Neutral Citation: 1994 ONICDRG 43
File No. A-007087
ONTARIO INSURANCE COMMISSION
BETWEEN:
BRENDA M. LAUTAOJA
Applicant
and
GENERAL ACCIDENT INDEMNITY COMPANY
Insurer
DECISION
Issues:
Mr. Norman Clipperton was involved in a motor vehicle accident on June 11, 1993. He was treated in the hospital, but died on August 7, 1993 as a result of his injuries. Mr. Clipperton's niece, Brenda Lautaoja, applied to the General Accident Indemnity Company ("General Accident") and received accident benefits, payable under Ontario Regulation 6721.
Mrs. Lautaoja claims that at the time of his accident, Mr. Clipperton was her dependant and, therefore, she is entitled to death benefits of $20,000 under section 11 (2) (d) (i) of the Schedule. She also claims that she cared for Mr. Clipperton after his accident and, as a result, is entitled to care benefits of $2,000 under section 7(1)(a) of the Schedule. General Accident denies that Mrs. Lautaoja is entitled to these benefits.
The parties participated in mediation, but the dispute was not resolved. Mrs. Lautaoja then applied for arbitration. The issues in this hearing are:
Is Mrs. Lautaoja entitled to death benefits of $20,000 under section 11 (2) (d) (i) of the Schedule?
Is Mrs. Lautaoja entitled to care benefits of $2,000 under section 7(1) of the Schedule?
Mrs. Lautaoja also claims interest on any outstanding amounts owing, and her expenses related to the arbitration.
Result:
Mrs. Lautaoja is not entitled to death benefits under section 11 (2) (d) (i) of the Schedule.
Mrs. Lautaoja is not entitled to care benefits under section 7(1) of the Schedule.
General Accident shall pay Mrs. Lautaoja's expenses related to the arbitration, calculated according to Ontario Regulation 664, Dispute Resolution Expenses.
Hearing:
The hearing was held in Kirkland Lake, Ontario, on April 21, 1994, before me, David R. Draper, Arbitrator.
Present at the Hearing:
Applicant:
Brenda M. Lautaoja
Applicant's
Murray N. Ellies, Q.C.
Representative:Barrister and Solicitor
Insurer's
Gregory P. Heckel
Representative:Barrister and Solicitor
Witnesses:
Pauline England, Home Care Worker
Brenda Lautaoja, Applicant
Exhibits:
Six exhibits were filed and are listed in Appendix A.
Reasons for Decision:
1. Background
Mrs. Lautaoja is married and has three children, ages 13, 11 and 8. She and her husband are equal partners in Martin G. Lautaoja Construction Ltd., which operates out of their home. Mrs. Lautaoja is the secretary-treasurer, and is primarily responsible for keeping the books, answering the phones and clerical duties. Mr. and Mrs. Lautaoja each receive a salary of $1,000 a month from their business.
Mr. Norman Clipperton was Mrs. Lautaoja's uncle; his wife and Mrs. Lautaoja's mother were sisters. He had various health problems, including diabetes, a susceptibility to pneumonia and bronchitis as a result of contracting malaria during his military service, and mobility problems resulting from a serious industrial accident in 1959.
Mr. Clipperton's wife died in September of 1990. Mrs. Lautaoja described him as "emotionally devastated". In addition, his health problems were getting worse. I accept Mrs. Lautaoja's evidence that she and Mr. Clipperton were very close, and although he had other relatives in the area, she and her husband assumed primary responsibility for helping him.
In 1992, Mr. Clipperton had his left knee replaced, and Mrs. Lautaoja started visiting him every day. She helped him with various chores and kept him company. She was not paid for her services. On September 23, 1992, Mr. Clipperton executed a general Power of Attorney giving Mrs. Lautaoja authority to act on his behalf. He also moved his savings into joint bank accounts with Mrs. Lautaoja.
In September 1992, Mr. Clipperton was visited by a counsellor from the Department of Veterans Affairs, who applied on his behalf to the Canadian Pension Commission for an "attendance allowance" for assistance with his daily activities. On November 23, 1992, a Commissioner at the Canadian Pension Commission decided:
This seventy-nine-year-old pensioner meets the criteria for the purpose of adjudication under this section of the Pension Act as a result of chronic bronchitis for which he is pensioned, diabetes, peripheral vascular disease and generalized osteoarthritis. He lives alone in his own home and is cared for by his niece who visits daily. He also has a homemaker and weekly nursing care. He has a history of gangrene and has had knee replacement surgery on one leg and is awaiting similar surgery on the other. In his personal activities of daily living he is independent in eating, dressing and grooming and needs assistance with bathing and transfers to the toilet. He can communicate and use a telephone. He drives his car for short distances and cannot use public transportation. He cannot do housekeeping or shopping but can do some food preparation. He can walk up to two blocks using two canes and needs an attendant. He does not have a wheelchair. His niece assists him with his business affairs. He therefore requires minimal but daily assistance in his activities of daily living.
This pensioner's requirements for attendance and supervision are met by his niece and a homemaker. The pensioner qualifies for this award and the Commission is pleased to rule favourably on this application.
Mr. Clipperton was granted an attendance allowance, retroactive to September 1992. The amount of the allowance was $421.31 a month in 1993. Mrs. Lautaoja did not ask for any payment for her services and, therefore, the attendance allowance was deposited into Mr. Clipperton's bank account, along with his other income.
On June 11, 1993, Mr. Clipperton was involved in a motor vehicle accident. At the time of his accident, he was 80 years old and in poor health. He was still living on his own, but was receiving regular help from Mrs. Lautaoja, a Home Care Worker (Ms. England), and nurses from the Victorian Order of Nurses.
Following the accident, Mr. Clipperton was treated in the hospital, but died of his injuries on August 7, 1993, almost two months later. Mrs. Lautaoja applied to General Accident and received some accident benefits under the Schedule. She claims that she is also entitled to death benefits of $20,000 and care benefits of $2,000.
2. Death Benefits
Mrs. Lautaoja's claim for death benefits is under section 11 (2)(d)(i), which provides:
11.-(2) If, as a result of an accident, an insured person dies within the benefit period set out in subsection (3), the insurer will pay with respect to the insured person, if Optional Benefit 1 has been purchased,
(d) if, at the time of the accident, the deceased was a dependant, $20,000,
(i) to the person upon whom the deceased was dependent or, if that person is dead, to the surviving spouse of that person if the surviving spouse was the deceased's primary caregiver...
Section 11(2) is the relevant section because Mr. Clipperton had purchased Optional Benefit 1 and, as a result of his accident, he died within 180 days. In order to qualify for death benefits, therefore, Mrs. Lautaoja must establish that at the time of his accident, Mr. Clipperton was "a dependant" and that she was the person "upon whom the deceased was dependent".
Mr. Clipperton clearly relied on Mrs. Lautaoja. She visited him every day, was available in emergencies, and, together with her husband, provided him with practical and emotional support. She enhanced the quality of his life and probably made it possible for him to continuing living in his own home. It was conceded, however, that Mr. Clipperton did not rely on Mrs. Lautaoja for his income. At the time of his accident, he had over $187,000 in his savings account, and his monthly income was approximately $3,400, which significantly exceeded his expenses.
"Dependant" has a particular meaning in the Schedule, as set out in section 3(2):
3.--(2) For the purposes of this Schedule, a person is a dependant of another person if the person is principally dependent for financial support on the other person or the other person's spouse.
The issue, therefore, is whether Mr. Clipperton was "principally dependent for financial support" on Mrs. Lautaoja at the time of his accident. Mrs. Lautaoja's position was that although Mr. Clipperton did not rely on her for money, her assistance made it possible for him to remain financially independent. I am unable to agree that this makes Mr. Clipperton "a dependant" within the meaning of section 3(2).
The phrase, "principally dependent for financial support", has been interpreted in previous arbitration decisions, and also in a number of court decisions. Although I accept Mr. Ellies' submission that the cases present somewhat different situations, the consistent interpretation has been that in order to qualify as a dependant, the person must rely on the financial contribution of the other person more than on other sources.
In Maninder Singh and State Farm Mutual Automobile Insurance, and Pilot Insurance Company, June 4, 1993, OIC File Nos. A-001525 and A-001526, Senior Arbitrator Naylor provided the following helpful analysis of the judicial interpretation of "principally dependent" under subsection 2, Part I, Section B(3) of the former standard automobile insurance policy:
They have applied a strictly monetary calculation. To show such dependency, they require that an applicant be more dependent on the other person's contributions than on other sources of income, such as social benefits. They have accepted the dictionary definitions of the word "principally" to mean "for the most part" or "chiefly".
In Barnard et al. v. Safeco Insurance Co. of America (1986), 57 O.R. (2d) 559 (H.C.), Mr. Justice O'Driscoll held that the insured's mother who lived in a nursing home was not principally dependent upon the insured, because her chief source of financial support was her pension entitlement.
In Chevrier et al. v. Zurich Insurance Company (1985), [1985] I.L.R. 1-1920 (C.A.); affirming (1984), [1985] I.L.R. 1-1919, the applicant was held not to be principally dependent on her mother, where she and her mother both received the same amount of welfare, although the mother managed the funds.
I agree with Mr. Heckel that the most relevant arbitration decision is Adolf Crnkovic et al. and Simcoe & Erie General Insurance Company, April 8, 1993, OIC File No. A-002228. In that case, Mr. and Mrs. Crnkovic applied for death benefits as a result of the death of their daughter, whom they claimed was their dependant. Arbitrator Palmer concluded that although Mr. and Mrs. Crnkovic were generous parents who enhanced their daughter's life through financial assistance, gifts and emotional support, she was able to provide for herself financially and, therefore, was not "a dependant".
Similarly, Mrs. Lautaoja enhanced the quality of her uncle's life. At the time of his accident, however, Mr. Clipperton was financially independent. This is true even if a value is attributed to the services provided by Mrs. Lautaoja, as suggested in the decision in Peter Najem and AXA Insurance Company, and Economical Mutual Insurance Company, July 27, 1993, OIC File Nos. A-003115 and A-003116.
Mr. Ellies submitted that Mrs. Lautaoja's position is supported by the inclusion of the term "primary caregiver" in section 12(2) (d) (i). In my view, however, a plain reading of the section makes it clear that the deceased person's primary caregiver is entitled to death benefits only in one very narrow situation: the deceased person must have been "a dependant", the person upon whom the deceased was dependent must be dead, and that person's spouse must be alive and must have been the deceased person's primary caregiver.
For these reasons, I conclude that Mr. Clipperton was not "a dependant" and, therefore, Mrs. Lautaoja is not entitled to death benefits under section 11 (2) (d) (i) of the Schedule.
3. Care Benefits
Mrs. Lautaoja also claims care benefits under section 7(1)(a) of the Schedule, which provides:
7.--(1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident, for the care, if any, required by the insured person,
(a) the reasonable cost of a professional care-giver or the amount of gross income reasonably lost by a person other than the insured person as a result of the accident in caring for the insured person;...
General Accident paid Mrs. Lautaoja $50 a week for eight weeks. Following mediation, it paid her an additional $435, representing an additional $50 for eight weeks, plus interest. Mrs. Lautaoja understood that this was for care benefits, but Mr. Heckel, on behalf of General Accident, characterized the payments as "gratuitous". Whatever the nature of these payments, I must determine her entitlement under section 7(1)(a).
Mrs. Lautaoja claims care benefits of $2,000, representing two months salary from Martin G. Lautaoja Construction Ltd. Although she continued to receive her monthly salary, Mrs. Lautaoja takes the position that the business lost a significant amount of income because she was not available to answer calls about jobs. She stated that her husband was not always available to answer the phone and that although they had an answering machine, people hung up rather than leave a message.
Mrs. Lautaoja submitted a document which sets out the following gross income for Martin G. Lautaoja Construction Ltd.:
June to Aug.
June to Aug
June to Aug.
1991
1992
1993
$72,892.64
$31,777.13
$7,258.92
No income tax returns or other financial documents were presented with respect to the income of the business.
I agree with the following statement by Senior Arbitrator Naylor in Lawrence Whitney and Co-operators General Insurance Company, March 31, 1993, OIC File No. A-001005:
The purpose of section 7 is to ensure that the insured can receive necessary care from a spouse or other relative, without fear of financial loss on either part. The wording of the section should be given a broad and liberal interpretation, that best accomplishes this purpose.
I accept Mr. Ellies' submission that it is possible for an applicant to receive benefits under section 7(1)(a) for the reasonable cost of a professional caregiver and the amount of gross income lost by another caregiver. In my opinion, however, the cost of a professional caregiver can be claimed only if a professional caregiver is hired. Expenses for a non-professional caregiver must be based on the gross income reasonably lost by that person.
Mr. Heckel submitted that Mrs. Lautaoja was already caring for Mr. Clipperton prior to the accident, and that the accident did not result in any additional "care" duties. Therefore, she did not provide care "as a result of the accident". In the alternative, he submitted that any additional care that she provided after the accident was not "required" because the staff at the hospital would have provided it in her absence.
Although I accept the logic of these submissions, I find that the accident increased Mrs. Lautaoja's responsibilities beyond simply visiting Mr. Clipperton at the hospital. The clearest example is that she was the person who dealt with the doctors and made critical medical decisions on Mr. Clipperton's behalf. Given the close relationship between Mrs. Lautaoja and Mr. Clipperton, I also find that the care that she provided was required, and could not have been duplicated by the hospital staff.
The difficulty with Mrs. Lautaoja's claim is in determining whether she lost income as a result of caring for Mr. Clipperton. Even assuming that I can look behind the fact that she continued to receive her regular income of $1,000 a month from Martin G. Lautaoja Construction Ltd., I do not feel that she has established that the business lost money as a result of the additional time that she had to be away from the phones.
The first problem is that it was not clear from Mrs. Lautaoja's testimony that the time she spent away from the phones increased dramatically after the accident. It certainly is not clear that the difference was sufficient to explain a decrease in income of $24,518.21 from the previous year for a two month period. I am also influenced by the fact that according to Mrs. Lautaoja, she and her husband had decided to take a month-long vacation during this period. Although I accept her evidence that Mr. Clipperton urged her to take advantage of the fact that he was in the hospital and thought he was recovering, it raises questions about how much income the business lost as a result of Mr. Clipperton's accident.
I conclude, therefore, that Mrs. Lautaoja is not entitled to care benefits under section 7(1) of the Schedule. If I had reached a different conclusion, it is my view that I would also have had to deal with the issue of whether Mr. Clipperton's care was already being compensated through his monthly attendance allowance from the Department of Veterans Affairs.
4. Expenses
Mrs. Lautaoja claims the expenses that she has incurred in this arbitration. An award for expenses may be made under section 282(11) of the Insurance Act, R.S.O. 1990, c. I.8, which provides as follows:
282 (11) The arbitrator may award to the insured person such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations to the maximum set out in the regulations.
Arbitrators have consistently granted expenses, regardless of the outcome of the hearing, unless the claim was manifestly frivolous or vexatious, or the applicant's conduct unreasonably prolonged the proceedings. This approach was articulated by Senior Arbitrator Naylor in Ralph McCormick and Economical Mutual Insurance Company, October 21, 1991, OIC File No. A-000139:
The discretion to award expenses should be exercised, having regard to the intent and purpose of the legislative scheme. The arbitration process has been established under the Insurance Act, as amended, in order to facilitate applicants' access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits. The discretion to award expenses should be exercised in accordance with this objective, having regard to the individual circumstances of each case.
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.
The Director of Arbitrations approved this statement of the principles guiding an award of expenses in the appeal decision in Vito Luigi Calogero and The Co-Operators General Insurance Company, February 13, 1992, OIC File No. P-000251.
Although Mrs. Lautaoja was not successful in her claim, I conclude that this is an appropriate case in which to exercise my discretion to award expenses. She raised legitimate issues which were presented fairly and without delay.
The prescribed expenses and amounts are set out in Schedule 1 of the Dispute Resolution Practice Code and in Ontario Regulation 664, R.R.O. 1990. I remain seized of the issue of the amount of the expenses. If the parties are unable to agree on the amount payable, either party may bring the matter before me for an assessment.
Order:
Mrs. Lautaoja is not entitled to death benefits under section 11 (2) (d) (i) of the Schedule.
Mrs. Lautaoja is not entitled to care benefits under section 7(1) of the Schedule.
General Accident shall pay Mrs. Lautaoja's expenses related to the arbitration, calculated according to Ontario Regulation 664, Dispute Resolution Expenses.
May 10, 1994
David R. Draper Arbitrator
Date
APPENDIX A
Exhibit 1 -
Documents Brief, containing photocopies of the following documents:
Tab 1 -
Ontario Automobile Insurance Medical or Psychological Report, dated July 4, 1993.
Tab 2 -
Ontario Automobile Insurance Medical or Psychological Report, dated August 5, 1993.
Tab 3 -
Ontario Automobile Insurance Medical or Psychological Report, dated August 9, 1993.
Tab 4 -
Ontario Automobile Insurance Application for Accident Benefits, dated July 15, 1993.
Tab 5 -
Death Certificate re Norman Clipperton.
Tab 6 -
Power of Attorney, dated September 23, 1992.
Tab 7 -
Letter from Brenda Lautaoja, undated.
Tab 8 -
Letter from Brenda Lautaoja to Mrs. Chalmers, dated September 28, 1993, with attached dictionary page.
Tab 9 -
Letter from Brenda Lautaoja to Mrs. Chalmers, dated October 13, 1993.
Tab 10 -
Letter from Canada Pension Commission to Norman Clipperton, dated January 18, 1993, with Calculation of Adjustment of Pensions, dated January 18, 1993, and Decision of Commission.
Tab 11 -
Letter from Veterans Affairs Canada, dated February 15, 1994.
Tab 12 -
Kirkland Lake Hospital records; Admission; June 11, 1993 to June 29, 1993.
Tab 13 -
Kirkland Lake Nursing Notes re June 11, 1993 to June 29, 1993.
Tab 14 -
Kirkland Lake Hospital records; Admission: July 3, 1993 to August 7, 1993.
Tab 15 -
Kirkland Lake Nursing Notes re July 3, 1993 to August 7, 1993.
Tab 16 -
T-4 slips for Brenda Lautaoja for 1991 and 1992.
Tab 17 -
Bank book entries for Norman Clipperton.
Tab 18 -
Statement of Monthly Income for 1991 and 1992.
Tab 19 -
Letter from Pauline England, dated March 15, 1994.
Tab 20 -
Clinical notes and records of Dr. Gardiner.
Exhibit 2 -
A photocopy of the 1993 income tax return for Norman. L. Clipperton.
Exhibit 3 -
Photocopies of the entries for Mr. Clipperton's chequing account for the period from November 30, 1992 to August 26, 1993.
Exhibit 4 -
Photocopies of the entries for Mr. Clipperton's savings account for the period from November 18, 1992 to August 17, 1993.
Exhibit 5 -
A memorandum prepared by Pauline England's supervisor.
Exhibit 6 -
A Statement of Gross Earnings of Martin G. Lautaoja Construction Ltd.
In addition to the exhibits, the following documents were before the arbitrator:
Report of Mediator, dated October 25, 1993.
Application for Appointment of an Arbitrator, dated October 28, 1993.
Response by Insurer, dated November 29, 1993.
A letter, dated February 18, 1994, confirming a pre-hearing discussion held on February 10, 1994.
The Insurer's Authorities Brief, containing the following:
Imelda Gazzola and Canadian Surety Company, July 24, 1992, OIC File No. A-000324.
Adolph Crnkovic and Maria Crnkovic, parents of the late Dubavka (Debbie Crnkovic and Simcoe & Erie General Insurance Company, April 8, 1993, OIC File No. A-002228.
Maninder Singh and State Farm Automobile Insurance Company and Pilot Insurance Company, June 4, 1993, OIC Nos. A-001525 and A-001526.
Peter Najem and AXA Insurance Company and Economical Mutual Insurance Company, July 27, 1993, OIC Nos. A-003115 and A-003116.
Sections 3, 7 and 11 of the Schedule.
Pensions Act, section 38(1).
Barnard v. Safeco Insurance Co. of America (1986), 1986 CanLII 2522 (ON HCJ), 57 O.R. (2d) 558.
Lawrence Whitney and Co-operators General Insurance Company, March 31, 1993, OIC No. A-001005.
Manti and Wawanesa Mutual Insurance Co., December 17, 1992, OIC No. A-001496.
- The following cases were submitted on behalf of the Applicant:
Daniel Cattrysee and Westminster Mutual Fire Insurance Co., June 21, 1993, OIC Nos. A-001618 and A-001789.
Bruce and Eleanor McDonald and State Farm Insurance Company, March 11, 1993, OIC A-001347.