May 28, 1998
(Environment and Labour)

Government to implement Statutory Review Committee Recommendations

Government announced today its response to the 1996 Statutory Review Committee Report on the Workers' Compensation Act. On August 9, 1996, a Statutory Review Committee was appointed to make recommendations upon matters respecting the Workers' Compensation Act and regulations and their administration. Under the Terms of Reference, the committee was entrusted with the responsibility of making recommendations on any matter within its mandate that would improve the Workers' Compensation system.

During its review, the committee conducted 28 days of public hearings across the province. The committee received oral and/or written input from 213 contributors. Since that time, hundreds of stakeholders have contributed their views on this report.

Oliver Langdon, Minister of Environment and Labour, announced government's acceptance of most of the recommendations contained in the Report, some with modification. Changes will be made to the CPP Offsets, benefits to survivors of workers who died as a result of injuries, funeral expenses in the event of death, education and training initiatives, etc.. These changes in benefits will have no impact on employers' assessment rates.

Mr. Langdon stated: "In 1991 the financial position of the Workers' Compensation was bleak. Now, the Commission's financial position is getting back to a level where government can begin to make some reasonable adjustments in support of injured workers. Now, it is time to refocus and bring more balance and equity into the system." The minister stated during his announcement that a significant portion of the financial improvement came from changes implemented after the 1991 Statutory Review, such as reduced benefits paid to injured workers, additional premiums paid by employers above normal assessments, and positive returns on investments. There is now some flexibility to provide modest increases.

Contact: Sean Kelly, Communications, (709) 729-2575

Background Information

Today, workers' compensation is a mandatory, employer-financed, no-fault insurance system designed to provide benefits to workers for workplace injuries and diseases. Workers surrender their right to sue their employers with respect to injuries suffered during employment, in return for a system that guarantees financial compensation, and medical and vocational rehabilitation.

The original Disability System, designed to compensate injured workers on the degree of their physical impairment rather than their wage loss, was found to have some inequities particularly with respect to rehabilitation. In the 1970's, the notion of workers' compensation was re-examined. By the early 1980's, a new system was implemented to replace the Disability System and provide compensation for lost earnings, along with lump sums for partial or full disabilities. Under the new system, benefits are based on 80 per cent of net income, to a compensable ceiling of $45,500.

The thrust of the policies and actions of Workers' Compensation since 1991 has been directed at improving its financial position - especially the state of the unfunded liability. The Commission's financial position had deteriorated significantly since 1984. The commission showed an operating loss of $30 million for 1990 - an unfunded liability that escalated to $127 million during the 1991 committee's review process and $176 million by year end. The commission also recorded a marked increase in claims duration.

Because of changes implemented due to the 1991 Statutory Review, operating losses of the workers' compensation system are nearly eliminated. In addition, the unfunded liability has reduced from $176 million to $91.8 million in 1997. This improved the funded position of the system from 42 per cent to 75.7 per cent by 1997. A significant portion of the financial improvement has come from additional premiums paid by employers above normal assessments (i.e., an additional $13.4 million annual levy is imposed on employers); positive returns on investment and reduced benefits paid to workers.

In 1996, the Statutory Review Committee on the Workers' Compensation Act was asked to review and make recommendations on any matters that would improve the present Workers' Compensation. During its review, the committee conducted 28 days of public hearings across the province. The committee received input from more than 200 workers, workers' advocates, employers, employers' advocates, and administration agencies relating to benefit levels, survivors' benefits, legislative changes and policies. The stakeholders included those affected by benefit issues, those affected by cost related issues, and those who administer the program.

Responses from stakeholders suggested that the process was a constructive one that highlighted significant aspects of the Workers' Compensation requiring review. The final report points out the changes required to ensure a balanced and equitable workers' compensation system for all stakeholders.

Government feels it is time to refocus and make reasonable adjustments to Workers' Compensation to make the needs of injured workers better; however, this must be achieved without jeopardizing the financial integrity of the system. While the response does not completely satisfy the full interests of all stakeholders, it represents a step forward. The response reflects an approach which will still allow workers' compensation to achieve its goal of reaching a fully funded position by the year 2012.

Highlights of Government's Response to the 1996 Workers' Compensation Statutory Review

Recommendations Accepted

• Effective January 1, 1998, benefits to injured workers with claims of less than 39 weeks were increased from 75 per cent to 80 per cent.

• For the injured worker in receipt of CPP benefits, the amount of CPP that is offset from their workers' compensation benefits will be reduced, from 80 per cent to 75 per cent of net income. This change will provide long-term injured workers with an increase in benefits.

• Survivors will receive a minimum weekly payment of not less than $200.00 taking into account other survivor benefits such as CPP and employer sponsored pension plans. As well, the commission will now provide up to $5,000 to survivors to cover burial expenses.

• Implementation of the $200.00 weekly minimum payment to survivors and the CPP Offset for injured workers will take effect September 1, 1998.

• The employers' duty to accommodate and reinstate injured workers will be strengthened so that injured workers can be better accommodated back into the workforce through their pre-injury employer. A Plan will be designed by the worker, Workers' Compensation, and health care professionals which identifies a suitable occupation. This occupation, where feasible, will relate to the needs of the pre-injury employer.

• The deeming process will be monitored for one year by a sub-committee of the expanded Board of Directors who will assess the application of deeming on a one-year pilot basis and report back to the minister with their assessment.

• Health care entitlement will be determined in consultation with the treating physician and the health care team. Specialists reports will take priority over reports of general practitioners or occupational therapists, however, recommendations of the health care team will be considered.

• Homeopathic remedies and herbal medicines will be recognized forms of medical aid and funded by Workers' compensation if such forms of treatment are prescribed by the treating physician.

• Cancer of the larynx and cancer of the esophagus will be added to the list of industrial diseases.

• Time frames associated with the appeals process (internal and external) will be reduced to three months. The internal review process of Workers' Compensation and the external process by the Review Division will be required to conclude within three months rather than six.

• Given the importance of the system of Workers' Compensation and its increased mandate in education and prevention, the Board of Directors will be expanded to include three employer representatives; three employee representatives and three at large representatives - including representation from the not-for-profit sector, medical community, and/or health care support groups.

• Enhanced education and training of all stakeholders including labour, employers, health care providers, injured workers and staff on their roles, responsibilities and the expectations of Workers' Compensation to encourage a teamwork approach in servicing clients.

• Funding for Employer and Worker Advisors will be doubled to $200,000.

• The education and training functions of Occupational Health and Safety were merged with Workers' Compensation.

Recommendations Not Accepted

• An increase in benefit rates to claimants from 80 per cent to 85 per cent.

• Removal of the prohibition against top ups from collective agreements.

• Eliminate self-insured arrangement for employers.

• The requirement that limited life projects be pre-funded.

1998 05 28                    3:35 p.m.