How Ontario’s Workplace Insurance Favors Employers’ Interests Against Injured Workers
In 1914, workers gave up their right to sue employers in exchange for full and fair compensation for workplace injuries, for as long as their injuries last. The deal, which was a compromise, may be described as follows: full and fair compensation for injured workers in exchange for reasonable, dependable costs for employers who would collectively offset the reputational, legal, and financial risks of being sued. The promise was simple – full justice, no half measures.
During the century that followed there have been a number of changes following the findings of government commissions in 1932, 1950, 1967 and 1973. The late 1960s saw the rise of an injured workers’ movement characterized by social and political activism that addressed issues of a hostile and discriminatory Board administration and medical consultants who skirted responsibilities to injured workers, with calls for sorely-needed improvements to benefits and services for those who suffered permanent disabilities resulting from their workplace injuries.
In 1990, the system underwent further changes with a move away from the permanent lifetime pension model towards the formation of a ‘dual’ award system, which compensates a worker for loss of enjoyment of life, and then provides benefits for future loss of earnings. The changes also introduced the concept of “deeming” (also called “determining”). Deeming pretends that injured workers have phantom jobs – which they do not in fact have – and reduces their benefits by these imaginary wages, thereby only paying the injured worker the difference between what the Workplace Safety and Insurance Board (WSIB) simply guesses they should be making, compared to their actual pre-injury earnings.
Since 1996, the workplace compensation system has seen a dramatic shift in how it treats injured workers. The system that was created to compensate injured workers from the lasting effects of workplace incidents has been transformed to protect the interests of the employers who fund the system. Beginning in 1996, and accelerating since 2010, worker benefits have been severely reduced to pay off the WSIB’s unfunded liability (UFL) and reward employers with sizeable premium decreases.
How the WSIB Reduced the Unfunded Liability
The Unfunded Liability (UFL) represents the shortfall between the money WSIB would need to pay future projected benefits for all established claims and the monies in the insurance fund. In 2011, the UFL was $14.2 billion. As of March 31, 2021 the WSIB’s sufficiency ratio was 118 per cent, with more than $6 billion in net assets. The UFL was paid off eight years ahead of schedule. By regulation, the WSIB had until 2027 to retire the UFL. How did the WSIB pay off the UFL so quickly? The answer depends on which narrative one chooses to believe in.
Both the government and employers’ story goes like this. The UFL first became a problem in the mid-1980s, when the then Workers Compensation Board (WCB) started charging employers additional premiums to eliminate it (with the UFL also known as the “Past Claims Cost” or PCC). But the Board lost control of benefit costs and the UFL continued to grow until 2009, when it had reached a crisis level and was called out by the Auditor General. Since then, employers have paid out even more until they finally eliminated the UFL completely.
This story has a logical conclusion that employers paid off the UFL, so of course they should pay lower premiums now, since that is done. Just as they bore the entire cost of the UFL, they should receive the whole dividend. Unfortunately, they have created an alternative reality. The late US senator Daniel Patrick Moynihan said it best, “Everyone is entitled to his own opinion but not his own facts.” The employers have created their own facts.
The problem with the employers’ story is that it leaves out two crucial elements of the UFL’s history:
the employer premium reductions that contributed to the growth of the UFL in the first place, and
the huge contribution that injured workers made towards eliminating the UFL, in the form of reduced benefits.
So, for the record, here are the two major reductions in employer premiums that contributed to the UFL (as documented in Professor Harry Arthurs’ Funding Fairness (PDF), a study commissioned by WSIB itself):
From 1996 to 2001, the government first froze average premium rates and then oversaw their reduction by 30%
From 1995 to 2009, the WSIB’s employer experience rating programs (NEER, CAD-7 and MAP) resulted in a cumulative “off-balance” — an excess of premium rebates over surcharges — of $2.5 billion (which, as Harry Arthurs observes, was “a substantial contribution to the WSIB’s UFL”).
Here is a list of the benefit cuts. The first three were the result of legislative changes in the Workplace Safety and Insurance Act, 1997:
Wage loss benefits were cut by 5%, from 90% of net average earnings to 85%
The WSIB’s contribution to permanently disabled workers’ retirement pensions was halved, and
Cost-of-living increases for permanently partially disabled workers were deliberately set below the rate of inflation
The following describes other changes that the WSIB made to its adjudicative practices after the Auditor General called out the UFL in 2009:
After 2009, the WSIB cut spending on drug benefits by one third.
In 2011, the WSIB began rigidly implementing its "Better at Work" initiative, causing consternation among treating physicians; that workers were being forced back to work before they were ready, and resulting in large body of case law at the WSIAT, granting benefits to injured workers who were prematurely cut off by the WSIB for following their doctors' advice: e.g., Decisions Nos 2525/16, 524/16, 63/16, 888/16, 1889/15, 1069/16, 1133/16, 1437/16, 1062/16, 1436/16, 1479/16, 989/16, 1886/16, 2949/16.
In 2010, the WSIB paid out $126 million in permanent impairment settlement benefits to injured workers. By 2015, that number was $43 million – a 65% reduction in five years, with no matching reduction in injury rates.
The WSIB claims to have simply improved the permanent injury outcomes of workers in Ontario. It is simply not believable that they have eliminated permanent injury in two out of every three cases in a five-year period with better case management alone, especially given that this same period saw a 10% reduction in spending on healthcare as well.
For workers unable to return to their employer where they got injured, the WSIB reduced the amount of time it allowed for job search training in its labour market re-entry/work transition programs.
In 2012, the WSIB began routinely using asymptomatic pre-existing conditions as grounds to reduce, or terminate, workers’ LOE and NEL benefits.
In 2014, the WSIB imposed, through an updated policy, new restrictions on entitlement to LOE benefits for recurrences.
The WSIB’s own Annual Financial Reports reveal that between 2010 and 2015 alone, the benefits paid out to injured workers were cut in half, from $4,809 million to $2,332 million.
In 2016, injured workers won a huge victory when the legislation relating to the WSIBs coverage of work-related chronic mental stress injuries changed, requiring the Board to cover these types of injuries the same way it is required to cover others. Despite the change in the law, actual policies and practices remain inadequate and discriminatory.
WSIB’s own audits have shown that since the inclusion of work-related chronic mental stress injuries in 2016, the WSIB has only single digit fractions of chronic mental stress cases, compared to 78% of physical injuries.
The above system changes only begin to scratch the surface of the challenges that injured workers have faced in the name of eliminating the UFL. For example, I have not provided significant detail on other savings, such as:
Claims abandoned by workers due to the delays caused by bad decisions, a backlogged appeals system, and gross understaffing.
The active fostering of a culture of denial among WSIB staff.
The Board’s confirmed practices of creating opportunities to ignore injured workers’ treating doctors.
At the time of these cuts, injured workers were unambiguously told that once the UFL was eliminated, some benefits would begin to return. For example, on February 24, 2010, the former chair of the WSIB Steve Mahoney addressed the Standing Committee on Public Accounts, stating that:
The real benefit to eliminating the unfunded liability is that it would free up the one third of that premium, which could then be used to either reduce premiums, or increase benefits, or both.
Unfortunately, despite the UFL being eliminated, injured workers are still waiting for increases to benefits. In fact, it is the employers who have been rewarded with premium relief and injured workers continue to see benefits downgraded.
Employer Premium Relief
Since 2018, employers have been granted the following financial relief:
a 47% reduction in premium rates which has already saved them billions of dollars.
In 2016, the average premium rate was $2.59, whereas in 2020, it was $1.37.
Since 2016, the average construction premium has dropped by 63%.
Manufacturing since 2016 has seen a 43% reduction in average premium rates.
The 2021 premium rate will remain at $1.37 with no increase.
In its annual general meeting on Oct. 6, the WSIB announced the average premium rate would be reduced by 5.1 per cent in 2022, from $1.37 to $1.30.
Construction Deaths & Critical Injuries Still High
The decrease in employer premiums has not been the result of improved safety records or reductions in deaths or critical injuries. For instance, statistics on construction deaths and injuries from 2020 indicate that since 2014, construction has had on average 22 deaths per year.
2020 Critical Injuries in Construction
2020 was the worst of the past four years for critical injuries in the construction sector with 355 documented critical injuries. The totals from the previous three years were:
Despite the high number of deaths and critical injuries since 2016, the average construction premium has dropped by 63%. How is this a balanced and fair approach? These successive premium rate reductions continue to be funded by a downgrade in injured worker entitlements.
A reasonable observer might conclude that since employers have already been rewarded with massive premium rate cuts, there should only be one kind of consultation now: how to return some of the benefits to the injured workers who were forced to make the sacrifices that eliminated the UFL and are continuing to fund employer premium rebates.
To add insult to injury the Ontario government recently announced that plans to give the WSIB the power to distribute surplus funds to employers. The payouts would be optional when the sufficiency ratio of the WSIB’s fund is between 115 per cent and 125 per cent, and mandatory when it is over 125 per cent. The sufficiency ratio compares the fund’s assets to its liabilities. As of March 31, 2021 the WSIB’s sufficiency ratio was 118 per cent, with more than $6 billion in net assets.
Yet despite more than $6 billion in net assets. The WSIB continues to downgrade workers benefits. The current workers' compensation system has entered a period of rising complexity and increasing pressures by the employers who fund the system for change. The employer lobby continues to demand changes to reduce premiums and overall costs.
Adjudication at the WSIB operating area, and to a lesser extent, the Appeals Service division can be described as ‘regulatory capture’ by the employers. The concept of regulatory capture refers to a phenomenon that occurs when an agency/board (WSIB) that is created to act in the public interest (injured workers) instead, advances the commercial or political concerns of special interest groups (employers) that dominate an industry or sector that the agency is charged with regulating.
It’s time that the worker and union movement take collective action for the re-establishment of a workers compensation system that is “fair and balanced” and takes a worker-centric adjudication approach that treats all injured workers with dignity. I make these comments not because I am on the side of workers, but because I am on the side of fairness.
For more information on workers’ compensation please contact Carmine Tiano directly at email@example.com or by phone at (416) 679-8887. You can also visit The Ontario Building Trades Health, Safety & Prevention Resource
 For example, if an injured worker was earning $27 per hour prior to injury and the WSIB then deemed him or her able to earn $20 per hour, the injured worker would only receive 85% of the after-tax, take home pay of $7 per hour.  WSIAT (Workplace safety & Appeals Tribunal) is the final board of appeal that workers and employers may bring disputes concerning decisions of the Workplace Safety and Insurance Board  https://www.thestar.com/news/gta/2018/12/04/workers-compensation-board-denies-over-90-per-centof-chronic-mental-stress-claims-audit-shows.html  For more information on bad decisions, see No Evidence, 2017 http://iavgo.org/wpcontent/uploads/2013/11/No-Evidence-Final-Report.pdf  One small example: a case manager requires the approval of senior management for allowing claims above a certain dollar amount but may deny claims of any amount without the need to consult more experienced staff. Another: FOIs of training material have shown us that trainees are asked to ‘consider the consequences’ of allowing an illegitimate claim, while never been asked to think of the devastating consequences of denying a valid one.  For more information on WSIB’s approach to treating doctors, see Prescription Overruled, 2015 https://ofl.ca/wp-content/uploads/2015.11.05-Report-WSIB.pdf  https://www.ola.org/sites/default/files/node-files/hansard/document/pdf/2010/2010-02/committeetranscript-1-EN-24-FEB-2010_P027.pdf, p 479.