Neutral Citation: 1996 ONICDRG 132

File No: A-952871

BETWEEN:

ANTONIO NICOLO

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION

The Applicant, Antonio Nicolo, was injured in a motor vehicle accident on October 2, 1990. He applied for statutory accident benefits from the Insurer, Zurich Insurance Company ("Zurich"), payable under Ontario Regulations 672.¹ Zurich paid Mr. Nicolo weekly income benefits in the amount of $600.00 between October 9, 1990 and January 1, 1995. Additional weekly income benefits were set-off against Canada Pension Plan disability benefits until May 19, 1995. Mr. Nicolo effectively received weekly income benefits in the amount of $600.00 until May 19, 1995. The Applicant seeks reinstatement of his weekly income benefits from May 20, 1995 onwards at the rate of $600.00 per week. Both entitlement and quantum of weekly income benefit are in issue.

The Applicant also seeks a special award pursuant to section 282(10) of the Insurance Act,²interest on any benefits found to be owing and his expenses of this proceeding. Zurich seeks a repayment of any overpayment together with interest.

The parties were unable to resolve their dispute through mediation and the Applicant applied for arbitration under the Insurance Act.

The issues in this hearing are:

Is the Applicant entitled to weekly income benefits from May 20, 1995 onwards?
What is the proper amount of weekly income benefit to which the Applicant is entitled?
Is Zurich entitled to repayment of any overpayment under section 27(1) of the Schedule on the basis of error or fraud?
Is Mr. Nicolo entitled to receive a special award under section 282 (10) of the Insurance Act?

The Applicant also claims interest on any amounts found to be outstanding and his expenses incurred in the hearing. The Insurer claims interest on any overpayment found to be owing.

Zurich shall pay Mr. Nicolo weekly income benefits from May 20, 1995 onwards in the sum of $600.00 per week, less any Canada Pension Plan disability benefits that he is entitled to receive for this period onwards, pursuant to sections 12(5)(b) and 12(4) of the Schedule.
Zurich's claim for a repayment under section 27(1) of the Schedule is dismissed.
Zurich shall pay to Mr. Nicolo a special award of $600.00 inclusive of interest.
Zurich shall pay Mr. Nicolo interest on any overdue payments at the rate of 2% per month in accordance with section 24(4) of the Schedule.
Zurich shall pay Mr. Nicolo his expenses of the proceeding in accordance with Schedule 1 of the Dispute Resolution Practice Code.

The hearing was held in Ottawa, Ontario on December 11, 12, 13, and 14, 1995 before me, Fern Kirsch, Arbitrator.

Present at the hearing:

Applicant Antonio Nicolo

Applicant's Gordon Douglas Representative Barrister and Solicitor

Insurer's Peter Hagen Representative Barrister and Solicitor

Margaret Somody assisted Mr. Douglas. Candace Thomas, articling student, appeared with Mr. Hagen.

Mr. Nicolo was assisted by an Italian translator, Jacqueline Palumbo.

The proceedings were reported by Sara Ethier and Paolo Maiorini from Gillespie Reporting Services.

Witnesses:

Dr. Raymond Hudon

Mr. Christopher Riel

Dr. Claude Della Zazzera

Mr. Frank Calarco

Mr. Antonio Nicolo

Mrs. Palama Nicolo

Ms. Lynn Parker

Exhibits:

19 exhibits were listed on the Exhibit List filed in this proceeding.

ENTITLEMENT

Background

Mr. Nicolo is a 51 year old man of Italian origin. Mr. Nicolo came to Canada when he was 9 years of age. At the time of the accident on October 2, 1990, he was residing with his wife of 33 years, and his handicapped daughter. Mr. Nicolo also has two other children. Mr. Nicolo has a grade 3 education and is unable to read or write English. At the time of the accident, Mr. Nicolo states that he was employed by C&B Drywall. Zurich denies this and states that Mr. Nicolo was self-employed as a sole proprietor operating his company known as Tony's Custom Homes.

The accident and its aftermath

On October 2, 1990, Mr. Nicolo drove his car into a one-way laneway. He attempted to exit the entrance of the laneway by driving backwards. While reversing, he was hit by a car entering the laneway.

Mr. Nicolo states that as a result of the accident, he injured his back, and suffers chronic back pain and chronic pain syndrome, with psychological sequelae. Mr. Nicolo attended at the emergency department of the Ottawa Civic Hospital the day after the accident.

Dr. Hudon, Mr. Nicolo's family physician, examined Mr. Nicolo, and arranged for x-rays to be taken of his lumbar spine. Mr. Nicolo had stiffness in his back and transient numbness in his fingers.

Dr. Hudon testified at the arbitration proceeding. He advised that he has been Mr. Nicolo's family physician for the last 22 years with the exception of the periods from 1975 to 1979, and from 1987 to 1990. Mr. Nicolo started seeing Dr. Hudon again on a regular basis in October 1990.

Dr. Hudon testified that Mr. Nicolo suffered injury to his low back, and right knee. He also had some pain in his left flank. His conclusion was that Mr. Nicolo had sustained two types of injuries from the accident being chronic back pain and psychological injuries. The latter injuries first became evident in June 1991, when Mr. Nicolo advised him that he was having difficulty sleeping.

Mr. Nicolo attended physiotherapy at Grace Hospital from December 1990 until March 1991. There he received heat treatments, performed exercises and was provided with the use of a TENS machine,³ but his pain persisted. Mr. Nicolo performed stretching exercises as part of pool therapy at the Rehabilitation Centre. He also received treatment from an occupational therapist who taught him "pacing" techniques and postural correction.⁴ Mr. Nicolo attended psychotherapy on an ongoing basis. Nevertheless, his pain and depression have persisted.

Education, training and experience

Mr. Nicolo has very limited education, training and experience. He has a grade 3 education. He is able to speak English although he is unable to read or write English.

Prior to coming to Canada, Mr. Nicolo worked for his family harvesting oranges. He apprenticed as a carpenter but did not finish this apprenticeship. Mr. Nicolo came to Canada at the age of nine. He started working as a bricklayer at the age of 14, and also worked with cement products some time after this.

From 1970 until 1990 he worked as a drywall taper. In this position he was required to lift boxes from the ground, climb on and off a bench to reach and tape ceilings and drywall joints while holding a bucket of plaster and trowel. In addition he was required to carry a 50 lb box of plaster from room to room. This job required that the work be completed promptly, as the taper performed the preparation of the walls for the other tradesmen to continue. He performed this work on and off for C&B Drywall Inc. commencing about 1980.

In addition to his work as a drywall taper, Mr. Nicolo carried on a business, known as Tony's Custom Homes. Mr. Nicolo's company purchased land sites for the construction of houses. He constructed houses from approximately 1985 to 1987. Mr. Nicolo then attempted to sell the houses from 1988 until 1990. He arranged the details of the construction with the assistance of his children, his accountant, lawyer, and architect. He then acted as a general contractor and hired the various tradespeople who constructed the houses on his behalf. In addition, Mr. Nicolo performed his own drywall taping in these houses.

Applicable law

If Mr. Nicolo is to be to be successful in his claim for weekly income benefits for any period after May 20, 1995 he must establish that his injuries from the motor vehicle accident continuously prevent him from engaging in any occupation or employment for which he is reasonably suited by education, training or experience, pursuant to section 12(5) of the Schedule.

A number of arbitration decisions have interpreted this section of the Schedule. Arbitrator Manji recently considered it in the case of Caruso.⁵ At page 29 of her decision she outlines criteria which have been considered in various Commission decisions, in determining the suitability of the proposed employment. She states as follows:

The question of suitable employment in every case is a question of fact: the work must be suitable for that applicant, viewed fairly and realistically in the context of his or her educational and employment background.⁶
The range of alternative employment that may be considered depends on the applicant's background. It may include jobs that are different from the work that he or she was doing at the time of the accident, but only if they are reasonably suitable or appropriate for the applicant. If the job is substantially different in nature, status or remuneration, it may not be an appropriate alternative.⁷
Work is not necessarily suitable because an applicant has done a stint of it in the past. If the job is substantially different in nature, status or remuneration, it may not be an appropriate alternative.⁸
The primary focus is on an applicant's disability or functional limitations and not on the broader availability of work in the job market; however, the disability cannot be seen in a vacuum, but should be viewed in the context.⁹

I agree with these criteria.

Did Mr. Nicolo's injuries continuously prevent him from engaging in any occupation or employment for which he was reasonably suited by education, training or experience?

i) Dr. Lynne MacGregor

Mr. Nicolo was assessed at the Insurer's request by Dr. Lynne MacGregor, a physiatrist. She saw Mr. Nicolo on three occasions. At the time of her first report dated September 4, 1991, Dr. MacGregor noted that Mr. Nicolo complained of constant dull discomfort in his left low back. Lifting, bending, and prolonged sitting aggravated his pain. Mr. Nicolo also reported difficulty sleeping. Dr. MacGregor diagnosed Mr. Nicolo with mechanical low back pain compatible with a facet joint syndrome especially over L4-5 and L5-S1 on the left side. In addition, she stated that Mr. Nicolo presented to her with a "dysphoric mood and flat affect." She suggested that Mr. Nicolo attend the Chronic Pain Program at the Rehabilitation Centre which had a multidisciplinary health care approach.

Dr. MacGregor reassessed Mr. Nicolo on March 4, 1993. At this time Mr. Nicolo said that his low back pain was basically unchanged. Dr. MacGregor's report stated that Mr. Nicolo did not have any difficulties with his daily living, he was able to walk for about 15 to 20 minutes per day, and he attended a pool program two to three times per week. Mr. Nicolo had a sitting tolerance of 20 minutes, and a standing tolerance of half an hour. Dr. MacGregor states at page 3 of her report:

There certainly are no neurological deficits. He continues to have dysphoric mood and flat affect and is a vague historian. His functional capacity remains significantly limited although he has improved very slightly since I saw him in 1991, in that he is participating in a community activity program. However, my prognosis remains very guarded as it was before. It has been over two years since he worked in a fairly demanding job in construction and I think it is unlikely that he will be returning to his former employment despite these recent minor gains.

[emphasis added]

Dr. MacGregor saw Mr. Nicolo for a third assessment on July 21, 1993.¹⁰ She concluded as follows on page 4 of this report:

I agree with Mr. Vincent and Dr. Gillen that this gentleman is extremely dysfunctional with regard to his chronic pain experience. Despite maximum rehabilitation intervention in terms of chronic pain program, active physiotherapy programs and vocational assessments, he has not been able to participate and seems poorly motivated. Despite all the rehab input and the pain management program, one wonders about the benefit to him when he cannot recall any details of it and has not altered his functional status as a result of it.

I have no further recommendations for this gentleman. Certainly, his functional limitations place him at a level inconsistent with any form of employment part or full time.

ii) Dr. M. Gillen

Dr. L. MacGregor referred Mr. Nicolo to Dr. M. Gillen, a physiatrist with the chronic pain program at The Rehabilitation Centre ("TRC"). In his report dated January 4, 1995,¹¹ Dr. Gillen indicated that he first saw Mr. Nicolo on February 12, 1992 and performed a final evaluation of him on November 9, 1993.

Dr. Gillen stated that when he initially saw Mr. Nicolo in 1992, he had significant chronic pain syndrome secondary to chronic mechanical back discomfort. Mr. Nicolo was referred for a course of physiotherapy as well as for participation in the Outpatient Chronic Pain Management Group and individual therapy through TRC. The therapist concluded that Mr. Nicolo's sense of identity had been significantly impaired as a result of his being off work. Accordingly, Mr. Nicolo was referred to the Vocational Evaluation Unit. Mr. Nicolo's ability to participate in the vocational rehabilitation program was extremely limited as his maximum therapy tolerance in May 1993 was 10 to 20 minutes. Accordingly, Dr. Gillen found that Mr. Nicolo was still markedly dysfunctional with respect to his chronic pain.

Dr. Gillen diagnosed Mr. Nicolo as being severely depressed with dysthymic disorder secondary to his chronic pain syndrome. His chronic pain syndrome had developed as a result of a traumatically-induced mechanical back pain. Dr. Gillen went on to conclude that "regardless of his background, this gentleman's functional limitations are such that a return to work would not be feasible." He stated at page 3:

...in my view, this gentleman had a very strong work ethic and as a result of his inability to work, which he had done since the age of 14, that this gentleman's sense of self worth was significantly damaged and has resulted in a great deal of psychological suffering and hardship for this gentleman.

Mr. Nicolo's last appointment with Dr. Gillen was in November 1993.

iii) Dr. Della Zazzera

Dr. Gillen referred Mr. Nicolo in May of 1993, to Dr. C.A. Della Zazzera, a psychologist. Dr. Della Zazzera testified at the hearing. I found him to be a credible witness, and a caring doctor. Despite intense cross-examination, Dr. Della Zazzera was consistent in his evidence. Dr. Della Zazzera first met with Mr. Nicolo on June 23, 1993, and saw him for supportive therapy initially every four to six weeks and then every two weeks from the summer of 1995. He prepared three reports, the first dated July 9, 1993 and subsequent reports dated September 12, 1994, and July 25, 1995.¹²

Dr. Della Zazzera testified that when Mr. Nicolo came to see him he was utilizing a technique called "pacing." Mr. Nicolo "paced" himself when attempting to accomplish various tasks. Dr. Della Zazzera testified that Mr. Nicolo needed direction. He also stated that Mr. Nicolo had a tendency to somatize which made him vulnerable to chronic pain.

In his first report of July 9, 1993, Dr. Della Zazzera stated that Mr. Nicolo felt "useless and worthless" and that he was fairly limited with respect to his everyday functioning.

In his later report of September 12, 1994, Dr. Della Zazzera noted that Mr. Nicolo's set of symptoms include "somatoform pain disorder" and "dysthymic disorder." He defined "dysthymic disorder" as being a depressive neurosis, one which lasts at least two years, and which includes low self-esteem, impairs occupational functioning and creates long-term chronic depression. He also stated that Mr. Nicolo had high levels of anxiety which might warrant a diagnosis of "anxiety disorder." The report concluded that Mr. Nicolo's condition worsens under stress. He testified that Mr. Nicolo's condition had particularly worsened in the months leading up to the arbitration hearing.

Dr. Della Zazzera indicated that Mr. Nicolo's chronic condition is likely to last a long time. He also confirmed that Mr. Nicolo would have trouble sustaining regular involvement at work for more than about 20 minutes.

Mrs. Nicolo testified that two weeks prior to this hearing, her husband called 911 in distress after locking himself in his bedroom for four days. He had taken an overdose of medication, and was rushed to the hospital where he remained for four to five hours, before returning home.

iv) Dr. M.J. Agapitos

Zurich referred Mr. Nicolo to a third physiatrist for a medical examination. This examination was performed by Dr. M. J. Agapitos on December 8, 1993.¹³ I have reviewed his reports of December 22, 1993 and January 4, 1994. Dr. Agapitos concludes that Mr. Nicolo did not exhibit chronic pain behaviour. He based his conclusions on his assessment of Mr. Nicolo, and on informal observations of Mr. Nicolo when he came to his office with his wife for her appointments with Dr. Agapitos between October 16, 1990 and October 8, 1991.

In my view, the circumstances surrounding these latter observations are unclear. In addition, between the period October 16, 1990 and October 8, 1991 it appears that Dr. Agapitos' main focus was on Mrs. Nicolo not on her husband. Accordingly, I place little weight on this evidence. Where Dr. Agapitos' conclusions differ from that of Dr. MacGregor and Dr. Gillen, I prefer and accept the evidence of the latter two physiatrists.

v) Other evidence and analysis

The Insurer relied upon the ERGOS Evaluation,¹⁴ performed by Capital Vocational Specialists Inc. on July 5 and 6, 1993, by David Vincent, vocational evaluator, and the Access Therapy Centre—Physical Work Performance Evaluation¹⁵ performed on August 29, and September 2, 1994 by Astrid Norve, evaluator, to support its position.

Mr. Nicolo attended the ERGOS Evaluation on July 5 and 6, 1993. The results of the evaluation showed that Mr. Nicolo fell significantly short of his previous job requirements. He did not meet the sedentary work capacity test. He was able to sit for 17 minutes. Mr. Nicolo estimated that his sitting tolerance was about 15 minutes. He exhibited slow and laboured movements and required frequent breaks during the evaluation. His overall speed was very slow. He exhibited objective signs of discomfort including modifying his stoop by placing his left leg back and bending with his right knee. He also tended to perform the stooped activity in the sagittal plane to avoid torsion movements. He reported that his pain climbed from low intense to intense. Mr. Nicolo also stated that he felt dizzy, tired and sick and went home without completing the tests.

On the second day, Mr. Nicolo completed a modified protocol for static strength activities. He was unable to test for carrying, or static push and pull at shoulder height. He was only able to lift 10 lbs to bench height. His lifting was slow and laboured and he modified his lift with body movement. Mr. Vincent felt that his performance could have been improved if dynamic lifting could have been tested at knuckle height, however Mr. Nicolo again requested to go home, stating that he was dizzy and weak and he felt sick. Accordingly, Mr. Nicolo did not complete this evaluation either.

Mr. Vincent concluded that Mr. Nicolo was resistant to testing, raising the possibility of secondary gains influencing the assessment process. He concluded that it was obvious that Mr. Nicolo sees himself as very disabled and dependent. Mr. Vincent states on page 2 of the Supplemental Report:

The apathy, the need for prompting (even to the point of where he was being uncooperative, i.e. not wanting to continue and making a multitude of complaints) was evident and typical of the evaluation as a whole. This attitude is significant to note since it was prevalent regardless of the physical demands of the activity.

He went on to state:

Unfortunately, because of his very reluctant attitude, poor motivation, very evident guarding behaviour (portrayed fear of doing even sedentary physical activity), as well as possible depression, very little of the evaluation was even attempted. Consequently, one is at a loss to establish a baseline for his functional abilities, which is necessary to commence basic rehabilitation planning. His evasiveness and inconsistencies during discussions also pose the question of secondary gain. It appears that these issues will have to be dealt with before rehabilitation services will be effective.

At Zurich's request, Mr. Nicolo attended at the Access Therapy Centre for the physical work performance evaluation on two occasions, August 29, and September 2, 1994. This evaluation was conducted by Astrid Norve, evaluator. Mr. Nicolo was unable to completely perform the Physical Work Performance Evaluation. Mr. Norve indicated that the factors underlying Mr. Nicolo's limitations seemed to be pain, fear of pain, poor posture which was guarded, decreased muscular strength and endurance, difficulty bearing weight through left lower extremity and buttocks, due to pain, inability to effectively manage symptom, and poor cardiovascular endurance.

Mr. Norve states as follows on the final page of the report:

Based on the above factors, it is unlikely that the client can complete an 8-hour work day due to very low pain tolerance. The occupational therapist is aware that the client attended the pain management program at the Rehabilitation Centre, however the client is not able to function at a level where he would be employable with his pain at this time.

He goes on to recommend that Mr. Nicolo attend a three week work hardening program.

The Insurer submits that I should find Mr. Nicolo did not complete the several vocational assessments, and that he did not put his best effort into those he did attend. The ERGOS report prepared by Capital Vocational Specialists Inc. was the only report that suggested that Mr. Nicolo might be malingering. I do not accept this conclusion.

The evidence is clear that Mr. Nicolo was reluctant and guarded during his meetings and treatment. I find that this can be explained by the nature of his disability and the fact, which both Dr. Della Zazzera and Dr. Hudon noted, that Mr. Nicolo is phobic when it comes to meeting with doctors. Dr. MacGregor and Dr. Gillen agreed that Mr. Nicolo was extremely dysfunctional because of his chronic pain. Mr. Nicolo confirmed that he gets nervous with doctors and this makes his pain worse. Accordingly, in all the circumstances, I find that Mr. Nicolo was unable to perform the ERGOS test and the test at Access Therapy Centre for these reasons and not because he was malingering.

Zurich also referred Mr. Nicolo for a psychological consultation with Reesor & Associates. This consultation was performed by Dr. Ken Reesor, registered psychologist and Dr. Gilles Hébert, psychologist, on September 30, 1994. Their conclusions are found in their report dated October 20, 1994.¹⁶

Mr. Nicolo attended this examination in considerable physical and emotional distress. Dr. Reesor and Dr. Hébert tested Mr. Nicolo. These doctors state as follows on page 4 of their report:

I think prognosis in this case is extremely guarded, and a successful outcome will be severely compromised by this individual's cognitive functioning. Pain is undoubtedly taxing his cognitive abilities even further.

They suggest that in view of the considerable emotional distress Mr. Nicolo was experiencing, he should continue in treatment with Dr. Della Zazzera, Reesor & Associates prepared a follow-up psychovocational report dated October 27, 1994.¹⁷This report confirmed that Mr. Nicolo had some speech problems. In addition, it noted that he had difficulty understanding spoken and written English. His grade equivalence in reading, spelling and arithmetic was below grade three, which was consistent with his self-report. The tests showed Mr. Nicolo's activity level to be lower-lethargic. He was consistently distracted by pain and he tended to give up rather quickly. He exhibited significant weaknesses in comparison to his peers on all sub-tests. Dr. Reesor and Dr. Hébert concluded their report by stating that Mr. Nicolo has limited intellectual academic potential. They state on page 3 of the report:

Prognosis for vocational retraining or scholastic upgrading in individuals with low (sic) intellectual potential was very poor. Even in terms of pain management or other rehabilitation training and other therapeutic activity, Mr. Nicolo would likely experience significant difficulty remembering and implementing various skills he is taught. To learn, he would require considerable structure, direction and supervision. Prognosis for a positive outcome is very limited.

Unfortunately, due to Mr. Nicolo's limited level of intellectual functioning, there are actually very few occupations for which he would be suited, especially with persistent pain.

Dr. Reesor and Dr. Hébert were unable to complete the testing as a result of Mr. Nicolo's limitations. Nevertheless they reached a conclusion that the "test data does not suggest pain is a significant factor." The writers of the report have provided me with insufficient information in the report, for me to ascertain how they arrived at this latter conclusion.

Mr. Nicolo testified that in the past five years he has been depressed and does not sleep well due to his constant pain. He states clearly that he wants to work, but does not have the courage to do so. He too acknowledges that his depression has been getting worse.

During the course of his testimony Mr. Nicolo was agitated, anxious and upset. He cried on several occasions, asked that he be allowed to move around, complained that he could not continue to testify at the hearing, and further stated that he was leaving the proceeding. He agreed to stay on only after I indicated to him he should continue as directed by his lawyer. Mr. Nicolo was particularly agitated during cross-examination. Despite his distress, he answered the questions asked of him both in examination-in-chief and in cross-examination in a credible fashion. His answers were as complete as they could be in the circumstances.

The evidence from Mr. Nicolo's treatment providers confirming the early diagnosis of chronic pain syndrome noted by Dr. Hudon is overwhelming. I find that Mr. Nicolo continues to suffer from chronic pain syndrome.

The evidence not only of Mr. Nicolo's treatment providers, but of Dr. MacGregor, the medical examiner retained by the Insurer, supports the finding that Mr. Nicolo is not in a position to return to work given the level of his chronic pain syndrome and its effects.

The Insurer also submitted that three videotapes demonstrate that Mr. Nicolo is able to work.¹⁸These videotapes were taken on 36 different days. Counsel for the Applicant calculates that there was approximately 171 hours of videotaped material of which 15 minutes of the tape was relevant. This was confirmed by Lynn Parker, the senior staff adjuster from Zurich on the file.

At the hearing, the parties agreed that I should consider only those segments of the tapes specifically referred to me during the course of the proceeding.

Accordingly, I reviewed only these segments. I find that they are not helpful in assisting me with the issues that I must determine in this hearing.

Mr. Nicolo testified, as did his treating doctors, that he was required to remain active. He did not take issue with the contents of the surveillance. At no time did he deny the contents of the tapes, or deny that he was capable of performing the activities shown on the tapes. The surveillance tapes show Mr. Nicolo performing a number of physical tasks. Some of the surveillance clips show him snowplowing in his truck, carrying a pail of dog food, carrying a wooden crate with another individual, and rolling a bag into the trunk of a car.¹⁹ None of these segments nor the other segments referred to by counsel were long enough or complete enough in their context, to lead me to believe that Mr. Nicolo was able to engage in any occupation or employment for which he is reasonably suited by education, training or experience, in a sustained fashion. In addition, there were very few segments showing Mr. Nicolo actively engaged, considering the number of days that he was videotaped.

Mr. Nicolo has a grade three education and limited English language skills. He has been engaged solely in the area of construction/manual labour since he was 14 years of age. Despite this limited education and training, he was able to start Tony's Custom Homes based on his experience in the construction field over the years and with the help of various professionals, and his children who read documents to him. However, in my view Mr. Nicolo's low education, language difficulties, and his present injuries would severely limit him in any field outside of the construction industry.

It is clear that the level of Mr. Nicolo's disability is such that it would not allow him to presently work in the construction/manual labour field. The Insurer suggested a number of jobs that it felt that Mr. Nicolo could perform, including those of a gas station attendant and snowplow operator. Dr. Hudon was asked hypothetical questions about Mr. Nicolo's ability to perform these jobs. I did not find this evidence particularly helpful as I heard no evidence whether these jobs were suitable for Mr. Nicolo viewed fairly and realistically in the context of his educational and employment background. Nor did I hear evidence with respect to the nature, status or remuneration of these jobs in relation to the job that Mr. Nicolo was performing prior to the accident.

In all the circumstances, I find that Mr. Nicolo's chronic pain syndrome continuously prevents him from engaging in any occupation or employment for which he is reasonably suited, by reason of his education, training or experience. Accordingly, Mr. Nicolo is entitled to weekly income benefits from May 20, 1995 onwards.

Did Mr. Nicolo's injuries result from the accident or his bankruptcy?

The Insurer submits that if Mr. Nicolo's condition continuously prevents him from engaging in any occupation or employment for which he is reasonably suited by reason of his education, training or experience, that condition did not result from the accident. It submits that Mr. Nicolo's condition can be attributed to stress due to his existing financial problems.

In Grout,²⁰ with which I agree, Arbitrator Makepeace stated that in order to establish the necessary causal connection between the inability to perform the essential tasks and the accident, it is not necessary to show that the accident is the only cause of the inability. However, it must have "significantly" or "materially" contributed to the insured person's disability. In this case, I find that the accident significantly contributed to Mr. Nicolo's disability for the following reasons.

The accident occurred on October 2, 1990. The parties agree that Mr. Nicolo was insolvent at the time of the accident, that he was assigned into personal bankruptcy in May 1991, and was discharged from bankruptcy on January 20, 1993. Mr. Nicolo testified that he had been aware of his insolvency since June of 1990.

The Insurer submits that Mr. Nicolo was under stress both prior to and after the accident as a result of his insolvency and subsequent bankruptcy. I accept this submission. Nevertheless, despite his financial difficulties and stress, prior to the accident Mr. Nicolo was able to work for C&B Drywall as a wall taper and he completed drywall taping on two houses. Accordingly, I find that Mr. Nicolo's stress from his insolvency prior to the accident did not prevent him from doing his job as a drywall taper.

I particularly rely on the opinions of Dr. Gillen and Dr. Della Zazzerra in this regard.

Dr. Gillen indicated that Mr. Nicolo had a very strong work ethic and that as a result of his inability to work his sense of self-worth was significantly damaged and resulted in a great deal of psychological suffering and hardship.

Dr. Della Zazzerra stated that in his opinion the motor vehicle accident and not the bankruptcy was the precipitating factor which changed Mr. Nicolo's functioning. He also stated that Mr. Nicolo's clinical history shows that the motor vehicle accident was the cause, and that Mr. Nicolo would have overreacted to any adverse situation in his life, including the bankruptcy after the accident.

Both Mr. and Mrs. Nicolo testified that Mr. Nicolo was happy and relieved when the bankruptcy finally was discharged. In my view this is a normal reaction. Accordingly, if the bankruptcy was the cause of Mr. Nicolo's injuries, I would have expected that Mr. Nicolo's condition would have improved after January 20, 1993. This was not the case. Mr. Nicolo's condition has in fact deteriorated. In my view, Mr. Nicolo would have been able to continue to work as a drywall taper throughout the period of his bankruptcy, and despite the stress of the bankruptcy. The motor vehicle accident changed this fact.

Under all the circumstances, I find that Mr. Nicolo was continuously prevented from engaging in any occupation or employment as a result of his injuries sustained in the accident, and due to no other cause.

QUANTUM

What is the amount of benefit to which Mr. Nicolo is entitled?

a) Preliminary Issue: Was Mr. Nicolo's quantum of weekly income benefit settled by the parties in 1993?

Applicant's counsel submits that the Insurer and Mr. Christopher Reil, Mr. Nicolo's solicitor at the time, settled the issue of the amount of Mr. Nicolo's benefit on July 14, 1993. He claims that as a result of this settlement, the Insurer agreed to pay Mr. Nicolo weekly income benefits of $600.00. Zurich submits that the issue of quantum of benefit was not settled on a final basis as the letter confirming the amount was sent to Mr. Reil "Without Prejudice." If I find that the issue was settled, then it is not properly before me.

Mr. Reil, the Applicant's former solicitor, testified on Mr. Nicolo's behalf. He testified that he was retained by Mr. Nicolo in October 1991 to provide Mr. Nicolo with a second opinion on his tort claim, and to advise him regarding the calculation of his weekly income benefit. He testified that he contacted Zurich in October 1991. Mr. Reil spoke with Ms. Lynn Parker, a senior claims representative at Zurich, and advised her that Mr. Nicolo did not agree with the calculation of Mr. Nicolo's benefit of $396.00 per week. The actual amount of benefit was in fact $390.40 per week at this time.²¹

Mr. Reil followed up this conversation in writing in October 1991 and again in November 1991, and April 14, 1992. His correspondence asked Zurich to explain its method of calculation. Zurich responded by correspondence dated April 22, 1992.

On November 3, 1992, Mr. Reil again advised Zurich that the Applicant did not accept its explanation and proposed that instead of paying Mr. Nicolo $390.40 per week, it should have paid $600.00 per week.

Mr. Reil testified that he had a meeting with Ms. Parker on January 20, 1993. He stated that at the meeting she advised him that she had examined recent arbitration cases and came to the conclusion that it was correct to base the determination of the weekly income benefit on the "average income of $750.00 per week."

Mr. Reil testified that as Ms. Parker accepted Mr. Nicolo's average gross weekly income as being $750.00 per week, the only issue left was whether Mr. Nicolo was self-employed and was therefore required to deduct ceasing expenses from this amount.

Mr. Reil followed up the details of this meeting in correspondence dated January 21, 1993 where he stated:

At the meeting you indicated that in light of the recent arbitration cases to which you made reference, you accepted Mr. Nicolo's average gross weekly income was $750.00 prior to the accident. You stated that the only remaining concerns you had were whether Mr. Nicolo was an "employee" or "sub-contractor" of C&B Drywall and whether there were any non-continuing expenses which should be deducted from the gross weekly income noted above.

The letter goes on to state as follows on page 2:

You indicated that you expected to complete your investigation within the next two weeks and would then be in a position to address the question of the payment of the outstanding arrears and interest on the arrears. For his part, Mr. Nicolo confirmed that he is prepared to make application for disability pension under the Canada Pension Plan.

Mr. Reil wrote a further letter on February 5, 1993 which asked whether Zurich had completed its investigation. He restated Mr. Nicolo's position regarding what he believed Mr. Nicolo's weekly entitlement to be. He stated as follows:

To reiterate our position, we have made inquiries of Mr. Frank Calarco, the proprietor of C&B Drywall and are satisfied that Mr. Nicolo was employed by C&B Drywall and did not have the responsibility to bear any expenses in connection with his employment. On this basis, we take the position that Mr. Nicolo is entitled to 80% of his average gross weekly income at the time which you have conceded was $750.00. Mr. Nicolo is entitled to receive indemnity payments at the rate of $600.00 per week. As indicated to you we are applying the $7,500.00 cheque that you provided on January 20th towards the arrears which have accumulated in the first year of Mr. Nicolo's disability. This payment will be applied first towards interest with the balance towards principal. So that we may calculate the total amount of arrears inclusive of interest owing to Mr. Nicolo I would ask that you please provide me with a summary of all payments made to date. With respect to interest, I am prepared to recommend to my client that he accept an interest rate of 10%. Given the continuing nature of the payments made by your company, I am prepared to recommend to Mr. Nicolo that he accept an effective interest rate of 5% on the total gross amount of arrears as this will reflect the continuing nature of the payments. In addition, Mr. Nicolo has been required to obtain legal counsel to protect his rights in this matter, we believe that a contribution towards his costs should also be included in the settlement of the payment of the arrears now due and owing to him.

Mr. Reil again asked for the Insurer's position. On March 11, 1993, Mr. Reil sent further correspondence to Zurich in which he confirmed that Zurich paid Mr. Nicolo a further $9,061.60. He stated:

I assume that this sum is intended to be applied towards the outstanding arrears of payments.

So that I can understand the basis upon which you have calculated all payments made to date and propose to make payments for the future, I would ask that you please provide me with a summary of all payments made to this date. Please advise whether you have taken into account interest on the outstanding arrears and if so, how this has been done.

On April 13, 1993 Mr. Reil again confirmed that his client did not understand the basis upon which Zurich made the payments. He stated:

Nor does he understand the present basis upon which you propose to continue making payments to him. I cannot provide him with advice without the answers to the questions I have raised in my previous two letters.

Mr. Reil testified that he engaged in a further conversation with Ms. Parker on April 15, 1993. Zurich maintained that while Mr. Nicolo's gross weekly income figure was $750.00, amounts should be deducted for ceasing expenses. Zurich suggested that the amount of $20.00 per week should be deducted from $750.00, 80 % of which was $584.00 per week. Mr. Reil did not agree to this figure, and again confirmed on May 3, 1993 and June 17, 1993 that his client was seeking $600.00 as a weekly income benefit.

Zurich responded by correspondence dated July 14, 1993 which states as follows:

As per our telephone conversation attached please find a cheque in the amount of $6,053 which is payable to Mr. Nicolo. This amount represents the maximum entitlement Mr. Nicolo is entitled to which is $600 per week. Note that we have paid Mr. Nicolo up till July 31st, 1990 at the rate of $584 per week therefore there is an outstanding amount of $16 per week which is owed to him. This totals $2,938 owing plus interest of $3,115 for a total of $6,053.

The letter goes on to state:

With reference to legal fees, we normally do not allow them. However, as this is an exceptional case, we have allowed $500 for your services and that cheque is also enclosed.

Hoping this meets with your approval.

This letter was marked "Without Prejudice."

Mr. Nicolo continued to receive weekly income benefits at the rate of $600.00 until the summer of 1994, at which time Zurich advised Mr. Nicolo that his benefits were under review. Nevertheless, Zurich continued to pay Mr. Nicolo his income benefits until December 1994. Mr. Nicolo received Canada Pension Plan disability payments, which Mr. Reil set off against further weekly income benefits owing to his client. The parties agreed that Zurich effectively continued to pay Mr. Nicolo his weekly income benefits at the rate of $600.00, by way of this set-off from January 1, 1995 until May 19, 1995.

Mr. Reil did not send a letter confirming their agreement to Zurich, nor were Minutes of Settlement ever prepared or executed by Mr. Nicolo. Mr. Reil testified that he did not send such a letter to Zurich as he believed that the nature and tenor of his conversations with the insurance company were such that he considered the issue of quantum of benefit was resolved. Mr. Reil closed his file. Mr. Nicolo contacted Mr. Reil one year later and advised him that his benefits had been stopped by the Insurer.

Lynn Parker testified for Zurich. She testified that at the time of her involvement with Mr. Nicolo she had approximately 150 to 200 files and she was very familiar with this Schedule.

She indicated that no settlement was reached between the parties on this issue. She testified that Zurich initially paid Mr. Nicolo at the rate of $384.00 per week. Correspondence dated April 22, 1992 shows that Mr. Nicolo was being paid $390.40 per week at that time.²² Ms. Parker stated that this figure was later recalculated as a result of prodding from Mr. Reil. She also testified that Zurich recalculated Mr. Nicolo's weekly income benefit at the rate of $600.00. Counsel for the Insurer asked Ms. Parker whether anything was said to Mr. Reil which would lead him to believe that this was a final settlement. She indicated that she would never state that this was final, although she did mention that she might have said "at least we have this done now."

Ms. Parker testified that she put the words "Without Prejudice" into letters where issues remain to be dealt with. She testified that she put the words "Without Prejudice" into the letter of July 14, 1993, because she still had concerns about the appropriate quantum of benefit. In addition, Ms. Parker stated that Zurich paid Mr. Reil $500.00 as legal fees as senior management at the time was not really sure how the Commission would look at the issue of legal fees. Accordingly, Zurich paid $500.00 costs to Mr. Reil as a sign of good faith.

Both Mr. Reil and Ms. Parker are senior professionals. Nevertheless, where their evidence differs I choose to accept the evidence of Mr. Reil over that of Ms. Parker. Mr. Reil had a better recollection of the course of events between the parties, than Ms. Parker. I found Ms. Parker's testimony to be generally vague about her dealings with Mr. Reil. On the other hand, Mr. Reil was able to recall meetings and discussions that he had with Ms. Parker with detail and clarity.

Mr. Reil sent Zurich numerous letters which show that he proactively engaged in negotiations with Zurich on Mr. Nicolo's behalf. He advocated for his client in a ceaseless fashion. When Zurich did not respond to Mr. Reil's correspondence, Mr. Reil attempted to clarify Zurich's position vis-a-vis his client. Zurich finally responded to Mr. Reil's many requests on July 14, 1993. Zurich submits that the words "Without Prejudice" on this letter means it was not bound to pay the figures contained in the document. I do not agree.

In my view, negotiations continued between the parties until Zurich sent Mr. Reil its letter of July 14, 1993. It was at this time that the parties were finally ad idem regarding the amount of the weekly income benefit. This letter clearly settles the amount of Mr. Nicolo's income benefit at $600.00 per week. As a result of the contents of this letter, Zurich made a lump sum payment to Mr. Nicolo, bringing his weekly income benefit from $584.00 to $600.00. In addition, it paid legal costs to Mr. Reil. Zurich's actions subsequent to this letter confirm to me that it agreed that the amount of weekly income benefit was $600.00. It continued to pay Mr. Nicolo for a further year and one half at this agreed sum. Zurich paid him until December 31, 1994, and then by way of set-off until May 19, 1995.

I find that Zurich did not stop Mr. Nicolo's benefits in December 1994 because it questioned the amount of the benefit. Instead Zurich stopped the benefits as it questioned Mr. Nicolo's continuing disability. This was confirmed in Mr. Reil's letter of August 22, 1994, sent to Zurich.²³

Zurich gave Mr. Reil no indication between July 14, 1993 and December 1994 that it had concerns about the amount of weekly income benefit. Similarly, correspondence sent by Mr. Reil to Zurich in the months after December 7, 1994 did not reopen this issue. This correspondence simply informed Zurich that Mr. Nicolo had made application for a disability pension from the Canada Pension Plan, and discussed the effect that these benefits would have on the already agreed upon amount.²⁴ The CPP disability benefit was set off against further weekly income benefits owing to Mr. Nicolo at the rate of $600.00 per week for the period January 1, 1995 until May 19, 1995. In addition, in the hearing the parties agreed that in effect Mr. Nicolo was paid weekly income benefits at this rate until May 19, 1995.

Zurich submits that the words "Without Prejudice" on the July 14, 1993 correspondence showed that the issue was not determined on a final basis. I do not accept this submission since Zurich certainly did not act as if the agreement was "Without Prejudice."

In all the circumstances I find that the issue of the quantum of Mr. Nicolo's weekly income benefit was settled on a final basis at the agreed upon rate of $600.00 per week. Accordingly, the issue of the amount of Mr. Nicolo's weekly income benefit is not before me.

The parties agreed at the hearing that the quantum of Mr. Nicolo's weekly income benefit would be reduced by any Canada Pension Plan disability benefits to which Mr. Nicolo was entitled for the period May 20, 1995 ongoing. I heard insufficient evidence as to the amount of Mr. Nicolo's CPP disability benefit to allow me to be more specific. Accordingly, Zurich shall pay Mr. Nicolo weekly income benefits from May 20, 1995 onwards in the sum of $600.00, less any Canada Pension Plan disability benefits that he is entitled to receive for this period onwards, pursuant to sections 12(5)(b) and 12(4) of the Schedule.

REPAYMENT

Zurich claims that it is entitled to a repayment of benefits paid to Mr. Nicolo for the period up to May 19, 1995 on the basis of error or fraud pursuant to section 27 of the Schedule. Given my finding that Mr. Nicolo was entitled to receive a weekly income benefit in the sum of $600.00, it is unnecessary for me to consider this issue.

As the parties agreed that Mr. Nicolo's Canada Pension Plan disability benefits were set off against weekly income benefits for the period January 1, 1995 until May 19, 1995, there is similarly no issue as to whether Zurich is owed a repayment pursuant to section 27(3) of the Schedule for this period of time.

SPECIAL AWARD

Mr. Nicolo seeks a special award under section 282(10) of the Insurance Act on the ground that Zurich unreasonably withheld or delayed the payment of his weekly income benefits.

Section 282(10) states:

(10) If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the No-Fault Benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.

[emphasis added]

The term "unreasonable" was considered in Erickson,²⁵ with which I agree. Senior Arbitrator Rotter stated at page 6:

It is clear that conduct [of the insurer] may be unreasonable, but still not deliberately or wilfully injurious, or motivated by bad faith. I find that wilful or deliberate misconduct or bad faith are additional factors in the conduct of the Insurer, beyond unreasonableness, which should be taken into consideration when assessing the quantum of the special award.

Subsection 24(8) of the Schedule requires the Insurer to give written notice of its reasons for refusal of benefits.

As noted earlier in this decision, Zurich ceased payment of Mr. Nicolo's weekly income benefits on January 1, 1995. I heard no evidence suggesting that Zurich forwarded an Assessment of Claim form or other notice to Mr. Nicolo stating its reasons for cessation of payment after this date.

On December 7, 1994, Mr. Reil wrote to Zurich and advised them that Mr. Nicolo had been approved for a Canada Pension Plan disability pension. He requested immediate instructions as to how Zurich wished to deal with this payment. Mr. Reil sent follow-up letters on December 19, 1994, January 12, 1995 and January 25, 1995. On February 1, 1995, Zurich responded to Mr. Reil's requests. Zurich stated as follows:

The funds this claimant received from Canada Pension should have been forwarded to us as this now constitutes an overpayment of $9,922.48. We are, therefore not prepared to continue disability payments until this overpayment has been satisfied and would appreciate receiving a cheque to cover same.

Mr. Reil advised the Insurer on February 3, 1995 that he would set off the monies owing to his client from the Insurer against the monies owing to the Insurer by his client, and he would then send the balance provided that Zurich agreed to reinstate Mr. Nicolo's benefits. By February 27, 1995, Zurich still did not respond to Mr. Reil's requests of February 3, and February 16, 1995. Accordingly, Mr. Reil advised Zurich that he had advised Mr. Nicolo to use the portion of the surplus funds that he had received from CPP to offset the payments to which he would otherwise be entitled from the company. This set-off continued until May 19, 1995. As noted earlier in this decision, the parties agree, and I find that Mr. Nicolo effectively received weekly income benefits until May 19, 1995 as a result of this set-off.

Despite the fact that the Insurer did not actually pay Mr. Nicolo, Mr. Nicolo was not out of pocket during this period of time until May 19, 1995. He had the benefit of the monies and any interest accruing on these monies for this period.

In my view, the letter of February 1, 1995 did not serve as notice to Mr. Nicolo which is required under section 24(8) of the Schedule. An insurer cannot simply stop weekly income benefits solely because it believes that it might have overpaid an applicant. Section 27(3) of the Schedule deals with this question and states that a person "must repay the insurer any benefit received under sections 12 and 13 to the extent of any payments received by the person that are deductible from benefits under section 12(4) or 13(3). Canada Pension Plan disability benefits are deductible benefits under this section.

In addition, the February 1, 1995 letter indicated that Zurich was not prepared to continue disability payments until the overpayment was satisfied. The parties agreed that the overpayment was satisfied by May 19, 1995. Accordingly, on the basis of this letter Zurich should have reinstated Mr. Nicolo's benefits by May 19, 1995, unless subsequent notice was given to Mr. Nicolo as to why benefits were ceasing.

Zurich had a positive obligation under section 24(8) of the Schedule to advise Mr. Nicolo as to what information it was relying upon to terminate Mr. Nicolo's weekly income benefits, and to provide him with a copy of any report upon which they were relying in support of this decision. This should have been done in January 1995 and at the very latest by May 19, 1995 when the set-off ended. Zurich failed in this obligation, and no further benefits were paid and Zurich never provided Mr. Nicolo with its reasons for termination. In my view, in failing to do so, Zurich acted unreasonably in withholding Mr. Nicolo's benefits. Accordingly, Zurich shall pay a special award to Mr. Nicolo.

I heard no evidence to lead me to believe that Zurich acted with wilful or deliberate misconduct or in bad faith. I take this fact into account in determining the amount of the special award to be paid. Accordingly, Zurich shall pay to Mr. Nicolo a special award of $600.00 inclusive of interest.

EXPENSES

Mr. Nicolo seeks an award of the expenses he has incurred in this arbitration. Under section 282(11) of Insurance Act, an arbitrator may exercise discretion in awarding expenses. It has been held that it is appropriate to award an applicant his or her expenses unless it is established that the application for arbitration was "manifestly frivolous or vexatious, or that the applicant's conduct unreasonably prolonged the proceedings."²⁶

I choose to exercise my discretion in this case and find that Mr. Nicolo is entitled to his expenses as set out in Schedule 1 of the Dispute Resolution Practice Code. The solicitor for the Applicant seeks additional expenses stating that Mr. Nicolo was required to hire a new lawyer during the course of the arbitration proceeding. I heard insufficient evidence to consider the request for additional expenses at this time. If the parties cannot agree on the total amount of expenses, they may apply to the Commission for their assessment.

ORDER

Zurich shall pay Mr. Nicolo weekly income benefits from May 20, 1995 onwards in the sum of $600.00 per week, less any Canada Pension Plan disability benefits that he is entitled to receive for this period onwards, pursuant to sections 12(5)(b) and 12(4) of the Schedule.
Zurich's claim for a repayment under section 27(1) of the Schedule is dismissed.
Zurich shall pay to Mr. Nicolo a special award of $600.00 inclusive of interest.
Zurich shall pay Mr. Nicolo interest on any overdue payments at the rate of 2% per month in accordance with section 24(4) of the Schedule.
Zurich shall pay Mr. Nicolo his expenses of the proceeding in accordance with Schedule 1 of the Dispute Resolution Practice Code.

August 7, 1996

Fern Kirsch Arbitrator

Date

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.
R.S.O. 1990, c.1.8, as amended
Exhibit 4 - Report of Dr. L. MacGregor dated September 4, 1991, page 1.
Exhibit 4 - Report of Dr. L. MacGregor dated March 4, 1993.
Caruso and Guarantee Company of North America (May 9, 1996), OIC A-006856
Sandra Singh and State Farm Mutual Automobile Insurance Company (May 8, 1995), OIC A-005714
Spicer and State Farm Mutual Automobile Insurance Company (May 24, 1995), OIC A-010158
Rodway and Royal Insurance Company of Canada (June 12, 1995), OIC A-007593
Mills and Canadian General Insurance Company (July 6, 1995), OIC A-005599 and Reid and Continental Insurance Company (July 27, 1995), OIC A-006022
Exhibit 4
Exhibit 3
Exhibit 2
Exhibit 14
Exhibit 13
Exhibit 18
Exhibit 5, report of Dr. G. Hébert and Dr. K. Reesor
Exhibit 5
Exhibit 19--3 videotapes
There were other segments as well all of which are not listed here.
Grout and Pilot Insurance Company (May 4,199), OIC A-994805 (appeal pending)
Exhibit 6
Exhibit 6
Exhibit 7
Exhibit 7--letter dated February 1, 1995
Erickson and The Guarantee Company of North America (July 16, 1992), OIC A95-000560 (Decision on special award)
McCormick and Economical Mutual Insurance Company (October 2, 1991), OIC A-000139

Antonio Nicolo v. Zurich Insurance Company, 1996 ONICDRG 132

Case Summary