Neutral Citation: 1995 ONICDRG 117
File No. A-013610
ONTARIO INSURANCE COMMISSION
BETWEEN:
MICHAEL BOLTMAN
Applicant
and
PERSONAL INSURANCE COMPANY OF CANADA
Insurer
DECISION
Issues:
The Applicant, Michael Boltman, was injured in a motor vehicle accident on May 19, 1993. He applied for and received weekly income benefits under section 12 of the Schedule1.
Following the accident, Mr. Boltman was able to work intermittently and he earned a substantial amount of income. There is no dispute that Mr. Boltman continues to suffer a substantial inability to perform the essential tasks of his occupation.
The Insurer claims that 80% of all the post-accident income earned by Mr. Boltman should be deducted from the amount of weekly income benefits, payable now and into the future disability period.
The Applicant claims that 80% of his post-accident income earned in any given week should be matched to the weekly income benefit payable in that week only. Where post-accident income exceeds the weekly income benefit payable in any given week, the Insurer should not be entitled to carry over the excess as a deduction against further weekly income benefits payable in the future.
The parties were unable to resolve their dispute through mediation and Mr. Boltman applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The issues in this hearing are:
What is the correct method of deducting Mr. Boltman's post-accident income under section 15 of the Schedule from his weekly income benefits?
Is Mr. Boltman entitled to a special award under section 282(10) of the Insurance Act, on the basis that the Personal Insurance Company unreasonably withheld or delayed benefit payments?
Is the Personal Insurance Company entitled to repayment of benefits under section 27 of the Schedule?
Is the Personal Insurance Company entitled to interest on benefits it has overpaid to Mr. Boltman under section 27(4) of the Schedule?
Mr. Boltman also claims interest on any amounts owing, and his expenses incurred in the hearing.
Result:
The Insurer is entitled to deduct 80% of Mr. Boltman's net post-accident income to a maximum $212.60 per week, matched to the weekly period in which it was earned. The Insurer shall not carry forward any excess post-accident income to be applied against future benefits payable to Mr. Boltman's.
Mr. Boltman is not entitled to a special award.
The Personal Insurance Company is not entitled to repayment of benefits under section 27 of the Schedule.
The Personal Insurance Company is not entitled to interest under section 24(7) of the Schedule.
Mr. Boltman is entitled to his expenses incurred in respect of the arbitration hearing, calculated according to Ontario Regulation 664, Dispute Resolution Expenses.
Hearing:
The hearing was held in North York, Ontario, on May 30, 1995 before me, Bruce Robinson, arbitrator.
Present at the Hearing:
Applicant: Michael Boltman
Applicant's Representative: Harvey S. Consky, Barrister and Solicitor
Insurer's Representative: Philippa Samworth, Barrister and Solicitor (Sandra Zilli assisting)
Insurer's Officer: Erminio Bellissimo and Kieran Hallinan
The proceedings were transcribed by Ms. Boyle of Paul W. Rosenberger's office, Official Examiner.
Witnesses:
Mr. Michael Boltman
Mr. Daniel M. Edwards, M.A., A.C.A.,C.A.
Evidence and Findings:
Mr. Boltman is a 49 year old electrical contractor who has worked in this industry for thirty years. At the time of the May 19, 1993 accident, he was operating his own company GARCON HOLDINGS LTD. In previous years Mr. Boltman earned a very good living from his trade2, however, in 1992 he stated that his earnings were unusually low due to the economic downturn in the building industry in the year prior to the accident. There is no dispute that the weekly income benefit payable to Mr. Boltman is $212.60.
After the accident, Mr. Boltman was able to return to work on an intermittent basis, and earned a significant income. In approximately 23 weeks, between June 15, 1993 and November 19, 1993, Mr. Boltman's gross earnings were $15,262.41 for work performed for Comstock Canada, and $19,002.81 for work performed for Campbell-Cox. In approximately 57 weeks, between June 14, 1993 and July 25, 1994 his gross earnings from his own company, were an additional $5,600.00. The parties agree that the total amount to be considered for deduction under section 15 is $18,167.41.
The Insurer made weekly payments to Mr. Boltman from May 1993 to September 1993, for which it did not seek repayment. No payments were made between September 6, 1993 and September 4, 1994.
The Insurer made payments of $212.60 from September 4, 1994 to the date of the hearing. The parties agree that the amount of these payments total $11,140.40 as of May 28, 1995.
Section 15 of the 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. O. Reg. 273/90, s.15.
Mr. Daniel M. Edwards, a chartered accountant with Coopers & Lybrand testified at the hearing as an expert on behalf of the Insurer. He opined that section 15 does not specifically address the approach to be used when post-accident income is earned sporadically.
I agree that section 15 is silent on the precise period over which post-accident income deductions may be made. The parties proposed two approaches to these facts. There may well be other approaches that were not raised in this hearing.
Mr. Edwards proposed that post-accident income be deducted from the amount of weekly income benefits payable during the week it was earned and that any excess post-accident income could be carried forward and deducted from future weekly income benefits payable by the Insurer. Mr. Edwards called this the "carry forward" approach.
The Applicant did not call an expert nor lead any independent evidence to address the method proposed by the Personal Insurance Company at the hearing. However, Mr. Boltman submitted that his post-accident income ought to be matched directly to the specific weekly income benefit payable, with no carry forward of the excess by the Insurer.
Mr. Boltman stated that a deduction of post-accident income, on the carry forward approach, would act as a disincentive to him to return to work because all but 20% of any post-accident income earned by him would be deducted by the Insurer and the remaining 20% would likely be paid out in income tax.
Generally, I agree with the principle enunciated by Arbitrator Palmer in Lily Steele and Zurich Insurance Company, December 3, 1992, OIC File No. A-001024:
It is a restrictive code of limited benefits payable in particular circumstances to a carefully defined set of individuals.
The Schedule is not meant to provide a full or complete income replacement in all circumstances.
I also agree with the comments of Arbitrator Makepeace in her decision in Gene Meandro and Pilot Insurance Company, June 7, 1994, OIC File No. A-004433, where she states:
Weekly income benefits are intended, broadly speaking, to replace 80% of income lost as a result of the accident. I agree with the comment of Arbitrator Janice Mackintosh that "the inquiry into the amount of an insured person's pre-and post-accident income should go beyond mere form, to examine the substance of each individual's financial situation within the overall pre-accident context: Thomas George Piper and Zurich Insurance Company, December 6, 1993, OIC File No. A-002585 (under appeal).
In my view, the Schedule does not necessarily mandate a single accounting approach for all cases. In each case, the arbitrator has discretion to determine which approach most fairly, reasonably and accurately reflects the applicant's financial situation before the accident, considering all the circumstances.
Various decisions were referred to by both counsel which are listed in Schedule B. These decisions do not deal with the specific issue raised by the unique facts in this case, however, arbitrators have looked at a variety of methods to deal with the deduction of post-accident income, including lump sum and pro-rated deductions3. Generally, section 12 benefits are available to insured persons who suffer a substantial inability to perform the essential tasks of their occupation or employment, as a result of injuries sustained in a car accident. Section 12 limits the amount of weekly income benefit payable to a maximum of $600.00, except where optional benefits have been purchased.
Weekly benefits are not intended to replace the total earnings of disabled persons, but rather to maintain a cash flow during the period of disability.
Counsel for Mr. Boltman suggested that if I were to find for the Insurer, and not allow a matching of weekly benefits with weekly income, a lump sum deduction should be applied. It is my opinion that such an approach would cause a harsh and unreasonable result in Mr. Boltman's situation given the fact that he is not working at the present time and is only receiving benefits of $212.60 a week from Personal Insurance Company. This would place a severe financial burden upon him. The Insurer suggested a carry forward approach of deduction against ongoing weekly income benefits.
The Insurer submitted that if I were to permit Mr. Boltman to collect benefits as well as keep a substantial proportion of the sum earned by him post-accident, he will receive a larger benefit than is provided for under the applicable legislative scheme. This would act as a disincentive to his return to full time work.
I can not accept that argument. The uncontradicted evidence of Mr. Boltman demonstrated his desire to return to work and he did so. He wished to carry on with his occupation and earn his own income. Unfortunately, due to his continuing disability, he was forced to give up working. Such a sincere attempt to rejoin the work force as a self sufficient individual is to be encouraged and not penalized by deducting more than the Insurer was responsible to pay per week.
If I adopt the approach advocated by the Personal Insurance Company, it is the Insurer who would be receiving a substantial benefit from Mr. Boltman's efforts to return to work, and not Mr. Boltman himself.
This case is complicated by the fact that Mr. Boltman's post-accident income is so much higher than his 1992 pre-accident income. Mr. Boltman indicated that this was merely a coincidence of the market place and no evidence was put forward by the Insurer to contradict Mr. Boltman on this point. In reviewing the income tax returns for the years 1989 to 1993, which were filed as Exhibit 2, it is clear that the level of Mr.Boltman's post-accident income was consistent with his pre-accident income in the years 1989 to 1991.
The Insurer, in this case, had an unusually low income level as a starting point under section 12, with weekly benefits amounting to only $212.60 per week. That was the most the Insurer would be required to pay during Mr. Boltman's ongoing disability. Mr. Boltman had an unusually high earnings after the accident for a limited period . The Insurer did not pay any weekly income benefits in the weeks where Mr. Boltman's earned income exceeded the benefits that would normally be paid.
The Insurer now submits that there should be no cap on the amount of post-accident income that is deductible under section 15, and further that any excess should be used to reduce, or in this case, eliminate the weekly benefits, by way of the carry-forward approach.
Such an approach does not appear to be consistent with the intent of the legislation, which is rehabilitation. Senior Arbitrator Naylor stated in Francois Philippe and Royal Insurance Company, January 24, 1994, OIC File No. A-001736 at page 15:
Rehabilitation includes the goal of safely returning the injured person to the work force.
I find this to be a crucial consideration. The ability to return to work on a trial basis is part of the rehabilitation process. It is not uncommon that persons receiving weekly benefits attempt to return to work before they are able to perform the essential tasks of their occupation. As a result they are only able to work for a limited period or they suffer a relapse. While the weekly income earned during that period may exceed the weekly benefits, this income stops because of the ongoing disability. The weekly income benefits again become the only source of income. The Insurer's proposal does not allow for this contingency and the adverse effects it would cause to the disabled person who is left with no job, no income, no weekly income benefits and a continuing disability. This is precisely the position Mr. Boltman finds himself in.
If the Insurer's proposal in this case were to be adopted there would be little inducement to any disabled person to return to the work force. Indeed, there would be a disincentive as 80% of all net post-accident income would be deducted from the weekly benefits on a "carry forward" basis, which in the situation of a middle income person , such as Mr. Boltman, effectively wipes out future benefits.
Statutory interpretation requires that the words be given their usual and grammatical sense. This must be done in the context of the no-fault scheme. The Director of Arbitrations in Rosa Decicco and State Farm, December 18, 1991, OIC File No. P-000277, stated at page 6:
Following the general rules of construction....a statute should be read and interpreted to avoid disharmony, without importation of words or meanings that are not there, as a whole with every provision given meaning and, where passed as remedial legislation, given a liberal interpretation.
Part IV of the Schedule is entitled Weekly Benefits and section 12(1) speaks of "a weekly income benefit during the period in which the insured person suffers a substantial inability to perform the essential tasks of his or her occupation or employment.." , as do the following subsections.[emphasis added].
In considering the wording of section 15, it is necessary to consider the remedial purpose of the legislation, as set out above, and the words used in describing the benefits. The benefits are called "weekly" and they are calculated on a weekly basis. In order to have avoid disharmony between section 12 and section 15, it is reasonable that the same criteria of "weekly" be applied when considering deductions under section 15. I find that a direct matching of the weekly income earned by Mr. Boltman to the weekly income benefits he continues to receive is consistent with the intent of the remedial aspects of the legislation and the liberal interpretation of the wording of the legislation.
While pro-rating, or matching, of post-accident income over a specific past period has also been applied to specific situations in prior decisions4, I was not advised of any decision where the "carry forward" approach has ever been adopted or applied. The prior cases have not dealt with a situation where an applicant earned post-accident income greatly in excess of the weekly income benefits payable. Therefore the present situation is a novel one. I therefore find that the matching approach is appropriate in the circumstances of this case. Mr. Boltman was able to work over approximately five months in the year of the accident (1993), and earned a substantial income. He also derived income from employment on an intermittent basis between January 1994 and July in 1994.
This post-accident income can easily be confined and matched to the specific period over which Mr. Boltman generated that income. There will be no carry forward of any post-accident income in excess of the $212.60 a week benefit into the future disability period.
I recognize that there may well be other fact situations where it might not be possible to match post-accident income to a very specific event or a specifically defined period, and in those situations other approaches may be adopted.
Repayment:
The Insurer has not established any entitlement to repayment under section 27 of the Schedule.
Special Award:
Mr. Boltman seeks a special award under section 282(10) of the Insurance Act.
While counsel agreed that certain weekly benefits had not been made, I was not presented with either evidence or submissions on this issue by either counsel. For this reason, I decline to order a special award in a case which raised a novel issue. I will reserve my decision on the outstanding benefits, if any, and I will remain seized of that matter. Either party may apply to me if necessary on that point.
Expenses:
The Applicant seeks an award of the expenses he has incurred in this arbitration. An award for expenses may be made under section 282(11) of the Insurance Act, which provides as follows:
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.
In the Ralph McCormick and Economical Mutual Insurance Company, October 2, 1991, OIC File No. A-000139, Arbitrator Susan Naylor made the following comments about expenses, with which I agree:
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.
This case is based on particular circumstances, and it has raised a very important issue. I exercise my discretion and award expenses to Mr. Boltman. Mr. Boltman is entitled to his expenses as set out in Schedule 1 of the Dispute Resolution Practice Code. In the event that the parties cannot agree as to the total amount of expenses, I remain seized of this matter and either party may apply for assessment of the expenses before me.
ORDER
The Insurer is entitled to deduct 80% of Mr. Boltman's net post-accident income to a maximum $212.60 per week, matched to the period in which it was earned. The Insurer shall not carry forward any excess post-accident income to be applied against future benefits payable to Mr. Boltman. All appropriate deductions under section 15 been made.
Mr. Boltman is not entitled to a special award.
The Personal Insurance Company of Canada is not entitled to repayment of benefits under section 27 of the Schedule.
The Personal Insurance Company is not entitled to interest under section 27(4) of the Schedule.
The Personal Insurance Company shall pay to Mr. Boltman his expenses of this arbitration pursuant to Ontario Regulation 664.
August 25, 1995
Bruce Robinson Arbitrator
Date
SCHEDULE A
Exhibits:
Exhibit 1 Production Brief (Applicant)
Tab 1 - Schedule showing summary of post-accident income and calculations of weekly benefits payable
Tab 2 (i) Letter from Comstock Canada (ii) T4 Comstock Canada (iii) Payroll stubs Comstock Canada
Tab 3 (i) Letter Campbell-Cox (ii) T4 Campbell-Cox (iii) Payroll stubs Campbell-Cox
Tab 4 - Summary of weekly income not included in any T4 slip, and corresponding invoices for period May 19, 1993 to December 31, 1993.
Tab 5 - Summary of weekly income not included in any T4 slip, and corresponding invoices for the period January 1, 1994 to December 31, 1994.
Exhibit 2 Income tax returns for 1989, 1990, 1991, 1992 and 1993 (five pages)
Exhibit 3 Assessment of Claim by Insurer
Exhibit 4 Curriculum Vitae Daniel M. Edwards. M.A. A.C.A., C.A.
Exhibit 5 Coopers & Lybrand report August 10, 1994.
Exhibit 6 Coopers & Lybrand report May 29, 1995.
SCHEDULE B
Zigouras and Royal Insurance Company 46 D.L.R.(4th)
Elaine Boone and State Farm Insurance Company, July 17, 1992, OIC File No. A-000790
Jodi E. Wiseman and Coachman Insurance Company, June 10, 1994, OIC File No. A-005706
Gene Meandro and Pilot Insurance Company, June 7, 1994, OIC File No. A-004433
Anh Vuong and State Farm Insurance Company, October 4, 1993, OIC File No. A-003727
Peter Bonitatibus and Wellington Insurance Company, April 8, 1993, OIC File No. A-000082(2)
Andreas Kosmopoulos and Victoria Insurance Company, November 10, 1993, OIC File No. A-002264
Raja Alrawdah and Zurich Insurance Company, September 24, 1993, OIC File No. A-003551
Francois Philippe and Royal Insurance Company, January 24, 1994, OIC File No. A-001736
Rene G. Lafleur and Zurich Insurance Company, May 11, 1995, OIC File No. A-004141
Randi Osborne and Canadian General Insurance Company, May 10, 1995, OIC File No. A-004447
1989 $81,543.57 1990 $63,935.61 1991 $55,129.50 1992 $4,500.00 1993 $34,265.22
Jodi E. Wiseman and Coachman Insurance Company, June 10, 1994, OIC File No. A-005706 Anh Vuong and State Farm Insurance Company, October 4, 1993, OIC File No. A-003727 Randi Osborne and Canadian General Insurance Company, May 10, 1995, OIC File No. A-004447 Raja Alrawdah and Zurich Insurance Company, September 24, 1993, OIC File No. A-003551 Andreas Kosmopoulos and Victoria Insurance Company, November 10, 1993, OIC File No. A-002264 Pro rating: Elaine Boone and State Farm Insurance Company, July 17, 1992, OIC File No. A-000790 Peter Bonitatibus and Wellington Insurance Company, April 8, 1993, OIC File No. A-000082(2)
Footnotes
- Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994. In this decision, the term "Schedule" will be used to refer to Regulation 672.
- Gross employment income:
- Lump sum deductions:
- ibid, footnote 3