SUMMARY DECISION NO. 1387/99 Pensions (lump sum) (calculation) (discount rate). The worker suffered a back injury in 1989 for which he was granted a 10% pension in 1990. The worker requested payment as a lump sum in 1993 but the Board found that there was a possibility of deterioration of his condition. He requested the lump sum payment again in 1997. The Board granted the lump sum payment but based the payment on the 6% Friedland tables in use since 1995 rather than the 4% Devitts' tables that were in use in 1993. The worker appealed. The Board treated the 1997 request as a new application. However, the Vice-Chair found that the case came within the Board's criteria for use of the 4% Devitts' table since the request was made prior to January 1995, subsequently appealed and then allowed. The appeal was allowed. [7 pages] DECIDED BY: Gehrke DATE: 25/10/99 ACT: WCA
WORKPLACE SAFETY AND INSURANCE APPEALS TRIBUNAL DECISION NO. 1387/99 [1] This appeal was heard in Sudbury on July 20, 1999, by Tribunal Vice-Chair L. Gehrke. THE APPEAL PROCEEDINGS [2] The worker appeals the decision of E. Mroczek, Appeals Officer, dated November 17,1997. That decision concluded that the worker s lump sum settlement ought to be calculated using the Devitts table percentage rate which was in effect in 1977. [3] The worker appeared and was represented by Mr. E. Abitbol, a consultant. The employer was notified of this appeal but chose not to participate. THE EVIDENCE [4] The material in the Case Record prepared by the Tribunal Counsel Office (Exhibit #1) was considered. In addition, I considered Addendum No. 1 containing policy provided by the Board (Exhibit #2) and submissions by the worker representative (Exhibit #3). [5] Oral evidence was heard from the worker. Submissions were made by Mr. Abitbol. THE ISSUES [6] The issue in this appeal is quite a narrow one. It is whether, in calculating the worker s lump sum award, which was requested in 1993 but not granted until 1997, the Board should apply the pre-january 1, 1995 4% CPI (Devitts) table. The Appeals Officer s decision without a hearing based on the written materials on file, stated the following reasons for deciding not to apply the 4% Devitts table were stated as follows: In this case, it is felt that [the worker] when asked to provide information concerning his lump sum request in 1993, chose not to respond. The subsequent request for lump sum settlement in 1997 granted him his request on the basis of information provided in 1997. In view of this, the appeals officer finds that the matter was again pursued by [the worker] in 1997 and that the lump sum granted and processed in 1997 was correctly calculated and processed. Consequently, the appeal is denied. THE REASONS (i) Background [7] The following history, which constitute findings of fact by me, is taken from the file record contained in the exhibits to this appeal. [8] In May of 1990, the worker was granted a ten percent permanent disability award reflecting a permanent impairment resulting from a compensable injury to his left shoulder which he
Page: 2 Decision No. 1387/99 suffered on March 31, 1989. By letter dated March 1, 1993, the worker requested a lump sum payment of this award. He stated in his letter: I wish to have my claim turned over to a cash settlement if at all possible due to financial difficulty [9] The Board denied the worker s request for a commutation by letter dated March 24, 1993. In this letter, the Board s Senior Benefits Adjudicator informed the worker that his request did not meet the requirements of Board policy under section 42(4) of the Act for commutation of pensions of 10% or less, based on the Unit Medical Advisor s advice that there might be further deterioration in his condition. The Board then considered the worker s request under subsection 27(1) of the Act, stating that a commutation request purely for financial reasons would not meet the requirements of that section. The Board s letter then invited the worker: If you feel that your request meets the criteria and conditions outlined in this letter, then by all means provide a written submission to your claim file. [10] The Board eventually granted the worker s commutation request on March 18, 1997, after the worker s representative, who had recently been retained, wrote to the Board on February 17, 1997, objecting to and asking for a review of the decision to deny a lump sum pension by the Senior Benefits Adjudicator s March 24, 1993 letter. Mr. Abitbol s letter reviewed the materials in the Board file and argued that the Senior Benefits Adjudicator failed to acquire any further information on the issue of whether the pension commuted would not be to the advantage of the worker and simply relied on the possible deterioration as a bar to section 45(4) entitlement. The entitlement of section 45(4) is a judgement as to whether the commutation is to the advantage of the worker or not. Given the worker was employed and, in my submissions, notwithstanding, and in my view, not having of great significance, that his condition would deteriorate or not, his commutation should have been previously allowed. That is what we are objecting to. Mr. Abitbol requested that the lump sum award if allowed, be made retroactive to the denial of March 23, 1993. [11] On March 18, 1997, the Senior Benefits Adjudicator wrote to the worker, pursuant to Mr. Abitbol s letter, informing him that his lump sum award had been granted. However, the Board, in calculating the amount of the lump sum award, used the post-january 1, 1995 6% Friedland tables, rather than the pre-january 1, 1995 4% CPI (Devitts) table. This is the issue in this appeal. (ii) Law and Policy [12] Since the compensable injury which is the basis of this appeal occurred in 1989, the pre-1989 Workers Compensation Act (WCA) applies to this appeal. Subsection 45(4) of that Act provides: (4) Where the impairment of the earning capacity of the worker does not exceed 10 per cent of the worker's earning capacity and the worker does not elect to receive compensation by a weekly or other periodic payment, the Board shall, unless the Board decides that it would not be to the advantage of the worker to do so, direct that such lump sum as may be considered to be the equivalent of the periodic payment shall be paid to the worker. [13] Section 148 of the pre-1989 WCA provides in part:
Page: 3 Decision No. 1387/99 148(1) On the 1st day of January in each year, an indexing factor shall be determined, based on the percentage change in the Consumer Price Index for Canada for all items, for the twelve month period ending the 31st day of October of the previous year, as published by Statistics Canada. [14] Thus, at the time of the worker s injury, the Consumer Price Index (CPI) was used to calculate the indexing factor adjustment for benefits awarded under the WCA. Effective January 1, 1995, section 148 of the WCA was amended to provide for adjustments to benefits under the WCA using a new indexing factor, which is frequently referred to as the Friedland formula. The amended section 148 provides in part: 148(1) On January 1 in each year, an indexing factor shall be determined using the formula, Indexing factor = [3/4 x A] - 1 in which "A" is the amount of the percentage change in the Consumer Price Index for Canada for all items, for the 12- month period ending October 31 of the previous year, as published by Statistics Canada. The indexing factor shall be not less than 0 per cent and not greater than 4 per cent. (1.1) Subject to subsection (1.2), the indexing factor described in subsection (1) applies with respect to the calculation of all compensation payable under this Act. (1.2) The indexing factor described in subsection (1.3) applies with respect to the calculation of the following: Compensation under section 35 for survivors and dependants. Compensation for survivors and dependants under section 36 of the pre-1985 Act, as continued under section 145. Compensation for survivors and dependants under section 36 of the pre-1989 Act, as continued under section 146. Permanent disability benefits under subsection 43(1) of the pre-1985 Act, as continued under section 145, but only if the impairment of the earning capacity of the worker is 100 per cent of the worker's earning capacity. Permanent disability benefits under subsection 45(1) of the pre-1989 Act, as continued under section 146, but only if the impairment of the earning capacity of the worker is 100 per cent of the worker's earning capacity. All compensation payable to a worker whose permanent partial disability benefits are increased under subsection 147(14). [15] On January 1, 1998, the Workplace Safety and Insurance Act, 1997 (WSIA) came into effect. The WSIA provides that the WCA continues to apply to pre-1998 injuries. As well, certain provisions of the WSIA are applicable to this appeal. In particular, sections 112 and 126 require the Tribunal to apply Board policy in determining appeals where the hearing commenced January 1, 1998 or later. [16] The Board s General Counsel has confirmed by letter to the Tribunal dated August 4, 1998: With regards to the issue of which Devitt s Table is used for the calculation of the commutation of a permanent disability award which occurred during the transitional period, there is no SPECIFIC Board policy. However, the Board s practice can be found in a March 24, 1995 memorandum entitled Commutation Requests Prior to 1995. [17] The March 24, 1995 memorandum referred to by General Counsel states:
Page: 4 Decision No. 1387/99 (iii) With the implementation of Bill 165 and the introduction of the Friedland tables, an issue was raised regarding commutations. A worker who requests a commutation prior to January 1, 1995 but who does not have the award paid until after January 1, 1995 effectively loses a substantial amount of money due to the difference in the 4% CPI tables and the 6% Friedland tables. After meeting with Benefits Policy, it has been decided that if the commutation request was granted prior to January 1, 1995 we must commute the award using the 4% CPI tables. As well, if a worker requests a commutation prior to January 1, 1995 which is denied, subsequently appealed, then allowed, we must commute on the 4% CPI tables. [emphasis added] Findings and Conclusions [18] I have allowed this appeal for the following reasons. I have find that the worker requested a lump sum award of his pension on March 1, 1993, and that the Board denied that request by its letter dated March 24, 1993. The worker then appealed from that decision through his representative s letter of February 1997, and the Board reversed its 1993 decision, granting a lump sum award in March 1997. The Board practice, set out in the March 1995 memorandum, states that in such circumstances, the Board must commute on the 4% CPI tables. Further, such a result is consistent with the provisions of the WCA which were in effect at the time of the worker s request for a lump sum award in 1993. Finally, I note that subsection 45(4) of the WCA, which sets out the worker s entitlement to a lump sum award, provides that the Board shall pay pensions of ten percent or less as a lump sum unless the Board decides that this is not to the advantage of the worker. Thus, the Board was required to pay the worker a lump sum, if the conditions of subsection 45(4) were met, and this entitlement was not dependent upon the worker requesting it. [19] The Board s March 1993 letter set out two reasons for denying the worker s request for lump sum payment of his 10% pension. First, the Board s medical advisor was of the opinion that it was possible that the worker s condition might deteriorate and therefore entitlement was denied to a lump sum award under subsection 45(4) in accordance with the Board s policy, which stated that where there is a possibility of deterioration, a lump sum award would not be to the worker s advantage. Second, it denied entitlement under subsection 27(1) of the WCA, the more general commutation section, because the worker s request was purely for financial reasons and therefore did not meet the policy requirement that the commutation be likely to reduce the effects of the disability, and also did not fit within the category of a financial situation producing a disability. The letter then invited the worker to make a written submission to your claim file, if he felt that his request met the criteria and conditions outlined in the letter. [20] In my view, the Board s March 1993 letter communicated to the worker its decision to deny the worker s March 1, 1993 written request for a lump sum payment of his 10% pension. This denial remained in effect until the worker s representative wrote objecting to this decision, in February 1997, and the Board reversed its previous decision. The chain of events is that the worker requested a commutation in March 1993 and his request was denied in March 1993. In 1997 he objected to the decision to deny his request and his request was subsequently granted.
Page: 5 Decision No. 1387/99 [21] The Board s practice, set out in the memorandum of March 24, 1995, which I have quoted above, provides that the 4% CPI (Devitts) table applies where the request was made prior to January 1, 1995, denied, subsequently appealed and then allowed. That in my view is precisely what happened in this case. Therefore, I conclude that the 4% CPI (Devitts) table applies in the circumstances of this case, within the terms of the Board s policy. [22] This result is also consistent with section 45(4) and 148 of the pre-1989 Act, which was in effect at the time of the worker s injury and also at the time of his request for a lump sum award. The Board has in this case applied the amended section 148 formula (the Friedland formula ), which came into effect on January 1, 1995 under the amendments to section 148, more than two years after the worker requested the lump sum award and nearly five years after he was awarded the ten percent pension which is the basis of the lump sum award in March 1990. [23] The Board s Senior Benefits Adjudicator wrote to Mr. Abitbol on May 29, 1997 stating that since there was no adverse decision in 1993, the 4% Devitt s table does not come into play. With respect, I disagree. In my view, the Board s March 24, 1993 letter denied by its words and by its effect the worker s request for a lump sum or commutation, for specific reasons which were set out in that letter. [24] The Appeals Officer placed great weight on the fact that the Board was asked to provide further information and worker chose not to respond to the Board s March 1993 letter. The Appeals Officer concluded that the matter was again pursued in 1997. In other words, the Appeals Officer interpreted the March 1997 letter of Mr. Abitbol as a new request, rather than as an objection to the March 1993 decision of the Board. With respect, I disagree with the Appeals Officer s characterization of Mr. Abitbol s March 1997 letter. The words of that letter quite clearly object to and request a review of the March 1993 decision, for the reason that the March 1993 decision was faulty in its reasoning. It is not a new request. I construe the action taken by the worker s representative in February 1997 as effectively an appeal from the decision taken in March 1993 not to grant a lump sum award to the worker. [25] Further, I do not read the Board s March 1993 letter as asking the worker for more information. The Board did not ask the worker to provide any specific information. Rather, the Senior Benefits Adjudicator informed the worker that he might respond to the Board s decision by written submission to his file, if he felt that his request met the Board s criteria. In other words, if the worker wanted a review of that decision, he could make a written submission stating his reasons. [26] The worker s hand-written note requesting the lump sum payment in March 1993 is evidence to me that the worker was not accustomed to making written submissions on policy and legal issues. I do not take his silence following the March 1993 decision letter from the Board as a choice not to respond. In 1997, the worker did respond, through his representative, who filed a written objection to the decision contained in the March 1993 letter. [27] Thus, since the worker requested a lump sum payment of his pension award and the Board denied the worker s request before January 1, 1995, and since the worker appealed from that decision and his appeal was allowed, I conclude that it is within the intent of the Board s March 24, 1995 policy or practice memorandum, that the 4% CPI table be applied in this case.
Page: 6 Decision No. 1387/99 THE DECISION [28] The appeal is allowed. DATED: October 25, 1999 SIGNED: L. Gehrke