Neutral Citation: 1994 ONICDRG 6
File No. A-001665
ONTARIO INSURANCE COMMISSION
BETWEEN:
RAVINDER KHANNA
Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
DECISION
Issues:
The Applicant, Ravinder Khanna, was involved in a motor vehicle accident on February 14, 1991. He applied for and received statutory accident benefits from State Farm, payable under Ontario Regulation 6721. Weekly income benefits were paid at the rate of $246.15 a week until April 8, 1992, when State Farm terminated them on the basis that Mr. Khanna was capable of performing the essential tasks of his pre-accident occupation or employment.
The parties participated in mediation, but the dispute was not resolved. Mr. Khanna then applied for arbitration under the Insurance Act. The issues in this hearing are:
Is Mr. Khanna entitled to receive weekly income benefits under section 12 of the Schedule during the period from April 8, 1992 to September 7, 1992?
What is the proper amount of Mr. Khanna's weekly income benefits, as calculated according to the Schedule?
The Applicant also claims interest on any outstanding amounts owing, and his expenses incurred in the hearing.
Result:
Mr. Khanna is not entitled to receive weekly income benefits during the period from April 8, 1992 to September 7, 1992.
Mr. Khanna has not established an entitlement to weekly income benefits in excess of the minimum amount of $185.60. Because he received weekly income benefits of $246.15 until April 8, 1992, he was overpaid at a rate of $60.55 a week. Mr. Khanna must repay this amount to State Farm, together with interest calculated according to section 27(4) of the Schedule.
Mr. Khanna is not entitled to his expenses related to the hearing.
Hearing:
The hearing was held in Hamilton, Ontario, on September 29 and 30, 1993, before me, David R. Draper, arbitrator.
Present at the Hearing:
Applicant:
Ravinder Khanna
Applicant's Representative:
Stuart Aird Barrister and Solicitor
Insurer's Representatives:
Joseph Sullivan Barrister and Solicitor
Peter Robinson, Claims Supervisor
Marianne Voorthuyzen, Claims Supervisor
Witnesses:
Ravinder Khanna and James Forbes, chartered accountant
Exhibits:
Fifty-nine exhibits were filed and are listed in Appendix A.
REASONS FOR DECISION:
1. The history of Mr. Khanna's claim
Mr. Khanna and his wife, Veena Malhotra, were involved in a single car accident on February 14, 1991. Two days later, Mr. Khanna applied to State Farm for weekly income benefits under section 12 of the Schedule, which provides:
12--(1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident a weekly income benefit during the period in which the insured person suffers substantial inability to perform the essential tasks of his or her occupation or employment if the insured person meets the qualifications set out in subsection (2) or (3).
In order to qualify for weekly income benefits, Mr. Khanna had to establish that at the time of the accident, he was:
employed or self-employed [s.12(2)i],
on a temporary lay-off [s.12(2)11],
entitled to start work within one year under a legitimate offer of employment made before the accident and evidenced in writing [s.12(2)iii], or
neither employed nor self-employed, but had been employed or self-employed for any 180 days in the twelve-month period before the accident [s.12(3)].
In his application for accident benefits, Mr. Khanna declared that at the time of the accident, he was on a seasonal lay-off from Active Lawn Spray, but had been employed by that company for twenty weeks in the 52 weeks preceding the accident, earning a total gross income of $16,000. State Farm accepted that Mr. Khanna fit within section 12, apparently under section 12(3).
Mr. Khanna also had to establish that as a result of the accident, he suffered a "substantial inability to perform the essential tasks of his or her occupation or employment". In support of his application, he submitted a form completed by his family doctor, Dr. Czuba, on February 25, 1991. Dr. Czuba found "slight tenderness" of Mr. Khanna's paracervical muscles, his low back area, and his right wrist. He did not expect Mr. Khanna to have any prolonged disability, and thought that he would be able to return to work in 7 to 14 days.
Although Dr. Czuba's medical report is rather weak, State Farm paid weekly income benefits to Mr. Khanna, calculated according to the following provisions of the Schedule:
12 (4) Subject to subsection (5), the weekly benefit under subsection (1) will be the lesser of,
(a) $600 plus, if Optional Benefit 2 has been purchased, the amount of the benefit chosen; and
(b) 80 per cent of the insured person's gross weekly income from his or her occupation or employment, less any payments for loss of income, except Unemployment Insurance benefits,
(i) received or available to the insured person under the laws of any jurisdiction or under any income continuation benefit plan, or
(ii) received under any sick leave plan.
(7) The following rules apply to the calculation of gross weekly income:
- The person's gross weekly income shall be deemed to be the greatest of,
i. his or her average gross weekly income from his or her occupation or employment for the four weeks preceding the accident,
ii. his or her average gross weekly income from his or her occupation or employment for the fifty-two weeks preceding the accident,
iii. $232.
State Farm calculated Mr. Khanna's weekly income benefits based on the information that he provided in his application. Because there was no indication that he had worked in the four weeks preceding the accident, his gross income of $16,000 was averaged over 52 weeks: $16,000 / 52 = $307.69. His weekly income benefits were based on 80% of this amount, or $246.15.
Mr. Khanna received weekly income benefits of $246.15 for just over a year. During this period, he submitted a number of medical reports from his doctors. He was also examined by medical professionals at the request of State Farm. State Farm terminated Mr. Khanna's weekly income benefits, effective April 8, 1992, on the basis that he was not substantially unable to perform the essential tasks of his pre-accident occupation or employment as a result of the accident.
Mr. Khanna applied for mediation, raising two issues. First, he claimed that he continued to be eligible for weekly income benefits after April 8, 1992. Second, he claimed that he was entitled to receive weekly income benefits of more than $246.15 a week. It is his position that average gross weekly income from Active Lawn Spray was actually $800, and that this amount should be averaged over the weeks that he actually worked, rather than over the full 52 weeks preceding the accident. He claims, therefore, that he should have received the maximum weekly income benefits of $600, rather than $246.15.
According to the Report of Mediator, dated June 22, 1992, these issues were not resolved. Mr. Khanna returned to work on a full-time basis on September 8, 1992. On January 27, 1993, seven months after the date of the Report of Mediator, Mr. Khanna applied for arbitration. At the pre-hearing discussion, held on May 19, 1993, it was agreed that the issues in dispute were:
Is Mr. Khanna entitled to receive weekly income benefits under section 12 of the Schedule during the period from April 8, 1992 to September 7, 1992?
What is the proper amount of Mr. Khanna's weekly income benefits, as calculated according to the Schedule?
2. Credibility
Both issues in this arbitration must be determined based on Mr. Khanna's situation at the time of the accident. The parties disagree about his situation and how it should be characterized for purposes of the Schedule. Mr. Khanna relied heavily on his own testimony, presenting himself as a seasonal employee of Active Lawn Spray who was unable to return to work until September 8, 1992 due to injuries arising from the accident. He called no other witnesses. In contrast, State Farm obtained and submitted volumes of documentary evidence to show that Mr. Khanna was more than simply an employee of Active Lawn Spray, and that he had serious, pre-existing medical problems. State Farm also called Mr. Forbes, a forensic accountant, to analyze the amount of Mr. Khanna's entitlement.
Because Mr. Khanna relied so heavily on his own evidence, his credibility is critical. In my opinion, his evidence was thoroughly discredited during the course of this hearing. He was not forthcoming about his rather complicated financial and medical history. Further, much of his evidence was evasive, inconsistent and implausible.
Based on the findings set out below, I conclude that there is no merit to his claim for additional benefits. Rather, I agree with counsel for State Farm that Mr. Khanna has misrepresented his situation in an attempt to maximize his benefits.
3. What is the proper amount of Mr. Khanna's weekly income benefits?
The parties presented a number of alternative arguments about how Mr. Khanna's situation should be characterized for purposes of section 12. As stated above, he applied for benefits as a seasonally employed lawn spray supervisor. His primary submission is that he fits within section 12(3) on the basis that he was unemployed at the time of the accident, but had been employed for 180 days in the 52 weeks preceding the accident. In the alternative, he submits that because he was to return to work for Active Lawn Spray on March 20, 1991, he qualifies as being on a temporary lay-off (s. 12(2)1.ii), or as having an offer of employment (s. 12(2)1.iii).
It was submitted on behalf of State Farm that Mr. Khanna was actually a partner in Active Lawn Spray and that he also was self-employed as a property manager, managing the 23 income properties that he and his wife owned at the time of the accident. In the alternative, it was submitted that if Mr. Khanna was an employee of Active Lawn Spray, he had not worked for 180 days in the 52 weeks preceding the accident.
Mr. Khanna asked to be treated as a employee, rather than as self-employed, because both Active Lawn Spray and his income properties lost money in the year preceding the accident. If he is considered to be self-employed, therefore, he would only be entitled to receive the minimum benefit of $185.60 a week.
Mr. Khanna's employment situation at the time of the accident was difficult to determine because of his failure to provide a full explanation. I am unable to accept, however, that it is reasonable to characterize his work situation as that of a seasonally employed lawn spray supervisor.
According to Mr. Khanna, Active Lawn Spray has been in business since 1984, spraying lawns with fertilizers and herbicides. He testified that he has sprayed lawns "off and on" since 1984. He was unable to explain the ownership of the business with any certainty. His recollection was that it was originally in his wife's name, but that they were partners "for a few years" - 1988 and 1989, he thought. I note, however, that the financial statements indicate that they were partners in 1987, 1988 and 1989.
Mr. Khanna explained that in 1989, the Unemployment Insurance rules changed to allow employed spouses to receive benefits. He testified that in late 1989, he became an employee of Active Lawn Spray in order to take advantage of these changes.
Mr. Khanna and his wife are entitled to structure their business in any manner allowed by law. The difficulty in this case, however, is that there is no evidence that any arm's length relationship was created. Mr. Khanna testified that he did not know if his wife paid him for his share of Active Lawn Spray when she became the sole owner. He acknowledged that he essentially ran the business, including financial matters, with little involvement from Ms. Malhotra. The bank records obtained by State Farm are difficult to interpret, but they show an intermingling of the various accounts of Mr. Khanna and his wife.
I find that Mr. Khanna is uncertain about the ownership history of the business because the ownership was largely irrelevant to the day-to-day operation of the business. From the start, he was primarily responsible for running Active Lawn Spray, whether or not he was actually doing the spraying. Ms. Malhotra was primarily responsible for her own business, Agra Real Estate Limited.
On September 15, 1990, Mr. Khanna applied for Unemployment Insurance benefits. His application declares that:
he was employed by Active Lawn Spray as a lawn spray supervisor from March 19, 1990 to September 8, 1990 (25 weeks).
he was not working because Active Lawn Spray is a seasonal business and there was a shortage of work.
he expected to be recalled to work on March 20, 1991.
his normal gross earnings were $650 a week.
he had not and did not expect to receive vacation pay from Active Lawn Spray.
he had not and did not expect to receive any other money from Active Lawn Spray.
In support of his application for Unemployment Insurance, Mr. Khanna submitted a Record of Employment, signed by his wife, on September 13, 1990. The Record of Employment indicates that Mr. Khanna worked for 25 weeks, and that he earned at least the maximum insurable earnings of $640 a week for each of the 20 pay periods prior to his lay-off.
I find it significant that Mr. Khanna's stated weekly income was only $10 a week more than the amount required to receive maximum Unemployment Insurance benefits. In my opinion, it is also significant that Mr. Khanna and Ms. Malhotra did not indicate that they were spouses. Although Active Lawn Spray operated out of their residence, they provided a post office box and a different phone number. It appears, therefore, that the Unemployment Insurance Commission paid benefits to Mr. Khanna without being aware that his employer was his spouse.
I find that in January 1991, T4 slips for 1990 were issued by Active Lawn Spray for two employees, Mr. Khanna and B. Singh. The amounts listed for gross income are $16,000 for Mr. Khanna and $12,700 for B. Singh. I note that if Mr. Khanna had worked for 25 weeks and earned $650 a week, as he and his wife declared in his application for Unemployment Insurance, he should have earned $16,250, not $16,000. If he had earned $640 a week, the maximum amount for Unemployment Insurance purposes and the amount shown on his Record of Employment, he would have earned $16,000. It appears, therefore, that Mr. Khanna's T4 slip was prepared based on the Record of Employment filed with the Unemployment Insurance Commission and not from payroll records.
Active Lawn Spray remitted $6,008.65 to Revenue Canada for statutory deductions on January 24, 1991. The source of this amount is unclear, because the deductions on the two T4 slips total $4,697.48. In February 1991, however, Ms. Malhotra signed a Summary of Remuneration Paid form, as "proprietor" of Active Lawn Spray, which states that the total wages paid to employees was $28,700, the same amount as on the T4 slips, but the deductions total $6,008.65.
These documents are the strongest evidence in support of Mr. Khanna's position that he was an employee of Active Lawn Spray. It was submitted that because they were produced before the accident, they are reliable. I note, however, that these document were necessary to confirm Mr. Khanna's eligibility for the Unemployment Insurance benefits that he had been receiving since September 1990. In addition, Active Lawn Spray, which had been profitable in 1987, 1988 and 1989, lost money in 1990, partly due to Mr. Khanna's wages. As a result, Ms. Malhotra was able to claim a loss from Active Lawn Spray on her 1990 income tax return.
On February 16, 1991, Mr. Khanna applied to State Farm for accident benefits. Once again, nothing in his application indicates that his employer is his spouse. On his application, Mr. Khanna declared that he had been employed for twenty weeks in the 52 weeks preceding the accident, earning $16,000. He testified that the number of weeks was just an estimate because the State Farm agent told him that it was not important. I find this unlikely, but possible.
Mr. Khanna explained that by the time he completed his application for accident benefits, he knew that he had actually earned $800 a week because his wife paid him $4,000 in cash in January 1991 for vacation pay and a bonus. The $16,000 on his application, therefore, represents twenty weeks at $800 a week, although he actually worked 25 weeks.
I do not accept that Mr. Khanna was paid a bonus prior to the accident. The only way that he could have calculated a new weekly rate of $800 is by dividing the total amount of his income in 1990, including the bonus, by the number of weeks worked. It is difficult to understand, therefore, how he could have recorded the correct weekly rate, but the wrong length of employment.
There are other reasons for rejecting this evidence:
Mr. Khanna specifically declared on his Unemployment Insurance application that he did not expect to receive any vacation pay or other income from Active Lawn Spray. Ms. Malhotra also indicated on the Record of Employment that his entitlement to vacation pay was "Nil" and no amount was to be paid later.
There is no independent proof of the payment. He testified that Ms. Malhotra paid him $4,000 in cash and that he probably deposited some of it in the bank. However, Mr. Khanna was unable to point to such a deposit in the bank records.
It is surprising that the business paid a bonus for a year in which it lost money.
Mr. Khanna claims that the payment was made in January 1991, but the Summary of Remuneration form that Ms. Malhotra signed in February 1991 does not include this amount.
Although it is unlikely that Ms. Malhotra filed her 1990 income tax return before the end of January 1991, the income statement for Active Lawn Spray that was filed with her return does not include the $4,000.
Mr. Khanna reported income of $16,000, not $20,000, on his 1990 income tax return.
The 1991 income statement for Active Lawn Spray includes "administration fees" of $4,000. If this represents an amount paid to Mr. Khanna for vacation pay and a bonus, it is unclear why no payment was made to the other employee, at least for vacation pay.
No explanation was given for not calling Ms. Malhotra as a witness, even though it was clear that documents signed by her would be challenged by State Farm.
Toward the end of his testimony, Mr. Khanna stated that when he returned to work in September of 1992, he was paid the same rate of $800 a week, but with no bonus. He seemed to be suggesting that his normal rate of pay before the accident had been $800 a week. I was left with the impression that Mr. Khanna simply lost track of what he was claiming as his regular weekly income.
I conclude that Mr. Khanna's income figures do not represent actual weekly amounts that he received. Rather, he has structured his income in order to maximize his Unemployment Insurance benefits and then his accident benefits. In all of the circumstances, I conclude that at the time of the accident, Mr. Khanna is best described as a partner in Active Lawn Spray. Therefore, his eligibility is determined under section 12(2)1.i, and the amount of his weekly income benefits is based on the income of the business.
According to its 1990 income statement, Active Lawn Spray lost money, even if the $16,000 expense included for Mr. Khanna's income is removed. I conclude, therefore, that Mr. Khanna's weekly income benefits are limited to the minimum amount of $185.60.
I also conclude that Mr. Khanna was self-employed as a real estate manager. At the time of the accident, Mr. Khanna and his wife owned 23 income properties. Mr. Khanna testified that in the 1970's, they purchased a number of single-family residences as investments, but had not purchased any investment properties since 1980. However, the income tax returns prepared for him and his wife indicate that although Mr. Khanna consistently claimed rental income from the same thirteen properties from 1987 to 1993, his spouse's list of rental properties increased by three properties in 1987, seven in 1988, two in 1989, and two in 1990.
I accept that the rental agreements were set up to minimize the involvement of Mr. Khanna and Ms. Malhotra in the maintenance of these properties. However, given the number of properties, the lack of a property manager or other employee, the fact that business-type expenses had been deducted in relation to these properties on earlier income tax returns, and the unexplained financial activity in the bank records, I conclude that Mr. Khanna's real estate interests were more than an investment. Therefore, the losses that he declared from his properties in the year preceding the accident would also have to be included in the calculation of his weekly income benefits.
Even if I am wrong, and Mr. Khanna should be considered an employee of Active Lawn Spray, there is some question whether he fits within section 12. His principal position is that he qualifies under section 12(3) because he was employed for 180 days in the 52 weeks preceding the accident. On his application for accident benefits, however, the only employment that he listed was twenty weeks, or 140 days, with Active Lawn Spray. He was paid weekly income benefits, but at some point, someone at State Farm raised the issue of whether he met the 180 day requirement. Mr. Khanna then claimed that he had actually worked for Active Lawn Spray for 25 weeks. This is consistent with the declaration that he made on his Unemployment Insurance application, but still only totals 175 days.
Mr. Khanna now claims that he also did casual work for his brother and wife for an additional three weeks, raising his number of days of employment to more than 180 days. In support of this claim, he relies on his oral evidence and the following documents:
A letter from his wife, dated May 3, 1991, stating that he was paid $500 by Agra Real Estate Ltd. to sort out listings and files from February 18 - 24, 1990;
A letter from his brother, dated March 3, 1991, stating that he was paid $490 for landscaping work done on his apartment building from February 25, 1990 to March 3, 1990;
A note signed by Mr. Khanna and dated March 5, 1990, stating that he received $490 from his brother for spring clean up and landscaping work;
A letter from his wife, dated May 8, 1991, stating that he was paid $495 to clean up the unit out of which Agra Real Estate operated from March 4 - 10, 1990.
Documents created after the accident and long after the purported employment are not the best evidence. It would have been helpful to hear from Mr. Khanna's wife or brother. Although there was no suggestion that they were unavailable, Mr. Khanna did not call them as witnesses.
The documents are admissible under the relaxed rules of evidence in an arbitration hearing, but I do not feel that I can give them any weight. Mr. Khanna acknowledged that the documents were not prepared by his wife or brother. Rather, they were prepared by him and his daughter. He testified that his daughter typed the three letters based on his instructions, relying on his notes about the jobs. However, Mr. Khanna did not produce any such notes. He was also unable to explain when the letters were prepared. In particular, he was unable to explain why one of the letters is dated at a time when he was in India.
I note that although Mr. Khanna testified that he had done this type of casual work in the past, he did not present evidence of such previous work. In addition, it appears from the financial records of Active Lawn Spray and Agra Real Estate that this was the only time that it had expenses for this type of casual labour.
I simply do not find the evidence supporting his claim that he worked an additional three weeks to be credible. I conclude that this is another example of Mr. Khanna's willingness to do whatever he thinks will maximize his benefits.
Even if Mr. Khanna qualifies under section 12 as an employee of Active Lawn Spray, however, it is my opinion that the income figures that he has presented are so unreliable that they could not be used to calculate his benefits under section 12 of the Schedule. It is also my view if he were treated as an employee, his situation would be similar to the applicant in Chuong Vo and Maplex General Insurance Company (O.I.C. #A-002777, dated October 4, 1993). In that decision, I concluded that the applicant's income had to be averaged for the 52 weeks preceding the accident, rather than just for the number of weeks that he had worked. I note that this decision is currently under appeal to the Director.
In summary, Mr. Khanna's failure to provide a full and reasonable explanation of his employment situation makes it difficult to determine and characterize his situation at the time of the accident. Based on the evidence presented, I conclude that he should be treated as a partner in Active Lawn Spray, who also has a business managing rental properties. In the 52 weeks preceding the accident, Active Lawn Spray and the rental properties lost money and, therefore, Mr. Khanna is only entitled to weekly income benefits at the minimum benefit of $185.60 a week. Even if he should be treated as an employee of Active Lawn Spray, I conclude that his evidence about his income is so unreliable that he has not established that he is entitled to more than the minimum amount.
4. The Period of Mr. Khanna's Eligibility for Weekly Income Benefits
As stated above, Mr. Khanna received weekly income benefits from February 21, 1991 until April 7, 1992. He claims that he is eligible for weekly income benefits until September 7, 1992. Mr. Khanna has a long history of injuries which, in my view, is relevant to this issue. He has also been involved in a series of disputes about the impact of these injuries on his ability to work.
a) Mr. Khanna's medical history
In October 1980, Mr. Khanna injured his lower back in a work-related accident while working as an aircraft assembler at Canadair in Montreal, Quebec. As a result of this accident, he received workers' compensation benefits from Quebec.
By July 1983, Mr. Khanna had moved to Ontario and had started seeing Dr. Naumetz, an orthopaedic surgeon, about his back. Dr. Naumetz provided periodic reports to the Quebec workers' compensation board. By October 1983, Dr. Naumetz was of the opinion that Mr. Khanna had "mechanical low back pain" that was unlikely to improve sufficiently to allow him to return to his previous, physically demanding job as an aircraft assembler. In June 1984, he reported to the board, as follows:
In summary then, this man has plateaued. I once again stress that I do not think he should be put on a pension but he should be retrained for some other type of work which is basically sit-down type work and which does not involve lifting weights of more than 10 kg.
Mr. Khanna's evidence was that he has worked "off and on" for Active Lawn Spray since it started in 1984. Whatever the legal structure of the business, a lawn spraying business is a strange venture for someone who has the kind of back problems described by Dr. Naumetz. In his oral evidence, Mr. Khanna described lawn spraying as heavy work, involving lifting heavy bags weighing an average of 50 pounds, climbing on the truck and carrying the sprayer. Ironically, Dr. Naumetz' report, dated July 26, 1983, states that Mr. Khanna's back was "made worse with activity such as mowing the lawn and driving."
In November 1984, Dr. Naumetz advised the Quebec workers' compensation board:
I have stated on February 14, 1984 that he was 80% disabled for returning to his former employment and as far as his regular day to day activities are concerned I would say that he is 40% disabled.
Dr. Naumetz expressed essentially the same opinion in reports dated September 26, 1985, November 10, 1986 and February 1, 1988.
The clinical notes and records of Dr. Czuba indicate that Mr. Khanna began to see him in January 1985. Unfortunately, Dr. Czuba's notes are difficult to read and, therefore, are of limited assistance.
Mr. Khanna continued to receive monthly benefits from the Quebec workers' compensation board until January or February of 1991, on the basis that he was physically unable to return to work as an aircraft assembler. My understanding is that he then received a lump sum pension, representing compensation for a permanent disability, but no further monthly payments.
This means that although Mr. Khanna continued to be compensated for a work-related back injury, he was able to work "off and on" for Active Lawn Spray.
The lawn spray business is clearly a seasonal business, with an off-season during the winter. In my opinion, the evidence strongly suggests that Mr. Khanna has aggressively pursued various types of income support, particularly to cover the off-seasons.
Dr. Czuba's notes for October 30, 1987 indicate that Mr. Khanna twisted his left knee getting up on a truck. "WCB" is noted, although no detail is given of any claim. The notes for February 3, 1988 indicate that Mr. Khanna was still limping, but the notes for March 2, 1988 state "better". It appears, therefore, that he claimed to be disabled to some extent from October 30, 1987 to March 2, 1988.
On September 8, 1988, Mr. Khanna injured his right shoulder while working for Active Lawn Spray. He saw his family doctor, Dr. Czuba, on the day of the accident and was diagnosed as having a right rotator cuff strain. Dr. Czuba estimated that Mr. Khanna would be physically unable to return to his work for 7 to 14 days.
Mr. Khanna made a workers' compensation claim with respect to this accident. The Employer's Report of Accidental Injury, signed by Mr. Khanna's wife on September 9, 1988, indicates that he was a partner in Active Lawn Spray and that he had earned $3,500 over 27 days, or approximately $650 a day. Based on the Workers' Compensation Board records, I find that Mr. Khanna informed the Board that his business involved spraying lawns until the beginning of December and repairing and servicing the equipment during the off-season. I note that this is inconsistent with his later descriptions of Active Lawn Spray as a seasonal business, operating from March to September.
Mr. Khanna received temporary total disability benefits from the Workers' Compensation Board. He did not return to work within two weeks, as anticipated by Dr. Czuba, but continued to complain of pain in his right shoulder. He was referred to Dr. McIntyre, an orthopaedic surgeon. In his report, dated November 14, 1988, Dr. McIntyre states that Mr. Khanna had a rotator cuff injury. Dr. McIntyre injected the shoulder and suggested that he return to work within ten days, at least part time, doing work below chest level.
Based largely on Dr. McIntyre's report, Mr. Khanna's workers' compensation benefits were terminated, effective December 23, 1988, three and a half months after the accident. Mr. Khanna objected to this decision, but did not pursue his objection for over a year.
Even after his workers' compensation benefits were terminated, Mr. Khanna did not return to work, but went to see Dr. McIntyre on January 17, 1989. Dr. McIntyre found that Mr. Khanna still had some mild rotator cuff tendinitis, but felt that he could do his winter duties for Active Lawn Spray. On February 24, 1989, Dr. McIntyre reported:
... I cannot believe he has significant deficit here other than mild impingement pain.
I have told him then what he must do and urged him to take four Tylenol extra strength daily and return to his regular work and carry on with it forthwith...
Mr. Khanna still did not return to work. In further reports, dated March 27, 1989 and May 26, 1989, Dr. McIntyre reported that he encouraged Mr. Khanna to return to work.
Active Lawn Care continued to operate in 1989 and, according to the income statement filed with Ms. Malhotra's 1989 income tax return, had gross sales of $70,861. It is not clear, however, whether Mr. Khanna worked at all during the 1989 season. Dr. Blackstone, another orthopaedic surgeon, saw Mr. Khanna in October 1989 and reported that Mr. Khanna had been doing some work for Active Lawn Spray since April 1989, although he had difficulty with the heavier tasks. I note, however, that Mr. Khanna appealed the decision to terminate his workers' compensation benefits on the basis that he had been unable to work at Active Lawn Spray from September 1988 until January 1990. In his testimony in this Wearing, Mr. Khanna also stated that he was unable to return to work until January 1990.
In October 1989, Dr. Blackstone found a full range of motion in Mr. Khanna's right shoulder, with pain at the extremes. He injected Mr. Khanna's right shoulder with cortisone on October 25, 1989. Dr. Blackstone saw Mr. Khanna again approximately two months later, on January 4, 1990. He found that Mr. Khanna's shoulder had been considerably improved by the cortisone injection and that he "has resumed his normal activities and has an excellent range of motion".
Despite the fact that he was still receiving workers' compensation from Quebec for his back injury, Mr. Khanna claims to have been employed as a lawn spray supervisor on a full-time basis in 1990. On September 15, 1990, he applied for Unemployment Insurance benefits. Mr. Khanna testified that he looked for work while he was receiving Unemployment Insurance benefits, but I find that he did little, if anything, to find another job. He was only able to give vague information about one factory where he said he applied. He also indicated that since he was expecting to return to work in March 1991, the staff at the Unemployment Insurance Commission did not seem to be too concerned about his job search efforts.
In the late summer and fall of 1990, Mr. Khanna was also challenging the decision of the Ontario Workers' Compensation Board to terminate his benefits in December 1988. He claimed that he was entitled to additional benefits to January 1990 based on the injury to his right shoulder.
On November 6, 1990, Mr. Khanna saw Dr. Czuba. Dr. Czuba's clinical notes indicate that Mr. Khanna was "concerned re state of compensation by W.C.B." It is not clear whether this refers to his workers' compensation benefits from Quebec or Ontario. Although he was still receiving Unemployment Insurance benefits, the note also indicates that Mr. Khanna had attempted to work, but could not continue due to pain. When Mr. Khanna was asked about this on cross-examination, he simply said that he did not think that he told Dr. Czuba that he was unable to work.
On January 28, 1991, just eighteen days before Mr. Khanna's motor vehicle accident, he saw Dr. Naumetz. In his evidence, he acknowledged that he was aware that Dr. Naumetz would be reporting to the Quebec workers' compensation board. Dr. Naumetz reported to the Quebec workers' compensation board, as follows:
On examination, he walks without a limp. He has a markedly reduced range of lumbar spinal motion and can walk on his heels and toes. The seated and supine straight leg raising tests are much the same as they were on Februar [sic] 1, 1988. Straight leg raising is limited to about 30 degrees bilaterally. Forward flexion is about 14" from the floor. Extension is one-half normal and is painful. Lateral benefit is one-third normal and is similarly painful. He continues to have sciatica, especially in the left leg extending down to the toes.
This man's condition and physical examination remains static. It has not changed and my recommendations remain the same as they were on September 26, 1985 wherein I stated that he was 80% disabled for returning to his former employment and as far as his regular day to day activities are concerned, he is 40% disabled.
At the time of his accident on February 14, 1991, he had been receiving Unemployment Insurance benefits for approximately five months. It is my understanding that this would be roughly the length of his entitlement based on 25 weeks of employment. Mr. Khanna testified that he stopped receiving Unemployment Insurance benefits in February 1991, but there is nothing in the Unemployment Insurance file to suggest that he notified the Unemployment Insurance Commission that his Unemployment Insurance benefits should be discontinued because he was receiving accident benefits. It appears, therefore, that the accident occurred at about the same time that his Unemployment Insurance benefits were ending.
I find, therefore, that at the time of the accident on February 14, 1991, Mr. Khanna had an ongoing back injury which he claimed prevented him from doing his former duties as an aircraft assembler. He had been receiving monthly workers' compensation benefits from Quebec as a result of this injury, but he had recently been "pensioned off". He also had an injury to his right shoulder for which he received compensation from the Ontario Workers' Compensation Board from September 9, 1988 to December 23, 1988. At the time of the accident, he was attempting to convince the Board that he continued to be totally disabled as a result of this injury until January 1990, another full year. Finally, he had an old injury to his left knee.
Mr. Khanna claims that he was unable to return to work at Active Lawn Care until September 8, 1992. It is difficult to ignore that September 8, 1990 is the date that Mr. Khanna advised the Unemployment Insurance Commission that the lawn spray season was over. On exactly the same date in 1988, he injured his right shoulder and was unable to work.
Mr. Khanna's 1992 income tax return includes a T4 slip from Active Lawn Spray showing employment income of $6,406.40. It is not clear how he could have earned this amount. First, it was the off-season. Second, it appears that Mr. Khanna was involved in another motor vehicle accident on October 30, 1992. According to Dr. Czuba's clinical notes for November 11, 1992, he complained of pain in the base of his neck and in the lumbar area. Dr. Czuba found some spasm and tenderness, but hoped that he would get better in two to three weeks. In December 1992, Mr. Khanna was still complaining of pain and Dr. Czuba referred him to Dr. Naumetz. According to his report dated February 1, 1993, Dr. Naumetz concluded that Mr. Khanna "did not sustain a very severe injury" in the accident. Dr. Czuba's clinical notes for April 6, 1993 indicate that Mr. Khanna planned to return to work the following week.
In my view, this history raises serious questions about Mr. Khanna's credibility and makes it reasonable to require independent evidence in support of his claim.
b) Mr. Khanna's eligibility from April 8, 1992
The onus is on Mr. Khanna to prove his eligibility for the period from April 8, 1992 to September 7, 1992. Even if it is assumed that the proper job reference is his employment as a lawn spray supervisor, I conclude that the evidence presented falls far short of establishing that he was substantially unable to perform the essential tasks for the period from April 8, 1992 to September 7, 1992.
At the time of the accident, Dr. Czuba had been Mr. Khanna's family doctor for at least six years. In his initial report following the accident, dated February 25, 1991, Dr. Czuba stated that he did not expect Mr. Khanna to have any prolonged disability and thought that he would be able to return to work in 7 to 14 days. Shortly after the accident, Mr. Khanna travelled to India. The next two medical reports, dated March 2, 1991 and April 6, 1991, were completed by a doctor in India, Dr. Namba. Dr. Namba felt that Mr. Khanna would be able to return to work in or about May 1991. By June 1991, Dr. Czuba felt that Mr. Khanna could try modified work.
Mr. Khanna did not return to work in 1991. State Farm arranged for him to see Dr. John G. Evans, an orthopaedic surgeon, on October 1, 1991.
Dr. Evans concluded that Mr. Khanna was exaggerating his symptoms and could be back to work by October 7, 1991.
State Farm also arranged for Mr. Khanna to be assessed at the Canadian Back Institute on November 6, 1991. Up to this point, he had not been involved in any form of physiotherapy. The Canadian Back Institute recommended a two-week trial period of active exercise therapy. In his evidence, Mr. Khanna testified that he did not go to the Canadian Back Institute because Dr. Naumetz preferred that he go to Joseph Brant Hospital for physiotherapy. I find that this is not true. In his letter to Dr. Czuba, dated November 21, 1991, Dr. Naumetz agrees that Mr. Khanna would benefit from physiotherapy, but does not express a clear preference for a particular program. Dr. Czuba's file indicates that Mr. Khanna told him that he could not afford to attend the Canadian Back Institute, although he had a very significant balance in his bank accounts at the time.
I find that Mr. Khanna did not want to go to the Canadian Back Institute because it was State Farm's choice and he did not trust it as a neutral program. This may be understandable, but again, I am concerned about Mr. Khanna's willingness to present evidence that distorts the situation.
State Farm asked for Dr. Czuba's opinion about Mr. Khanna's disability. On March 3, 1992, Dr. Czuba wrote to State Farm, as follows:
As stated in my previous correspondence I was in agreement with Dr. Evans opinion.
Mr. Khanna was last seen by me February 13, 1992, at which time he didn't seem to want to move his shoulder about too much and he tried to convey to me he was having a great deal of difficulty, even though I was unable to see it clinically.
He has been attending physiotherapy and from a recent phone conversation the physiotherapists informed me they are trying to understand his difficulty and although they are frustrated by an apparent lack of motivation they are persisting in their efforts.
I do not find him totally disabled as you have stated in your opening paragraph, but he does have a certain amount of discomfort and disability.
I regard this opinion as significant. By this time, Dr. Czuba had been Mr. Khanna's family doctor for at least seven years. He appears to have had more contact with Mr. Khanna than any other doctor during this period. In my view, Dr. Czuba's clinical notes and records indicate a frustration with Mr. Khanna's inactivity.
The other doctor who has had a long-term involvement with Mr. Khanna is Dr. Naumetz. Mr. Khanna saw Dr. Naumetz on April 6, 10 and 22, 1992. In his report, dated May 4, 1992, Dr. Naumetz expressed the opinion that the accident resulted in a "typical acceleration-deacceleration injury of the cervical spine." He did not think that Mr. Khanna's pre-existing back problem was significantly affected by the accident. Dr. Naumetz also treated Mr. Khanna's right shoulder with a cortisone injection. He concluded:
Usually an acceleration-deacceleration injury of the cervical spine will get better within 18 months of the trauma. This I would expect to be the case in this man's injury.
Mr. Khanna relied heavily on this report, arguing that it supports his position that he was eligible for weekly income benefits until September 7, 1992, 19 months after the accident. In my opinion, however, Dr. Naumetz was only predicting when Mr. Khanna's symptoms from the accident likely would be gone. He specifically asked for additional information in order to express an opinion on when Mr. Khanna might be able to return to work.
State Farm wrote to Dr. Naumetz on June 29, 1992, providing further information about his job requirements with Active Lawn Spray. Dr. Naumetz provided a further report, dated August 17, 1992. In this report, he states his opinion that Mr. Khanna's shoulder problems are not related to the accident. In his opinion, Mr. Khanna suffered a "mild to moderate acceleration-deacceleration injury of the cervical spine". He also states:
I would think that it is reasonable to assume that this man can at least attempt a return to work and should be able to do the duties as described in your second paragraph. This is at least as far as his neck injury is concerned. It is his neck which was the injury which he sustained in the motor vehicle accident.
In my opinion, this report does not suggest that Mr. Khanna was unable to return to work before the date of the report. Dr. Naumetz' second report is based on his observations in April 1992. Mr. Khanna suggested that he was not "cleared" to return to work until he received this second report. I cannot find any such suggestion in the medical evidence. Rather, I find that Mr. Khanna was consistently encouraged by the various health professionals to remain active and to return to work as soon as possible.
Finally, it is difficult to understand why Mr. Khanna did not attempt to return to work on a part-time basis. Whatever the legal structure of Active Lawn Spray, he exercised significant control over its operation. Mr. Khanna has maintained, however, that he was unable to work at all until September 8, 1992, when he returned on a full-time basis. In my opinion, this simply does not make sense.
I conclude, therefore, that Mr. Khanna has not established his eligibility for weekly income benefits for the period from April 8, 1992 to September 7, 1992.
Expenses
Mr. Khanna seeks an award of his expenses of this arbitration, according to section 282(11) of the Insurance Act:
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 generally awarded expenses, regardless of the outcome, unless the applicant's case was frivolous or vexatious, or the applicant unduly delayed the proceedings. I agree with this approach.
In this case, however, I find that Mr. Khanna's claim for additional benefits is totally without merit. He attempted to construct a claim that would maximize his benefits, even though it was not based on an accurate description of his situation at the time of the accident. Because he was not forthcoming about his previous medical history and his financial situation, State Farm was put to considerable expense in this arbitration. In all of the circumstances, I conclude that Mr. Khanna should not be awarded his expenses.
Order:
Mr. Khanna is not entitled to receive weekly income benefits during the period from April 8, 1992 to September 7, 1992.
Mr. Khanna has not established an entitlement to weekly income benefits in excess of the minimum amount of $185.60. Because he received weekly income benefits of $246.15 until April 8, 1992, he was overpaid at a rate of $60.55 a week. Mr. Khanna must repay this amount to State Farm, together with interest calculated according to section 27(4) of the Schedule.
Mr. Khanna is not entitled to his expenses.
January 26, 1994
David R. Draper Arbitrator
Date
APPENDIX A
Exhibit 1
A photocopy of the report of Dr. Evans, dated October 3, 1991, together with his curriculum vitae.
Exhibit 2
A photocopy of the report of Dr. Naumetz, dated May 4, 1992.
Exhibit 3
A photocopy of the report of Dr. Naumetz, dated August 17, 1992.
Exhibit 4
A photocopy of the report of the Canadian Back Institute, dated November 6, 1991.
Exhibit 5
A photocopy of the report of the Canadian Back Institute, dated January 8, 1992.
Exhibit 6
A photocopy of Mr. Khanna's statement of claim form, completed by him and Dr. Czuba on May 6, 1991.
Exhibit 7
A photocopy of Mr. Khanna's statement of claim form, completed by him and Dr. Czuba on June 20, 1991.
Exhibit 8
A photocopy of Mr. Khanna's statement of claim form, completed by him and Dr. Czuba on August 14, 1991.
Exhibit 9
A photocopy of a letter, dated February 4, 1992, from Dr. Czuba to State Farm.
Exhibit 10
A photocopy of Mr. Khanna's statement of claim form, completed by him and Dr. Czuba on February 13, 1992.
Exhibit 11
A photocopy of a letter, dated March 3, 1992, from Dr. Czuba to State Farm.
Exhibit 12
A photocopy of Mr. Khanna's statement of claim form, completed by him and Dr. Czuba on March 23, 1992.
Exhibit 13
Photocopies of the clinical notes and records of Dr. Naumetz.
Exhibit 14
Photocopies of the records of the Unemployment Insurance Commission with respect to Mr. Khanna.
Exhibit 15
A photocopy of Mr. Khanna's 1990 personal income tax return.
Exhibit 16
A photocopy of a letter, dated July 31, 1992, from Judd Bedford, C.A., to Mr. Khanna, enclosing his 1991 personal income tax return.
Exhibit 17
A photocopy of a letter, dated September 16, 1993, from Judd Bedford, C.A., to Mr. Khanna, enclosing his 1992 personal income tax return.
Exhibit 18
A photocopy of Veena Malhotra's 1989 personal income tax return.
Exhibit 19
A photocopy of Veena Malhotra's 1990 personal income tax return.
Exhibit 20
A photocopy of a letter, dated July 31, 1992, from Judd Bedford, C.A., to Veena Khanna, enclosing her 1991 personal income tax return.
Exhibit 21
A photocopy of a letter, dated September 16, 1993, from Judd Bedford, C.A., to Veena Khanna, enclosing her 1992 personal income tax return.
Exhibit 22
Photocopies of the bank records of Mr. Khanna from the Avestel Credit Union Limited for 1990.
Exhibit 23
Photocopies of the bank records of Mr. Khanna from the Avestel Credit Union Limited for 1991.
Exhibit 24
Photocopies of the bank records of Mr. Khanna from the Avestel Credit Union Limited for 1992.
Exhibit 25
Photocopies of the bank records of Active Lawn Spray from CUNA of Ontario Credit Union Ltd. for 1990.
Exhibit 26
Photocopies of the clinical notes and records of Dr. Czuba.
Exhibit 27
A photocopy of a draft report, dated September 21, 1992, from James A. Forbes of Coopers & Lybrand, chartered accountants, together with Mr. Forbes curriculum vitae.
Exhibit 28
A photocopy of a letter from September 22, 1993, from Judd Bedford, C.A., to Mr. Khanna
Exhibit 29
A photocopy of a T4 slip for Mr. Khanna for 1990, and a photocopy of a reporting card from the Unemployment Insurance Commission.
Exhibit 30
A photocopy of a T4A slip for Mr. Khanna for 1991.
Exhibit 31
A photocopy of a letter, dated March 3, 1991, from Anil Khanna.
A photocopy of a letter, dated May 3, 1991, from Veena Malhotra.
A photocopy of a letter, dated May 8, 1991, from Veena Malhotra.
A photocopy of a letter, dated May 8, 1991, from Veena Malhotra.
Exhibit 32
A photocopy of the trial balance of Agra Real Estate for the year end, December 31, 1990.
Exhibit 33
Photocopies of the O.H.I.P. records for Mr. Khanna.
Exhibit 34
Photocopies of the clinical notes and records of Dr. Mussani.
Exhibit 35
Photocopies of the Ontario Worker's Compensation Board file with respect to Mr. Khanna.
Exhibit 36
Photocopies of the clinical notes and records of Dr. Blackstone.
Exhibit 37
A photocopy of Mr. Khanna's statement of claim form, completed by him and Dr. Namba on March 2, 1991.
Exhibit 38
A photocopy of Mr. Khanna's statement of claim form, completed by him and Dr. Namba on April 6, 1991.
Exhibit 39
A photocopy of Mr. Khanna's statement of claim form, completed by him and Dr. Czuba on June 26, 1992.
Exhibit 40
A photocopy of Mr. Khanna's statement of claim form, completed by him and Dr. Czuba on September 3, 1992.
Exhibit 41
A photocopy of a handwritten receipt, signed by Mr. Khanna, and dated March 5, 1990.
Exhibit 42
A photocopy of the financial statement of Agra Real Estate Limited for the year ended December 31, 1990.
Exhibit 43
Mr. Khanna's Application for Accident Benefits, dated February 16, 1991.
Exhibit 44
Medical or Psychological Report, completed by Dr. Czuba on February 25, 1991.
Exhibit 45
A receipt from Revenue Canada for a payment of $6,008.65 made on January 23, 1991.
Exhibit 46
A photocopy of a letter, dated September 23, 1993, from W.H. Ettridge, C.A.
Exhibit 47
A photograph of Mr. Khanna's home.
Exhibit 48
A photocopy of a letter, dated September 28, 1993, from W.H. Ettridge, C.A., enclosing his records with respect to Mr. Khanna.
Exhibit 49
Photocopies of four rental agreements.
Exhibit 50
Photocopies of the records from National Trust with respect to Mr. Khanna's savings account.
Exhibit 51
A letter, dated March 3, 1991, from Anil Khanna.
Exhibit 52
A subsearch of Mr. Khanna's home on Lakeshore Road, and a photocopy of a Deed with respect to this property.
Exhibit 53
Photocopies of the records of Mr. Khanna's account with Central Guaranty Trust Company from January 1990 to January 14, 1991.
Exhibit 54
A photocopy of a letter, dated September 28, 1993, from Royal Trust, setting out Mr. Khanna's dealings with Royal Trust.
Exhibit 55
A photocopy of a letter, dated September 28, 1993, from the Canadian Imperial Bank of Commerce, setting out Mr. Khanna's dealings with the bank.
Exhibit 56
Photocopies of the records of Mr. Khanna's account with the Canadian Imperial Bank of Commerce from May 17, 1991 to December 10, 1992.
Exhibit 57
Photocopies of the Bank of Montreal's records with respect to Mr. Khanna.
Exhibit 58
Photocopies of Scotiabank's records with respect to Mr. Khanna.
Exhibit 59
Photocopies of National Bank Mortgage Corporation's records with respect to Mr. Khanna.
In addition to the exhibits, the following documents were before the arbitrator:
Report of Mediator, dated June 22, 1992.
Application for Appointment of an Arbitrator, dated January 27, 1993.
Response by Insurer, dated February 22, 1993.
A letter, dated May 25, 1993, confirming a pre-hearing discussion that took place on May 19, 1993.
A letter, dated August 12, 1993, confirming a further pre-hearing discussion that took place on August 11, 1993.
Brief of authorities filed on behalf of State Farm
Excerpt from Black's Law Dictionary.