The Court of Appeal Clarifies the Rules for Transferring Benefit Costs

On January 24, 2018 the Quebec Court of Appeal, in the matter of Commission de la santé et de la sécurité du travail v. 9069-4654 Québec inc., 2018 QCCA 95,  rendered a highly anticipated decision on the interpretation of section 326 of the Act respecting industrial accidents and occupational diseases (the “Act”). This decision was all the more welcomed since, pending clear judicial guidance on the rules for the transfer of benefit costs, a self-imposed moratorium on such transfers by the Commission des normes, de l’équité, de la santé et de la sécurité du travail (the “Commission”) had prevailed since 2015.

The facts

The facts underlying the decision are relatively straightforward. In August 2011, a worker suffered an employment injury. In February 2012, his physician authorized a progressive return to work, during which time the worker’s conduct was deemed unacceptable by his employer, who decided to terminate his employment. As the worker’s injury had not been consolidated by the time of his dismissal, the Commission de la santé et de la sécurité du travail (the “CSST”, since replaced by the Commission) resumed income replacement indemnity (“IRI”) payments. The employer then requested that the costs associated with the IRI payments be transferred, on the grounds that it was being unjustly burdened by the costs that were being imputed to its file. The CSST denied this application, and the decision was therefore contested by the employer before the Commission des lésions professionnelles (the “CLP”, since replaced by the Tribunal administratif du travail (the “TAT”)).

The previous decisions

At the hearing before the CLP, the employer argued that the costs of payments made after the employee’s dismissal should not be imputed to it because they do not stem from the employment injury (s. 326, para. 1 of the Act) but also because it was being unduly burdened by the imputation of the IRI costs to its file ((s. 326, para. 2 of the Act).

The administrative judge concluded that section 326, para. 2 of the Act did not apply in this instance because it applies only in the case of a total transfer of the cost of the benefits. However, the judge found that the employer’s request was justified by virtue of the first paragraph of section 326.

The Commission applied to the Superior Court for a judicial review of this decision, but the Court dismissed the application.

The Commission then appealed the Superior Court’s decision to the Court of Appeal.

The Court of Appeal decision

For reasons written by Justice Vézina, the Court of Appeal accepted the Commission’s appeal and sent the file back to the TAT to be decided de novo.

First of all, the Court rejected the CLP’s restrictive interpretation of paragraph 2 of section 326, as in its view, nothing justified the conclusion that this provision applied only in the case of a total transfer of the costs of the benefits.

Second, the Court found that as the Act provides that all benefits paid must be so “by reason of an industrial accident”, the conclusion that the wording of the first paragraph of section 326 excludes certain benefits, is not a reasonable interpretation.

Finally, the Court put an end to the debate in the case law and confirmed that the one-year period to apply for a transfer of benefit costs begins to run on the day the right to the exemption arises, which in this case, was the date of dismissal rather than the date of the injury.

For the foregoing reasons, the Court of Appeal decided that the file should be returned to the TAT for a determination of whether or not the employer was in fact unduly burdened by the imputation of the costs of the IRIs paid to the worker after his dismissal. In other words, while the worker’s dismissal was not contested, the legitimacy of his dismissal should nevertheless be established if the employer is to successfully claim that it is being “unduly” burdened.

After a wait of several years, there is every reason to believe, now that this decision has been rendered, that the moratorium imposed by the Commission will be lifted, and that thousands of applications for transfers of benefit costs will be dealt with in the upcoming months.

Recommendations

When a temporary assignment or progressive return to work is interrupted because of circumstances that are independent of both an employment injury and the employer (e.g. unrelated personal disease, dismissal, resignation, retirement, etc.) we recommend that you take the following few steps, which could have a major impact on your financing file.

First of all, in our view, it would be prudent to contest the legitimacy of IRI payments when they are being made for reasons other than the employment injury.

Second, when an occurrence or circumstance, independent of the injury, effectively interrupts the temporary assignment or progressive return to work, we recommend that you apply, within the year following such interruption, for a transfer of the benefit costs imputed to your file, pursuant to the provisions of paragraphs 1 and 2 of section 326 of the Act.

Finally, in support of your application, we recommend that you prove to the Commission or the Tribunal the origin of the alleged undue burden.

Thus, you will need to establish, through clear and objective evidence, that the interruption of the temporary assignment or progressive return to work is secondary to a cause other than the injury, but for which the temporary assignment or progressive return to work would not only have been offered to the worker, but would have been performed by the latter.