Kevin M. Jarvis v. Jevco Insurance Company, 1996 ONICDRG 63

ONTARIO INSURANCE COMMISSION

Neutral Citation: 1996 ONICDRG 63

File No.: A-006063

BETWEEN:

Kevin M. Jarvis Applicant

and

Jevco Insurance Company Insurer

DECISION

Issues:

The Applicant, Kevin M. Jarvis, was injured in a motor vehicle accident on October 13, 1992. He applied for statutory accident benefits from Jevco Insurance Company (the Insurer), payable under Ontario Regulation 672.¹ The Insurer paid weekly benefits of $185.00 to Mr. Jarvis under section 13(1) of the Schedule, until May 24, 1993. Mr. Jarvis believes he should have received weekly income benefits in the amount of $312.00 under section 12(1) of the Schedule, over that same period. The parties were unable to resolve their disputes through mediation and the Applicant applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Does Mr. Jarvis' entitlement to weekly benefits arise under the provisions of section 12(1) (Income Benefit) or section 13(1) (Benefit if No Income) of the Schedule?

2. If benefits are payable under section 12(1) of the Schedule, what rate of weekly income benefit is payable to Mr. Jarvis by Jevco?

The Applicant also claims interest on any amounts owing, and his expenses incurred in the hearing.

Result:

1. Mr. Jarvis' entitlement to weekly benefits arises under the provisions of section 13(1) (Benefit if No Income) of the Schedule. The Insurer paid weekly benefits in the amount of $185.00 to Mr. Jarvis, in accordance with these provisions.

2. Mr. Jarvis is entitled to his expenses of arbitration under section 282(11) of the Insurance Act.

Hearing:

The hearing was held in Hamilton, Ontario on May 23, 1995, before me, Janice Mackintosh, Arbitrator.

Present at the Hearing:

Applicant's Representative: D. Robert Findlay Barrister and Solicitor

Insurer's Representative: C. Jeffrey Freedlander Barrister and Solicitor

No witnesses testified. An Agreed Statement of Facts was filed by the parties along with three letters on the letterhead of the Workers' Compensation Board, dated October 29, 1992, July 8, 1993 and September 20, 1993. Certain corrections and additions to the Agreed Statement of Facts were made at the hearing on consent of the parties. Further submissions and documents were filed on behalf of the Insurer by letter dated June 6, 1995.

Evidence and Findings:

The following facts are not in dispute:

Mr. Kevin Jarvis was involved in a motor vehicle accident on October 12, 1992. The parties agree that, as a result of this accident, Mr. Jarvis is entitled to receive weekly benefits from Jevco under either section 12 or 13 of the Schedule until May 24, 1993. (ie. 24 weeks less the first week of disability pursuant to section 12(5)(a) or 13(8)(a) ). The issue of whether Mr. Jarvis suffers a substantial inability to perform his essential tasks is not in dispute.

At the time of the accident Mr. Jarvis was attending an occupational re-training course in the field of child and youth work at Mohawk College. This course of studies was arranged through the Worker's Compensation Board (W.C.B.) in connection with a workplace injury and disability sustained by Mr. Jarvis in July 1987, when he was employed by Firestone Company (Firestone). No evidence was adduced to establish whether Mr. Jarvis continued to be an employee of Firestone at the time of the motor vehicle accident (approximately five years after he left work due to his workplace injury). I therefore make no finding whether section 12(1) of the Schedule applies on that basis.

Mr. Jarvis submits that his participation in the retraining program through Mohawk College ought to be considered "employment or self employment" to qualify him for weekly income benefits under section 12 (2)1.i of the Schedule. He also maintains that the amounts paid to him by the W.C.B. prior to his motor vehicle accident ought to be treated as "income from his ... occupation or employment" for the purpose of determining the amount of his gross weekly income under section 12(7)1. and calculating the amount of his weekly income benefit under section 12 (4)(b) of the Schedule.

While participating in the vocational rehabilitation program, Mr. Jarvis was receiving the following payments from the W.C.B.:

a) The sum of $187.86 per month as an award for permanent partial disability, pursuant to s. 45 of the Workers' Compensation Act, R.S.O. 1980, c. 539, as amended;

b) The sum of $1, 690.77 per month as a temporary supplement to the permanent partial disability award, pursuant to section 147(2) of the Worker's Compensation Act.

Mr. Jarvis received no other income in the 52 weeks preceding the motor vehicle accident. After the motor vehicle accident, Mr. Jarvis continued to receive the W.C.B. award for permanent partial disability however, the W.C.B. revoked his temporary supplement effective November 1, 1992, because he could no longer participate in the program of studies at Mohawk college due to his injuries from the car accident.

The Insurer submits that Mr. Jarvis was neither employed or self-employed in the 52 weeks preceding the accident and does not qualify for weekly income benefits under section 12 of the Schedule. Further, the Insurer states that payments received from the W.C.B. were not "income from his... occupation or employment" as contemplated under sections 12(4) and 12(7) of the Schedule, but were payments for loss of income or payments in the nature of a living allowance, not to be equated with wages or profit from employment.

Employed or Self-employed:

Mr. Jarvis' counsel relied upon the decision of the trial judge in Todd v Pitts Insurance Company,² as authority for his position. This case involved a person who, prior to a motor vehicle accident, was enrolled in an adult occupational training programme under the provisions of the Adult Occupational Training Act, R.S.O. 1970, c.A-2, and in receipt of a weekly allowance. The issue before the trial judge was whether the person was "actively engaged in occupation or employment for wages or profit" within the meaning of Part II of Sch. E of the [Insurance Act],³ in order to qualify for "no fault" loss of income automobile insurance benefits. The trial judge found that the occupational training program was designed to provide training to adults to increase their earning capacity or opportunity for employment. Those enrolled were expected to complete the program and were paid an allowance, supplemented by unemployment insurance benefits. These payments were terminated when the individual was no longer able to attend the program due to injuries suffered in a motor vehicle accident. The trial judge found that the person was "not 'employed' or 'engaged in employment for wages or profit' while enrolled in the course." The judge noted that employment implies work or activity for which one has been engaged and is being paid by an employer or master. He concluded that the usual indicia of an employment relationship were not present.

However, the trial judge found that the plaintiff was "engaged in occupation for wages or profit" as required by the legislation. He concluded that the training programme constituted the plaintiff's "occupation" during the time he was actively engaged in it and the payment or allowance received for attending the occupational training course could be considered to be either "wages or profit" to satisfy the requirements of the legislation. The trial judge reached this conclusion, bearing in mind the purpose and intent of the no-fault benefit legislation.

Counsel for the Insurer disputed the interpretation proposed by Mr. Jarvis and pointed out that the trial judge's decision in Todd v Pitts Insurance Company, was overturned, in part, by the Ontario Court of Appeal.⁴ The Court of Appeal concluded that regardless of the claimant's occupational/employment status, he was not engaged "for wages or profit." The Court of Appeal found that the allowance paid to the person during his participation in the re-training program was in the nature of a living allowance only and could not be equated with wages or profit earned in the pursuit of his trade. Consequently the claimant was not entitled to loss of income benefits.

The Insurer also relied upon the decision of the British Columbia Court of Appeal in, Bradley v. Insurance Corporation of British Columbia.⁵ The issue in that case was whether Mr. Bradley, who was actively engaged in an occupational re-training program and receiving a training allowance prior to an automobile accident, was "employed or actively engaged in an occupation for wages or profit" within the meaning of Regulation 78 and 80 of the Insurance (Motor Vehicle) Act, R.S.B.C. 1979, c. 204, in order to qualify for disability benefits under that scheme. Mr. Bradley's re-training program included both lectures and on-site job experience. Mr. Bradley sought to have the training allowance for those periods that he worked on the job site treated as "wages or profit." The B.C. Court of Appeal concluded that the purpose of the disability benefits under the auto insurance scheme (B.C.) was to provide income that otherwise would have been earned through employment or engaging in an occupation. The court rejected Mr. Bradley's position that he was "employed" while completing the on-site portion of his training program. The Court of Appeal concluded that Mr. Bradley was "studying to be employed" but was "not employed" and was not "engaged in an occupation for wages or profit" while participating in the occupational re-training program and receiving a training allowance. Consequently Mr. Bradley did not qualify for benefits.

Arbitrator Palmer reached a similar conclusion in Ranko Raickovic and Gore Mutual Insurance Company, May 26, 1993, OIC File No. A-002533, the facts of which are very similar to the present case. Following a motor vehicle accident in June 1992, Mr. Raickovic claimed weekly income benefits under section 12 of the Schedule. At the time of the motor vehicle accident he was participating in a W.C.B. approved vocational rehabilitation program in connection with an earlier workplace accident. The only pre-accident income Mr. Raickovic was able to establish was an award for permanent partial disability paid to him pursuant to section 40 of the Workers' Compensation Act and a temporary supplement to the permanent partial disability award, paid to him pursuant to section 147(2) of the Workers' Compensation Act. Following his automobile accident, Mr. Raickovic no longer received the temporary supplement since he was not able to participate in the vocational rehabilitation program because he was attending physiotherapy for his injuries received in the motor vehicle accident. Arbitrator Palmer reviewed the definitions of employed and self-employed and concluded that in the twelve months preceding the motor vehicle accident, Mr. Raickovic was neither. She concluded that Mr. Raickovic did not qualify for section 12 benefits and calculated his benefits under the provisions of section 13 of the Schedule without reference to his W.C.B. income.

The weight of authority cited supports the Insurer's position in this case. The terms "employed" and "self-employed" are not defined in the Schedule, however in common parlance these terms imply a connection to the workforce and connote the concept of an exchange of goods and/or services for value. I find that Mr. Jarvis provided neither goods nor services for the benefit of either the W.C.B. or Mohawk College, within the meaning of "employed" or "self-employed" as these terms are generally understood. Instead, he participated in his own rehabilitation for his own benefit, within the legislated framework of the Workers' Compensation Act. Mr. Jarvis' situation is readily distinguishable from that of Mr. Hanna in Kevin Hanna and Royal Insurance Company of Canada, December 21, 1995, OIC File No. A-005409. In that case Arbitrator Makepeace found that Mr. Hanna was employed as a car cleaner under section 12 while participating in a government sponsored Futures Program. The Arbitrator found that Mr. Hanna entered into an agreement as to his hours and remuneration, in which the car cleaning company was described as the "employer," that he performed essentially the same work as the other employees of the car cleaning company who were not part of the Futures Program, and that his activities were related to the workplace. In contrast, I find that Mr. Jarvis was neither "employed nor self-employed" within the meaning of section 12 of the Schedule, while engaging in a W.C.B. rehabilitation program at the time of the motor vehicle accident. Consequently his entitlement arises under section 13 with the maximum weekly benefit payable being $185.00 under section 13(3).

Income from his or her occupation or employment:

Had Mr. Jarvis succeeded in establishing that he was "employed" or "self-employed" within the meaning of section 12, he would still be required to establish the amount of his pre-accident gross weekly "income from...occupation or employment" to determine the quantum of weekly income benefit payable to him. Therefore, I have considered the submissions of the parties in respect of this second issue in the event of an appeal on the first issue.

Mr. Jarvis initially took the position that both the permanent partial disability award under section 45 of the Workers Compensation Act and the temporary supplement to the permanent partial disability award under section 147(2) of that Act, ought to be treated as "income from ...occupation or employment" for the purposes of determining the amount of his pre-accident gross weekly income under section 12(7)1., and calculating the amount of his weekly income benefit under section 12(4)(b). During the course of the hearing counsel for Mr. Jarvis conceded that the payments from the W.C.B. in respect of his permanent partial disability were not "income from... occupation or employment." However a question remained whether such payments would be deductible from gross weekly income under section 12(4)(b) as a payment "for loss of income." Senior Arbitrator Naylor, considered the character and nature of permanent disability pensions from the W.C.B. in the decisions Antonio Pallotta and Alpina Insurance Co. Ltd.(Zurich Insurance Company), April 22, 1992, OIC File No. A-000808 and Carlo Caringi and the Wawanesa Mutual Insurance Company, February 18, 1993, OIC File No. A-000860. In those cases, the insurers sought to deduct ongoing W.C.B. pensions for permanent partial disability, from weekly income benefits on the basis that they were "payments for loss of income." Senior Arbitrator Naylor, determined that the amount of a permanent partial disability award is not directly related to the employment income of an individual and is not intended to reimburse an injured worker for loss of income from occupation or employment. She found that permanent pensions were assessed according to the nature and degree of injury and were payable for life, as compensation for permanent disability, regardless of subsequent earnings. Based on these findings she concluded, and I agree, that a W.C.B. pension in respect of permanent partial disability is not related to income from occupation or employment. I therefore conclude that Mr. Jarvis' pension in respect of permanent partial disability should not be included in the calculation of gross weekly income under section 12(7), nor deducted from the amount of gross weekly income under section 12(4)(b).

Mr. Jarvis submits, however, that the temporary supplement of $1,690.77 a month paid under section 147(2) of the Workers' Compensation Act,⁶ ought to be treated as "income from... occupation or employment" for the purposes of calculating his gross weekly income under section 12(7). This supplement was payable to Mr. Jarvis for the period during which he participated in a W.C.B. approved vocational rehabilitation program with Mohawk College. The motor vehicle accident prevented him from continuing his program with Mohawk College and resulted in the termination of a substantial portion of his W.C.B. income. Counsel for Mr. Jarvis submitted that the Schedule ought to be given a broad, liberal, and remedial, interpretation in keeping with the purpose of the legislative scheme. This would provide a continuing stream of income to injured accident victims, comparable to the level of income they enjoyed prior to the accident, up to the legislated maximums. Accordingly, counsel submits that the temporary benefits paid to Mr. Jarvis in connection with his attendance at the Mohawk College program ought to be treated as "income from his... occupation or employment" for the purpose of calculating the amount of his weekly income benefits.

Arbitrators have frequently considered whether various payments received prior to a motor vehicle accident, ought to be treated as "income from ... occupation or employment" under sections 12(4)(b) and 12(7)1. when determining gross weekly income. Numerous decisions of the Commission have excluded pre-accident payments received from Unemployment Insurance, W.C.B., or other private disability plans or motor vehicle accident insurers from this calculation. Senior Arbitrator Naylor excluded W.C.B. temporary total disability benefits from the calculation of gross weekly income in Ralph McCormick and Economical Mutual Insurance Company, October 2, 1991, OIC File No. A-000139 and she excluded unemployment insurance benefits from the calculation of gross weekly income in Vincenzo Scavuzzo and Canadian Home Assurance Company, March 18, 1992, OIC File No. A-000626 (under appeal); Arbitrator Draper, excluded unemployment insurance benefits from the calculation of gross weekly income in Chuong Vo and Maplex General Insurance Company, October 4, 1993, OIC File No. A-002777 (under appeal); Senior Arbitrator Rotter excluded statutory accident benefits received in respect of a first motor vehicle accident from the calculation of gross weekly income in respect of a second motor vehicle accident in William Ntana and Zurich Insurance Company and Allstate Insurance Company of Canada, November, 15, 1993, OIC File No. A-003279 and A-003280 (under appeal); Senior Arbitrator Rotter excluded W.C.B. total temporary disability benefits related to a workplace accident and statutory accident benefits received in respect of a motor vehicle accident from the calculation of gross weekly income in respect of a third accident in Peter Jolin and Jevco Insurance Company, October 27, 1993, OIC File No. A-002187 (supplementary decision March 31, 1994); Arbitrator Palmer excluded W.C.B. temporary total disability benefits from the calculation of gross weekly income in Joseph N. Bush and Pilot Insurance Company, April 25, 1994, OIC File No. A- 004687; I excluded unemployment insurance benefits and W.C.B. temporary total disability benefits from the calculation of gross weekly income in Baraket (Ben) Mouawad and Alpina Insurance Company, Limited, June 30, 1994, OIC File No. A-003226 (under appeal) and I excluded statutory accident benefits received in connection with a first accident from the calculation of gross weekly income in respect of a second accident in Douglas P. Gibson and York Fire & Casualty Insurance Company, January 4, 1995, OIC File No. A-006150.⁷

In the present case, Mr. Jarvis seeks to calculate his pre-accident gross weekly income based on the amount of his temporary supplements to his permanent partial disability paid under section 147(2) of the Workers' Compensation Act ( ie. $1690.77 per month, divided by 4.33 weeks = $390.48 gross weekly income x 80% = $312.38 per week, less $185.00 per week paid by the Insurer x 23 weeks from October 21, 1992 to May 24, 1993). As previously noted an identical supplement was considered and excluded from the calculation of income in the decision Ranko Raickovic and Gore Mutual Insurance Company, (supra).

In Baraket (Ben) Mouawad and Alpina Insurance Company, Limited (Supra), I considered a similar W.C.B temporary supplement in the context of whether it was deductible as a "payment for loss of income." In that case, approximately one year after his car accident, Mr. Mouawad's temporary total disability benefits, which continued to be paid by W.C.B. in connection with an earlier work place accident, were replaced with two monthly payments: future loss of earnings benefits under section 43(1) of the Workers' Compensation Act, R.S.O. 1990, and a supplement to his future loss of earnings benefit under section 43(9) of the Workers' Compensation Act. The insurer in Mouawad sought to characterize the supplement as a "payment for loss of income" in order to deduct it from the amount of weekly income benefit payable under section 12(4)(b).

In that case, I found that Mr. Mouawad's supplements to his future loss of earnings benefits were primarily an incentive to ensure his participation and co-operation in the rehabilitation goals of the Workers' Compensation Act rather than to compensate him for loss of income resulting from his workplace accident. I concluded that the supplement was not a "payment for loss of income" and was not deductible by the insurer under section 12(4)(b).

In the present case, the temporary supplement to the permanent partial disability award paid to Mr. Jarvis under section 147(2) of the Workers' Compensation Act, shares many of the same characteristics as the supplement to the future loss of earnings benefit considered in Mouawad. Both benefits were initially triggered by disability, and were calculated with reference to the worker's pre-injury employment earnings. However, as observed by Senior Arbitrator Naylor in Antonio Pallotta and Alpina Insurance Co. Ltd. (Zurich Insurance Company), (supra):

Payments do not constitute "payments for loss of income" merely because entitlement is initially triggered by a requirement of disability. Nor is the fact that the pension is based on a proportion of the Applicant's pre-injury earnings sufficient. In order to constitute "payments for loss of income," they must be predicated upon there being a loss of income and paid for that loss. (page 16)

In Mouawad, and in the present case, the W.C.B. supplements were payable only for so long as the worker participated in W.C.B. approved rehabilitation. In each case the supplements were terminated when the worker could no longer participate in rehabilitation, for reasons unrelated to the workplace injury, despite the continuation of the original loss of income. As in Mouawad, I conclude here that the temporary supplement to the permanent partial disability paid to Mr. Jarvis under section 147(2) of the Workers' Compensation Act is not a "payment for loss of income."⁸ I find that the W.C.B. supplement paid to Mr. Jarvis was not predicated upon there being a loss of income and paid for that loss. Instead, the payment was more in the nature of a living allowance or incentive to ensure Mr. Jarvis' co-operation in the rehabilitation goals of the Workers' Compensation Act and was terminated when the W.C.B. rehabilitation goals could no longer be met. Thus, I conclude that the supplement is not "income from his .... occupation or employment" and should not be included in the calculation of gross weekly income under section 12(7), nor should it be deducted from the calculation of gross weekly income under section 12(4)(b) of the Schedule.

Expenses:

The parties did not specifically address the issue of expenses. However, this case involves a bona fide dispute about the interpretation of several complex provisions of section 12 of the Schedule. I find this is an appropriate case in which to award the Applicant his expenses incurred in the hearing. In the event there is a dispute concerning the amount of expenses owing, either party may apply to the Commission for an assessment of those expenses.

Order:

1. Mr. Jarvis' entitlement to weekly benefits arises under the provisions of section 13(1) (Benefit if No Income) of the Schedule. The Insurer paid weekly benefits in the amount of $185.00 to Mr. Jarvis, in accordance with these provisions.

2. Mr. Jarvis is entitled to his expenses of arbitration under section 282(11) of the Insurance Act.

April 26, 1996

Janice Mackintosh Arbitrator

Date

This approach was also taken by Arbitrator Draper in Chuong Vo and Maplex General Insurance Company, (supra ) and by me in Baraket (Ben) Mouawad and Alpina Insurance Company Limited, (supra) and Douglas P. Gibson and York & Casualty Insurance Company, (supra). In each of these cases the pre-accident payments were characterized as "payments for loss of income" and were excluded from the calculation of gross weekly income under section 12(7) but remained deductible from gross weekly income under section 12(4)(b) in situations where they continued to be paid beyond the date of the motor vehicle accident.

Footnotes

1. 1Prior 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.
2. 2(1980) 1980 CanLII 1791 (ON HCJ), 32 O.R. (2d), 173.
3. 3R.S.O. 1970, c. 224, as amended by s.26, c84 enacted in 1971.
4. 4[1982] 1. L.R. 1-1511.
5. 5[1989] B.C.J. No. 2369, summarized in 18 A.C.W.S. (3rd) case number 1160.
6. 6R.S.O. 1980, Chapter 539, as amended to Ont Reg. 253/85.
7. 7The underlying rationale for the exclusion of these amounts from the calculation of pre-accident income is not explicitly stated in the majority of these decisions. However, in Peter Jolin and Jevco Insurance Company, October 27, 1993, OIC File No. A-002187, Senior Arbitrator Rotter specifically rejected Mr. Jolin's argument that he was engaged in the occupation of being disabled and that W.C.B. benefits and statutory automobile insurance accident benefits received by him in connection with two earlier accidents ought to be included as "income from his... occupation or employment" for the purpose of calculating his pre-accident gross weekly income under section 12(7) in respect of his third accident. Arbitrator Rotter noted that the legislative scheme clearly distinguishes revenue which is "income from employment" from revenue which is "payment for loss of income" and treats them quite differently. She determined that amounts which qualified as "payments for loss of income" deductible under section 12(4)(b) could not also be characterized as "income from. . . occupation and employment" so as to be included in the calculation of gross weekly income under section 12(7). Senior Arbitrator Rotter concluded that the very purpose of such benefits was to compensate a person for their loss of income from occupation or employment and therefore they could not be viewed as income from occupation or employment at the same time.
8. 8Thus, the reasoning of Senior Arbitrator Rotter in the Jolin decision, (supra), namely that payments could not be characterized as "income from . . .occupation or employment" and "payments for loss of income" at one and the same time, does not apply to exclude the supplement from the calculation of pre-accident gross weekly income.