Highlights of Noteworthy Decisions

Decision 1562 12
A. Patterson
  • Downside risk
  • Jurisdiction, Tribunal (experience rating)
  • Experience rating (moving from MAPP to NEER or CAD-7)

Prior to 2007, the employer was in the MAPP experience rating program. It was then transferred to the CAD-7 experience rating program because its average annual premiums exceeded $25,000. Workers of the employer had accidents in 2003 and 2004. The 2003 claim had benefit pay-outs in 2003, 2004 and 2005. The 2004 claim had benefit pay-outs in 2004, 2005 and 2006. Up to and including 2006, the employer was rated under MAPP. In 2007, when the employer migrated to CAD-7, the employer was assessed with a CAD-7 surcharge for 2006, based on accident costs in 2004 and 2005.

The employer had appealed to the Appeals Resolution Officer at the Board and the ARO had allowed the employer's appeal in part. The employer appealed to the Tribunal. The Board's chief actuary submitted that the ARO should not have allowed the employer's appeal even in part. This raised a downside risk to the employer of continuing with the appeal. However, the employer decided to proceed.
In a preliminary matter, the Vice-Chair found that the Tribunal had jurisdiction to consider the appeal. Section 123(2) para. 4, provides that the Tribunal does not have jurisdiction on appeal from decisions made under s. 81(1) to (6) and s. 83(1) and (2). Thus, the Tribunal has jurisdiction to consider appeals related to s. 83(3), dealing with application of the experience rating system to a particular employer.
The employer submitted that, under a plain reading of Board Operational Policy Manual, Document No. 13-02-04, when a firm migrates from MAPP to CAD-7, the calculation of a surcharge or refund is done by experience rating the accident costs of the valuation year only. In this case, the valuation year was 2006. The Board's chief actuary submitted that there is no authority to differentiate the calculation for firms which have migrated from firms which have not migrated.
The Vice-Chair found that the position of the actuary was the more correct application of the Board policy. The phrase relied on by the employer that "the accident costs of the valuation year are experience rated by either NEER or CAD-7" is written in the context that is intended to clarify that the accident costs of the valuation year are not adjusted under MAPP but, rather, are experience rated under CAD-7 (or NEER). The policy does not state that it is only the accident costs of the valuation year that are experience rated under CAD-7 (or NEER).
For any given year, a firm is either in MAPP or CAD-7. It cannot be in both simultaneously. However, pre-migration MAPP and post-migration CAD-7 calculations will be based upon the actual cost claims of an overlapping period. In this case, the 2006 MAPP premiums and adjustment were based upon the years 2003, 2004 and 2005; the 2007 CAD-7 premiums and adjustment were based on 2005 and 2006. The claims costs for 2005 were taken into account for calculations under both MAPP and CAD-7, but this did not mean that the employer paid premiums twice with respect to claims costs in 2005, nor did it mean that the employer was double experience rated for 2005. The employer did not pay a CAD-7 adjustment for 2006; rather, the 2007 premiums and adjustment took into account actual claims costs for 2005 and 2006.
The Vice-Chair overturned the decision of the ARO. The appeal was dismissed.