim suppression: the first two weeks of any time-loss claim should be assigned to the employer’s industry sector and funded collectively by that sector out of the accident fund.
Fernandez believes that the move would prevent claim suppression by small- and medium-sized firms that do not have the resources to invest in alternate-duty programs. He also thinks that this would help deter less conscientious employers from riding at the expense of those that play by the rules and protect small employers from big rate hikes.
Curtis Forbes, a WCB consultant for employers with BCL Consulting Group Inc. in Edmonton, thinks that the solution is to have employers pay for lost time between three and five days after a worker is injured without the incident affecting their insurance rates. “It would be better for the system if the guy who cut his hand could go home and rest for a day. With this pressure to not have time-loss claims, every employer is forced to get the guy modified work immediately, and they are dreaming up kinds of modified work.”
He believes that this will diminish claim suppression by employers, who want to keep their records clean. “I think most employers would be happy with that, as they could go ahead and have a time-loss claim,” suggests Forbes, a former manager at Alberta’s WCB.
Partners in Crime
Canada’s workers’ compensation system began in 1913, when Ontario judge, politician and lawyer Justice William Meredith, who headed the Ontario Royal Commission, studied the issue and submitted the Meredith report. It proposed a historic trade-off, in which workers gave up the right to sue their employers for a guaranteed protection from loss of income, regardless of fault.
The report led to the proclamation of Canada’s first Workers Compensation Act in Ontario, based on the five Meredith Principles of no-fault compensation, collective liability (all employers share the total cost of the compensation system), security of payment (a fund that guarantees compensation will be available for injured workers when they need it), exclusive jurisdiction (all compensation claims are directed solely to the compensation board) and an independent board (which is autonomous and financially independent of government or any special-interest group).
But the workers’ compensation system has since turned 100 years old. Forbes thinks that it is not designed to handle the types of injury claims being made today. “When the WCB started, they were covering miners and loggers. Accidents used to be a broken leg, a cut — something significant and something physical. Now, you see a grey zone,” he says, citing workplace aggravation of a pre-existing condition. Forbes says he has seen many workers in their 50s with rotator-cuff tears report that they had been sore for a few weeks, and their doctors then told them that they needed surgery.
Diana Ludwick, occupational health nurse with the MFL’s occupational health centre in Winnipeg, says workers in the food-processing sector are often discouraged to report job-related injuries.
“Within food-processing plants, I hear some workers — as many as half of the workers on any given day — are working in considerable pain,” Ludwick says, with many citing fast line speeds as a factor. “Workers are often instructed to not go to a doctor for five days and told to go back to work.” If they are in too much pain, she says they are often reassigned to lighter duties and not given the opportunity to file a claim.
In high-risk industries like construction, claim suppression is further exacerbated by online companies, such as ISNetworld and Contractor Qualification Network, which prequalify firms to bid on large jobs. These firms connect hiring clients with contractors rated safe and reliable by a point system. As such, a company’s safety record can make or break its approval rating and jeopardize the chances of a firm landing a project. “If you have a score below a certain threshold, they kick you out and you don’t get to bid,” Forbes says.
As an employer consultant, Forbes adds that he has handled numerous employers who were anxious about WCB claims and feared losing out on bids. “I had one employer tell me he would rather pay three times the WCB premium if it meant losing his time-loss claim, because he can’t bid on millions of dollars of work because of that one claim.”
But employers are not the only ones guilty of suppressing claims. Forbes points out that workers themselves are also partners in crime, especially in the construction sector, in which it is apparently not uncommon for employees to smoke marijuana. Many workers fear seeking first aid following an injury, because employers require mandatory urine tests, which will reveal that they have been smoking marijuana. “So they learn very quickly not to say anything. The urine test is getting to be quite common,” Forbes suggests.
Claim suppression is especially difficult for vulnerable workers — which include young workers, newcomers to Canada, Aboriginal workers and temporary foreign workers — who often do not know or understand their rights.
From the Horse’s Mouth
Winnipeg’s Tim Cashion was working for a well-established temporary employment agency in 2011, when he suffered severe burns to his left foot after spending the better part of an afternoon cleaning caustic soda drums at a multi-national chemical company. Cashion says he received no training or direction regarding the corrosive chemical, which ate through his steel-toed work boot, sock and skin.
The 45-year-old did not report his injury for fear of reprisal from the job-placement agency and his co-workers. Cashion would work at the Winnipeg chemical manufacturer for another three months. Although he walked with a noticeable limp after his injury, no one ever asked him about it. As an unskilled, temporary labourer, Cashion felt especially vulnerable during the time when he was injured, since he believed that he had no rights and felt very much alone.
“You are taking a hell of a chance thinking you are going to reform the temporary-worker industry,” Cashion says. “That is not a good idea for your employability. Besides, I did not have any particular interest in becoming the Joan of Arc for Manitoba’s temporary workers.”
But incidents of claim suppression at the chemical plant were common, whether that involved not reporting moderate injuries to the WCB or rewarding workers for having no lost-time claims within a certain period of time, he suggests.
“As a celebration of a certain time period of no injuries, we were given steaks at lunch,” Cashion recalls. “I could not believe how excited everyone was. This is a common worksite trick. What shocked me was the psychological impact these low-expense company gestures had on employees. By that point, I could afford to buy my own steak.”
Only time will tell whether WCBs in other provinces will follow in Manitoba’s footsteps of reviewing its experience-rating system. The Workplace Safety and Insurance Board in Ontario, which adopts a similar rate-experience model to Manitoba, commissioned an independent study last April. The report found that “the most important conclusion to be drawn from the research is that claim suppression appears to be a real problem. It is unlikely that claim suppression is restricted to a small number of anecdotal cases.”
Meanwhile, Manitoba’s NDP government is cracking down on employers who suppress claims. In late April, the government introduced amendments to the Workers Compensation Act (Bill 65) to broaden worker protection by increasing penalties to employers who suppress claims. Maximum fines will increase from $7,500 to $50,000. The bill also gets tough on employers by requiring those who take “discriminatory action” against a worker to prove that the action was not related to the worker making a claim.
“We know from WCB research that claim suppression is happening far too often, to far too many workers,” Manitoba’s Labour and Immigration Minister Erna Braun says. Braun also announced new measures to boost workplace safety, including a new mobile unit for workplace health and safety officers, a new serious-injury support worker position in the Worker Advisor Office and Manitoba’s first annual leadership conference for safety and health committees, scheduled to take place in September.
Preece says the findings from the report will help the board analyze claim behaviour and review how it can intervene proactively. “We are focusing on overt claim suppression, because that is where a worker has to use their sick time or vacation,” he says. “We want to make sure that if you are hurt at work, you are not forced to go without pay.”
Kelly Putter is a writer in Beamsville, Ontario.
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Hide and Seek
Claim suppression comes in various permutations when employers engage in any of the following actions:
• Discourage or blatantly prevent injured workers from filing workers’ compensation claims;
• Pressure injured workers to return to work before they have fully recovered;
• Punish workers for reporting injuries;
• Fight workers’ compensation board (WCB) claims by setting up a workplace culture hostile to injured workers;
• Reward employees with gifts and bonuses for not reporting injuries; and
• Encourage injured workers to accept cheaper and less comprehensive private insurance compensation rather than going through the WCB.
Types and prevalence of claim-suppression identified in Claim Suppression in the Manitoba Workers’ Compensation System:
Percentage of claim-suppression activity
Annual number of claims affected
When an employer uses threats or coercion to influence a worker not to file a claim or withdraw a claim once filed.
Estimated at 6%
When an employer continues to pay the worker his or her regular wage, once he or she has had a workplace injury and is missing work. Soft claim suppression may occur whether or not employers are aware of their reporting responsibilities under the Workers Compensation Act.
Estimated at 18.8%
When an employer reports a time-loss claim as a no-time-loss claim. This is also known as cost suppression.
Estimated at 14%
When workers choose not to pursue a claim for a workplace injury or illness with the WCB.
Unclear. Likely a significant factor.