When a workers' compensation beneficiary in Ontario has a disability claim that lasts for six years, he or she is eligible for a "locked-in" benefit—a benefit that continues to be paid out until the beneficiary reaches the age of 65. Between 1997 and 2003, the proportion of wage-replacement claims that were awarded a locked-in benefit by the Workplace Safety and Insurance Board (WSIB) increased from 1.5 per cent to four per cent.
In 2007, the WSIB and the Institute for Work & Health (IWH) created a joint working group to develop and implement a plan to analyze the factors most responsible for the increasing number of long-duration disability claims. One specific area of concern was an increase in the number of compensation claims that applied for relief under the Second Injury and Enhancement Fund (SIEF).
SIEF is used to release individual employers from all or a portion of the costs of a compensation claim when a pre-existing condition or impairment is determined to cause, aggravate or prolong a work disability episode. The number of claims receiving SIEF treatment had grown rapidly since 1997. A 2008 report by Morneau Sobeco noted that over $420 million (30 per cent) of benefit costs in 2007 were excluded from experience rating due to the administration of the SIEF policy.
Research confirms SIEF relief claims more likely to lock in
The Morneau Sobeco report raised concerns about the potential unfairness of the SIEF program and concerns that employers receiving SIEF relief may have a diminished incentive to devote attention to optimal prevention and return-to-work practices. Analysis conducted by IWH members of the joint working group determined that disability claims awarded SIEF relief were more likely to be awarded a locked-in benefit, confirming the concern that SIEF may reduce employers’ commitment to accommodate disabled workers.
The Morneau Sobeco report recommended a number of short-term amendments to the existing SIEF policy that would restrict the number of wage-replacement claims that were eligible for SIEF relief. In 2010 and 2011, the WSIB created a specialized SIEF adjudication team to improve the consistency of individual decisions. In the first six months of 2011, benefit costs relieved under the SIEF policy were reduced by approximately $48 million compared to the same period in 2010.