Neutral Citation: 1996 ONICDRG 193

Appeal P96-00042

OFFICE OF THE DIRECTOR OF ARBITRATIONS

NON-MARINE UNDERWRITERS, MEMBERS OF LLOYD’S OF LONDON, ENGLAND

Appellant

and

GLENN E. THOMPSON

Respondent

Before:

David R. Draper, Director’s Delegate

Counsel:

Thomas R. Swabey (for Lloyd’s)

Vera M. Arajs (for Mr. Thompson)

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 decision, dated March 11, 1996 is confirmed.

2. Mr. Thompson is entitled to weekly income benefits at the rate of $600 per week, less deductions allowed by the Schedule.

3. Interest is payable on overdue benefits, but only to the extent that Mr. Thompson received less than $525.09 per week.

4. Mr. Thompson is entitled to his reasonable appeal expenses.

November 8, 1996

David R. Draper

Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This is an appeal by Non-Marine Underwriters, Members of Lloyd’s of London, England (“Lloyd’s”) from an arbitration decision, dated March 11, 1996, ordering that Mr. Thompson is entitled to ongoing weekly income benefits from November 4, 1994, plus interest and his arbitration expenses.

II. BACKGROUND

Mr. Thompson was seriously injured in an automobile accident on August 30, 1990. He was returning home after a long day of work, when his car left the road. The arbitrator found that he suffered a closed head injury, lung contusions, heart contusions, a ruptured diaphragm and a dislocated left shoulder.

At the time of his accident, Mr. Thompson was 28 years old. He and his partner were in the business of installing drywall. In the three years before the accident, most of their work came through Bill Olmstead, a local contractor.

Lloyd’s paid Mr. Thompson weekly income benefits on the basis that he was substantially unable to perform the essential tasks of his pre-accident work as a drywaller. After Lloyd’s received the Employer’s Confirmation of Income form signed by Mr. Olmstead, Mr. Thompson was paid $525.09 per week based on his reported income in the 52 weeks preceding the accident.

The medical professionals were doubtful that Mr. Thompson would be able to return to drywalling. Therefore, he was involved in a vocational rehabilitation program at Kingston General Hospital. By August 1993, three years after his accident, Mr. Thompson still had not returned to any regular employment.

According to section 12(5)(b) of Ontario Regulation 672, Statutory Accident Benefits Schedule - Accidents Before January 1, 1994 (“the Schedule”), the eligibility test for weekly income benefits changes after 156 weeks. To qualify, the person’s injuries must “continuously prevent” him or her “from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience.”

Lloyd’s stopped paying weekly income benefits, effective August 30, 1993, on the basis that Mr. Thompson did not meet this stricter post-156 week test. He disagreed with this decision and applied for mediation. By the time the mediation took place, Mr. Thompson had found a job through his vocational rehabilitation program at Autopak, an auto parts retailer. At the mediation, Lloyd’s agreed to reinstate his benefits (on a reduced basis because of his income from Autopak), pending a new vocational assessment.

The assessment report is dated July 5, 1994. Lloyd’s continued to pay weekly income benefits until November 4, 1994, when they were again terminated. Mr. Thompson applied for arbitration, claiming that he remained eligible for ongoing benefits.

The parties participated in a pre-hearing on November 2, 1995. They agreed that the only issue in dispute was whether Mr. Thompson was entitled to weekly income benefits pursuant to section 12(5)(b) of the Schedule from November 4, 1994 onwards. The amount of his benefits was not included as an issue. The record shows, however, that Mr. Thompson’s lawyer agreed to obtain and provide Lloyd’s with copies of Mr. Thompson’s personal income tax returns for a number of years preceding the accident.

The arbitration hearing went ahead on January 9, 1996. Mr. Thompson was the only witness. His 1990 income tax return was filed as an exhibit, but his tax returns for the previous years were not available. Lloyd’s argued that Mr. Thompson’s ability to work at Autopak demonstrated he was able to maintain employment for which he or she is reasonably suited by education, training or experience. As part of this argument, Lloyd’s submitted that Mr. Thompson’s income from Autopak (approximately $18,000) was roughly equivalent to his pre-accident income.

The arbitrator concluded that Mr. Thompson met the post-156 week test and, therefore, remained eligible for weekly income benefits. In reaching this conclusion, he stated: “I am satisfied that Mr. Thompson earned significantly more money as a drywaller than he does at Autopak, both on an hourly and yearly basis” (p.9). The arbitrator ordered that Mr. Thompson was “entitled to recover from the Insurer weekly income benefits pursuant to section 12(5)(b) of the Schedule from November 4, 1994 and continuing for such period during which the Applicant is continuously prevented from engaging in any occupation or employment for which he is reasonably suited by education, training or experience.” The order did not include the rate at which benefits were to be paid.

III. THE APPEAL

Lloyd’s appealed the arbitration order, submitting that the arbitrator erred in finding that Mr. Thompson’s pre-accident income was substantially higher than his income from Autopak. In its Notice of Appeal, Lloyd’s asked for an order staying the arbitration order. I did not order a stay, but acknowledged that because Lloyd’s had not been ordered to pay benefits at any particular rate, it retained the right to determine the proper amount of Mr. Thompson’s weekly income benefits. As I understand it, Lloyd’s did not pay any additional weekly income benefits on the basis that Mr. Thompson’s income from Autopak offset his entitlement.

The situation on appeal was unusual. Although the amount of Mr. Thompson’s weekly income benefits was not the issue in dispute, his pre-accident income had become the central question.

Oral submissions were heard on July 12, 1996. It was agreed, however, that I should reserve my decision to allow the parties to exchange additional information about Mr. Thompson’s pre-accident income. Lloyds was not satisfied by the information provided and no settlement was reached.

It became clear that the parties genuinely wanted to resolve the matter, but were unlikely to do so unless the quantum issue was addressed. They agreed to a partial rehearing for me to hear evidence about Mr. Thompson’s pre-accident income, the nature of his work at Autopak and the payment history of his weekly income benefits.

The partial rehearing took place on October 30, 1996. Mr. Olmstead, the contractor through whom Mr. Thompson did most of his work, attended and brought some additional records. In particular, he provided copies of two documents filed with the Workers’ Compensation Board, dated March 1990 and March 1991 (Appeal Exhibit 3). After receiving an explanation of these documents from Mr. Olmstead, Lloyds’ counsel conceded that Mr. Thompson’s pre-accident income was substantially higher than his income from Autopak, and sufficient to qualify him for weekly income benefits at the maximum rate of $600 per week.

The evidence before me amply supports the arbitrator’s findings. Mr. Thompson’s job at Autopak is not comparable to his pre-accident work in many respects, including remuneration. The fact that he was able to work at Autopak does not establish that he is able to maintain employment for which he is reasonably suited by education, training or experience. It is to his credit that he made such a diligent effort to return to work. Unfortunately, he was recently laid off and will need to look for other opportunities.

Based on the evidence filed at the rehearing, I also conclude that Mr. Thompson is entitled to $600 per week from one week after the accident until he no longer meets the eligibility test. This is subject to the deductions allowed under the Schedule, including his post-accident income.

IV. INTEREST

Lloyd’s counsel argued that the proper amount of Mr. Thompson’s weekly income benefits could not be determined until the rehearing and, therefore, Lloyd’s should not be required to pay interest on the full amount. Mr. Thompson’s lawyer conceded that this argument has merit.

In the particular circumstances of this case, I accept that interest should be limited. With respect to past benefits, Lloyd’s is required to pay the difference between the amount paid to Mr. Thompson and the $600 per week to which he is entitled. Interest is only payable, however, to the extent that Mr. Thompson received less than $525.09 for any week. I encourage the parties to reach an agreement on this calculation. If they are unable to do so, further submissions can be arranged through the Registrar.

V. APPEAL EXPENSES

Lloyd’s counsel submitted that in considering appeal expenses, I should take into consideration that if Mr. Thompson had provided complete information at an earlier stage, the appeal would not have been necessary. I am not convinced that the financial evidence was as critical a factor as Lloyd’s contends. In my view, there was other evidence that Mr. Thompson met the post-156 week test. He was successful in resisting Lloyd’s appeal and should receive his reasonable expenses. Again, I encourage the parties to resolve the amount of those expenses. If that is not possible, an assessment can be arranged through the Registrar.

November 8, 1996

David R. Draper

Director’s Delegate

Date

APPEAL EXHIBITS

Exhibit 1 - Copies of documents from Lloyd’s file regarding the calculation of Mr. Thompson’s weekly income benefits:

(a) Application for Accident Benefits, dated September 1990.

(b) Employer’s Confirmation of Income, dated October 16, 1990.

(c) Letter, dated October 4, 1990, from the adjuster to the broker.

(d) Letter, dated October 19, 1990, from the adjuster to the broker.

(e) Letter, dated November 5, 1990, from the adjuster to the broker.

(f) Letter, dated November 13, 1990, from the adjuster to the broker.

(g) Report of Mediator, dated April 7, 1994.

Exhibit 2 A copy of Mr. Thompson’s 1989 personal income tax return.

Exhibit 3 Copies of Worker’s Compensation Board forms filed by Mr. Olmstead (“Employer’s Statement of Payroll”), dated March 1990 and March 1991.

Exhibit 4 Copies of cheques issued to Mr. Thompson by Mr. Olmstead in June, July and August 1990.