HANSARD
and
Workers' Compensation Board - Former Board Members
Printed and Published by Nova Scotia Hansard Reporting Services
STANDING COMMITTEE ON HUMAN RESOURCES
Mr. Ronald Chisholm (Chairman)
Mr. Brooke Taylor
Mr. Cecil O'Donnell
Mr. Frank Corbett
Mr. Howard Epstein
Ms. Joan Massey
Mr. Russell MacKinnon
Mr. Leo Glavine
Ms. Diana Whalen
In Attendance:
Mrs. Darlene Henry
Legislative Committee Clerk
Mr. Gordon Hebb
Legislative Counsel
WITNESSES
Workers' Compensation Board - Former Board Members
Mr. Jim White
Ms. Charlene Long
Mr. Elwood Dillman
[Page 1]
HALIFAX, TUESDAY, MARCH 29, 2005
STANDING COMMITTEE ON HUMAN RESOURCES
9:00 A.M.
CHAIRMAN
Mr. Ronald Chisholm
MR. CHAIRMAN: I call to order this meeting of the Human Resources Committee. Agencies, boards and commissions. Mr. O'Donnell.
MR. CECIL O'DONNELL: Mr. Chairman, to the Department of Community Services, Disabled Persons Commission, I so move M.F. Clarke, William Crawford, Ralph Ferguson, John Kyle, C.E. Richardson, Brian Tapper and H. Jane Warren as members.
MR. CHAIRMAN: Are you ready for the question? Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
Mr. Taylor.
MR. BROOKE TAYLOR: Mr. Chairman, to the Department of Economic Development, Film Development Corporation Board, I so move James Gogan and Bonita Kirby as directors.
MR. CHAIRMAN: Are you ready for the question? Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
Mr. O'Donnell.
[Page 2]
MR. O'DONNELL: Mr. Chairman, to the Department of Education, Dalhousie University Board of Governors, I so move Jamie Baillie, Elizabeth Beale, William Black, Robert Chisholm, Hon. Lorne Clarke, Murray Coolican, James Cowan, Jay Forbes, Daurene Elaine Lewis, Don Mills, Dr. Alasdair MacLean Sinclair, Dr. Jim Spatz and Bruce Towler as members.
MR. CHAIRMAN: Mr. MacKinnon.
MR. RUSSELL MACKINNON: Mr. Chairman, just a housekeeping measure with regard to James Cowan, Q.C. I'm not sure what the process or protocol is since Mr. Cowan has been appointed to the Senate. Perhaps my colleague who is teaching at Dalhousie would be able to make a comment on it. Should we just stay it until we get clarification from the board of directors or what?
MR. CHAIRMAN: Mr. Epstein.
MR. HOWARD EPSTEIN: I can't think of any impediment to a Senator serving on a university's board of governors. If there is an impediment, I think it would have to appear in federal legislation but I can't think that there is a problem. I know Mr. Cowan - Senator Cowan, I guess I should say - and I have nothing but the greatest respect for the man and his well-known sense of integrity. I think he served the board of Dalhousie University extremely well as its chairman. I'm sure if there is an impediment, he will note it himself and probably step down if he has to step down. I don't think he is obliged to do that, though. I would suggest we just go ahead with the appointment and leave it to him to act accordingly and if something is brought to our attention, we can always deal with it later.
MR. CHAIRMAN: I guess it was my observation as well that these names were put forward by the board of governors from Dalhousie and they will probably make a decision at some point in time whether he can remain on that board. Mr. Taylor.
MR. TAYLOR: Mr. Chairman, I too, would be in support of James Cowan's name going forward. He does an incredible amount of work and a lot of the work and positions for Mr. Cowan are on a volunteer basis. He serves the Halifax International Airport Authority in a capacity although it is by position, I guess pretty much, doing the secretary work and things of that nature and some legal counsel but he certainly is multi-tasked and able to do those jobs on a great basis.
As well, I would like to say that I see former colleague Robert Chisholm, no stranger to these Chambers, his name coming forward. Another exceptional individual as is Jamie Baillie and other individuals, Murray Coolican. I think we should move along with these names, Mr. Chairman, and I will be supporting them en bloc.
[Page 3]
MR. CHAIRMAN: Are you ready for the question? Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
The last one, Mr. Taylor.
MR. TAYLOR: Mr. Chairman, to the Department of Finance, Halifax-Dartmouth Bridge Commission, I so move Wayne Mason as a member.
MR. CHAIRMAN: Are you ready for the question? Would all those in favour of the motion please say Aye. (Interruption) Mr. Glavine.
MR. LEO GLAVINE: At the last meeting of the Human Resources Committee, I had asked a couple of questions regarding the appointment to the Bridge Commission. I was wondering if you have, in fact, determined those at this time.
MR. CHAIRMAN: Well, Mr. Glavine, as you recall, I wasn't at that meeting but there was a letter that was sent on behalf of the committee to Paul LaFleche and we do have an answer to that letter. I apologize for not getting to all the members but we can provide you with a copy of that today. With the Halifax-Dartmouth Bridge Commission vacancies, in answer to your question, why of the five vacancies only three appointees were put forward, I am advised by the Department of Finance that paperwork for the other two appointees has not been completed but will be coming forward shortly. So that information is there for you and we will provide you with a copy of that letter.
Mr. MacKinnon.
MR. MACKINNON: Just quickly on that point, Mr. Chairman, much of that may change with regard to the Capital Region Transportation Authority legislation that is before the House and anticipated further debate and the possible approbation of that. So this all may be negated in the final analysis.
MR. CHAIRMAN: Mr. Glavine.
MR. GLAVINE: I certainly wanted to go back on the record today that since the secretary's position is not being filled under the Statutes of the Bridge Commission, I'm wondering how this commission will actually function since the secretary position is required from the executive standpoint, the three-member executive of the Bridge Commission. That position also holds the corporate seal, the records, acknowledgement and notice of meetings and so forth.
[Page 4]
I wanted to bring that to the attention of this committee since, from what I have been able to ascertain, in fact, how can this commission function without the official position of the secretary actually having been presented and approved by the Human Resources Committee? In my view, is the minister now going to step in and be part of the decision making for the Bridge Commission? There is certainly a number of unanswered questions around the lack of the fifth appointment and the secretarial position.
MR. CHAIRMAN: Your comments are well noted. Maybe we can make some inquiries to the Executive Council on that and hopefully by the next meeting we'll have some of that information for you.
Are you ready for the question? Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
The next item we have on our agenda is the Workers' Compensation Board former members: Ms. Charlene Long, Mr. Jim White and Mr. Elwood Dillman. I think before we get to our witnesses we should maybe identify ourselves as we usually do.
[The committee members introduced themselves.]
MR. CHAIRMAN: Thank you, everyone. For the benefit of the witnesses, how we operate our committee is we allow the witnesses to make a presentation and then we go into questions and answers. If there is somebody who is spokesperson for your group, we will have them go ahead.
MR. MACKINNON: Just for the benefit of our witnesses I think we should assure all witnesses that they have the full rights and privileges of the House and protection, as all other witnesses and members of the House.
MR. CHAIRMAN: Well noted, Mr. MacKinnon.
MR. JIM WHITE: I want to thank the committee for providing myself and my former colleagues with an opportunity to address our serious concerns with respect to the future of the Workers' Compensation Board of Nova Scotia.
My name is Jim White and until November 2004, I was a non-voting, public representative on the WCB board. I was appointed in 1999, based, I believe, on my experience as a lawyer, corporate executive, journalist and university lecturer. Some may say the fact that I was a Past President of the Conservative Party of Nova Scotia and a candidate for that Party's leadership in 1995, may also have been a factor.
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The point we want to stress this morning, however, is that our actions while on the WCB board, and my decision to resign, were non-partisan. The WCB is far too important to Nova Scotia to allow politics, big "P" or little "p", to be involved. In fact, it was the increasing politicization of the WCB by this government which directly led me to the decision to resign. I will let my colleagues - one a Liberal and one a former NDP candidate - speak for themselves on this issue.
How has the WCB gotten to this point where it has only two voting board members? In the next few minutes I will attempt to put these issues into some historic, broad context. Committee members will likely be familiar with this story, but I think it's important to place the current crisis in that historic context.
[9:15 a.m.]
Workers' compensation legislation arose out of the industrial slaughter brought on by the Industrial Revolution. First in Germany in the late 19th Century, then England during the early 20th Century, the concept was adopted in Ontario in 1914 and Nova Scotia in 1917. Sir William Meredith developed the solution which is now referred to as the historic compromise between employers and employees. In return for setting up a no-fault insurance scheme for those hurt on the job, workers gave up the right to sue those same employers.
The key to this legislation was the link between the injury and the workplace. Compensable injuries must arise out of and in the course of employment. For decades, this definition has provided a guideline that worked. If a hand was mangled in a machine, a worker fell off scaffolding, or a foreign object pierced an eye, it was very easy to determine whether or not there was a work-related injury.
In Nova Scotia, the financial crisis in the WCB of the 1980s, appeared largely self-inflicted. First, there was questionable actuarial work which resulted in an underestimation of the liabilities and second, there was political interference in awarding benefits and assessing rates. As a result, by the early 1990s, the WCB was in serious crisis. In 1994, it found itself with 27 per cent of its liabilities funded, a $400 million shortfall. In a word, the WCB was bankrupt.
The answer was to cut benefits and increase rates but to do so would result in political risks. So legislation was brought in to hand over the WCB to a stakeholder board responsible for straightening out the mess. By providing this independence, the board liabilities were kept off the provincial books. Politicians could rightly point to the WCB and say that if benefits were low and assessments were high, then it was the board's fault, not our fault.
The board, with representatives from employers, organized labour and the public could get down to the business of running the Workers' Compensation Board, and it worked. Gradually, the WCB started to get on track. Where previously it was believed the unfunded
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liability would be retired in 2039, by 2003 it appeared the unfunded liability could possibly be retired in 2014 or earlier. This was a major achievement, it meant that in the foreseeable future, rates might be reduced and benefits increased.
This was not simply an academic exercise, our high rates hurt employment in this province. Companies thinking about expanding or establishing their business here often went elsewhere because of high employment costs. Injured workers receive the lowest benefits of any injured worker in the country. With the unfunded liability wrestled to the ground, these defects could finally be addressed.
Provinces, such as our neighbour, New Brunswick, point to our high WCB rates as a major reason why companies should expand in New Brunswick, rather than Nova Scotia. Explicit WCB board policy was to hold the line until this unfunded liability could be eliminated. Suddenly, and without consultation, government policy toward the WCB appeared to change. The Government Restructuring Act in 2001, designated the WCB as a "government agency" and brought budget approval under the Treasury Board.
For nearly a decade, the government had been hands off the WCB. Two years ago, with the arrival of our new chairman, it appeared the WCB was back in what one academic expert on governance would call the political bargaining arena. The first serious hint of this change was firefighter legislation. As a member of the board at the time, this legislation came as a complete surprise. Having met on an ongoing basis with stakeholders, not once did the issue arise, it was not part of the Dorsey report, nor was there any discussion about the science behind such a benefit. The government simply legislated the benefit in response to an effective lobbying effort.
Since the reforms of the early 1990s, the stakeholder representatives on the board were the focal point of consensus building. When difficult issues arose - and there were many - stakeholders would defend their representative interests. Public representatives, such as myself, who did not vote, worked with both sides to ensure a compromise was reached. Stakeholder groups would work through their board representatives to achieve their objectives.
If the board could not reach consensus, it would redouble efforts to reach consensus. Two chairmen, Dr. Elgie and Innis Christie, explicitly told the board they would not break a tie vote, for fear their total impartiality was compromised. The role of non-voting, public representatives was to assist in building consensus and to focus on the long-term effects of board policy. With our new chairman all this changed.
A revised consultation process resulted in stakeholders going directly to the chairman and to government. Often stakeholder representatives on the board of directors were kept completely out of the loop, only finding out about board positions from the stakeholders, themselves.
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Throughout the past two years, the board of directors became increasingly irrelevant. This became crucial when the Martin decision of the Supreme Court of Canada brought to the board table, once again, the difficult issue of chronic pain. Let me first of all say, Nova Scotia has been in the forefront of this issue worldwide. It was one of the first boards to adopt a bio-psycho-social model of causation and treatment of chronic pain. It did so after exhaustive research and study by staff and the board.
While I was not on the board at the time the policy was set, I reviewed extensive materials on the subject, some of which I have strewn about me back here. Most of our board attended conferences on the issue where world leaders in the field were present and presented.
Nothing in recent years has the prospect of destroying the financial viability of the WCB than the chronic pain policy and for this reason: our new chronic pain policy - in my view - unhinges the relationship between the injury and the workplace. A qualifier which stood for nearly a century, that an injury be incurred in the course of employment, has been thrown aside and this further sets the stage for costly claims in the area of stress and low-back pain.
More importantly, as a member of the board at the time, I am convinced that the policy and response to the Martin decision was written in the Department of Labour, rather than the WCB. Certainly, the injured workers' associations knew what the policy was going to be before the members of the WCB board did. Further, they purportedly learned of the policy during meetings at the Department of Labour.
In Nova Scotia, WCB was a world leader in recognizing that chronic pain was multi-causal. In recent years, this initial position - which at the time was very courageous - has been borne out by further research. The Martin decision in October 2003, required the WCB to individually assess workers who had developed chronic pain. The policy, which developed in response, applies a modified American Medical Association guide to the evaluation of permanent impairment from the 5th edition to assess chronic pain claims, known as the AMA 5th . It is the leading methodology in assessing the impact of pain.
The AMA 5th recognizes only rateable pain as compensable. This would exclude such conditions as fibromyalgia, myofascial pain syndrome and chronic pain syndrome, but the WCB policy goes beyond that to award benefits for unrateable pain, which is pain independent of any well-established medical condition. This modification means that for the first time, there will be no need for objective medical evidence of injury to qualify for benefits. Without this objective medical evidence, it would be impossible to determine - in my view - whether the chronic pain arose from a compensable injury.
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The magnitude of the possible costs can be viewed by thinking about these numbers. Ontario, which compensates for chronic pain, is a much larger province with a greater industrial base. It averages 10 chronic pain awards a year. Our own WCB, with the new policy, is estimating 100 claims per year for 20 years, or 2,000 claims. At the time the policy was adopted, the WCB estimated there would be 3,000 claims, of which as many as 2,000 would go into pay. As of early November, the WCB had registered 4,000 claims to be assessed and the latest figure I have heard is that the WCB has received 6,200 chronic pain claims. The original estimated cost of chronic pain was $200 million; it could easily be 50 per cent higher.
Recently, I understand, there have been accepted claims for stress and spinal compression and one can only speculate how much stress claims or low-back pain claims might cost the WCB. As a direct result of the decision to eliminate the need for objective medical evidence linking injury to the workplace, the future financial viability of the WCB is again in jeopardy.
The final straw for me was that government planned to give direct stakeholder representation on the board. You will recall our chairman speaking to this committee only last February 17th . At that time he told the committee that he felt governance of the WCB was satisfactory. Only a few short weeks later, he and the Deputy Minister of Labour began to work on a plan to revamp the appointment process for directors.
As a director of WCB, we first found out about such a plan when stakeholder groups informed us that they had been promised additional seats on the board. The chairman and deputy minister revealed this plan to the board at the same time they released it to the public for comment. Our experienced board, by a large margin, was against this plan.
It has the potential to paralyze decision making of the board and as directors, we have always taken the view that we act in the best interests of the WCB and system. If directors are directly responsible to some outside organization, I believe this may undermine the fundamental nature of the director's duty. Since the chairman was not interested in the views of the board, it seemed clear to me that we had lost his confidence. Later, I understand, after I left, the board passed a motion confirming that the chairman himself had lost the confidence of the board.
Finally, I want to suggest urgent action is needed to ensure the long-term viability of the WCB. The board's new emphasis on prevention is welcome and critical work also needs to proceed on return-to-work issues. If the government, through the Department of Labour, wishes to control board direction and policy, I suggest that the government must put the unfunded liability on the books of the province. It is unwise to allow the government, which does not put 5 cents into the operation of the board - in fact, the board subsidizes government operations at WCAT, WAP and OH&S - or somebody who is not paying the freight, to call the shots, it's really taxation without representation and accountability.
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For example, the WCB recently allocated $500,000 for a workplace safety advertising campaign. When the board of directors saw the proofs, the ads indicated they were sponsored by the WCB and the Department of Labour, yet the Department of Labour did not contribute 5 cents to the campaign. Wishing to emphasize the independence of the WCB, the board of directors directed that the staff eliminate the reference to the Department of Labour. We all know that today those ads are out and they are identified as sponsored by the WCB and the Department of Labour. This is a small point but the stakes are high.
The financial viability of the WCB is critical to the long-range economic health of the province. Anytime you have a system where a group can spend another group's money without accountability, the seeds of disaster have been planted. Industry funds 100 per cent of WCB costs. History has proven that anytime the government has interfered with the operation of the system, costs have run out of control.
I urge this committee to restore the WCB's independence. I urge this committee to scrap the flawed appointment process reform. I urge this committee to fill the vacant board positions with qualified applicants.
The WCB cannot become a political football. It cannot set policy by political, back-room deal making between the Parties, in a minority government situation. Nova Scotians deserve better. They deserve a WCB which is financially viable and which does not undermine their industrial competitiveness. Injured workers deserve proper compensation.
In due course, I would be happy to entertain any questions.
MR. CHAIRMAN: Thank you, Mr. White. Ms. Long.
MS. CHARLENE LONG: Good morning, Mr. Chairman and committee members. I would like to thank you for inviting us and for the opportunity to present our concerns for the Workers' Compensation Board. I would like to make a little distinction before we start, between board and directors, because board of directors and board are often used interchangeably and they really aren't, they are two separate entities.
My name is Charlene Long and I was appointed as a worker representative to the board in September 2000. My background is that of a registered nurse, as well as a political and social activist. Just as an aside, my employer did not consider the position to be one of public service, but rather that of worker representation and denied my application for salary continuation. So in order for me to accept this position, I requested and received assistance from the Nova Scotia Nurses' Union so as to maintain my pension benefits. I then sent my per diems back to the Nurses' Union.
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[9:30 a.m.]
My experience to that point with the workers' compensation system was that of Political Action Committee Chairman for the Nurses' Union and in that capacity, I monitored the proposed changes to the Act in 1995. From labour's perspective at the time, the system was coming out of an era of poor management and evident political interference in the adjudication process. While the system was definitely in need of reform, the Nurses' Union felt that the proposed changes promised to impact unfairly on workers and injured workers in Nova Scotia.
Compromised changes were made at the Law Amendments Committee, the end result being that both workers and employers in this province had to bite the bullet to revive a system which was only then about 30 per cent to 34 per cent funded - I don't have the exact figure, but it was poorly funded. The end result of those reforms, as difficult as they were and remain for all concerned, is eradication of the unfunded liability within the foreseeable future and, it is my hope, real improvement in the benefits to workers and injured workers.
I sat on the board of directors' Governance and Human Resources Committee for three years, during which time we produced a corporate governance manual which clearly delineates the responsibilities, as outlined in the Act, of the directors, the chairman, the deputy chairman and the CEO. I believe we have one of the best governance documents among compensation boards across this country. In my opinion, that document was no longer governing board governance and so I tendered my resignation.
The challenges facing the board over the past three years have included: three Ministers of Labour; a new chairman and deputy chairman; the Dorsey Commission Report; a new CEO; and the issue of chronic pain. The challenge for the future is predominantly that of chronic pain, as Dorsey appears to be another commission on a shelf somewhere.
I made a brief appearance before this committee a year ago, when the chairman was asked about the governance of the board of directors, where he clearly stated that he felt it was working well. I was asked by my labour colleagues to respond to the issue of governance and representation. My response at that time was that I felt we represented both workers and injured workers and that we represented them well.
There has been and is an assumption out there that I left the board over the issue of the chairman and deputy minister's paper on board governance. While the issue is very annoying for me because of its implications, it's really a question of why. It was a stakeholder board that governed well, and it really doesn't matter whom you choose to put on it or how much you pay them if they are no longer stewards of the legislation. I think that three or four years down the road you will still be hearing complaints of poor or non-representation.
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When we met with the Cape Breton Injured Workers Association in the Fall of 2002, we were told if we could do something about the appalling levels of supplementary benefits, their problems would be 95 per cent solved. With a great deal of effort and wrangling, and after an impassioned plea from one of the public representatives on the board, and the co-operation of all three Parties in this House, we were able to effect changes in the Act in 2003. While this had financial implications for Nova Scotia employers, the directors unanimously decided it was the right thing to do. The board functioned as it should and a good result was obtained. At that time we didn't need anyone's permission to do the right thing.
Following Dorsey, the stakeholder consultation process started out by getting all the constituencies together at one time, and then it moved on to separate caucuses, and then the chairman at that point unilaterally decided that this should not include the directors anymore - the consultation process. After that point, he reported to the directors what the results of consultation were. The process has, since that time, turned to one of the chairman and the deputy minister direct contact from injured workers, and government direct contact from some of the employers.
Why would anyone consult with their director representatives if they think they have a direct pipeline? Unfortunately, the interference of the chairman and the deputy minister, and the constant bypassing of directors on director matters, has rendered those governance issues moot and the directors to mere wallpaper for the chairman and the government's agenda.
While distressed at the lack of respect for directors, as evidenced by documents - both position papers and communications advertising going to the public before directors even saw them - I was nevertheless heartened by some of the positive steps being taken, in terms of prevention, when that mandate came down from the Department of Environment and Labour to the Workers' Compensation Board.
The proverbial straw that broke the camel's back for me, however, was the November 2004 board of directors meeting, where I felt that the chairman and deputy chairman did a tag-team number on the board. The chairman told us he was going off to meet with the minister to discuss replacing him if the board couldn't follow his direction. The deputy chairman was left there to ask us, what are we going to do? When I asked if that was an ultimatum, I received a lot of ers and umms, and a blank stare. I left the meeting and prepared my resignation for the minister.
What the current chairman has never seemed to understand is that a stakeholder representative board of directors sets the direction, approves the financial and communications plans, oversees the implementation of the Act, and makes recommendations to government regarding regulatory and legislative changes. What those in government do not seem to understand is that this is an arm's-length operation, it's funded by employers in
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the province, and only under clear and public evidence of mismanagement of that governance should they be required to interfere in the matters of the Workers' Compensation Board.
If government is to be involved, perhaps they could deal with the appointment and reappointment issues in a more timely fashion than they have, or deal even with the revenue-neutral Dorsey recommendations we sent them over a year ago. Indeed, if government is to be involved to the extent that they seem to be, perhaps they should be funding the operation.
I left the board of directors because I felt that the Workers' Compensation Board is at risk of reverting to political management, which will have a tremendously negative impact on both the employers and the workers of this province over the long term. What seems politically expedient for all concerned at this time will, in my opinion, lead back to the disastrous board of the early 1980s. Thank you.
MR. CHAIRMAN: Mr. Dillman.
MR. ELWOOD DILLMAN: My name is Elwood Dillman and I have a day job in Hantsport. I served on the board for about eight years and was nominated back in 1998, to represent business. First I want to thank your committee, you people who are sitting here today, for inviting us to come and talk to you about this issue. I don't think there is much you could do which would serve this province better than having this discussion.
You have already heard this morning the degree of unanimity that the three of us are bringing to this issue. I think that's startling when you look at our backgrounds, where we have come from and what we normally do. Not only have we resigned as a matter of principle, but we come from pretty different backgrounds, and yet we are on the same page on this issue. Quite frankly, this is our attempt to get on the record what we think is one of the most serious issues facing this province and MLAs like you can do something about it.
Just as you in the House of Assembly have done the very best you could do for your constituents, at the end of the day the entire province must and should be paramount. Why am I here today? Quite frankly, my fellow Nova Scotians, it is my view that the Workers' Compensation Board in this province is in very, very serious trouble. It is on life support, not unlike it was in 1995. Ten years ago, with hard work, the consensus-building ability of a knowledgeable chairman, a conscientious and capable board, and government staying out of the business of running the board, the patient recovered.
We hope that through your questions today and our overview of the Legislature, the business community, which writes the cheques, the injured workers - far too many have fallen through the cracks - and Nova Scotians generally will start to understand the seriousness of this issue and the collective response that is needed. With your permission I want to make a few points.
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First, the WCB, in my view, has deep and serious problems and second, they are not well understood. They are not well understood in the business community, and with the greatest respect, I don't think they're well understood in the House, I don't think they're well understood in a lot of places, and that needs to happen. Secondly, I don't see a solution for this issue by leaving things go as they are. Thirdly, if the major issues facing the Workers' Compensation Board are not dealt with now, the system that has served Nova Scotia since 1917 will, in my view, crash. You don't have much time. We don't have much time, but it is still worth fighting for.
I want to make a couple of observations about what the Workers' Compensation Board is not. This has been hard for some people to understand, because it is a different, unique organization in this province. The WCB is not the Liquor Corporation, it's not the Gaming Corporation, it's not a private insurance company, it's not a university, it's not a corporate power or any other private sector business. My mission today is to place no blame but because the organization is so important to Nova Scotia business and employees, we must find a way to protect their future.
As you know, the WCB directors, in January and December passed a vote of no confidence in the leadership of the board as referred to earlier by my former colleague, Mr. White. I would be prepared to take questions on that but I know you are anxious to get at the questions so I will soon close. Hopefully, during the next few hours, some picture will start to emerge as to how we might move forward and get this patient, called the Workers' Compensation Board, off life support for the second time.
I want to conclude my remarks with regard to an issue that is the most important in the weeks ahead and it has already been referred to by my colleagues. I refer to the very dangerous and divisive move now afoot to have the Workers' Compensation Board made up of special interest groups. That is the most dangerous move that I think this Legislature can support if you are asked to support it. I plead with you to think about what you are doing if and when you do that. From my eight years . . .
MR. TAYLOR: On a point of clarification. Could I ask the honourable witness if he would repeat what he had just said, what he considers to be the most serious issue? I didn't hear. I apologize, Mr. Chairman.
MR. DILLMAN: My point is simply this. There are all kinds of rumours, and rumours that were there when I was on the board, to change the makeup of the board to include special interest groups on the board. Any special interest groups that make up the Board of Directors of WCB will produce gridlock and it's a very dangerous precedent that can only happen by changing Section 151 of the Act.
I plead with you that Section 151 is not the problem. Section 151 - you have a copy of it before you - sets out how the boards get appointed. That's not the problem. The problem
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is not Section 151 and the appointment of the board. The problem, quite frankly, my friends, is leadership and third-party interference in the way this board operates. Now in my eight years on the board, that's the conclusion and, quite frankly, it may be said in a different way but that's what my colleagues are saying.
There are dozens of well-meaning Nova Scotians who would very much like to have a seat, own a seat, on this board, organizations that would like to own a seat. Since this is impossible, I urge you today to leave the process, in terms of board appointments, in place so that the board of directors can become as effective as it was when we were wrestling to the ground the unfunded liability and some of the claims out there that were hurting injured workers so badly. Unless the Legislature, supported by ordinary MLAs like you serving on the Human Resources Committee and moving to have debate, and I hope stopping proposed legislation promised by somebody - and I don't think that's important. What is important is not who promised what to whom. What is important here is that you get it right because there is no room, quite frankly, my friends, for any more mistakes at WCB. Section 151 is attached, you have it anyway.
With that, Mr. Chairman, and colleagues, I conclude my remarks. I know there are questions. We are here today out of a sense of public duty. We are here today out of a sense of conviction and, as you can tell, we feel pretty strongly about this issue because it's not our issue. We are out of here but our kids and our grandkids are the business of this province and are going to go on after we go on to do something else.
MR. CHAIRMAN: Thank you for the presentations. We do have some questions. The first one I have on the list here is Mr. MacKinnon.
MR. MACKINNON: Mr. Chairman, I would like to focus on a couple of points. Are we going to go in 10-minute intervals?
MR. CHAIRMAN: We are, yes.
MR. TAYLOR: Mr. Chairman, if I could just interrupt, do we have presentations from Mr. Dillman and Mr. White, written presentations?
MR. CHAIRMAN: Do you have written presentations? Yes, we have one from Ms. Long but if we could have a copy of those.
MR. TAYLOR: I'm wondering if we could have those circulated, please, for background. I apologize, Mr. MacKinnon, but I think it's very important.
MR. MACKINNON: Mr. Chairman, I would like to direct my first set of questions to Mr. White because he made some reference to the Department of Environment and Labour interfering with the development of the policies surrounding chronic pain and the
[Page 15]
implications of that both to employers and injured workers in the province. I would ask Mr. White if he could give us a little more detail as to what he is referring to. I know there are different types of pain that we are dealing with here, some what they refer to as rateable, some non-rateable, that sort of thing. Would he please give us a little more detail as to what he referred to and what the implications are?
[9:45 a.m.]
MR. WHITE: I think the major implication is the issue of unhinging an award of benefits from the issue of proof that the injury occurred in the course of employment. If you look at the definition of unrateable pain, which includes such issues as chronic pain syndrome, fibromyalgia, I think that there is a danger that the analysis is so subjective that the award of benefits becomes not an exercise founded in science but an exercise founded in subjective opinion. Therefore, it becomes a very difficult conclusion to come to and is fraught with the opportunity for decision making based not on science but on subjective opinion.
MR. MACKINNON: I recall when the piece of legislation for the restructuring of government came before this House. I believe I spoke rather extensively, upwards of two hours, on the issue of the WCB and the potential politicization of the board and the entire operations by putting it under the Treasury and Policy Board and at the time the minister scoffed at that notion but what you are suggesting here is, in fact, what is happening. Is that not correct?
MR. WHITE: Well, I think it's a question of a creeping takeover that that particular provision, while it had the potential of politicizing the board, was somewhat innocuous in the beginning but as matters developed the other issue became the Department of Environment and Labour mandating the chairman to develop a strategic plan for the WCB system which included WCAT and WAP. So for the first time you have a situation where the Chairman of the WCB was responsible for issues outside the mandate of the board of directors and inside the operating authority of the Department of Justice and the Department of Labour in terms of OH&S and so what happens is that you have unaccountability everywhere. You have the chairman partly responsible to the board for certain things and not responsible to the board for other things. The opportunity for chaos is present and it's chaos that I think we have as a result of these structural anomalies that have propped up.
MR. MACKINNON: On October 20, 2003, the Minister of Labour, when he was introducing amendments to the Workers' Compensation Act, referred to as Bill No. 30, he stated, "We will repeal the sections of the Act specific to chronic pain and will work with all parties to develop regulations during the Law Amendments Committee process." He left the impression that there was something wrong with the legislation that was in place that made it impossible to develop regulations and policies surrounding the issue of chronic pain. Was
[Page 16]
there anything wrong with the legislation or was it specifically the regulations and the policy that was developed?
MR. WHITE: I'm not a legislative counsel, I'm just a poor country lawyer so I don't know much about the detailed aspect of it.
MR. MACKINNON: I guess what I'm asking you, there was no need to amend the legislation to deal with the policy on chronic pain.
MR. WHITE: I think ultimately we decided that we could do it through regulation and through board policy.
MR. MACKINNON: Because that legislation hasn't been approved, per se, and all of a sudden we are now developing new policies. So it looks as if the legislation was okay. I guess that's the point I'm making, but I want to focus on the number of claims for chronic pain. My understanding is very few have been paid out. Even if we took the figure of 3,000 and then 2,000 possibly being paid out, how many are you aware of at the time when you left the board that had been paid out?
MR. WHITE: My understanding, as of recently, something in the order of 20 to 30 claims actually have been paid.
MR. MACKINNON: Is that the understanding of the other two members? Correct? Yes?
I would like to go to this issue of the confidence in the chairman. Was there a formal vote taken at a board of directors meeting on this issue? Mr. Dillman, you raised the issue initially. What happened with that motion? Where did it go and what were the implications?
MR. DILLMAN: In December, after Charlene decided she had to leave, when some of the rest of us were considering it, the situation, we thought, was so bad that maybe if we passed a motion for the board of non-confidence in the chairman, we would find a way to fix something and take the right fork in the road as Yogi Berra would have done. So the only thing we could think of was a motion of non-confidence, which was written, prepared and submitted, moved and carried, and voted on at the board, and it was passed 2-1 with support from labour.
The motion was directed to the Governor in Council for a very good reason.
MR. MACKINNON: Cabinet.
[Page 17]
MR. DILLMAN: Yes. I felt that the minister and the leadership had a good working relationship so it probably may not get the kind of objective hearing that it would have gotten in Cabinet, so that was where it was supposed to go.
I found out later that, in fact, it did not go to Cabinet, it ended up in the minister's office, with the chairman arriving at about the same time. The minister wrote me a letter saying he thought that it was not very useful for me to make a motion such as that, supported by only a 2-1 vote on a serious matter. The problem with the minister's comment to me was, we only had three voting delegates there because board members hadn't been replaced since before April, for whatever reason.
The second point was, we had been making decisions all day in the meeting before that, based on the same number of people who were there. The issue was, should we be making decisions on how to run the board and be accepted, but making a decision on the confidence of the chairman and it not being accepted? That was the end of my correspondence with the minister, but there was a vote of non-confidence passed by the board and that is what happened.
MR. MACKINNON: Does the chairman vote on motions even if it's not a tie?
MS. LONG: No.
MR. MACKINNON: How many recommendations of the Dorsey report have been acted on to date?
MR. WHITE: My recollection is supplemental benefits.
MR. MACKINNON: That's one.
MR. WHITE: I think that's it.
MR. MACKINNON: Out of 44, is it? How many recommendations altogether, 44? (Interruption) So very few is what you're saying.
MR. WHITE: I think it's important, I have the Dorsey report here and I'll just read one section to you because I think it's quite interesting. Dorsey wrote, "The Nova Scotia Workers' Compensation Board has always had to work to maintain the independence of its operations and decision-making from government. It has succeeded more in the 1990s than past decades. This does not mean there is any less need for everyone to be vigilant and protective of the board's independence. There may be a greater need." So even the Dorsey report recognized on Page 229, that it is a very fragile relationship fraught with the opportunity and the possible government interference.
[Page 18]
MR. CHAIRMAN: Thank you, Mr. MacKinnon. Mr. Corbett.
MR. FRANK CORBETT: I guess I should go right to the point - and this goes to you, Mr. Dillman - of special interest, injured workers. I'm wanting to know, we've had injured workers on the board before in one form or another, this is not a new thing to the board. Would you say that is an accurate statement?
MR. DILLMAN: We have had many hard-working, well-minded people on the board who were nominated by labour, who happened to be injured workers, but not injured workers' associations, that's the difference.
MR. CORBETT: Not all were nominated by labour, too, Mr. Dillman. The fact is, and this is not to be argumentative, but I think it's a bit incumbent from the three submissions today, if you could each give me your version of the downside of having injured workers on the board, if you could?
MR. DILLMAN: There's no downside to having injured workers on the board, as a matter of fact, that's a plus. The issue that grabs at me in this whole process, and at my colleagues as well, is when you start to move injured workers individually out from that to somebody representing an association. I don't only mean injured workers, it could be the Santa Claus drivers of Truro. If they're an association, once you start putting associations on boards, where do you stop? There is no stopping, there's no end to it.
I served on this board for eight years under a lot of people who were nominated by labour and I want to tell this committee that at no time did those members ever bring politics to the board, nor did they ever flinch from arguing or making a case for injured workers in this province. That happened at every meeting I ever attended, before I was there and after. So it is possible - some people don't agree with this - to have people who have had an injury, serve on this board - and there have been many - who would debate, argue and make their points and if they could convince the rest of the board that we should do this in the interest of the system, they were supported, the same as you do here. If they were doing things that put in jeopardy the system as a whole, then they would back off, because the system was more important to them than an individual part.
I guess my answer to your question is that the Boards of Directors of the Workers' Compensation Board that I served on, which were supported by injured workers who were nominated by labour, did one hell of a job in making their cause to the board and in a lot of cases, they got what they wanted.
MR. WHITE: It's very important keeping the distinction here that we have to keep in mind, as I understand the new process that's being contemplated, previously, the appointments to the board were open to all applicants who were then screened and the
[Page 19]
applicants were promulgated by business and industry and organized labour and injured workers' associations. They were screened and eventually came to this committee.
When I came to the board, there were three injured workers on the board of directors and they did a superb job advocating for injured workers and also, fulfilling their mandate as directors of the Workers' Compensation Board. What concerns me is the proposal, as I understand it, is that board seats would be dedicated to appointments of groups. One group, for example, would be injured workers, so the appointment would be the purview of the injured worker organization, not of this House or the Legislature.
As a result, my fear is that the appointee, because they are appointed directly by the organization they represent, will have a stronger duty to that organization than they do to the Workers' Compensation Board. That is what makes it fraught with danger because then, the politicization that you have outside the House is brought directly to the boardroom table and people start taking stronger lines and are not able to make the switch from the best interests of the group they represent, to the best interests of the Workers' Compensation Board.
[10:00 a.m.]
Then what happens is the consensus building, which is something I was involved in as a non-voting public representative, one of the tasks that I had on the board was to develop consensus. Prior to this current chairman, we never voted. If there wasn't a consensus of the board, nothing happened and so we worked very hard to build a consensus. Even though I was a non-voting member, if I didn't agree with what was going on, we fought until we could build a consensus that everybody concurred with. I don't ever recall a vote being taken at the board until our current chairman. So it's a subtle distinction, but in my view it's a very important distinction.
That is not to say that injured workers aren't wonderful people and some of the injured workers' associations have people in it who are extremely knowledgeable about workers' compensation issues. It's just that you dance with the one that brung ya and if you have a stronger affiliation and loyalty to the people who bring you than a duty to the organization that you're dealing with, then I think there are serious subtle and important differences there. That goes with the employer side, too.
If the Truckers Association has a dedicated member, the manufacturers association has a dedicated member, and somebody else has a dedicated member, I think it's important that the responsibility and the duty lie to the organization that you are a director of.
MS. LONG: I think Mr. White made the distinction really, really well and that's the misunderstanding that has taken place, certainly between injured workers and their constituency directors on the board, that misunderstanding is a problem. I would like to say that since I sat on the board and before I sat on the board, every labour nominee that I know
[Page 20]
of, for quite some time, has been an injured worker and in the system at some point and I had benefits and there are some here in the gallery, very capable representation for workers and injured workers in this province. If I expressed annoyance about the reconstruction of the board, it was the implication that those people, myself included, did not do that job, because I think we did.
I don't like the term "special interests" because it has connotations, but I agree, you can no more have an association promised seats than you can have - I wouldn't want to see seats dedicated to the Truckers Association or the Forestry Association, it's just a question of understanding what you mean by injured workers.
MR. CORBETT: Thank you for your answers. I think we had to get that out to find out what special interest is and to define special interest. As with you, I agree with having injured workers on that board and how that is done is that we're talking about the mechanism, not the person. I want to go back to something else and I think it may have been you, Mr. White, who talked about bringing over from government, or however you want to describe it, extra responsibilities and so on. One of them that has always perplexed me was giving WCB, OH&S because it seems to be on the surface that it isn't a natural fit.
The fact of the matter is, not all employers in this province pay premiums, so one of the things you're doing here - while WCB is asked to do this - they are being asked to do OH&S on the prevention side for everybody, while not everybody is paying into it. Was that part of your concern when you brought it up?
MR. WHITE: Only part of my concern, because I think you have to get both parts of the puzzle right, you have to have the structure right and you have to have the strategy right. If you don't have the structure right, none of the individuals - as well-minded as they are - our current chairman is a seasoned executive with tremendous experience in industry, was one of the architects of the privatization of Nova Scotia Power, which was a great success for investors. As a result, he's a very talented, experienced person, but the structure is wrong in that he has responsibility for things that he has no control over. He's responsible for the strategy around WAP, WCAT and OH&S, and yet all of those organizations report elsewhere. The Workers' Compensation Board assessments, the industry, pay for WCAT, they pay for WAP, and they pay for OH&S, and yet he has no ability to pull any levers to allocate resources.
I made an impassioned plea in front of Dorsey to have the structure right; in my view, all of those organizations should be under one umbrella group, only because I think it is only natural to have prevention under the people who are going to pay the bill, if prevention doesn't work and somebody is unfortunately injured. To me, that's a natural evolution of the system. To have it so that somebody pays for it, another person runs it, and a third party is developing the strategy for it, is just a structure that Jobe himself couldn't operate. It's
[Page 21]
fraught with structural inefficiency, inaccountability and so I think it needs to be rethought if we're going to have any hope of bringing this system, as it were, together.
MR. CHAIRMAN: Mr. O'Donnell.
MR. O'DONNELL: Let me thank the presenters for coming in today. It seems to me that the theme of the discussion on governance and accountability has been to ensure that the board is stakeholder-driven and accountable to the stakeholders, or at least it should be.
I understand that the Canadian Federation of Independent Business, the Federation of Labour, three designated injured workers, NSGEU, CUPE, trucking and retail gas associations have been invited to participate in the discussion on governance and accountability. In your opinion, are there others who should have been invited and do you agree or disagree with these objectives?
MR. DILLMAN: I'm not sure, Mr. O'Donnell, whether I agree or disagree with the position of all of these organizations because, quite frankly, I don't think we know what they are, that's the first point. It seemed to us - when I was on the board - that the positions of these organizations kept changing every time there was a new position made. I'm not sure I know what the real position is up to this point. The problem though, more important than that, is how much more representative can you get than having an opportunity for everybody in this province, if they're qualified, from Tusket to Meat Cove and from Sambro to Amherst, to have an opportunity to make an application to this Legislature to have a seat on that board and do the best they can.
Who better to make those decisions, in my view, than the government of this province, regardless of their political stripe? If the government of the day made those decisions - and I think this committee has come a long way in coming to that - then you will get quality people on that board, without the necessity of those people having to go back to my Santa Claus association of Truro on Christmas Eve and say, can we do this? They have to have the ability to make those decisions, as we did with complementary benefits in Sydney, because it's the right thing to do.
The argument about stakeholders not being involved and having no input, I think is a bogus argument to try to get to someplace else on the agenda.
MR. O'DONNELL: One other quick question. I heard the number 3,000 chronic pain applications before the board. This 3,000, is that going back over a number of years or is this just within the last few years? Where does the 3,000 come from?
MR. WHITE: It was estimated because the Martin case went back to the implementation of Canada's Charter of Rights, which was 1985, so it was roughly 20 years.
[Page 22]
It was an estimation with a very low confidence level on behalf of the staff and as it's now proven, it was dramatically low.
Going back to your question about stakeholders, I think it's important to understand the difference between pre our last chairman and our current chairman in terms of methodology, in terms of stakeholder consultation and I think our current chairman did it because Dorsey recommended that stakeholder consultation must be increased. What happened was that pre-Dorsey, if I may, or pre our current chairman, if the stakeholders wanted a point of view brought to the board, they did it through their stakeholder representatives. Post-Dorsey, or post our new chairman, they felt that they could go around the stakeholder representatives on the board, go directly to government and go directly to the chairman and they did so.
As a result, the board of directors was taken totally out of the stakeholder loop - this is the point that Charlene made earlier - and that caused the decision making at the board to break down because, on occasion, stakeholder positions were expressed at the board and the board didn't have any direct knowledge of what the stakeholder positions really were and sometimes it wasn't quite what was represented to us. So that caused, I think, a neutering of the board's ability to understand where stakeholders were coming from and therefore advocate on behalf of stakeholders and then make informed decisions based on what they felt the stakeholders' positions were. So stakeholders felt that they could go directly to the Minister of Labour, could go directly to the chairman of the board and effectively make their position, totally ignoring their own representatives on the board.
MR. O'DONNELL: Thank you, Mr. Chairman. I will turn the rest of my time over to my colleague.
MR. CHAIRMAN: Okay, you have about three minutes, Mr. Taylor.
MR. TAYLOR: Mr. Chairman, I would be remiss if I didn't thank the former board members for serving this province. I think Nova Scotia was very fortunate to have three highly qualified and very capable individuals serve us in the capacity that they did. I take the message that they are bringing to this committee this morning very seriously and it disturbs me that these members have felt the need to resign their positions on the Board of Directors of the WCB and I recall during one of the presentations, I think it was during Mr. Dillman's, a suggestion that the solution is not the status quo, to let things fester and manifest themselves the way they have for the last significant period of time.
I would like to, if I could, focus on just for a minute the specific example that Mr. White referenced on Page 3 of his presentation where he suggested that "For nearly a decade the government had been hands off the WCB. Two years ago, with the arrival of our new chairman, it appeared the WCB was back in what one academic expert on governance would call the political bargaining arena." Mr. White used the example of the firefighter legislation
[Page 23]
which, at the time - and I still do, Mr. Chairman - I thought was an excellent piece of legislation. It's claimed here that it's not part of the Dorsey report nor was there any discussion about the science behind such a benefit. The government simply legislated the benefit in response to an effective lobbying effort. You know, unless it can be articulated, I'm having some difficulty reconciling why the directors would have difficulty with that particular piece of legislation based on the legislation itself. I feel it has merit but I would like to hear some further expansion relative to that example, if I could.
MR. CHAIRMAN: Mr. White.
[10:15 a.m.]
MR. WHITE: Well, on firefighters, we never had the opportunity to debate the issue. We were just simply told that this was our new policy so it wasn't for us to discuss the merits of the legislation but again, when you look at the merits of the legislation, you may run into a causality factor in terms of medical science and, as I said, I haven't studied the issue because it wasn't part of Dorsey, it's never been a part of our chronic pain discussions. It was just a fait accompli. You, in fact, may have far better information because obviously you were subject to the same exhortations of the interest group that was advocating the legislation. We never saw it so we don't know about all the merits or demerits of the case.
MR. CHAIRMAN: Quickly.
MR. DILLMAN: If I might, Mr. Chairman, quickly. I think, Mr. Taylor, the merits of the legislation is not necessarily the issue here. The issue is that the government of the day decided, for whatever reason, which is their business, their prerogative, to do this. Our problem was, it was never discussed at the board to see what the implications would be on our budgetary process. We are still responsible for the budget. We are still responsible for the rates. We are still responsible for doing what the government sets out in legislation. So in a world where co-operation should have been there, if the government wants to do something, that's their right but surely there was a responsibility to come to the WCB and say if we do this, what is the cost going to be, how are you going to do it, how long before you get these guys paid, what do you think of it, that whole business. But it wasn't done so it's not so much, Mr. Taylor, the legislation, the issue is doing it without any consultation and that's the nub of where we're at here.
MR. TAYLOR: On a point of order, Mr. Chairman, I think I heard from Mr. White that in fact he had some difficulty with, I think he called it, the science. Like I said, just as an MLA who supported that legislation, I think all honourable members in this House did. The merits of the legislation, I think Mr. Dillman has cleared up what his difficulty is, it's the process. He has some problem with the process not the value of the legislation. There are two different opinions here being expressed.
[Page 24]
MR. CHAIRMAN: Mr. MacKinnon. The time, actually, is up.
MR. MACKINNON: I know but in all fairness to our witnesses, with the misrepresentation that I've just heard from Mr. Taylor, or misunderstanding, that is not what Mr. White has indicated. He has indicated he hasn't had an opportunity to examine the merits or the evidence.
MR. CHAIRMAN: Point taken. Mr. Glavine, you have the floor.
MR. GLAVINE: Thank you very much for being here today. I think your presence is a very compelling statement about the current state of WCB and where it is going vis-à-vis restructuring of the board. I would like for each of you to sort of, maybe just in a very summative way, say how far you think the change of leadership has caused an erosion of how the board is now functioning when you consider only two voting members, no appointments since April. What does that, in effect, mean on an operational basis for the board? Maybe starting with Mr. Dillman.
MR. DILLMAN: Well, the first thing it speaks to is unfairness. It's unfair. When that happens it's unfair to injured workers, it's unfair to the business community that writes the cheques, it's unfair to the people of Nova Scotia because the people of Nova Scotia and the system deserve to work under a full board. So in the first case it's unfair. The second thing is it's terribly disruptive when you look at the complexities of the Workers' Compensation Board, and it is complex. It's a long, long learning curve. So the complexity of that issue and the length of time it takes to get up to speed is not a short learning curve. It takes a lot of time to get up there.
So it is terribly unfair because I don't know that the board has ever been asked to operate as it has been operated this last year with the kind of support, or lack thereof, at the board of directors level. We struggled and we did the best we could and we stood there and we fought until there was nothing more to give. After you come to a point where you say, I can't contribute anymore, you have to leave and we did. It wasn't because we didn't like the work, it wasn't because we didn't like our friends, it wasn't because we didn't like the issue, it wasn't because there was no work to do, we weren't making a contribution.
MS. LONG: Mr. Dillman said it very well. I sat on the board for three months between my first appointment and my second appointment with no vote. That leaves you in a position where you're there at the pleasure of the chairman and you really can't accomplish anything if an issue does come to a vote.
I disagree with Mr. White, we have had issues come to a vote before this chairman, maybe he just doesn't remember them, I don't know, but we did have issues come to votes. You're left in a position that is totally ineffective. Right now the position of the board with
[Page 25]
basically three voting members is a mess, what can you do? It may well be intended to be that way.
MR. WHITE: In particular, two of the three public representatives are not there and by convention and by our governance manual, one chairs the Investment Committee, which has stewardship of about $700 million - rough numbers - of investments; one chairs the Audit and Finance Committee, that's the position I chaired when I left; and of course, one chaired the Governance Committee.
All of those committees were very active and we're talking about a lot of money, we're talking about a very large organization with $225 million in revenue, 330 employees, and just not enough oversight, in terms of what's going on. That gives one a great deal of concern and as you found out this morning, we didn't always agree on issues and by disagreeing and by arguing, we always made better decisions, I think. So the more people you have, knowledgeable people who have driven themselves up the learning curve, you have informed debate and better decisions are made.
MR. GLAVINE: Just one further question and again, maybe a comment from each of the witnesses. When I was reading and preparing for today, in taking a look at the commitment of board members, the input that they had, to take the state of where WCB was 10 years ago to where it was at the beginning of 2000, it certainly has had a very commendable change of direction. I'm certainly perplexed as to why things have taken this turn in the last couple of years. Is it about government agenda? Is it about leadership style? I think this is as candid as you can be here, to me, there is an enormous problem current and lurking and it has the potential of undoing a decade of turning WCB around. I find this quite astounding, to be honest. So, starting with Mr. Dillman.
MR. DILLMAN: Well, it is astounding and in my view, it's serious. As I said in my remarks, we don't have - and we're out of here today as you know. You people who represent the people of this province are apparently going to have to deal with something in a way to try to fix this. The status quo is not acceptable, it can't work that way.
I said this before, it is an extremely large and complex organization like no other in the province. There's no other like it. It just simply must be fixed and I think, quite frankly, MLAs like you, sitting here this morning listening to us, you have the best chance in talking with your Cabinet colleagues, in talking with the government, in talking people into doing what is right. As I said before, the problem with this bad situation is not in Section 151, which allows for the appointment of the boards.
I think Jim White raised a very important point which shouldn't go unnoticed here. The public representatives on the board, non-voting, were the people who chaired these very important committees of the board: Governance, Audit and Finance, and Investment. With them gone, the fairness and understanding to be fair went with them because now, what I
[Page 26]
think you'll find is that the leadership has pushed itself into these committees, which would be considered by many to be unfair, and they're making these decisions based on another whole set of criteria.
I'll finish my answer with this, I urge you - with all the energy you can muster - to make sure that you have a long, hard look at what you're being asked to do to fix this situation through legislation because when the same legislation was there as is there now, this board worked well, so you can't blame it on the legislation, I don't think. I think you can blame it on something else.
MS. LONG: I just want to state simply that if I didn't think there was something wrong there now, and if I didn't think there was some third-party interference, I would still be there.
Mr. Dillman is right, we're out of here today and I would love to be able to say, gee, we were wrong, and if things continue I'll take no pleasure in saying I told you so. If something isn't done, you're headed down a really steep and slippery slope back to political management of the Workers' Compensation Board, and if that's what you want, that's fine, then government should pay for it and go on with it.
If I have a chairman telling me that Rick Clarke agrees with what I say, where does that leave me as a stakeholder representative and I have to make a decision at a meeting and after the meeting I have to say to Mr. Clarke, did you really say that? And he says, no. We're not supposed to be playing those kinds of games. This isn't a game, this is serious stuff.
MR. WHITE: I'd like to address that.
MR. CHAIRMAN: Very quickly, Mr. White, if you would.
MR. WHITE: When I wrote my newspaper column in The ChronicleHerald, I used to talk about the constant temptation of politicians to bribe voters with their own money, and in this particular instance it's even better than that because the politicians can bribe voters with industry's money and it's virtually impossible to resist that temptation.
MR. CHAIRMAN: Mr. Epstein.
MR. EPSTEIN: I'd like to tell you what I heard all three of you say, although I guess it was primarily Mr. White. There seemed to be a focus on several points, about four of them I really see. One was the whole point about the firefighter legislation, where the complaint was that there wasn't consultation. The second was the relations between the board chairman and the Minister of Labour and there was some feeling that perhaps the full board wasn't involved as much as they ought to be in those kinds of discussions or talks, or perhaps that the board chairman wasn't appreciating the extent to which there ought to be an arm's-length
[Page 27]
relationship. Third was this problem about the new stakeholder representatives on the board or this possibility. But the fourth is the one that really I have some concern over and want to focus on, which is the whole question of the financial viability of the board around chronic pain.
Mr. White, I think it was you who brought this up so can I ask you first, we have a discussion document called the Funding Strategy 2005, put out by the board. According to the notes we have, it was approved by the board of directors some time last year, and it was originally prepared by the Financial Services Department for consideration by the board back in July 2004, and it seems to have been adopted by the board. Is that correct, it was adopted by the board?
[10:30 a.m.]
MR. WHITE: I don't know the document you are referring to specifically, but I do recall that process, yes.
MR. EPSTEIN: Does that happen every year, that is that there is a new funding strategy that comes forward for consideration and so on?
MR. WHITE: Yes.
MR. EPSTEIN: That would include looking at things like the performance of the fund during the course of the year, is that right?
MR. WHITE: That is correct.
MR. EPSTEIN: And it would also include looking at the rates that ought to be applied in the different categories for different employer classes. Is that right?
MR. WHITE: That's correct.
MR. EPSTEIN: And it would also consider the framework legislation, of course; that is to say, your obligation to pay out.
MR. WHITE: That's correct.
MR. EPSTEIN: And, of course, your experience. So as I read the document, that's, in fact, exactly what it did and I see consideration in the document of chronic pain and I guess what I'm really left wondering is why it is that you are linking chronic pain to what you called the future financial viability of the board. I think what you said was the future financial viability of the WCB is once again in jeopardy. Since earlier you used the word "bankrupt" to describe the history of the board, it seemed to me that you were trying to suggest to us that
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because of the engagement on the issue of chronic pain, the board might go bankrupt. If that is not your view, I would like to hear differently.
MR. WHITE: I think it's a very serious financial challenge for the board that will increase the unfunded liability beyond any current estimate of what that could be. You will recall when we were doing the chronic pain decision making around the policy, the board staff put a very low likelihood or probability on the estimate of $200-odd million. I think they had it bracketed anywhere from $200 million to $350 million based on an estimated 3,000 claims. Well, now we sit here several months later and there are around 6,200 claims. We have the possibility of going at the higher end of the cost of chronic pain which you add to the existing unfunded liability and you go way beyond anything that we saw in 1995 in terms of total unfunded liability.
MR. EPSTEIN: But, Mr. White, you told us this before. I think what we need to understand is why exactly you reached the conclusion that the financial viability of the board might be in danger here and let's look at this. The board staff considered the possible costs in the future. Isn't that right?
MR. WHITE: That's correct.
MR. EPSTEIN: And you are telling us now that the number of claims that have come forward is higher than they originally estimated. That's the next thing you are telling us?
MR. WHITE: That's correct.
MR. EPSTEIN: Is it also the case that the number of claims that come forward is quite a different thing than the number of claims that are actually approved? Isn't that also the case?
MR. WHITE: Yes, sir.
MR. EPSTEIN: As I recall, the Martin decision from the Supreme Court of Canada came down in 2003. Would it have been the Fall of 2003, maybe November 2003?
MR. CORBETT: October.
MR. EPSTEIN: I'm told it's October 2003. I know it was 2003. I thought it was November, I'm told it's October. Okay, so we've known from the Supreme Court of Canada . . .
MR. WHITE: December 9th.
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MR. EPSTEIN: Well, okay, all right. Some dispute. My friend, the expert, Mr. Corbett, tells me he thought it was October. In any event, I thought it was November, you think it's December. It was the Fall of 2003. At that time, we now have a full year and a half of experience of - okay, he's showing me a paper that says October 2003. Maybe it wasn't received until later on. In any event, we have a full year and a half of some experience with this and you are telling me, as I understand it, that so far about 20 cases have been accepted by the board in a year and a half under chronic pain. Is that the case or is it a different number?
MR. WHITE: It's my understanding, yes.
MR. EPSTEIN: So if those are the hard facts, if the hard fact we have is that in a year and a half, 20 cases have been accepted, how can you end up with the conclusion that the board is going bankrupt?
MR. WHITE: Some people may accept that the unfunded liability will only be retired in 2040 or 2045 and therefore are quite content to allow the finances of the board to deteriorate to that extent. Other people suggest that the intergenerational transfer involved in that and that the dampening effect on our economy is acceptable and I, for one, don't accept that.
MR. EPSTEIN: You like 2014 as the target date.
MR. WHITE: I think with the opportunity that we had to retire the unfunded liability, and if you ask yourself the question, if you had $200 million, $300 million, $400 million to spend on workers' compensation in the Province of Nova Scotia, for the betterment of this province, would you spend it on chronic pain claims? When I asked that question of a lot of stakeholders their response is, absolutely not, there are other priorities.
MR. EPSTEIN: So it is a question of priorities, I would agree with that. In the document that we looked at - the one I quoted to you earlier, the financial planning document that the board accepted last Summer - it talks about different factors that go into the date, which is not the revised projected date for retiring the unfunded liability, it's no longer 2014, it's 2024, but one of the main factors was the underperformance of the fund during the 2003 fiscal year. Isn't that correct, they only got half the income they thought they were going to get that year?
MR. WHITE: There's no doubt that the funding formula is very complex. One of the continuing frustrations of the board is that we work very hard to keep the administrative budget under control and then the actuary decides to change an assumption, and it makes a seven-year or $100 million difference, versus a $30 million administration budget.
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MR. EPSTEIN: There was one other point in your presentation that left me a little puzzled. In giving us the history lesson on historic compromise, you firmly reminded us that the link was between workplace injury and a no-fault system, and the payment of premiums and so on. It seems to me, as well, that there have always been instances in which not workplace injuries but workplace illnesses have been recognized as being compensable situations. You left me somehow with the impression that you didn't think that workplace illness ought to be compensable. Is that your view?
MR. WHITE: That's not my view but only when there is a clear link.
MR. EPSTEIN: So the pneumoconiosis provision that has been in our Statute for a very long time would be an acceptable item?
MR. WHITE: And that is a clear question of law as opposed to science.
MR. CHAIRMAN: The time of the NDP caucus has expired. Mr. Taylor, we will have to go to some short ones.
MR. TAYLOR: How much time do we have, Mr. Chairman?
MR. CHAIRMAN: We'll allow about five minutes for each caucus.
MR. TAYLOR: Thank you. Again, I want to repeat that I'm very concerned by the allegations that the former board members have brought to this committee today. Mr. Dillman has commented that as a committee, we can do something. Based on the face value of the presentations at this point, I would say that it would be incumbent on us as a committee to further explore this issue.
When you go through the three presentations, there's one thing that rings very familiar, Mr. Chairman, and that is how the board members feel that their positions and their mandate have become irrelevant. I think Mr. White may have even referenced that in his presentation. In that context and in the name of fairness - I don't know if you can exactly get to the bottom of this, it is quite complex, as most issues with the WCB are - I would think as a committee - and we can speak about this perhaps a little later - bringing in the chairman and the deputy minister to respond to some of the concerns.
It has been a little more than a year since we spoke to the chairman and I think it would be doing the Workers' Compensation Board and these very highly-respected individuals with a lot of integrity, a service if we would perhaps try to look at the other side, if you will, of the concerns that have been brought forward. When there are allegations of third-party interference, one has to be very concerned.
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I referenced the firefighter legislation because it was brought to our attention this morning. Again, I felt at that particular time that it was a good piece of legislation and, in fact, all members of the House must have felt that it was good legislation and voted for it, not knowing that the process had been allegedly flawed getting to the Legislature, as far as bringing it forward. Sometimes as MLAs we don't fully comprehend all the complexities and protocols that should be established.
Again, I guess it's not really a question. It would be easy to say to the individual, I think I hear what they're saying, there's a problem there. How do we fix the problem? If it would be a fair question, I would like to go to each of our presenters and ask them in a sentence to tell us, how do we fix the problem, as you identify it and as you see it?
MR. DILLMAN: After all I have said here today, privately and publicly, I don't have the answer, Mr. Taylor, of how to fix the problem. I think I know how bad it is, and I also know how it can be fixed. I think two key elements in doing that are, I think there needs to be a change in leadership and I think there needs to be a commitment from government - whatever government, under whatever stage - to let the Workers' Compensation Board be what it's supposed to be, a separate, arm's-length organization which is charged with certain responsibilities, one of which is not taking direct orders from government. So those two things are paramount.
Beyond that, I think there are enough competent, smart people in Nova Scotia who would not have any hidden agenda for themselves or anybody they would represent, that they couldn't come together, a small group of them, by themselves, and understand that what they're doing is putting something together in the interest of the province. They may need a former board member, a former chairman, I don't know who it is, but a small group of people to go behind closed doors and put the coffee on and say, here are the issues and here are our solutions to how we get out of there.
The only suggestions I have that are specific are, this organization needs a commitment from government to stay out of its affairs and it needs a change in leadership. I think there's enough grey matter in this province that four, five, six or nine people can come together to produce a plan that's going to resolve this important issue for all of us.
MR. CHAIRMAN: Mr. MacKinnon. You have about six minutes.
MR. MACKINNON: I would like to go back to Mr. White on the issue of chronic pain. The board, as I understand, has been booking for chronic pain even though they haven't been paying out any substantial amounts. I think to date, maybe $0.5 million-plus, is that correct?
MR. WHITE: Yes, last year's financial statements took an allowance for an estimated value of the chronic pain case of around $200 million.
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MR. MACKINNON: I understand, as well, that Ms. Clarke from the Workers' Advisers Program also has an appeal before the Supreme Court of Nova Scotia to go pre-1985 on the Charter issue of claims that have come in before that period, am I correct?
MS. LONG: I think there is a challenge to pre-1985 out there, yes.
MR. MACKINNON: Would that have the effect of increasing, ballooning, the number of claims well beyond 60 to 100?
MS. LONG: It could.
MR. MACKINNON: It is possible that if she wins that challenge which, from the legal minds I've consulted with . . .
MS. LONG: If you build it they will come.
MR. MACKINNON: That's right, yes. So it could be as high as 20,000, based on the total number that are in the system, is that not correct?
MS. LONG: I'm not sure. I wouldn't want to speculate on the number.
MR. MACKINNON: I guess the point I would like to make is we're talking about leadership here, since the leadership that we have now, the stewardship, the total number of time loss claims has increased; the average duration of time loss claims has also increased; the unfunded liability has also increased by six percentage points, according to the latest annual report; the average targeted assessment rate has also increased - and I'll table this, it's in the annual report - despite the fact that the total assessable payroll has increased by $1.26 billion. My question is, where in the name of heavens is the money going? What's so wrong there?
The point, Mr. White, that you've made is that the door has been opened up so that somebody can call up their MLA, who may be in favour with the government and say, I want my chronic pain case or I want this case or that case settled to my satisfaction and despite the evidence, then that's a possibility because we're going back to what was previously. Is that not the general overview of what the implications are of this political interference by the government?
MR. WHITE: I think there is that risk.
[10:45 a.m.]
MR. MACKINNON: Yes, okay. I would suggest, Mr. Chairman, one of the problems is the fact that we don't even have a proper quorum on the board of directors and the
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legislation is worded so loosely. I would certainly be willing to put a motion and I will put a motion that we, as a committee, recommend to the government that we have a minimum number that is required on there and not the rather vague terminology that we have. If we have 11 on the board, we should have 50 per cent plus one, six members on that board for a quorum and that's the whole idea, to measure the quorum, in terms of what the intended full complement was, not this watered-down version that the government has. That's a motion that I would put and ask my colleagues to consider.
MR. TAYLOR: May I ask a question on the motion, Mr. Chairman? Do all board members, directors, must they attend the meetings in person or is some of it done by distance communication? (Interruptions)
MR. DILLMAN: The answer to your question is, members have been known to participate in board meetings from quite some distance away. (Interruption) In some cases, yes.
MR. TAYLOR: I have some difficulty with that allegation as well.
MR. DILLMAN: Well, it's not an allegation, it's the truth.
MR. TAYLOR: According to Mr. Dillman it's the truth and I'll take it then as factual. I'm wondering if there should be some provision in our motion that would require a physical quorum to be in place? I know that for several months now I've heard that allegation and if these honourable presenters - as I like to call them - are bringing this forward, I think there's some difficulty with people not attending meetings. I think it would be in the best interest of the system - not just the injured workers who are certainly a priority - the employers and all people who are considered to be stakeholders. I'm just wondering if the honourable member would consider amending the motion to require a quorum to have a physical presence?
MR. MACKINNON: Yes, Mr. Chairman.
MR. WHITE: Mr. Chairman, if I may just briefly address that point. I think President Lincoln once said of General Grant, I'd rather have Grant drunk than a half-dozen generals sober. In this particular case, it's very tempting to say physical presence is an important aspect of it but I think more importantly is the ability of the member to fulfill the mandate that he was appointed to fulfill. In this particular case, I'd rather have this individual in Florida by telephone than maybe some others present in the boardroom, a very effective member. I know that there are concerns and all of that but I think . . .
MR. CHAIRMAN: Point well taken, Mr. White, but I have a lady down back who has been trying to get on the agenda since we started. We do have a motion on the floor. Would the clerk read back the motion, please? (Interruption) What was that motion again, Mr. MacKinnon?
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MR. MACKINNON: The motion essentially is that we have 50 per cent, plus one of the total intended complement of what the legislation would prescribe. For example, in this particular case the intent is a maximum of 11, so we should have, in this case, a quorum of six. If we have amending legislation that says 10, then we should have five plus one, six.
MR. CHAIRMAN: Are you ready for the question? Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
We've had Ms. Massey waiting patiently to ask a couple of questions. Ms. Massey.
MS. JOAN MASSEY: I certainly appreciate you folks coming in today and I hear your frustration. I did have numerous questions prepared but you've done such a lovely job of giving us so much information that really, you've answered the questions. What I think I'm hearing you say is that you now have a chairman who is not a consensus builder, who prefers to go the way of voting, that you have a lot of government interference, that your governance manual is not being used, and that you do have problems with representation on the board. These issues can be solved by the government today, they just need to do what needs to be done.
I'm not going to question you further on that but I do have a question involving young Nova Scotia workers. I'm just wondering if somebody from the three of you can answer a question for me. I was reading in the manual that one in 10 Nova Scotians covered by workers' compensation had an injury on the job last year and that workplace injuries are occurring in every sector of the economy, and that among young workers, those under 25, the injuries are increasing, and that the WCB did commit over $3 million towards a new program for the prevention of workplace injuries in Nova Scotia. The question is, how much of that money was spent specifically earmarked for youth injury prevention and if you can give me an idea of how that was spent? How much and how was it spent, on what programs, if any?
MR. WHITE: I can't recall the details of how the budget broke down but I know - and I think I can speak for my colleagues on this - the emphasis on prevention and prevention education at WCB is one of the more exciting, positive developments that we have seen in some while. The difficulty, as with everything, is advertising, social marketing, you never know how effective it's going to be. You only know that unless you do it, you won't have any opportunity to have an effect. I think the board was very gung-ho and very excited and it was very welcome to get that additional mandate.
I know that there was some advertising specifically directed towards young people, and that's quite proper given the statistics as you have related them, but I don't know how that breaks down. Maybe my other colleagues do.
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MS. LONG: I don't have an exact figure but I don't think it would be too difficult for you to get it from the Workers' Compensation Board.
MS. MASSEY: You're referring to there was around $500,000 spent on an advertising campaign? That's a different amount?
MR. WHITE: That's the most recent social marketing campaign, yes.
MS. MASSEY: Did that include any advertisements aimed at youth?
MR. WHITE: That was the WorkSafe Program with the advertising. There were a couple of television ads and some posters. I think there is also a Web site, worksafe.ca, or something.
MS. MASSEY: I assume it would be too early then for numbers to have come in on whether any of this is having any effect on these injuries going down. It would be too early for anything like that?
MR. WHITE: I presume so.
MS. MASSEY: I just wanted to make a comment. On the weekend I was going through - in the United States they have the Occupational Health and Safety - OSHA I think it's called. They have a fantastic Web site there for young workers, it's interactive. I'm just hoping it would be something that we could look at here in Nova Scotia, it's absolutely far superior to what, I believe, we have here, that people have access to here. (Interruption) It's on the record.
MR. CHAIRMAN: Thank you, Ms. Massey. Mr. MacKinnon.
MR. MACKINNON: I think the point has been made and I'd like to put it in the form of a motion that we invite the Minister of Environment and Labour and the chairman and deputy chairman to appear before this committee, so as to provide a balanced view on many of the major issues that have been raised here. We compliment the Premier on this Come to Life campaign, I think we'd like to get WCB off life support as quickly as possible, so I move this motion.
MR. CHAIRMAN: Are you ready for the question? Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
Mr. Corbett, the last word to you.
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MR. CORBETT: To the board members, the three options laid out for chronic pain, there are options one, two and three, I won't go into them but I presume you know what the options are. Were they presented to you in no particular order and how much input did you have in each one of these steps? I know we're short of time but I'm trying to get that out. Step one was AMA 5th modified, MLDA and AMA 4th.
MS. LONG: The staff at the board generally prepares policy for the board of directors to consider. I forget offhand what the particular order was but generally, when the staff prepares policy, they also prepare a recommendation. Whether the board of directors follows that recommendation or not is really up to the board of directors; sometimes they do and sometimes they don't.
MR. CHAIRMAN: That pretty well concludes the time allotted for the presentations and questioning of the former members of the Workers' Compensation Board. We thank you on behalf of the committee for coming in and presenting today.
The committee does have some further business that we have to deal with: the next meeting and the witness for the next meeting. April 26th we have scheduled the Department of Education regarding special education. That is an issue that has been on the agenda for quite some time, so I guess they will be in. We will also have the ABCs that day, as well.
We have a letter that just came in on March 23rd so you people may not have it. It's dealing with the issues facing students in universities, tuition fees, funding and financial barriers. Apparently there was a poll done that came up with some numbers for Danielle Sampson from the Canadian Federation of Students; Linda Van Esch, the Association of Nova Scotia University Teachers; and Joan Jessome of NSGEU. They want to come in to present some of the results of that poll. What are the wishes of the committee? That's okay?
SOME HON. MEMBERS: Agreed.
MR. CHAIRMAN: Okay, we'll work on that for probably the May meeting.
The meeting is adjourned.
[The committee adjourned at 10:57 a.m.]
