Reduce premiums through cost relief

Maurice Dransfeld
Sometimes even the most safety conscious employer can experience a workplace accident. Depending on the nature and severity of the injury, this employer might end up watching substantial claims costs accruing on its experience rating —resulting in increased premiums.

In such circumstances, a request for cost relief can sometimes be an additional avenue through which an employer can attempt to limit its claims cost and premium liability.

Generally speaking, all costs associated with a compensable injury are attributed (or “charged”) to an employers’ experience account where they play part in contributing to future premium assessments. However, in virtually all Canadian jurisdictions, the workers’ compensation board (WCB) maintains some discretion to relieve employers from claims costs in certain exceptional circumstances.

The general idea behind cost relief is that it allows for a transfer of costs away from the employer’s experience rating where claims costs arise from circumstances that are not really within the employer’s control. The WCB may relieve all or part of the costs of a compensable claim.

Once the costs have been relieved against (either by being charged against a reserve fund established by the responsible WCB or by being applied against the employer’s industry as a whole), the employer’s own experience rating will see a commensurate reduction in claims costs, resulting in sometimes dramatic positive effects on future premiums.

In moving towards a request for cost relief, you must familiarize yourself with the applicable policy and understand the circumstances and scope in which the WCB in your jurisdiction can award such relief.

The most common type of cost relief available concerns claims costs associated with a pre-existing condition or pre-accident disability. Almost universally, WCBs will consider relieving costs for an employer where the compensable accident-related disability is prolonged as a result of a separate and pre-existing condition or disability. Generally speaking, the employer will need to be able to point to some medical evidence confirming the existence of a pre-existing condition in order for this avenue of cost relief to gain any traction at all. Reasonable inferences, anecdotal evidence, predispositions to injury or circumstantial evidence such as a family history of certain conditions will usually not suffice.

Further, in order for cost relief to be applied, the file materials usually have to disclose a causal link between the pre-existing condition and the prolonged period of disablement. The mere presence of a pre-accident disability is therefore not conclusive. The employer needs to be able to point to something that can support the view that increased costs are being incurred as a result of the pre-existing problem. That being said, this type of relief from costs is available most often in cases where a relatively minor accident results in a more serious or substantial impairment.

Back injuries are usually a prime example — pre-existing back conditions are relatively commonplace and workers with occupations requiring any amount of heavy lifting are at a high risk to aggravate these issues.

Another common category of cost relief relates to “second injuries.” Cost relief may be provided on the basis of a second injury where a compensable injury, or treatment for a compensable injury, results in a distinct additional injury occurring. Often, second injuries occur in the course of WCB-approved treatment and may qualify for cost relief on that basis. As an example, a worker may receive some form of physiotherapy for a neck injury which ends up injuring his shoulder or a worker might suffer from a prolapsed disc which progresses into impacts on the spinal canal leading to some degree of paralysis.

Between the various jurisdictions, any number of additional grounds for cost relief may be available. The Alberta WCB will consider factors relating to the worker’s actions. If the employer can point to circumstances where the worker’s own actions and error in judgment have delayed, prolonged or otherwise stunted recovery, the WCB might consider relieving any such additional costs associated with the period of delay.

British Columbia allows for cost relief in cases where a disaster or other related circumstance lead to losses the WCB would consider to unfairly burden the employer’s rate group.

Saskatchewan’s WCB policy contains provisions to relieve costs in the event of administrative errors in calculating claims costs.

Ontario’s policy contains provisions that state employers are entitled to cost relief where the Workplace Safety and Insurance Board (WSIB) sues on behalf of the worker and receives a court award or settlement.

In New Brunswick, WorkSafeNB allows for cost relief in situations where a non-compensable injury prolongs the recovery from injury.

Where an employer believes it has some grounds to be relieved from some of the costs of a claim, it should first request its WCB file and conduct a thorough review. Where relevant medical evidence is lacking — for example in cases where a pre-existing condition is suspected but not detailed in the records — a request for further medical documentation might be prudent.

Once the grounds for cost relief have been identified, the employer should contact the claims manager responsible for a compensable claim and outline the reason for the request in writing. This should include a letter pointing to the relevant file materials and medical evidence in support of the request. In cases where cost relief is denied despite support for this outcome in the applicable policy, the employer may be in a position to appeal or have the decision reviewed.

Ultimately, seeking cost relief is a relatively risk-free proposition. The worker is usually unaffected and will not have a stake in the outcome and, as a result, lengthy stretches of litigation are usually avoided.  

This article originally appeared in the August/September 2015 issue of COS.