Damaged Fingers: Minimized Employee Accident Report Forms Lead to $600,000 in Fines and Penalties

The Canadian salt mining company had a stellar employee safety record. In the latter ’90s, the U.S.-based Salt Institute lauded the firm for having the lowest injury rate among salt producers in North America. But the safety record wasn’t worth its salt – investigators found that the company had intentionally downplayed a number of serious injuries, which resulted in the company receiving hundreds of thousands of dollars in government rebate money.

A sharp-eyed claims adjudicator in the Windsor, Ontario, office of the Workplace Safety and Insurance Board (WSIB) first found the irregularity that led to our investigation. While reviewing an employee’s accident report filed by the salt mining company, the adjudicator found the worker had “damaged two fingers on his left hand” but hadn’t recorded any lost time from work. However, a Windsor hospital had sent the WSIB office a bill for treatment that indicated the worker had spent four days in the hospital. When the adjudicator called the mining company, the company told her that the worker had been hospitalized for a pre-existing angina condition. Suspicious about the irregularities, she reported matters to our department, the Special Investigations Branch (SIB), of the WSIB.

So began our six-month investigation that eventually resulted in guilty pleas from the mining company, and a $600,000 fine with penalties – the largest ever settlement in Ontario under the 1997 Workplace Safety and Insurance Act.

For 70 percent of Ontario’s workers, the WSIB is a no-fault insurance system funded by employers that provides benefits if they sustain injuries in the course of employment, or if they contract a recognized occupational disease. The WSIB requires Schedule 1 and 2 employers to register with the WSIB. (Schedule 1 employers, who are collectively liable for all costs of their claims, pay premiums to the insurance fund. Schedule 2 employers, who are individually liable for all costs of their claims plus administration fees, don’t pay premiums to the insurance fund.) The other 30 percent who aren’t covered can choose to obtain their insurance from private companies. In exchange for employers’ funding of the workplace safety and insurance system, injured workers forgo the right to sue.

The salt mining company is a prominent Fortune 500 company with three Canadian mines and employing more than 1,000 people.

In November 1997, four SIB fraud examiners began interviewing more than 100 witnesses, including company and union officials, injured workers, and WSIB staff such as adjudicators, revenue specialists, and analysts.

Discrepancies immediately became apparent with the Windsor injured worker’s claim. His accident report reported he had damaged “two fingers on his left hand” but actually he caught his hand in the rotating shaft on a conveyer and tore off the tips of two fingers at the joints. He spent four days in the hospital after reconstructive surgery. For the next four months while he healed, he would come to the plant each day, punch his time card in and out with “No Lost Time” recorded, and leave. The company continued to pay his full salary.

Rebate Temptation 

In six years, the salt mining company received several hundreds of thousands of dollars in rebates through WSIB’s New Experimental Experience Rating (NEER) program. Under the NEER program, firms who are below industry average injuries receive rebates, while employers with claims costs above the industry average must pay a surcharge. Depending on the size of the firm, rebates can range from 5 percent to 50 percent of the payable premium. Surcharges can range from 10 percent to 100 percent. Any WSIB accident claim registered for a calendar year will erode a firm’s position, which could eventually result in a surcharge.

NEER tries to encourage employers to use the rebate money for improving their safety programs and assisting injured employees as they return to work. But our investigators began wondering if the lucrative rebates to the company instead inspired creative accident reports.

From the initial investigation in 1997 until the court case completion in 1999, the SIB adjudication team reviewed 348 claims. They particularly scrutinized the copies of the WSIB’s Employer’s Record of Accident form, which reported detailed accounts of the types of accidents, whether medical attention was required, and indications of “Lost Time” or “No Lost Time.” The investigators found that the accident reports tended to be non-descript, and deliberately minimized the extent of the injuries. For example, in another incident, a worker fell almost 15 feet from a metal platform and went to the hospital suffering from a broken shoulder, a concussion, and a gash that required 10 stitches on his chin. The company’s accident form merely stated that the worker had suffered “a sore left shoulder and cut on chin.” Again, the company reported the accident as No Lost Time.

Over the course of the investigation, a general pattern became apparent. After entering the NEER program in 1986, the company’s reporting practices changed dramatically throughout the early ’90’s when they had a change in staff. While the number of recorded injuries remained the same, the ratio of reported No Lost Time accidents to Lost Time accidents increased significantly. As the graph in this article shows, there was a change in reporting practices corresponding to this staff change in late 1991 and early 1992. The graph also indicates that it probably was more than just a coincidence that the number of Lost Time claims began to rise again once the investigation started.

We started re-adjudicating (or reviewing) claims from late 1991 onwards. These efforts particularly were concentrated on claims from 1995 and forward, with many inconsistencies uncovered. As this graph shows, our re-adjudication resulted in the salt company’s Lost Time ratios being much closer to the industry standard than they originally had reported.

(On the graph, “Ontario” is all the registered businesses in the province. “Sector” refers to all of the mining operations including gold, nickel, and uranium mining; quarrying; sand and gravel pits; drilling and mining contractors; diamond drilling; and prospecting and developing. “Rate Group,” a sub-group of “Sector,” refers to all other mines not classified elsewhere including iron, other metal mines, gypsum, potash, peat, salt, and coal.)

Ratio of “No Lost Time” accidents versus “Lost Time” accidents

This graph shows an increase in the ratio coinciding with the change in the company’s reporting practices, which commenced in late 1991 and early 1992. After re-adjudication, the “No Lost Time” ratio is closer to the industry average. 

After six months of investigation, the SIB concluded that the company had changed its reporting practices to maximize the rebates awarded by the WSIB. In April 1998, 24 charges of filing false or misleading statements to the WSIB or for failing to report accidents were filed against the company and two human resources employees. During negotiations, the company agreed to accept responsibility for its actions. WSIB dropped the charges against the two human resources employees, and other charges against the company of failing to report a material change with respect to modified work performed by injured workers during the injury period. On April 12, 1999, the company pleaded guilty to seven counts of misleading the WSIB about six incidents at their salt mines between 1996 and 1998, and paid a total of $600,000 in fines, penalties and surcharges.

Clear Message Against Fraud and Non-compliance 

The verdict sent a message to other non-compliant companies to change their behavior. It also reiterated the WSIB goals to prevent accidents in Ontario and to try to create a level economic playing field by working to put employers on an equal financial footing. (The WSIB pays for benefits even if a company is non-compliant in paying its premiums. Therefore, non-compliant companies have the advantage of reduced expenses and can provide more competitive quotes or can bolster their bottom-line profits.)

While some may view corporate fraud and non-compliance as a victimless crime, it actually hurts everyone in the workforce. When an employer or worker doesn’t report an injury, there are negative short- and long-term implications for the worker. Obviously, in the short term, non-reporting deprives the worker of a proper diagnosis, and appropriate healthcare and rehabilitation programs. Also, if the injury is improperly or inaccurately reported, a worker may have difficulty obtaining benefits he is due. In the long term, a worker may not be able to obtain proper benefits if the injury reoccurs or leads to a long-term disability and there is no record of the injury’s true nature.

In our experience, most successful businesses have legitimate, compliant health and safety programs. Also, employers who lie about accidents probably don’t have legitimate programs. Undoubtedly, a system that offers rebates for good safety records will tempt unethical employers. Even those who are honest may feel pressured to blur the distinction between Lost Time and No Lost Time accident claims. Businesses facing global competition and pressures from shareholders who insist on above-average returns are particularly susceptible to the rebate enticement. Workers, who are coerced by management to reach safety goals, are reluctant to be whistle-blowers for fear of losing their jobs. Indeed, they can be put in an untenable position of not receiving appropriate benefits if they don’t report an accident, or facing an employer’s retribution if they report an accident against his wishes. The system won’t improve unless management is sensitive to these issues.

Lessons Learned  

It was a long six months, but we gained some insights from investigating this case.

Get support from the union. At best, it’s difficult for workers to report suspected wrongdoings committed by their managers. We received the union’s backing by having them take on the issue with management. The union dealt with our case as a serious health and safety issue with all injured parties being represented. By getting the union’s backing, workers gained the confidence they needed to come forward without fear or retribution.
Be prepared to negotiate. A company that touts its good safety record obviously doesn’t want a parade of workers marching to the witness box to recount their injuries. Because the company agreed to cooperate with the WSIB and take full responsibility for the false reports, both sides were able to avert an expensive court case.

Interview workers in a non-threatening environment. All workers have a story to tell. However, few will open up to an investigator over the telephone, at their job site, or even at home. To make the interviews as unthreatening as possible, we conducted them in neutral hotel suites. The investigators took the time to make the workers comfortable before taking their statements.

Use videotaped statements. Once investigators established “comfort zones,” the injured workers weren’t reluctant to have their statements videotaped. These tapes had an incredible impact on the employer and defense counsel during the investigation and, in particular, during negotiations as both the employer and defense counsel realized it wouldn’t be in the company’s best interests to have the workers testify in court. (Consult with your lawyer before taping any conversations.)

Take a close look at worker bonuses or incentive plans. Normally companies tie employee bonuses to individual performances beyond expected job standards. Consequently, workers are likely to feel pressure not to report an accident because they don’t want their colleagues to lose their bonuses. Look behind any bonuses to determine whether the awards promote safety or reduce the reporting of Lost Time claims.

Create a better system of checks and balances. By legislation, physicians are required to report workplace injuries to the WSIB. Unfortunately, pressure on injured workers by their employers often results in the injured worker advising the doctor that the injury didn’t occur in the workplace, thus relieving the doctor of the need to report accidents to the WSIB. Therefore, many physicians and hospitals fail to file the WSIB Form 8 when treating a compensable claim. This circumvents an important control mechanism in the reporting process. Medical professionals must be taught to file appropriate notices for workplace injuries.

Stay focused on the goal. The goal of this investigation was determining whether the company reported false information on the Employer’s Record of Accident forms. Even though we uncovered other areas of concern, we didn’t broaden the investigation because it would have involved more resources and prolonged investigative and court processes. By focusing on the goal, we won the case and, more importantly, brought a large employer into compliance in the most efficient way possible.

Ensure proper claims management. Along with the growth of the SIB over the years, came a corresponding increase in the volume of complex cases requiring intensive, time-consuming reviews. Hence, we formed a Special Adjudication Services Team – independent of the SIB investigation team – with the skills and expertise to reconsider administrative decisions that others made on complex cases of fraud and non-compliance. (The adjudication team in Windsor was being bombarded with queries on all these claims files, but didn’t have complete access to all the additional information that had been gathered during the investigation. As a result, all workers’ claim files were reassigned from the Windsor WSIB office to the SIB adjudication team.)

The adjudication team understands the rules of disclosure and evidence and the court process. Reassigning the workers’ claims files to the SIB adjudication team ensured the consistent and proper management of routine claims throughout the investigative and court processes.

The compensation insurance prevention services provided by the WISB are extremely complex and it’s not possible for all WSIB staff members to understand all the processes in detail. An inappropriate remark to defense counsel or to the employer could have resulted in that staff member being called in as a defense witness, and questioned on only the statement he made thereby raising reasonable doubt. Given the time and resources invested in this case, it would have been tragic to lose it due to an innocent remark or mistake of a staff member.

Actions invariably speak louder than words in any business mandate. The WSIB’s actions against the salt mining company – investigative, administrative, and legal – sent critical messages to Ontario’s employers and workers that were impossible to ignore: non-compliance and inaccurate reporting of accidents is unacceptable. The WSIB will act.

Linda Lamoureux is the director of the Special Investigations Branch of Ontario’s Workplace Safety and Insurance Board. Wayne Pushka is the assistant director of the branch. 

SIDEBAR  

WSIB’s Special Investigations Branch Pursues Workplace Fraud  

The Special Investigations Branch (SIB) of the Workplace Safety and Insurance Board investigates five main areas for fraud and non-compliance: revenue, employee benefits, supplier and service providers, and our internal staff.

The SIB, which has 70 employees, has an Action Line to encourage members of the public to anonymously report cases of suspected non-compliance and fraud, and a surveillance process as a decision assist tool for investigations and adjudicators. The surveillance process is used for two distinct purposes: to provide evidence to support a charge under the Workplace Safety and Insurance Act, and to provide additional information to an adjudicator who is required to make a decision about entitlement and payment of benefits.

The mandate of the separate SIB prosecutions team is to prosecute cases that have been investigated with charges laid by investigators. The final SIB unit is the Special Adjudication Services Team, which manages complex cases of fraud and non-compliance.

The investigations team recruits experienced investigators from the fraud units of the Royal Canadian Mounted Police, Ontario Provincial Police, Toronto Police Force, regional police forces of Halton and Hamilton-Wentworth, and provincial agencies like the Ministry of Health and Ontario Securities Commission. The team pursues offenses listed by the Workplace Safety and Insurance Act such as knowingly making a false or misleading statement or representation to the WSIB in connection with any person’s claim for benefits. Maximum fines are $25,000 for individuals and $100,000 for corporations, and the courts may sentence individuals to up to six months in jail.