Labour leaders want WSIB chair fired over 'death' rebates
Published: April 11, 2008
Source: NUPGE

The Ontario Federation of Labour (OFL) and other groups are demanding that Steve Mahoney be fired as chair of the Workplace Safety and Insurance Board (WSIB) over revelations that the province has paid safety rebates to companies prosecuted for the death of workers on the job.

The Toronto Star has reported that "safety rebates" have been paid out by one provincial program to some of the same companies that had been prosecuted by another arm of the government as a result of workplace fatalities. In many cases the rebates were higher than penalties imposed for the deaths.

OFL president Wayne Samuelson says he was stunned to hear Mahoney say he was unaware of the problem with the rebate program.

"This is an issue we have been raising with the board for over a decade," he wrote in the letter to Premier Dalton McGuinty. "Surely the chair and the entire board of directors were aware of the serious deficiencies ... and the resulting injuries and deaths that have been sustained by workers while rewarding employers with lavish rebates."

The letter was also signed by Steve Mantis of the Ontario Network of Injured Workers Groups and Marion Endicott from the Injured Workers' Consultants Legal Clinic. The leaders are calling for an end to the rebate program and the appointment of an new WSIB board of directors.

On March 10, after the newspaper first raised questions about the rebates, Mahoney announced a review of the program, and declared a moratorium on payouts.

"I was absolutely not aware that at the same time as the ministry was levelling fines against companies, that they were receiving rebates from us. It is very recent that I was made aware of that," he said this week.

He expressed disappointment at the calls for his resignation but the labour groups were not swayed.

"In scores of meetings we have raised this issue ..." the labour leaders said in their letter to McGuinty. "The chair of the board has been aggressively defending the experience rating system since being appointed. For him to suggest at any time that he did not know this was going on does not ring true."
 

When companies get rewarded for mistakes
Flaw in worksite safety system allows big rebates even when a death occurs

Apr 05, 2008 04:30 AM
David Bruser
Moira Welsh
Toronto Star Staff Reporters

Bonnie Heffern worked near the hospital in downtown Sudbury, so she was already in the emergency room when they brought in her husband.

There had been an accident at the nickel refinery where Gordie worked.

The 46-year-old shift foreman had shut off an oxygen line valve and reopened it without equalizing the pressure on both sides of the valve. Gas was moving fast through the pipes.

A provincial investigation would later find that Inco Ltd. had not properly trained its workers to operate the valves at the refinery. But also, the valve contained hydrocarbon grease, which is highly flammable near pure oxygen.

The valve exploded.

Gordie looked like a spent fire log. Bonnie stood close by and watched his charred body stiffen, his blue and uncomprehending eyes wide and darting. He slipped into unconsciousness. The next day, on July 28, 2001, Gordie died.

What happened after his death reveals a serious flaw in Ontario's workplace safety system. Inco was prosecuted and fined by the province, while another arm of government rewarded the company with a safety rebate many times the value of the fine.

In the intervening years, Bonnie mourned, sat through a coroner's inquest and made plans to remarry. With clarity and a steady voice, she recently recited the details of the day Gordie got hurt on the job.

What she cannot understand is how Inco's mistake could cost her so much yet the company so little.

In 2004, after a Ministry of Labour prosecution, Inco pleaded guilty in court for its role in Gordie's death, and paid a $375,000 fine. But Bonnie recently learned that after the accident, the Workplace Safety & Insurance Board awarded the company $5 million in rebates.

"They shouldn't be rebated. It should not happen," Bonnie said when told about the payouts. "Gordie was a big advocate for safety at Inco. Any dangerous job that had to be done he would do. He was always the dirtiest man walking out of the refinery. If there was something wrong and it could be made right, he would be the one talking now."

Most companies in Ontario are required by law to buy insurance from the Workplace Safety & Insurance Board (WSIB). Their premiums finance the program, spreading each company's costs among all employers. The WSIB should then be using rebates to reward those that have made workplaces safer and surcharges to goad unsafe workplaces into improving.

But the Star found that the insurance agency has given at least tens of millions of dollars in rebates to companies that have been prosecuted by the provincial government and found guilty of safety violations leading to deaths, amputations and other gruesome injuries.

The Star looked at whether rebates were issued in the year following the accident and the year of the guilty finding; that analysis led to 75 cases that most dramatically illustrate the problem. These offending companies were fined a total of $14 million yet received payouts totalling $42 million from the WSIB.

While the WSIB has known about the practice for years – labour groups have repeatedly complained about it – it is now searching for solutions after the Star started investigating.

WSIB chair Steve Mahoney said he wants to address the issue promptly and get in step with his agency's graphic "Road to Zero" TV ad campaign that warns of fatal risks in the workplace.

"When you see people are getting rebates when they have obviously fallen down through fatalities or (safety) convictions, that doesn't jive," Mahoney said. "The good (companies) wind up paying rebates to people who are not performing well."

The Star found the WSIB issued payouts that were often double, sometimes quadruple the penalties levied after the province took companies to court, allowing businesses to recoup their financial losses.

"What's wrong with this picture? That means we're paying their fines," lamented Mahoney, who began his tenure as WSIB chair in 2006, long after the incentive program was created. "It doesn't make any kind of sense."

While Mahoney says he wants "more money for the good guys and no money for the bad guys," some critics question the very existence of the incentive program. They want it scrapped. In 2002, the year after Gordie Heffern's death, Inco – now called Vale Inco after a takeover – received a rebate of $2.5 million from the WSIB. Then, in 2004, the year of the guilty plea and fine, the mining giant was awarded another $2.5 million.

At the time, a lawyer for the ministry told the sentencing judge that the fine "must be substantial enough to serve as a deterrent value to the accused company."

But labour groups say the WSIB system gives companies little incentive to enhance workers' safety.

"I was shocked at the extent to which the board of directors at the (WSIB) had been allowing this to go on for years and years," said Wayne Samuelson, head of the Ontario Federation of Labour. "It's an insult to those families and workers who have been injured or killed, to think that money was even paid."

At Vale Inco, spokesperson Cory McPhee said the employer of 12,000 is committed to safety and reviewed its oxygen piping system after Heffern's death.

"I don't want to start trying to speak to, defend, or otherwise explain the WSIB's programs. We pay our premiums and we participate in their programs," he said. "Our record has been improving but we have a ways to go. A single fatality is one too many."

The incentive program – known in WSIB circles as the "experience rating system" – began in 1985 to make companies safer by using a penalty-rebate ("carrot-stick") approach. The system looks at the "experience" of each company.

Premiums are based largely on the expected cost of a company's claims for the year. If lower than projected, the company gets a rebate. How much lower determines the amount of the rebate. If a firm's insurance costs exceed expectations, it is hit with a surcharge.

In this system, a death is treated the same as a minor injury: Both cost money, whether the claim pays out for lost work time or a casket. For medium and large companies, the program does not add any extra penalty when there is a death. "The cost of a fatality can actually be lower than the cost of an injury, particularly if there are no dependants – just pay for the funeral, and it's over," said WSIB chief Mahoney.

In addition, this widely used insurance system is no-fault – while workers are guaranteed compensation for accepted claims, they cannot sue their employers for work-related injuries.

As early as 2000, the WSIB was concerned at how cheap death had become in the incentive program.

"For a significant number of cases, the seriousness of a traumatic fatality is not always reflected in the actual costs," the agency said in a review. "The effects of these costs ... are insignificant when compared to the loss of human life." Here are some of our findings (rebates represent a total of amounts issued the year after the accident and the year of the guilty plea):

Semple-Gooder Roofing. The Toronto-based firm pleaded guilty after one of its trucks, which was operating without a proper signalling system, hit a temporary worker and dragged him 10 metres. Cristobal Montoya de Vacas was killed July 28, 2001.

Fine: $150,000

Rebates: $318,000

• Semple-Gooder president Francis Baxter said his company has a full-time safety consultant. He suggested, however, that the accident was partly the employee's fault and said the company paid the fine because "it wasn't worth fighting."

"He was in the country three days under false ID. He was from Ecuador. He wasn't even an employee of ours. We had subcontracted," Baxter said. "The unfortunate thing in this case is they sent someone who's working under false ID and who knows what type of person. This guy had a few different names."

• Priestly Demolition. When the company botched the demolition of the Uptown Theatre on Balmuto St. in 2003, bricks and masonry crashed on the Yorkville English Academy next door. One student at the academy died and 14 others were hurt. Priestly pleaded guilty to failing to ensure the protection of a worker by not properly inspecting the roof before demolition. Ultimately, it was a bystander, not a worker, who was killed, but the Ministry of Labour still prosecuted and secured a guilty plea.

Fine: $200,000

Rebates: $273,000

One hundred mourners attended the open-casket visitation for 27-year-old Augusto Cesar Mejia Solis, who was crushed to death and found lying in a fetal position, shielding a sobbing 10-year-old boy from the rubble. It was supposed to be Solis's last full day in Canada before returning home to his fiancée in Costa Rica.

Priestly boasts on its website "that each year we receive substantial rebates" from the WSIB. The company claims: "Our safety record is second to none."

At Priestly, office manager Robin Savage said the incentive program is "probably" flawed. But she noted the victim in the theatre collapse was not a Priestly worker. While the cost of the death may not have been reflected in her firm's WSIB costs, it increased Priestly's general liability insurance costs, she said.

"I don't think our company can be used as an example (in the Star story). WSIB is worker insurance. Unfortunately, the gentleman that was killed was a person of the public," she said. Savage defended her company's claim of having a safety record "second to none," saying that the lightly regulated demolition industry is dangerous.

• Parmalat. Worker James Dann, 31, was killed Nov. 15, 1999 by an assembly-line machine at the company's Mitchell, Ont. location.

Fine: $100,000

Rebates: $329,000

Dann, a new hire, was working on a machine that loaded containers of cream cheese from a conveyor belt into cartons. When the machine stopped working, Dann moved in to fix it. The machine's mechanical arm trapped him. Dann suffocated as his colleagues tried to stop the arm from crushing his neck. He had only been on staff for a few months when he died and left two children.

Parmalat, a multinational dairy company based in Italy, pleaded guilty in 2001 to failing to provide machine guarding. The company said it would not discuss the matter.

• Woodbridge Foam Corporation. The company pleaded guilty for failing to ensure a shredder had been properly maintained. So Lieu, 52, had worked at the company for 20 years. He died March 4, 2003.

Fine: $175,000

Rebates: $186,000

At the time of the guilty plea, Woodbridge maintained many locations, some of which received surcharges under the WSIB incentive program. But at the facility where Lieu died, the company received a rebate. The company did not respond to interview requests.

Kim Warner collapsed Aug. 6, 2001 while working the ovens at a Weston Bakeries facility in Barrie that made breads and rolls. Fifteen minutes shy of ending a 12-hour shift, Warner, 44, slumped to the floor. He was working in the middle of a record-setting heat wave. Just before his death, Warner's insides were cooking at a temperature of 42.5 degrees Celsius, according to transcripts from the prosecution against Weston.

When his sister Brenda Bamford gave a victim impact statement in a Barrie courthouse in 2004, she made it clear she wanted Weston Bakeries to be punished for its role in Kim's death.

"I just want everyone here to understand that my brother ... He was a man. He had a life and that was wiped out in a very short time, and his death devastated my family," she told the court before Weston was fined $215,000 for not implementing a heat stress management plan at the facility. The year after Warner's death, Weston received a rebate of $133,000, and in the year of the guilty plea, the WSIB paid Weston a rebate of $605,000, bringing the total for those two years to $738,000.

Weston spokesperson Geoff Wilson said the incentive program generally succeeds in pushing companies to address safety concerns, and that Weston's rebates reflect such efforts and investments.

Speaking specifically about Kim Warner, Wilson said, "There may have been a lapse in terms of this individual and his adherence to the policies and the training he and all our employees had. We've now enhanced our training and now are policing it in a greater fashion to make sure in a high-heat environment they are taking frequent breaks. The company took very quick actions to remedy any lapses. It was a very unfortunate circumstance for our employee and his family. The safety and health of our employee is paramount."

Bamford has placed no pictures of Kim around her home. She has not been to visit his headstone in Newmarket. She is too afraid of reliving the grief that consumed her then, when she crocheted into the early morning hours.

But now, sitting in her Wiarton home, Bamford – when told Weston received enough rebates to pay the safety violation fine three times over – said she feels grief anew.

"I'm so upset they could get such a payoff for my brother's death," she said.

"My brother's dead. You can't replace that."