Michael Lewis
Special to Ontario Construction News
A surge in employer-initiated litigation is a likely consequence of the Workplace Safety and Insurance Board’s abrupt move in July to wind down the 80-year-old Second Injury and Enhancement Fund, an online seminar has heard.
“Unfortunately, there will be more employer litigation,” said Les Liversidge, a workers’ compensation lawyer who led the Sept. 22 webinar in his role as a legal representative of the Construction Employers Coalition (CEC). The presentation was organized by the CEC and construction employer group the Residential Construction Council of Ontario (RESCON).
Both organizations are calling for reinstatement of the fund, a formal policy options paper and a four-month stakeholder consultation. The CEC works as a voice for construction employers in Ontario on workplace health, safety and insurance issues.
The webinar focused on the implications of losing SIEF cost relief and reviewed legal challenges to the WSIB’s retroactive policy implementation. Liversidge also outlined objections to what he called a lack of WSIB consultation leading up to the fund’s erasure.
He said SIEF had sheltered employers from skyrocketing worker disability insurance premiums by shifting a portion of claim costs stemming from pre-existing conditions away from an employer’s record and into a collective board fund. Instead of the employer being responsible for the full cost of a drawn-out recovery, the SIEF transferred from 25 per cent to 100 per cent of those expenses out of the employer’s individual account.
“SIEF mitigated employer interest to a certain degree. That interest will no longer be mitigated,” Liversidge said, suggesting that what had been a routine cost recovery mechanism will give way to litigation from day one. He said instead of easily obtaining cost relief through SIEF, employers will fight the legitimacy of a claim, trying to prove that a worker’s prolonged recovery is due to their pre-existing pathology and not the workplace accident itself.
In cases where an underlying condition caused or enhanced disability, employers will seek to move more aggressively to prove whether the claim was bona fide, he said. “This will likely increase focus on individual claim entitlement,” according to CEC briefing notes authored by Liversidge. The upshot for injured workers, he said, will be potential delays in receiving benefits amid uncertainty about whether claims will be allowed.
Without SIEF an employer must absorb all of claim costs inflated when a pre-existing condition prolongs recovery time, driving up insurance premiums due to factors unrelated to the workplace incident, according to the notes.
Liversidge advised employers to seek medical decisions on the nature of disabilities “to make sure the condition you’re paying for is a result of the aggravation and not the pre-existing condition.”
As well, since the WSIB in announcing the end of SIEF said relief can only be adjusted or reconsidered “through the appeal process,” employers are expected to file administrative appeals at an accelerated rate.
Employers are also mounting legal challenges against the retroactive application of the change (which was announced on July 16 but made effective June 16). And they are asserting “procedural unfairness,” contending that processing ongoing claims under a policy that was eliminated retroactively violates basic administrative law principles. Liversidge said the WSIB’s email notification to employers of a policy cancellation already in place raises fundamental concerns about fairness.
He added that WSIB costs related to increased litigation will easily exceed administrative savings from elimination of the fund.
The SIEF was shut down arbitrarily in the “complete absence of stakeholder consultation that absolutely offends the WSIB policy conventions,” Liversidge said. “It unilaterally undercuts the board’s own commitment to openness and transparency.”
He said a WSIB commissioned value-for-money audit by consulting firm Deloitte evaluated SIEF using the wrong goal—its 1945 mandate to incentivize hiring injured WWII veterans. He contends that since the 1970s, SIEF’s actual operational purpose has been employer equity, ensuring that businesses are not financial victims of claim costs prolonged by pre-existing conditions outside their control.
Liversidge in his presentation noted that SIEF survived workers’ compensation reforms in 1996 and 2011–2012 precisely because Ontario employers presented unified evidence of its high value. He said the WSIB has “turned its back” on the traditional stakeholder consultation framework normally granted for critical policy changes.
THE CEC in July formally requested reinstatement of SIEF, a request rejected by the WSIB, the provincial agency that administers Ontario’s no-fault workplace insurance system.
The request has been accompanied by a province-wide letter-writing and lobbying campaign, with industry groups appealing directly to Premier Doug Ford and Minister of Labour David Piccini to overrule the WSIB’s decision.
The board has said the decision is final and that SIEF never delivered genuine value to businesses. It said cutting SIEF is an effort to crack down on “complex business models” built around navigating and reclaiming historical cost relief.
Instead of cost relief programs like SIEF, the WSIB is directing employers to focus on premium reductions by participating in the WSIB Health and Safety Excellence Program.
