CIA Annual Meeting 2006

Bob Thomas, Manager

Regulatory Services

Agenda

• WSIB Compliance History• Regulatory Services Overview• Non-Compliance Impacts• New Compliance Model• WSI Act Offences• Penalties• Impacts and Outcomes of New Compliance

Model• Case Studies

• Identification and pursuit of cases of non-compliance and fraud

• “Zero Tolerance” to Fraud• New legislative authority (Bill

15)• Special Investigations Branch

(SIB) expansion• Continued enhancement of

legislation; major Offences and Penalties section

WSIB Compliance History

• Extent of non-compliance/fraud not well understood

• Impacts were clear including:• injured workers at risk (non

reporting and under reporting of accidents)

• compliant employers at a competitive disadvantage (non reporting and under reporting of premiums)

• premium rates reflecting claims and health care costs that are not legitimate(worker and health care provider fraud)

Late 1996 and early 1997

Regulatory Services

• Investigations – POA (WSI Act) and

Criminal

• Surveillance– Use PI firms

• TIPS Action Line– 1-888-SILEADS or

1(888)745-3237

• Analysis and Education

• Specialized Adjudication

• Prosecutions– 3 internal Prosecutors– Crown (Criminal)

• Special Compliance Projects

Impact of Employer Non-Compliance

• Accident costs not allocated to employer

• Employer avoids impact of experience rating

• Negative impact on WSIB unfunded liability

• Employer gains unfair competitive advantage

Impact of Worker Non-Compliance

• Inappropriate payment of benefits

• Incorrect costs allocated to Employer

• Misdirected needed resources (e.g. medical)

New Compliance Model

• More broadly based approach to addressing compliance issues throughout the system.

• Incorporates a continuum of activities including:– clarifying the rules where necessary– seeking voluntary compliance through education and

cooperation– applying appropriate administrative penalties– pursuing investigation and prosecution when

appropriate

Outcomes of the New Compliance Model

• Compliance by workplace parties with the spirit of compensation legislation

• Financial security of compensation system

• Improved health outcomes for injured workers

• Implementation of legitimate safety programs

• Reduction in accidents

• Improvement in economic well-being of workplace parties

• Increased confidence in compensation system

WSI Act Offences

Strict Liability Offence

The action or inaction itself is an offence.

Represents non-compliance with a legislated obligation.

Proof of the offence is generally straightforward and convictions result in small fines.

Example: fail to register within 10 days

Specific Intent Offence

Represents an act of intentional deceit Comparable to fraud under the Criminal

Code. Requires proof beyond a reasonable

doubt of an intent to mislead the WSIB. Generally result in higher fines and are

treated more seriously by the courts than strict liability offences.

Example: knowingly make a false or misleading statement about benefit entitlement

WSI Act Offences Cont’d

Section 149 of WSIA

• 149 (1) knowingly make a false or misleading statement or representation to the Board in connection with any person's claim for benefits

• 149 (2) willfully fail to inform the Board of a material change in circumstances in connection with your entitlement to benefits

WSI Act Offences Cont’d

• 149 (3) willfully fail to inform the Board of a material change in

circumstances in connection with your obligation as an employer under the Workplace Safety and Insurance Act, 1997

• 149 (4) knowingly make a false or misleading statement or

representation to the Board to obtain payment for goods or services provided to the Board, whether or not the Board received the goods or services

WSI Act Offences Cont’d

Section 151 Offences• Section 151 (1)

an employer failing to register with the Board;

• Section 151 (1.1)an employer makes a false statement when

registering with the Board

• Section 151 (2) an employer failing to notify the Board that it has

ceased employing; (ceased to operate)

WSI Act Offences Cont’d

• Section 152 (1) (2) an employer failing to submit a

statement setting out the wages of its workers for any period required by the Board, whether monthly, quarterly or yearly.

• Section 152 (3) an employer failing to notify the

Board of an accident to a worker within 3 days of learning of the accident, where that accident necessitates health care or a loss in wages.

• Section 155 (1) (2) an employer who directly

or indirectly deducts wages from a worker, or requires or permits its workers to contribute toward indemnifying the employer, for or against the employers' liability under the Act.

WSI Act Offences Cont’d

Section 157 Offence by Director, Officer

• If a corporation commits an offence under this Act, every director or officer of the corporation who knowingly authorized, permitted or acquiesced in the commission of the offence is guilty of an offence, whether or not the corporation has been prosecuted or convicted

Penalties

Individual

• Maximum fine for each offence $25,000

• Prison not exceeding 6 months - or both

Corporation

• Maximum fine for each offence for a Company $100,000

2003 $1.725 million fines

2005 $2.268 million fines

2000 2005 Total Charges Laid 1086 283

Strict Liability Offences

938 (86.4%) 159 (56%)

Specific Intent Offences

148 (13.6%) 124 (44%)

Most Common Strict Liability Offence

Failure to Register Average fine: $1017

Failure to Report an Accident Average fine: $11,885

Most Common “Intent” Offence

Knowingly make a false or misleading statement about benefit entitlement Average fine: $18,916

Knowingly make a false or misleading statement about benefit entitlement Average fine: $24,872

New Compliance Model: Impacts and Outcomes

Case Studies: Employers

Investigation - Company• Automobile accident

• 5 employees died

• Investigation revealed extensive under reporting of payroll over a

number of years

• Search warrant disclosed the use of a double bookkeeping system to

avoid WSIB liabilities. A plea agreement was reached with the company and endorsed

by the Court. It resulted in guilty pleas to 28 charges with total fines of $1 million and a restitution order requiring the company to pay $4 million in retroactive premiums.

Case Studies: Workers

Investigation - Worker

• pinned between two cows while milking• variety of physicians found no organic reason for subsequent paraplegia,

however wheelchair bound/unemployable• psychological injury; entitlement including home modifications• video surveillance: not a paraplegic, can walk, run, drive, garden etc.• only used wheelchair when seeing persons at the house or WSIB• no report of material change; advised condition worsening• SIB investigation; many witnesses confirm not a paraplegic• charged: material change / false statement

guilty plea; failing to report a material change $10,000 fine; $ 54, 896.75 benefit overpayment