Neutral Citation: 1993 ONICDRG 69

File No. A-002264

ONTARIO INSURANCE COMMISSION

BETWEEN:

ANDREAS KOSMOPOULOS

Applicant

and

VICTORIA INSURANCE COMPANY OF CANADA

Insurer

DECISION

Issues

The Applicant, Andreas Kosmopoulos, was injured in a motor vehicle accident on April 10, 1991. He applied for and received accident benefits from Victoria Insurance, payable under Ontario Regulation 672 (the "No-Fault Benefits Schedule"), enacted under the Insurance Act, R.S.O. 1990, c. I.8.

Weekly income benefits were paid to Mr. Kosmopoulos until April 4, 1992, when Victoria Insurance terminated this benefit. Mediation was unsuccessful in resolving the dispute between Mr. Kosmopoulos and Victoria Insurance, and Mr. Kosmopoulos applied for arbitration under the Insurance Act.

The issues in this hearing are:

1. What is the length of time that Mr. Kosmopoulos is entitled to weekly income benefits, and what is the amount of such benefits?

2. Does Mr. Kosmopoulos have post-accident income which is deductible from his weekly benefit?

3. Was Mr. Kosmopoulos overpaid benefits?

The Applicant also claims interest on any outstanding amounts owing, a special award, and his expenses incurred in the hearing.

Result:

1. Mr. Kosmopoulos is entitled to a benefit of $763.16 per week until January 22, 1992.

2. Mr. Kosmopoulos has post-accident income which may be deducted from his benefits.

3. Mr. Kosmopoulos has been overpaid $26,125.36, which represents the post-accident earnings and benefits paid to Mr. Kosmopoulos for which he was ineligible.

Mr. Kosmopoulos is not entitled to a special award, interest or his expenses.

Hearing:

The hearing was held in North York, Ontario, on June 24 and 27, July 14 and September 22, 1993, before me, Fred B. Sampliner, arbitrator.

Present at the Hearing:

Applicant:

Andreas Kosmopoulos

Applicant's

Frank Loreto

Representative:

Barrister and Solicitor

Insurer's

Gregory P. Heckel

Representative:

Barrister and Solicitor

Witnesses:

Andreas Kosmopoulos - applicant

George Kosmopoulos - applicant's son

Bessy Kosmopoulos - applicant's spouse

Maria Beneventano - claims specialist

Darren Bonk - investigator

Phillip J. Turner - chartered accountant

Dr. Michael Hall - physician

Mark McDougall - investigator

Exhibits:

The parties' thirteen exhibits are listed in Appendix A.

The proceedings of June 24 and 27, 1993 were recorded by Mr. Glen Horenblas, official examiner of Rosenberger, Weir & Macdonald.

Mr. Kristos Georgiou provided translation services for the testimony of Bessy Kosmopoulos.

Evidence and Findings:

On April 10, 1991, Mr. Kosmopoulos' car was stopped at a red light. His automobile was struck by a pickup truck, which left the accident scene without stopping.

Mr. Kosmopoulos testified that he was stunned by the collision. He got out of his car and, after inspecting his damaged bumper, tail light assembly and gas filler, Mr. Kosmopoulos drove his vehicle home.

Mr. Kosmopoulos stated that his neck and lower back became sore that evening. He claims that since this accident he has been unable to return to his work as a self-employed leathercutter, and that he qualifies for ongoing weekly benefits under section 12 of the No-Fault Benefits Schedule.

Section 12 provides for payment of a weekly benefit to an insured person who was employed at the time of the accident or has a recent record of employment. If the insured person is substantially disabled from performing his or her essential job tasks, then he or she is entitled to a weekly benefit from one week after the disability commences until he or she is fit to return to work.

On the morning after the accident, Mr. Kosmopoulos did not go to work. He went to the Full Care MD Clinic ("Clinic") near his home. He had used the doctors at the Clinic as his family physicians prior to the accident. In a medical report dated April 19, 1991, Dr. O'Byrne of the Clinic diagnosed Mr. Kosmopoulos with a lumbosacral strain. He ordered x-rays and gave Mr. Kosmopoulos a prescription for analgesic medication. The prognosis for Mr. Kosmopoulos' recovery was six weeks. I accept Dr. O'Byrne's opinion that Mr. Kosmopoulos sustained a back injury from the accident which prevented him from working. I must determine the duration of his disability.

Since the motor vehicle accident, Mr. Kosmopoulos has continuously complained to his family doctors and other health practitioners of low back and neck pain. The medical evidence reveals no objective findings of back or neck injury. The diagnoses of soft tissue injury to Mr. Kosmopoulos' neck and lower back are based upon his subjective complaints.

Credibility:

Because Mr. Kosmopoulos' subjective complaints of pain cannot be objectively measured, his credibility was an issue throughout the proceedings. In order to assess Mr. Kosmopoulos' credibility, I must compare his testimony about his condition with the views expressed by his family doctors in their clinical notes and records.

Mr. Kosmopoulos admitted in his testimony that he had made a workers' compensation claim, but he denied that he had previously complained to his doctor about his back. The June 4, 1991 medical report from the Clinic states that Mr. Kosmopoulos "has had back pain for about a year" before the automobile accident, and that the Clinic had treated him for a similar condition "since summer of 1990".

The clinical notes and records of the Clinic indicate that, from July 1990 until October 1990, Mr. Kosmopoulos' complained of low back pain and had treatment for a work injury. On October 16, 1990, the entry states, "back pain persisting, unable to work unless takes anti-inflammatory, and only good for 2-3 hrs. of work." The doctor diagnosed chronic back pain. Thus, Mr. Kosmopoulos' testimony denying any pre-existing low back condition is contradicted by his own family doctors' clinical notes.

When confronted on cross-examination by the statements contained in his doctors' notes, Mr. Kosmopoulos changed his story. According to Mr. Kosmopoulos, his back pain from the June 1990 work injury was not really bad. He also explained that the April 1991 automobile accident hurt a different part of his back than the work injury.

However, in this regard, Mr. Kosmopoulos' testimony is again contradicted by the notes of his family physicians. Between June 1990 and October 16, 1990, Mr. Kosmopoulos attended at the Clinic 16 times. His doctors recorded continuous low back complaints. They treated him with ultrasound and medication for five months. The diagnosis was chronic low back pain. Contrary to Mr. Kosmopoulos' assertion, these treatment records indicate to me that his work injury chiefly affected his low back and the pain from this injury was not insignificant.

After the automobile accident, the Canadian Back Institute ("CBI") examined and tested Mr. Kosmopoulos. The August 26, 1991 CBI report states, "This patient reports no previous history of low back or neck pain, or any involvement in an accident." I accept the CBI statement as an accurate reflection of what Mr. Kosmopoulos said at the examination. Mr. Kosmopoulos' failure to disclose his prior injury to CBI is another instance of his unreliability.

As a result of Mr. Kosmopoulos' inconsistent, contradictory statements, recanted testimony, his evasiveness and general demeanour during questioning, I suspect he has fabricated or exaggerated his evidence about his injury. In any event, I do not find his testimony credible or reliable, and I do not accept his evidence. My findings about his credibility are also affected by the evidence regarding his employment after the accident, discussed below.

Disability Period:

Mr. Kosmopoulos testified that he has been a leathercutter all of his working life. At the time of the accident, he was a self-employed, independent contractor, working for a company called Avon Sportswear. He stated that almost all of his leathercutting was done at the Avon factory before the accident.

His job duties consisted of picking up and sorting through bales of skins. While standing, Mr. Kosmopoulos would place a skin on his work table and use his knife to cut and trim the leather against a pattern.

I assess Mr. Kosmopoulos' period of disability bearing in mind the surveillance evidence. Mark McDougall, an investigator with McNulty and Associates Investigations Ltd., testified. I found Mr. McDougall to be a reliable and credible witness. He conducted surveillance of Mr. Kosmopoulos by video camera and personal observation during January 1992, and provided a written report.

On January 23, 1992, Mr. Kosmopoulos' car was seen parked in the lot at Avon Sportswear in the morning and the late afternoon. At the end of the work day, Mr. Kosmopoulos was observed exiting the factory and driving home. During the early morning hours of January 27, 1992, the investigator followed Mr. Kosmopoulos most of the way from his home to Avon Sportswear. The investigator briefly lost sight of Mr. Kosmopoulos' car in traffic, but drove straight to the Avon factory, where he found the vehicle parked in the company lot. At 1:00 that afternoon, he returned to observe Mr. Kosmopoulos' car still in the Avon lot. On January 28, 1992, at around 10:00 a.m., the investigator again found Mr. Kosmopoulos' car parked in the Avon lot. Mr. McDougall called Avon Sportswear that day and asked for Mr. Kosmopoulos, who was summoned to the phone. The following morning his car was seen again at the company parking lot.

Darren Bonk from Signum Corporate Services testified about his surveillance of Mr. Kosmopoulos. Mr. Bonk was a reliable and credible witness, whose evidence consisted of his personal observations, videotape and a written report. At about 7:30 a.m. on April 28 and 29, 1992, he followed Mr. Kosmopoulos from home to Avon Sportswear, where Mr. Kosmopoulos entered the workplace. Mr. Kosmopoulos' vehicle was also observed in the Avon Sportswear lot around noon on April 30, 1992.

This surveillance evidence clearly documents specific instances where Mr. Kosmopoulos and/or his personal vehicle were seen at the workplace. It is substantially different from the surveillance evidence tendered in Emmanuel Ntiri and Prudential of America General Insurance Company (Canada) (O.I.C. File No. A-002213, dated April 19, 1993). In that case, I found that the Insurer had not accurately identified the Applicant at the workplace or working. The investigator had seen the Applicant's cousin, who was mistakenly identified as the Applicant. Here, I viewed the videotape, read the surveillance reports and heard testimony from the two investigators, which conclusively persuaded me that Mr. Kosmopoulos was going to work.

Mr. Kosmopoulos did not adequately explain his appearances at Avon Sportswear. His counsel argued that Mr. Kosmopoulos was never observed performing his duties inside the factory, and that I should not infer that Mr. Kosmopoulos went to Avon to work. Counsel suggested that Mr. Kosmopoulos could have been visiting friends at work during the six days he was observed there.

In my view, Mr. Kosmopoulos must offer a reasonable explanation for his appearance at the workplace if he is to maintain his disability claim beyond January 22, 1992. The suggestion that he spent many hours during consecutive days visiting friends at the factory is not plausible, and he has offered no evidence to otherwise explain or refute Victoria Insurance's evidence. Thus, I conclude that Mr. Kosmopoulos was substantially able to perform the essential tasks of his employment as of January 22, 1992.

This finding is further buttressed by the medical evidence. Again, I rely on the clinical notes and records of the doctors at the Clinic. They treated Mr. Kosmopoulos since the time of his work injury, and I find the notes of their continuous treatment before and after the accident helpful.

On May 31, 1991, Mr. Kosmopoulos had his seventh appointment with the Clinic in as many weeks since the April 10th accident. He had been taking physiotherapy since the first appointment, and had continued to complain about his sore back. The doctors' notes reflect that he had not returned to work, using these words, "I don't know what to do with this man, he seems well but says he cannot work."

Eight weeks after the accident, Mr. Kosmopoulos' family physician at the Clinic filed another medical report, dated June 4, 1991. Significantly, it indicates that Mr. Kosmopoulos had "no limitations on examination". The doctor's finding directly conflicts with Mr. Kosmopoulos' self-evaluation of his condition at the time of the examination.

The statements contained in the medical reports and notes of the Clinic suggest that Mr. Kosmopoulos' pain did not prevent his return to work after June 4, 1991. I am unwilling to base my findings upon this evidence alone, but I do find that Mr. Kosmopoulos had made considerable progress in his recovery by June 1991.

Dr. Michael Hall examined Mr. Kosmopoulos twice. At the first examination on July 4, 1991, Dr. Hall felt that Mr. Kosmopoulos would not be able to cut leather all day with his arms outstretched over the worktable. The doctor recommended a structured exercise program. Dr. Hall's recommendations for an exercise program were not followed.

On January 30, 1992, Dr. Hall examined Mr. Kosmopoulos for a second time. Of significance are Dr. Hall's observations of Mr. Kosmopoulos' hands:

It is noted that his hands remain thick in the skin, quite stained, and he has an unusual thick callus at the tip of the right index finger and to a lesser extent the left index finger. He says this is the result of using a knife at his occupation. I am surprised that this does not appear to have thinned or disappeared during the nine months he has not, I am told, been able to work.

From Dr. Hall's observations, and the surveillance evidence indicating Mr. Kosmopoulos' presence at work beginning in January 1992, I conclude that Mr. Kosmopoulos was working and able to perform the essential tasks of his employment by January 22, 1992, while claiming to be disabled from performing his job.

Quantum & Post-Accident Earnings:

At the outset of the hearing, the parties agreed that Mr. Kosmopoulos' benefit was $763.16 per week for the period of his disability (Exhibit 8). This benefit is greater than the standard $600 maximum because Mr. Kosmopoulos had purchased optional coverage under his policy. The parties dispute whether Mr. Kosmopoulos earned any post-accident income which can be deducted from this benefit.

Section 15 of the No-Fault Benefits Schedule provides:

The insurer may deduct from any benefit payable under this Part 80 per cent of any income received or available from any occupation or employment subsequent to the accident.

Victoria Insurance claims that Mr. Kosmopoulos continued to earn income from Avon Sportswear after the accident. Mr. Kosmopoulos claims that he could not work after the accident, and that his wife and son did all of the leathercutting and made this money.

Again, this case stands in sharp contrast to the evidence presented on post-accident earnings in the Ntiri case. Mr. Ntiri's newspaper route remained in his name after his automobile accident. The evidence indicated that he did not participate in delivery or collection of the proceeds to any significant degree. The work was managed by other people, and in that case I could find no evidence that Mr. Ntiri received money from the business.

In this case though, Avon Sportswear has provided a summary of money paid to Andreas Kosmopoulos from September 1990 to April 1993 in Exhibit 1, Tab 2. Mr. Kosmopoulos did not deny that he received this money. He testified that until the April 10, 1991 accident he earned all of the income listed on this schedule, and after the accident he earned none of the income listed by Avon Sportswear as paid to him. According to Mr. Kosmopoulos, his wife and son worked and earned all of the money, and he was simply the conduit. I do not consider Mr. Kosmopoulos credible or reliable and I do not accept this explanation.

The Applicant's wife and son testified that they cut leather for Avon Sportswear at the family home after the accident. Mr. Kosmopoulos would pick up and drop off the work at the Avon Sportswear factory. The couple's adult son, George, testified that after working all day he would arrive home in the late afternoon or early evening, where he and his mother would cut leather under his father's supervision. The work was tedious and often times went into the late night hours.

Bessy Kosmopoulos, the Applicant's wife, stated that she did not work outside of the family home after her husband's accident. Mrs. Kosmopoulos testified that she assisted her son George in the evening leathercutting sessions after the accident and also worked alone during the day. She said that her husband was unable to help in this work, other than by providing supervision. Neither George or Mrs. Kosmopoulos stated they were paid for their work.

While I am prepared to accept the evidence that Mr. Kosmopoulos was assisted in the leathercutting work by his wife and son during some portion of the disability period, in my view, the earnings from his business are still "available" to him within the meaning of section 15 of the No-Fault Benefits Schedule. Mr. Kosmopoulos is an independent contractor whose choice to complete his work by purchasing outside labour or using family members is entirely within his discretion. He, and not his workers, controlled the work and received the fruits of that labour. Income which is clearly received by an applicant cannot be attributed to another person, particularly a family member, by viva voce testimony alone. Otherwise it would be impossible to reliably assess earnings. Since Mr. Kosmopoulos received the money from Avon Sportswear, it is deductible by Victoria Insurance, in accordance with section 15.

The parties dispute the amount of Mr. Kosmopoulos' post-accident earnings. The tax returns of Mr. and Mrs. Kosmopoulos reported that both husband and wife received post-accident income from the Avon Sportswear. Mr. Kosmopoulos admitted that he structured his financial affairs to minimize his taxes, and he argued that I should disregard both his and his wife's tax returns. Considering his admission, and in view of Mr. Kosmopoulos' unreliability, I agree and find that the tax returns which he helped to prepare are, in fact, unreliable indicators of his post-accident earnings.

This leaves the evidence from Avon Sportswear as the only reliable source of the amount of Mr. Kosmopoulos' post-accident earnings. Victoria Insurance submitted two documents from Avon Sportswear. The first is a handwritten monthly summary of money Avon paid to Andreas Kosmopoulos during 1991 (Exhibit 1, Tab 3). For the period from January to April 1991, the initials "AK" appear next to the bracketed months, and the initials "BK" next to the bracketed remaining months of 1991. This document purports to attribute post-accident earnings to "BK", Bessy Kosmopoulos. However, the document is not signed or dated, and I do not regard it as the best evidence, compared to the second summary provided.

The second summary was accompanied by a signed and dated cover letter from Avon Sportswear. Typed under "Monies Paid To Andreas Kosmoplous [sic] From Sept./90 - April/93" are weekly amounts. Mr. Kosmopoulos did not dispute that he received these monies. I find that the monies listed in this schedule are "received or available" to Andreas Kosmopoulos, the Applicant, and may be deducted by Victoria Insurance from his weekly benefits during the disability period.

Repayment:

When Mr. Kosmopoulos' post-accident earnings are deducted, an overpayment arises. Section 27 of the No-Fault Benefits Schedule provides for repayments to insurers:

(1) A person must repay to the insurer any benefit received under this Schedule that is paid to the person through error or fraud.

The assessment of the overpayment begins with a review of the post-accident earnings. The schedule provided by Avon Sportswear lists two payments to Mr. Kosmopoulos for the month of April 1991. I heard no evidence when, during April, he received each payment, and I am not prepared to speculate. No May 1991 payment is listed. Beginning from June 1991 until the third week of January 1992, Avon Sportswear made payments to Mr. Kosmopoulos totalling $23,117.20, of which eighty per cent or $18,493.76 is deductible from his benefits and constitutes an overpayment.

The period of time that Mr. Kosmopoulos was paid but ineligible for benefits must also be considered in an assessment of an overpayment. The parties agree that Mr. Kosmopoulos was paid $40,294.83 until benefits were terminated on April 4, 1992. Since I have held that Mr. Kosmopoulos was fit to work by January 22, 1992, his benefits for the ten (10) weeks between January 22 and April 4, 1992 ($763.16 x 10 = $7,631.60) must be repaid to Victoria Insurance. Thus, the total repayment due to Victoria Insurance from Andreas Kosmopoulos is $26,125.36, exclusive of interest that Victoria Insurance may be entitled to under section 27(4) and (5) of the No-Fault Benefits Schedule.

Expenses:

Mr. Kosmopoulos seeks an award of his expenses of this arbitration. In Ralph McCormick and Economical Mutual Insurance Company, (O.I.C. File No. A-000139, dated October 2, 1991), Senior Arbitrator Naylor said that arbitrators should exercise discretion in ordering expenses, having regard to the intent and purpose of the no-fault scheme. She felt that the process was established to facilitate relatively speedy and inexpensive access to adjudication.

Accordingly, it is appropriate to award an applicant his or her expenses, unless, in the circumstances of the particular case, it is determined that the application for appointment of an arbitrator was manifestly frivolous or vexatious, or that the applicant's conduct unreasonably prolonged the proceedings.

I agree with this view, but in this case I cannot award expenses. Mr. Kosmopoulos decided to proceed with the hearing in the face of substantial evidence provided to him beforehand by Victoria Insurance that he earned post-accident income, and was working during the period of his alleged disability. He failed to provide any reasonable explanation for his presence at Avon Sportswear for the surveillance periods. When faced with unexplained evidence that an applicant has worked and received benefits at the same time, I do not feel that an award of legal expenses is appropriate.

I am mindful of the need to foster an open and friendly adjudicative system for no-fault benefits. The insured public needs to know that in most cases it can expect reimbursement for expenses where a claim is legitimate. However, it is my view that Mr. Kosmopoulos' claim is not legitimate. He continued to assert his ongoing disability claim despite the unrefuted evidence that he worked. The blatant inconsistencies between the evidence of Mr. Kosmopoulos and his physicians also undermine his credibility.

An applicant who chooses to proceed with a claim in the face of clear evidence indicating he has worked while receiving benefits cannot automatically expect that his expenses will be reimbursed. This case is similar to Marcel Richardson and Royal Insurance Company, (O.I.C. File No. A-001141, dated November 3, 1992), where the Applicant attempted to perpetrate a fraud by simultaneously working and collecting benefits. Like Mr. Kosmopoulos, he denied the insurance company's evidence when confronted with it. I agree with Arbitrator Palmer that expense awards should be denied in these circumstances.

Special Award:

I am satisfied that Victoria Insurance acted reasonably in paying Mr. Kosmopoulos his benefits. He is not entitled to a special award.

Order:

1. Mr. Kosmopoulos is not entitled to further weekly benefits.

2. Mr. Kosmopoulos must repay Victoria Insurance $26,125.36 plus interest.

Mr. Kosmopoulos is not entitled to a special award, interest or his expenses.

November 10, 1993

Fred B. Sampliner Arbitrator

Date

APPENDIX "A"

Exhibit 1

Benefit Payment Brief, Tabs 1 to 10

Exhibit 2

Medical Brief of Applicant, Tabs 1 to 15

Exhibit 3

Letter from Maria Beneventano, Insurer, to Applicant, dated August 15, 1991

Exhibit 4

Payment Receipt from Workers' Compensation Board, dated 2-10-90

Exhibit 5

Damage Appraisal from Colorama Auto Body, dated April 12, 1991

Exhibit 6

Accident note of Mr. Kosmopoulos

Exhibit 7

Workers' Compensation Board File (19 pages)

Exhibit 8

Confirmation of Earnings from Avon Sportswear (and calculation tape), dated April 24, 1991

Exhibit 9

Letter from Maria Beneventano, Insurer, to Applicant, dated May 5, 1992

Exhibit 10

Report of McNulty & Associates Investigations Ltd., dated January 31, 1992

Exhibit 11

Surveillance Videotape (McNulty & Associates)

Exhibit 12

Report of Signum Corporate Services Inc., dated April 30, 1992

Exhibit 13

Surveillance Videotape (Signum Corporate Services Inc.)