Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1996 ONICDRG 170

Appeal P-001665

OFFICE OF THE DIRECTOR OF ARBITRATIONS

RAVINDER KHANNA

Appellant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Respondent

Before:

Elisabeth Sachs

Representatives:

Ms. Mili Khanna (for Ravinder Khanna)

Joseph Sullivan (counsel for State Farm)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The appeal is dismissed and the arbitration order dated January 26, 1994 is confirmed.

2. No appeal expenses are payable.

October 9, 1996

Elisabeth Sachs

Director

Date

REASONS FOR DECISION

I. BACKGROUND

Ravinder Khanna was injured in a motor vehicle accident on February 14, 1991. He received weekly income benefits of $246.15 per week from the respondent, State Farm Mutual Automobile Insurance Company ("State Farm") until April 8, 1992, under section 12 of O. Reg. 672, the Statutory Accident Benefits Schedule–Accidents Before January 1, 1994 (the "Schedule"). Mr. Khanna disputed both State Farm's termination of these and the amount he was paid.

After mediation did not resolve the dispute, Mr. Khanna applied for arbitration. A hearing was held on September 29 and 30, 1993. Two witnesses testified at the hearing—Mr. Khanna and a chartered accountant called by State Farm. Fifty-nine exhibits were filed.

The arbitrator found Mr. Khanna was not entitled to receive weekly income benefits after April 8, 1992. He also found that Mr. Khanna was entitled only to the minimum benefit amount of $185.60. This finding resulted in an overpayment to Mr. Khanna of $60.55 per week which he was ordered to repay with interest, under the provisions of subsection 27(4) of the Schedule. The arbitrator also declined to award Mr. Khanna any arbitration expenses.

Mr. Khanna appealed the arbitrator's decision. Although he was previously represented by counsel, Mr. Khanna submitted a Notice of Appeal drafted by him personally. In it he stated his reasons for appealing the order were that the arbitrator had used evidence "improperly", State Farm had made various offers to settle with him during mediation and he was "told" insurance companies pay claimants' arbitration expenses. He also referred to specific medical reports prepared by his family doctor as supportive of his entitlement to benefits.

State Farm objected to any reference about settlement discussions in its Response. At the start of oral submissions, I advised the parties that I regarded their mediation settlement discussions to be privileged communications and would not consider them. Further, Mr. Khanna wished to introduce several documents created after the release of the arbitrator's decision, including four Employer's Confirmation of Income forms, signed by members of his family for whom he allegedly worked. Given the circumstances of their creation and lack of evidentiary value, I advised the parties that these documents would not be admitted as new evidence on appeal.

II. ANALYSIS AND CONCLUSION

A. Entitlement to Benefits

Mr. Khanna claims the arbitrator erred in concluding that his entitlement to weekly income benefits ended on April 8, 1992. He submits benefits should be paid for a further five months, as claimed in arbitration.

Appeal decisions have extensively canvassed the Director's duty on appeal.¹ It is not my role to second-guess the arbitrator's interpretation of the evidence or re-try the issues. The Director is required to review the evidence to ensure no error occurred and that the findings made in relation to it are supportable. To overturn the arbitrator's findings, I must determine that the arbitrator's conclusions have insufficient or no evidence to support them.

No transcript of the oral testimony is available. As noted in previous decisions, lack of a transcript presents parties with significant difficulties in refuting an arbitrator's factual findings, the weight placed on oral testimony and any synopsis of the evidence "unless the exhibits show that a fact found and relied on by the arbitrator could not have been so found in all of the circumstances, or documentary evidence was ignored or fundamentally misconstrued."²

Mr. Khanna was the only witness testifying on his behalf at the hearing. His credibility was central to the arbitration. The arbitrator found Mr. Khanna's 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....Mr. Khanna has misrepresented his situation in an attempt to maximize his benefits.

(Decision, p.7)

Mr. Khanna relied on a statement made by Dr. Victor A. Naumetz in his report of May 4, 1992, claiming the arbitrator should have accepted it at face value, as follows:

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 submitted this report supports his position that he was eligible for weekly income benefits for 19 months after the accident, until September 7, 1992. The arbitrator characterized the statement as Dr. Naumetz' "only predicting when Mr. Khanna's symptoms from the accident likely would be gone." I agree. It is apparent Dr. Naumetz did not see Mr. Khanna after April 22, 1992 and in a later report (August 17, 1992) he suggested "it is reasonable to assume that this man can at least attempt a return to work. "

Dr. T. Czuba had been Mr. Khanna's family doctor for seven years by the time of the accident. Dr. Czuba wrote to State Farm on March 3, 1992 that he agreed with the opinion of Dr. John G. Evans, an orthopaedic surgeon who examined Mr. Khanna. On October 1, 1991. Dr. Evans saw Mr. Khanna at State Farm's request, concluding Mr. Khanna was exaggerating his symptoms and could return to work by October 7, 1991. Dr. Czuba stated he did not find Mr. Khanna "totally disabled...but he does have a certain amount of discomfort and disability." The arbitrator regarded Dr. Czuba's opinion as significant. Certainly the arbitrator was justified in placing weight on Dr. Czuba's opinion, in light of the totality of the medical evidence before him.

Although Mr. Khanna contended he continued to be eligible for weekly income benefits until September 8, 1992, I am satisfied the arbitrator's conclusion that he was fully able to return to work at least by April, 1992 is fully supported by the evidence.

B. Amount of Weekly Benefit

The comments about the Director's role on an appeal above apply equally to the issue of the weekly benefit amount Mr. Khanna claims. The arbitrator found Mr. Khanna's dual occupation or employment should be viewed as a partner in his wife's company, Active Lawn Spray, and as a self-employed real estate manager. He rejected Mr. Khanna's contention that he was merely an employee of the lawn care business and an investor in rental properties on the side. The arbitrator, at length, comments on the implausibility of Mr. Khanna's version of his working relationships, as well as the calculations he relied on to show he was entitled to the maximum weekly income benefit. Based on the material before me, I find the conclusions drawn by the arbitrator on the nature of Mr. Khanna's income earning activities, and the amounts derived therefrom, supportable and fully justified.

The arbitrator also found Mr. Khanna did not qualify as a person on a "temporary lay-off". However, this would not have affected the amount of the benefit Mr. Khanna was entitled to in any event.

III. EXPENSES

A. Arbitration Expenses

Subsection 282(11) of the Insurance Act, R.S.O. 1990, c.I.8, as amended, sets out the basis upon which an arbitrator may grant expenses:

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.

The use of the word "may" emphasizes that an expenses order is at the discretion of the arbitrator. Here the arbitrator found Mr. Khanna's claim for additional benefits to be "totally without merit." The arbitrator characterized his efforts as an attempt "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." In light of my findings, there is no reason to interfere with the arbitrator's decision to deny Mr. Khanna his arbitration expenses.

B. Appeal Expenses

1. Mr. Khanna's Expenses

In my view, this appeal was an ill-considered attempt to relitigate the issues in arbitration, which turned on the credibility and trustworthiness of Mr. Khanna's evidence. I find this appeal, based as it was on trying to recast the facts found by the arbitrator (so the next adjudicator "gets it right", as stated during oral submissions), and to rehabilitate the arbitrator's description of the case as close to fraudulent, does not justify an award of expenses to Mr. Khanna.

2. State Farm's Expenses

In its Response documentation, State Farm requested "costs" of the appeal. It is common ground that Commission adjudicators do not currently have the power to award expenses under the Act to insurers. I thus assume the request was for an award under subsection 282(11.2) of the Act.

Effective January 1, 1994, just before the release of the arbitrator's decision, the expenses provisions of the Act were amended, by the addition of subsection 282(11.2), applicable to appeals by subsection 283(7), as amended. The provision reads as follows:

If an insured person commences an arbitration [appeal] that, in the opinion of the arbitrator [Director], is frivolous, vexatious or an abuse of process, the arbitrator [Director] may award an amount to be paid by the insured person to the insurer that does not exceed the amount assessed against the insurer in respect of the arbitration [appeal] under section 14. (Words in [ ] added)

The arbitration hearing was over and argument concluded before the change in the legislation. Neither party could have addressed the possibility of such an award being made before the arbitrator.

The arbitrator issued a 29 page decision detailing why he found Mr. Khanna's case to be completely devoid of merit. The arbitrator felt strongly enough about what had transpired in the proceeding to deny Mr. Khanna his expenses. That should have been the end of this case.

The Notice of Appeal was filed a few weeks after the provision came into force, and it was not specifically raised in the Response. During oral submissions counsel raised it, but was equivocal about whether it might apply to this case. I am mindful that State Farm paid an assessment in respect of this appeal, and incurred additional expenses. However, I am not making an order under section 282 as Mr. Khanna did not have adequate notice of this possibility, nor an opportunity to fully respond.

Accordingly, the appeal is dismissed and no expenses or assessment are payable.

October 9, 1996

Elisabeth Sachs

Director

Date

Footnotes

1. 1See Calogero and The Co-operators General Insurance, (February 13, 1992, OIC P-000251) and the subsequent appeal cases applying the principles first enunciated in that decision and recently set out in Costantino and Wellington, (August 28, 1996, OIC P-000571), at pg. 2.
2. 2Singh and Simcoe Erie Group, (February 2, 1994, OIC P-000532) at p. 9, app'ld in Simpson and Royal Insurance, (August 22, 1996, OIC P-003863).