APPEALS RESOLUTION OFFICER DECISION
DECISION NUMBER: 20240056
FIRM NUMBER: XXXXXXX
OBJECTING PARTY: EMPLOYER
REPRESENTED by: EMPLYER REPRESENTATIVE
HEARING: HEARING IN WRITING
HEARD by: M. LA CIVITA, appeals resolution officer
ISSUES
The employer, via its representative, objects to the April 28, 2023 decision of the Employer Services Manager (ESM), which denied the representative’s request to remove any transition funding charges that were applied in the calculation of the employer’s premium rates for the years 2020 through 2023.
The employer seeks its premium rates be recalculated to exclude the transition funding charges applied since 2020, and also seeks interest from the recalculation.
BACKGROUND
The Workplace Safety and Insurance Board (WSIB) implemented a new classification and premium rate setting model, known as the rate framework, for Schedule 1 employers on January 1, 2020.
Under the new model, the WSIB sets premium rates for employers in Schedule 1 based, in part, on how their individual claims experience and insurable earnings compare with the collective claims experience and insurable earnings of their class. Within each class, a series of hierarchical divisions are established (termed risk bands) that represent different levels of risk in relation to the class risk profile. A premium rate is assigned to each risk band at approximately five percent increments in premium rate.
As part of the approach, each employer annually receives an employer projected premium rate and an employer actual premium rate that respectively represent how much an employer should pay, and how much they will pay, to fund their share of costs as well as the collective costs of their class. The employer projected premium rate is based on the employer’s projected risk band, which is determined by the employer’s adjusted risk profile. It shows the future direction, up or down, that an employer’s premium rate is headed. The employer actual premium rate takes into account previous year premiums and risk band limitations to determine an adjusted actual risk band, and the premium rate an employer will actually pay. Both the projected and actual premium rates are calculated to include applicable rate modifiers resulting from legislated obligations and transition funding.
Under certain circumstances, the WSIB may retroactively adjust an employer’s premium rates, as appropriate, in response to employer premium adjustments documented under Policy 14-02-06.
The employer’s operations were classified in NAICS Code 622111, General (except paediatric) hospitals, Class D3, and its 2020 through 2023 premium rates were set as follows under the new model:
2020 Premium Rate
In the first year of the rate framework, an initial prior year risk band of 70 was determined, which set the employer’s prior year (starting point rate) at 1.37. The employer’s projected and adjusted actual risk band was 63, and its projected and actual premium rate was $1.26, which included a transition funding charge of $0.25.
The employer’s September 24, 2019 Premium Rate Summary Statement (PRSS) advised the employer that its business had been classified as a non-profit organization (NPO) based on Canada Revenue Agency guidelines, which includes registered charities and other non-profit organizations.
The employer’s 2020 premium rate was adjusted due to claim cost/count changes, in accordance with Policy 14-02-06, Employer Premium Adjustments. Per the most recent Premium Rate Extended Statement (PRES) on record for 2020, which is dated February 9, 2024, the employer’s 2020 projected and actual risk band moved downward to 62, and its premium rate was reduced from $1.26 to $1.20 (including a transition funding charge of $0.239).
2021 Premium Rate
On a PRSS dated September 30, 2020, the WSIB advised the employer that its 2021 premium rate would remain at $1.26. The statement explained that, to help Ontario businesses adjust to the ongoing COVID-19 pandemic, all covered businesses would pay the same rate in 2021 that they had paid in 2020.
The employer’s 2021 premium rate was also reduced to $1.20 as its 2020 rate was, in keeping with the WSIB’s response to the COVID-19 pandemic.
2022 Premium Rate
The employer’s Annual 2022 PRSS, dated October 21, 2021, was based on claims and insurable earnings data as of May 15, 2021 and communicated that the employer’s 2022 premium rate would be $0.81.
The employer’s October 21, 2021 PRES detailed that the employer’s projected and actual risk bands were 55, and that its 2022 rate before modifiers was $0.64, while its prior year rate was $1.26. As the employer was eligible for a rate decrease from the prior year, a transition funding modifier of $0.173 was applied, increasing the employer’s 2022 actual premium rate to $0.81.
Glossaries of both the PRSS and PRES included the following definitions:
Rate Modifier – refers to premium rate setting elements that adjust your rates, i.e. OHSA/and Safe Workplace Associations (SWA) exemption, Mine Rescue charge and transition funding for applicable businesses.
Projected rate – is the rate that each business should pay to fully fund their fair share of costs of the insurance fund. It also shows the future direction, up or down, that your premium rate is headed, if there is no change in your individual and class experience from year-to-year. This projected rate includes any applicable rate modifiers resulting from legislated obligations and transition funding.
The PRSS also included information specific to the transition of NPOs to the rate-setting model.
The employer’s 2022 premium rate was recalculated a number of times due to employer premium adjustments related to claim count/cost changes. According to the most recent PRES on file for 2022, dated February 9, 2024, the employer’s projected and actual risk bands moved downwards to 53 and its premium rate, which included a transition charge of $0.157, was adjusted to $0.74.
2023 Premium Rates
As per the 2023 annual PRES, dated November 1, 2022, a transition funding charge was not applied to the employer’s 2023 premium rate of $0.78. The employer’s projected and actual risk band was 55, which was equal to the prior year risk band at that time. Following adjustments related to claim cost/count changes, the employer’s 2023 projected and actual risk band dropped to 52 and its premium rate was reduced to $0.71.
On April 18, 2023, the employer’s representative emailed the WSIB’s Experience Rating area that they had reviewed the employer’s extended rate statements and noted that transition funding fees had been allocated to the employer. The representative cited WSIB Policy 14-01-11, Non-Profit Organizations Transition to the Rate Framework, and requested the removal of the transition fees and that the employer’s rate revert “back to the projected risk band”.
The ESM denied the representative’s request in a letter dated April 28, 2023, stating that although the transition window is longer for non-profit organizations, as outlined in the WSIB’s Non-Profit Organizations Transition to the Rate Framework policy, the policy does not exclude transition funding from being applied to a non-profit organization if their business is eligible. The letter noted that employers cannot appeal their premium rate, but may appeal the application of the premium rate calculation methodology, allowance or cost of a claim if they feel it was not justifiable, and informed the employer as to the time limits for objecting to WSIB decisions.
The employer representative communicated the employer’s intent to object to the