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Are workers
compensation boards using employers' money wisely?
The Canadian Injured Workers
Society is asking all employers:
1.) Do employers feel that workers
compensation boards have excessive overhead costs?
2.) Are small businesses
subsidizing larger companies (and even private individuals) through workers
compensation system investment funds?
3.) Is WCB leaving
businesses open to lawsuits by injured workers?
| 1.) Do
employers feel that workers compensation boards have excessive overhead
costs? |
The 2006 Auditor General's report on the Manitoba WCB
stated:
"The compensation to the former Chair of WCB was significantly
higher than all but one other government enterprise in
Manitoba."
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In Ontario, the 2004
WSIB Annual Report states that the administrative costs for 2004 were $494
million dollars to administer $2,811 million in injured worker benefits.
This is a 17.6% overhead cost to administer WSIB claims!
Does it really cost this
much to handle injured workers' claims?
(This does not include another
$188 million dollars for legislated obligations and commitments such as
Occupational Health and Safety Act, the Workplace Safety and Insurance Appeals
Tribunal (WSIAT), the Offices of the Worker and Employer Advisor or the
Institute for Work and Health and Safe Workplace Associations, clinics and
training centres.)
Adding the above would bring the overhead to
$682 million dollars
and a 24% overhead cost!
(notice on page 29 of this
Annual Report that the "Benefits Costs" table could easily
mislead the reader to believe that the administrative costs are $290 million
dollars. On page 30, however, WSIB states: "Administrative and other
expenses in 2004 were $494 million. . . . On the Statement of
Operations, administrative and other expenses are shown as $204 million for
2004 . . . This amount is after a reduction of $290 million . . . which
represents claims administration costs and is included in benefit
costs.")
How far
could this administrative money have gone to simply pay denied legitimate
claims and adequate compensation? How many employers will face civil litigation
from injured workers who were denied benefits under WSIB?
Is this an effective use of
employers' money?
Here is an example of the salaries exceeding
$100,000.00 at the WSIB in Ontario for 2006:
Ontario WSIB
Salaries |
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2.) Are small businesses subsidizing larger
companies (and even private individuals) through workers compensation system
investment funds?
The provincial Auditors General do a surface audit of
workers compensation investment funds but do not scrutinize where the money is
actually being invested. Could it be that provinces are selectively investing
in some companies at the expense of others? For instance, do small Alberta
businesses subsidize the provincial oil industry? Are investments being made in
'friends'' companies? Are there conflicts of interest with provincial
investments? The evidence suggests - YES! Quotes from the
Manitoba Auditor General's 2006 report on
WCB
also at:http://oag.mb.ca/reports/reports_fr.htm
(see "Review of the Workers Compensation Board" Jan 2006)
| * Due to the undocumented and largely informal
investment processes and procedures that guided the Investment Department,
accurate, timely and complete information regarding private placement
investments was not reported to the Investment Committee, increasing the risk
that poor investment decisions would be made. |
| * Opportunities to improve WCB's private
placement investment performance may have been sacrificed by continuing to
only invest in funds that made investments in Manitoba. This practice may
have conflicted with the Committee's responsibility to "generate the highest
possible return" with WCB's assets. |
Conflicting roles and concurrent
relationships that made the ABC Fund investment problematic from a
conflict of interest perspective included:
o WCBs former
Chair/former Chair of the Investment Committee was also Chair of the Investment
Committee of Partner A;
o WCBs former CIO also chaired the
Board and the Investment Committee of Partner C;
o The WCB
Investment Committees Advisor was the CEO of Partner A and the promoter of the
ABC Fund;
o Partner A, an investor in ABC Fund, owned 65% of
the management company, and 50% of the ABC Fund development corporation
(which was proposed to renovate, develop and redevelop the ABC Fund properties
for a fee); and
o Partner B, an investor in ABC Fund, contributed
an asset that it owned to the initial transaction rather than cash, owned 35%
of the management company, and 50% of the development corporation.
* By actively pursuing a transaction such as ABC Fund amidst conflicting roles,
concurrent relationships, and considerable concerns leading up to the
transactions finalization, WCB placed their public reputation, and monies of
the WCB, at risk.
* In spite of WCBs former Chair and the
Investment Committee Advisor leaving the room in order to avoid a conflict of
interest when ABC Fund was being discussed by the Investment Committee, we
believe that their advocacy in favour of the ABC Fund investment was an
influence on the Committees ongoing deliberations.
* Given the
concerns expressed by so many, June 2003 was too soon in the development of the
ABC Fund investment for the WCB Investment Committee to be asked to approve the
notion of proceeding to the next stage.
* It is unclear why WCB
structured the ABC Fund investment with the Partner A and Partner B as the
owners of the management company. It begs the question as to why WCB did
not simply sponsor the R/E Consultant as the property manager along the lines
of how the investment was initially contemplated in December 2001. By the time
the investment was booked in July 2004, all of the changes needed in order to
be able to accommodate the ABC Fund investment in accordance with the ABC Fund
management company structure had cost WCB time, energy and money.
* Conflicts of interest made for difficulties for Investment
Department staff, and could have led to poor decision- making. It should not
have been left to the Director, Investments to be moved to remind her
superiors, in a June 20, 2003 memo, that it is important for WCB to do
independent due diligence of the project, as our interests and the interests of
the promoters are not entirely the same. |
The Office of the Auditor General (OAG)
noted several other areas of concern in its report stating:
". . .
This is the first time that a public sector organization disputed our right of
full and uninhibited access to information.
". . . the former Chair
of the WCB telephoned a consultant engaged by the OAG to assist with the
review, at her home during the evening. Inappropriate remarks were made to the
consultant, and the consultant was left with the clear impression that her
career and reputation were in jeopardy if the report produced for the OAG were
to be unfavourable to WCB or its former Chair.
". . . The OAG
considers this incident involving our consultant to be unacceptable and
constituted interference with our review.
". . . Throughout the
initial stages of our work there was a strong reluctance on the part of some
WCB officials to provide original records and supporting documentation until
that documentation was reviewed by WCB senior representatives. Further, several
of the persons interviewed were in significant distress and indicated
significant apprehension about their careers and/or reputations if WCB were
able to link any of our findings to them as individuals or even if WCB senior
representatives were aware of the fact that they had been
interviewed.
". . . In our opinion, certain of WCB senior executives
did not display, nor fully demonstrate, openness and transparency throughout
the conduct of our work. As a major public sector organization, we believe that
this behavior was inappropriate.
". . . The concerns brought forward
to the former Minister by WCB's former CEO related to the operations of the
Board and the former Chair. The issues were not addressed by the former
Minister, but instead were referred to the former Chair to handle in
conjunction with the Board. The former Minister considered this to be a
personnel matter. In our opinion, this was inappropriate as several of the
concerns raised dealt specifically with the former Chair.
". . . We
are also aware of one other instance in which a former CEO's letter of
complaint to a Minister received insufficient action on the part of the
Minister.
". . . Based on the review of human resource practices
conducted, we found that for a number of staff at the senior management ranks,
WCB was a hostile work environment, which was never formally acted upon under
WCB's harassment protocol or code of conduct policies.
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| 3.) Is WCB
leaving businesses open to lawsuits by injured workers? |
According to the
Hospital Employees’ Union (BC) - What Can We Do About
Stress? (Part Two) "There is documented evidence that work-related
stress leads to illness, injury, and disability. Even so, some workers’
compensation boards in Canada do not recognize stress claims. . . . More and more individuals could be forced to launch civil
lawsuits against negligent employers if the WCB refuses to compensate people
unable to work due to stress. This is already happening in Great
Britain. The pressure to change the WCB will come from workers and from
employers who fear lawsuits."
"Ouch! A healthy fear of
lawsuits may motivate employers to reduce workplace stress. In Britain, workplace stress is the subject of an increasing
number of civil liability cases. The famous Walker case involved a
social worker who suffered a nervous breakdown. His union went to bat for him,
and Mr. Walker was eventually awarded £175,000 (about CDN $350,000) in
1996. The High Court judge ruled that Mr. Walker's collapse was due to an
"impossible workload," lack of control and insufficient help from senior
management. "
For more information on the chronic stress issue, see
our Commissions and Reports page under 'Chronic
Stress'.
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