POA Decision – 2001/10/15-03 – Calculation of Interest
The Panel of Administrators approved amendments to the Board's policies on interest, as provided in policy item #50.00 of the Rehabilitation Services and Claims Manual and policy no. 40:70:40 of the Assessment Policy Manual. There are several provisions in the Workers Compensation Act that provide for interest in specific situations concerning compensation, assessment and prevention matters. Generally, the Act requires interest to be paid where a decision of the Appeal Division is to the benefit of a worker or employer. This entitlement is limited to the period of time that the matter was under appeal. However, the Board determined that it has discretion to pay interest in situations other than those expressly provided for in the Act. Board policy provides for the interest rate, the method of calculation, and the scope of entitlement. With respect to compensation matters, the Board's previous policy provided interest if a retroactive wage-loss or pension lump-sum payment was made to a worker or an employer for a condition that was previously overlooked or for which the Board previously decided that no payment was due. The only restriction to interest entitlement was that the period of retroactivity had to be greater than one year. The rate of interest was equal to the average rate of return on the Board's total investment portfolio. The amended policy will calculate interest in a manner consistent with the Court Order Interest Act. This Act provides simple interest at a rate equal to the prime lending rate of the banker to the government (i.e., CIBC). With respect to compensation matters, more restrictive criteria for determining when it is appropriate to pay interest in situations other than those expressly provided for in the Act have been developed. Interest will be provided if a "blatant Board error" necessitates a retroactive wage-loss or pension lump-sum award. This test is presently used to determine when interest may be provided to employers due to an overpayment of assessment. For an error to be "blatant" it must be an obvious and overriding error. Generally, interest will be paid back to the commencement date of the retroactive benefit award. Notwithstanding, in no case will interest accrue for a period greater than twenty years. The amendments came into effect on November 1, 2001.