As a result of recommendations made in the Morneau Sobeco Report and comments made by the WSIB, there may soon be an announcement that employers will be limited in when and how much they can apply for a transfer of costs to the Second Injury and Enhancement Fund (SIEF). If these changes are implemented they could have a serious financial impact on employers with regard to refunds being received and/or surcharges being paid under the WSIB’s Experience Rating Programs.
The current WSIB policy with regard to the allowance of cost relief from the Second Injury and Enhancement Fund (SIEF) reads as follows:
“If a prior disability caused or contributed to the compensable accident, or if the period resulting from an accident becomes prolonged or enhanced due to a pre-existing condition, all or part of the compensation and health care costs may be transferred from the accident employer in Schedule 1 to the SIEF. Both physical and psychological disabilities are included.”
“The objectives of this policy are to provide employers with financial relief when a preexisting condition enhances or prolongs a workrelated disability. It thereby encourages employers to hire workers with disabilities.”
We have been very successful in pursuing cost relief from SIEF on behalf of many employers. In many cases we are able to get 75% to 90% of the costs of a WSIB claim transferred to the SIEF. This results in substantial financial savings for the employer.
However, if the Morneau Sobeco Report’s recommendations are implemented, the ability to obtain substantial cost relief for employers will be seriously impacted. Firstly, this report recommends that the amount of the costs transferred to the SIEF would be limited to 50%. It should be noted that in 2009 the maximum claim costs for each WSIB claim is $373,000.00 and for 2010 it will be $388,000.00. Therefore, for a WSIB claim that has maxed out for experience rating purposes, the limiting of cost relief to 50% could cost an employer approximately $150,000.00 if they were a larger employer with a high rating factor and previously could have obtained 90%.
Currently, employers are allowed to have costs transferred to the SIEF when the worker has a pre-existing disability which has resulted from a prior workrelated accident with the same employer. However, the Morneau Sobeco Report has recommended that the WSIB not allow costs to be transferred in the future when the pre-existing disability has resulted from a prior WSIB claim with the same employer. Therefore, an employer would be limited to obtaining a transfer of costs to the SIEF in only those cases where the worker has a preexisting non work-related disability, or if it was a work-related disability resulting from a WSIB claim with another employer.
Currently, the WSIB allows for a transfer of costs to the SIEF for both preexisting conditions and/or pre-existing disabilities.
However, the Morneau Sobeco Report has recommended that the costs of a WSIB claim should not be allowed to be transferred to the SIEF if the worker only has a pre-existing condition but not a pre-existing disability. Over the years, we have been very successful in obtaining substantial cost relief to the SIEF on behalf of employers on numerous occasions for workers with only pre-existing conditions. Therefore, if the Morneau Sobeco recommendations are implemented, the ability of an employer to obtain a transfer of costs to the SIEF in these circumstances would be lost. This, again, could have a substantial financial impact on employers.
As a result of this new development, we are recommending to employers that they pursue applying for a transfer of cost to the SIEF in any WSIB claim files that they feel would qualify under the WSIB’s current policy. We are encouraging employers to make these applications as soon as possible to avoid the possibility that the above recommendations could be implemented and these opportunities could be lost.
The current economic conditions are already having a very substantial impact on the profitability of many employers in Ontario. Therefore, it is important that employers take whatever steps are possible to reduce their costs.