Neutral Citation: 1996 ONICDRG 94
File No. A-005712
ONTARIO INSURANCE COMMISSION
BETWEEN:
BRUNO IERULLO
Applicant
and
MAPLEX GENERAL INSURANCE COMPANY
Insurer
DECISION
Issues:
The Applicant, Bruno Ierullo, was injured in a motor vehicle accident on August 10, 1991. He applied for and received accident benefits from Maplex General Insurance Company ("Maplex"), payable under Ontario Regulation 672, the Statutory Accident Benefits Schedule—Accidents before January 1, 1994 (the Schedule).1
Mr. Ierullo returned to work in June 1992. In October 1992, he developed intense pain in his lumbar spine, with radiation into his left leg. In June 1993, his condition was definitively diagnosed, by way of a CT scan, as two prolapsed lumbar discs, at the L3/4 and L4/5 levels. The parties could not agree whether the symptoms from the herniated discs occurred as a result of the injuries Mr. Ierullo received in the motor vehicle accident of August 10, 1991.
The Applicant applied for mediation of his dispute with the Insurer. The mediation was unsuccessful and Mr. Ierullo subsequently applied for arbitration.
The issues to be determined at the arbitration are:
Do Mr. Ierullo's lumbo-sacral complaints originate from the accident of August 10, 1991?
Should an amount owing by Walden II Realty Concept Inc. to the Applicant in the sum of $30,000 be included in his income for the 52 weeks preceding the accident of August 10, 1991?
Mr. Ierullo also claimed interest on any outstanding amounts and his expenses of the hearing.
Result:
Mr. Ierullo's low back symptoms were not caused by the accident of August 10, 1991.
The $30,000 management fee should not be included in Mr. Ierullo's income for the 52 weeks preceding the accident.
Mr. Ierullo is entitled to the expenses that he has incurred in respect of this arbitration.
Hearing:
A hearing was held at North York on February 20 and 21, 1995 before me, K. Julaine Palmer, Arbitrator. On February 25, 1995 I asked the Director of Arbitrations to refer a question related to Mr. Ierullo's medical condition to the Medical and Rehabilitation Advisory Panel ("MRAP"), under the provisions of section 282(5) of the Insurance Act. Before that could be accomplished, Maplex General Insurance Company became the subject of an order under the Winding-up Act, R.S.C. 1985, c. W-11, as amended. All proceedings involving the Insurer were stayed. On December 28, 1995 Mr. Ierullo obtained an order of the Ontario Court of Justice (General Division) permitting this arbitration to continue. The referral to the MRAP followed. A report of Dr. Barry W. Malcolm dated March 28, 1996 was subsequently received and marked as Exhibit 14 to the arbitration. A further letter from Dr. Malcolm, dated May 9, 1996 together with his curriculum vitae was marked as Exhibit 15. The parties attended at the Commission on May 7, 1996 for submissions with respect to the first report of Dr. Malcolm.
Present at the hearing were:
Applicant :
Bruno Ierullo
Applicant's Representative:
D. F. Longley Barrister & Solicitor (February 1995, only)
Insurer's Representative:
B. Atherton Barrister & Solicitor
Witnesses:
Dr. Thomas A. Wright, Dr. Edwin Urovitz, Bruno Ierullo, Michael
Cerisano, Bruce Webster, Dr. Shmuel Bergman.
Evidence and Findings:
1. Do Mr. Ierullo’s lumbosacral complaints originate from the accident of August 10, 1991?
The facts in this case are largely undisputed. Mr. Ierullo, now age 37, was injured in an accident on August 10, 1991. He was treated for pain in his neck, upper and middle back, and for headaches. He also suffered an injury to his left knee. His lumbar spine was asymptomatic until October 1991. He first complained about his lower back to his family doctor, Dr. Shmuel Bergman, so far as the doctor's notes reveal, on October 8, 1991. At subsequent visits on November 25, 1991 and December 18, 1991 Dr. Bergman recorded that Mr. Ierullo’s low back pain was "okay" or "better," respectively.
Mr. Ierullo's condition continued to improve and he returned to his work as a self-employed plumber in June 1992. The job to which Mr. Ierullo returned allowed him to manage new plumbing installations, which his brother, who was his business partner, and their employees would physically install. Mr. Ierullo worked until the first week of October 1992. At that time, he had a recurrence of his neck and shoulder pain and stiffness. Dr. Bergman prescribed rest and medication, as well as physiotherapy. Mr. Ierullo began to experience pain in his lumbo-sacral spine with pain radiating into his left leg.
Mr. Ierullo's physicians, Dr. Shmuel Bergman, and Dr. Thomas Wright, orthopaedic surgeon, testified that they felt Mr. Ierullo's disc herniations arose from the injuries he received in the motor vehicle accident. Mr. Ierullo had no previous incidence of low back pain; he did receive an injury to his spine in the accident; no other cause of which the doctors knew had intervened to account for the disc herniations; therefore they felt it related to the accident.
In his report of September 6, 1994, Dr. Wright wrote:
The story with regard to this man is that he had an injury to his back on the 10th of August, 1991. He developed low back discomfort slowly after the accident and was reviewed by his family doctor. This showed pain in his back in the upper lumbar spine in October 1991.
He subsequently went on to develop ongoing continuing low back pain which necessitated him seeing Doctor Catherine Zahn. At that time Doctor Zahn felt that he had a herniated disc which was subsequently proven by CAT Scan.
One feels that this gentleman probably damaged his lumbar spine at the time of the accident, and although he did not have the herniated disc immediately following the accident, this segment of his spine probably was damaged and with persisting movement as well as therapy, one feels this man probably pushed out his disc, so that he would up with the symptoms of a herniated disc which were noted by Doctor Bergman in October, 1992, and subsequently shown on a CAT scan in October 1993.
There is no previous history of any spinal injury and one can only assume that this herniated disc, in all probability, stems from the previous problem associated with his low back area.
Dr. Bergman also supported this view. In his report of February 20, 1994 Dr. Bergman wrote:
On September 13, 1991 he started to complain also of pains over his upper back and on examination he was tender over the middle and upper dorsal spine. On October 8, 1991 he complained of pains on his middle back and on examination he was tender over part of the dorsal spine and over upper lumbar spine. On December 18, 1991 he mentioned that the low back pains are better. On April 20, 1992 he mentioned that he is not disturbed by low back pain. On June, 1992 the patient had to return to work due to lack of income. He had to stop working October 8, 1992 due to an exacerbation of the neck, and right should pains. On October 24, 1992 he mentioned that he is suffering also from strong pains on his low back radiating to the left leg. He denied any new injury. Findings on examination were suspicious of prolapse (sic) discs and these findings were confirmed on a CT scan done in October, 1993.
[...] I don't have any better explanation to his low back pain, but to consider them a result of the motor vehicle accident of August 10, 1991.
Both doctors also testified at the hearing.
In contrast to this testimony was the evidence of Dr. Edwin Urovitz, orthopaedic surgeon. Based upon his review of the medical brief sent to him in October 1994, Dr. Urovitz concluded that Mr. Ierullo's complaints of lumbo-sacral pain, resulting from two disc herniations, did not originate from the injuries he received in the August 10, 1991 motor vehicle accident. Dr. Urovitz wrote in his report of October 24, 1994 as follows:
...based upon the information available to me to date, it is my impression that although Mr. Ierullo began experiencing symptoms consistent with a disc syndrome from October 1992 onwards, these symptoms appeared to this examiner to be of a spontaneous origin having initiated one year following the accident and to be totally unrelated to the after-effects of the index incident in question.
Dr. Urovitz confirmed his conclusions after his personal examination of Mr. Ierullo on January 18, 1995. At the arbitration hearing, Dr. Urovitz also reviewed Dr. James Kirk Houston's report of an examination of Mr. Ierullo on January 22, 1992, which he had not previously seen, and testified he felt Dr. Houston's findings on his examination of Mr. Ierullo in early 1992 supported his conclusions.
As a result of this conflict in the evidence, I felt this was an appropriate case to refer to the Medical and Rehabilitation Advisory Panel (MRAP) established under section 282(5) of the Insurance Act. I asked the Director of Arbitrations to refer this case to MRAP and received two reports from Dr. Barry W. Malcolm, orthopaedic surgeon, dated March 28 and May 9, 1996. Mr. Ierullo also filed a report of Dr. J.A. Mayer, neurosurgeon, dated February 1, 1995 at the resumption of the arbitration on May 7, 1996.
Dr. Mayer's consultation report reviews Mr. Ierullo's history and symptoms and his findings on his examination of him on February 1, 1995. Dr. Mayer concluded as follows:
As a result of his accident on August 10th, 1991 it is my opinion that Bruno Ierullo sustained:
An acute neck sprain.
An acute sprain of his right shoulder.
An acute low back sprain.
A lumbar disc herniation at L3-4 and at L4-5. The L3-4 disc herniation is larger than the one at L4-5.
Despite his disc herniations he does not show any abnormal neurologic signs and I am not sure that he would benefit from surgery.
Dr. Malcolm, on the other hand, wrote as follows in his report of March 28, 1996:
Based on my review of the medical documentation, it is my opinion that the overwhelming or preponderance of medical evidence does not support any causal relationship between Mr. Ierullo’s lumbar complaints, and the motor vehicle accident of August 10, 1991.
For me to implicate a causal relationship between the accident and the lower lumbar and left lower extremity symptoms, a very clear cut description of that type of symptomatology immediately following the motor vehicle accident in question would have been present. As I stated in my comments above, the majority of the population identifies no specific incident for their back and lower extremity complaint and there is no reason to suggest why Mr. Ierullo should be any different from other members of our society in this clinical situation.
As an aside, it is thought that the presence of congenital spinal stenosis does render patients at greater risk for the development of radiculopathies secondary to disc protrusions and herniations. It is my opinion that had a significant disc protrusion occurred in association with the motor vehicle accident in question, the low back and left lower extremity radicular complaint would have been present almost immediately.
In his report of May 9, 1996, Dr. Malcolm reported further after reviewing Dr. Mayer’s report. He concluded that Dr. Mayer’s impression that the disc herniations were caused by the accident to be unsupported by "the clinical records in terms of continuity of symptoms." He also wrote:
Given the time frame as described in all of the available documentation, it is my opinion that Mr. Ierullo’s back and left lower extremity complaints, were probably a spontaneous event with or without a contributing feature from his work.
Conclusion:
The question of causation in this case is difficult to resolve. I have sympathy for Mr. Ierullo, who is a young man suffering from a painful condition. But my task as an arbitrator is to weigh the evidence and make a decision based on that, not on sentiment or conjecture. I cannot determine the issue based upon the theory that a happening which follows another must be its result (post hoc ergo propter hoc). Where the evidence of causal connection between the accident and the disabling medical condition is insufficient, unclear, or speculative then the Applicant's case will not succeed.
Mr. Ierullo has been examined by a number of specialists. He has been followed since shortly after the accident by his family doctor. Mr. Ierullo complained of low back pain and tenderness in his low back was observed by Dr. Bergman on October 8, 1991. In April 1992, Mr. Ierullo reported to Dr. Bergman that he had no low back pain. The back pain reappeared or a new low back pain was reported on October 29, 1992. At that time, Mr. Ierullo complained of pain radiating into his left leg, as well.
Dr. Bergman, in his report of February 20, 1994 stated "I don't have any better explanation to his low back pain, but to consider them (sic) a result of the motor vehicle accident of August 10, 1991." In his oral testimony, Dr. Bergman stated his opinion that there was a relationship between the accident and the low back complaints, because Mr. Ierullo had complained on a number of occasions about low back pain, then without apparent reason it was exacerbated in 1992. I do not feel I can accept Dr. Bergman's reasoning on the issue of causation, since it appears to be based only on the fact that the complaints in October 1992 followed the accident in time.
Dr. Wright's opinion is that Mr. Ierullo damaged his lumbar spine in some way at the time of the accident, although not by herniating a disc immediately. Dr. Wright felt he may have torn fibres in or around the discs. He testified that it was not common to see such an injury settle down this much, but that orthopaedic surgeons do see problems settle then recur. He agreed in his cross-examination that in January 1992, at the time of the report for Great West Life, Dr. Houston found no evidence of low back problems nor did he record any complaint of low back pain. He agreed it would have been useful to him to have had Dr. Houston’s report at the time he initially examined Mr. Ierullo. Dr. Wright also agreed that he had no reason to doubt Dr. Houston’s credentials and volunteered that Dr. Houston was a "good" orthopaedic surgeon. Similarly, he was aware of Dr. Urovitz and had no reason to doubt his credentials. Dr. Wright had not seen Dr. Urovitz’s reports, but agreed that Dr. Urovitz had more information on which to base his opinion than he himself had. In fact, Dr. Wright had no reason to doubt Dr. Urovitz's opinion. I concluded from his testimony that Dr. Wright, although not recanting his own opinion, no longer held it as strongly as he had at the time of drafting his report and was prepared to accept that the alternate opinion might, indeed, be correct.
While Dr. Urovitz acknowledged that it was possible Dr. Wright could be correct—that it took time following the car accident for this injury to develop—he concluded that on the basis of the reported symptoms and Mr. Ierullo’s verbal history, that the herniated discs were unrelated to the accident. In his oral testimony, Dr. Urovitz explained that he would have expected low back symptoms to have developed within 24 to 48 hours following the accident, if Mr. Ierullo had seriously damaged low back discs in the accident.
Dr. L. Mascarhenas, a Fellow of the American Academy of Disability Evaluating Physicians, examined Mr. Ierullo in April 1993. Dr. Mascarhenas found "it is impossible for me as an independent medical examiner to state whether this is motor vehicle accident related, as opposed to work related."
Finally, Dr. Barry Malcolm, who examined Mr. Ierullo's file to give an opinion for the MRAP, reported that, in his opinion, if a significant disc protrusion had occurred in association with the accident, "the low back and left lower extremity radicular complain would have been present almost immediately."
The best evidence before me about the causal link between the accident and the low back symptoms comes from the testimony and reports of Dr. Urovitz and the reports of Dr. Malcolm. I accept their expert opinions that there is no causal relationship between the injuries Mr. Ierullo suffered in the motor vehicle accident of August 10, 1991 and his present low back symptoms. Accordingly, I find insufficient evidence upon which to accept the proposition that the accident caused the low back problems which disable Mr. Ierullo.
Issue 2. Should an amount owing by Walden II Realty Concept Inc. to the Applicant in the sum of $30,000 be included in his income for the 52 weeks preceding the accident of August 10, 1991?
Since I have found no link between the accident and the symptoms which disable Mr. Ierullo, strictly speaking, it is unnecessary for me to decide this second issue. However, since I heard several witnesses on this point, including expert testimony, I have decided to give the parties the benefit of my opinion on this issue.
Along with his self-employment through his corporation Ontario Plumbing, Mr. Ierullo also was one of three shareholders in a corporation called Walden II Realty Concept Inc. This corporation built custom homes. He testified that he was the active partner in the business, and that the other shareholders acted more as "silent partners." Mr. Ierullo testified that in the fall and winter of 1990-91, Walden II was building two new homes. He testified he was to receive $30,000 as a "management fee" for his supervision of the construction of the homes. His testimony was confirmed by the oral testimony of Walden II's accountant, Mr. Michael Cerisano,C.A. In addition, this $30,000 is reflected as a "management fee payable" in the liabilities section of the September 30, 1991 year-end balance sheet of the corporation.
Mr. Ierullo testified that he has never received this $30,000.00. Mr. Cerisano explained that in order for the sale of the last of the two homes to occur, Walden II was required to provide a $60,000 second mortgage to the new owner. Mr. Ierullo's counsel characterized this as a change of asset—instead of being paid $30,000, Mr. Ierullo now holds an interest in a mortgage.
However, the mortgage for the property on Ivey Avenue, Toronto, was not produced at the hearing. In addition, the indebtedness to Mr. Ierullo shown on the 1991 balance sheet does not seem to be retained on the 1992 financial statement of Walden II. No mention is made on the 1992 financial statement of this second mortgage, although a mortgage on another property on Wanstead Street in Scarborough is noted.
Mr. Bruce Webster, CA, testified on behalf of the Insurer. Mr. Webster raised two questions: whether there was a bona fide agreement to pay $30,000 to Mr. Ierullo and, secondly, if there was such an agreement, should amounts be included in Mr. Ierullo’s income for 1991, if they have not been received once a significant period of time has passed after they have been earned.
Mr. Webster referred to Mr. Cerisano's letter of October 4, 1994 (Exhibit 7 at the hearing). In that letter, Mr. Cerisano stated that the amount had not been paid, because bank financing was funding the project and not enough funds were available. Mr. Webster commented that this conflicted with the 1991 balance sheet, which showed only $7,621 as a current liability for bank indebtedness and showed $136,392 in deferred building costs as an asset of the corporation.
Mr. Cerisano also explained that because Walden took a $60,000 second mortgage at 10% interest, there was no money left to pay the $30,000 management fee. However, the 1992 financial statement shows no mortgage held on any property on Ivey Avenue, but only a $55,623 second mortgage on Wanstead.
The October 4, 1994 letter also states that "financial restraints in the company" precluded paying the fee to Mr. Ierullo, although the September 30, 1992 financial statement shows $57,945 in the bank. During the year ending September 30, 1992, shareholder's advances also declined by $593,565—whereas at the beginning of the year they stood at $602,579.00, at year end they stood at only $9,014.00. No oral testimony explained these transactions. Mr. Webster opined that services rendered by a manager to a company would seem to take priority over repayment to shareholders.
Mr. Cerisano's report also stated that the "$30,000.00 will eventually be paid." However, as of February 22, 1995, the amount outstanding since 1990-1991 had yet to be paid. This conflicts with the l992 Walden II financial statements which show zero dollars payable as management salary.
Mr. Webster did not disclose his opinion as to whether there was a bona fide agreement to pay Mr. Ierullo the $30,000 management fee. However, if there was such an agreement, he suggested criteria to determine whether or not such a receivable should be included in Mr. Ierullo’s income or not, for the purposes of calculating his entitlement to weekly income benefits under the Schedule.
It might be reasonable to include the amount if it was received during a reasonable time after the work was performed; or
If, at the time of performance, the collection of the money was reasonably assured. In Mr. Ierullo’s case, it might also have been included in income if after the sale of the Ivey Avenue homes, the amount had been received, or if there was a mortgage in place which acknowledged Mr. Ierullo’s right to $30,000.00.
It would appear from the financial statements, that the Ivey Avenue homes only generated $18,817 in "profit", before considering any management fees or other Walden II expenses.
Accordingly, even if there were a bona fide agreement to pay Mr. Ierullo $30,000, Mr. Webster concluded this amount cannot be included in Mr. Ierullo’s 1991 pre-accident income, because it has not been received during a reasonable time after the work has been performed. Neither was the collection reasonably assured at the time the services were performed.
I accept the evidence of the Insurer's expert in this regard and find that the $30,000 management fee should not be included in Mr. Ierullo's income for the 52 weeks prior to the accident.
Expenses:
The Applicant seeks an award of the expenses he has incurred in this arbitration. An award for expenses may be made under section 282(11) of the Insurance Act, which provides as follows:
The arbitrator may award to the insured person such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations to the maximum set out in the regulations.
The prescribed expenses and amounts are set out in Schedule F of the Dispute Resolution Practice Code-1995 Release and in Ontario Regulation 664, R.R.O. 1990, Dispute Resolution Expenses.
In the McCormick and Economical Mutual Insurance Company case, October 2, 1991, File A-000139, Sr. Arbitrator Susan Naylor made the following comments about expenses, with which I agree:
The discretion to award expenses should be exercised, having regard to the intent and purpose of the legislative scheme. The arbitration process has been established under the Insurance Act, as amended, in order to facilitate applicants' access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits. The discretion to award expenses should be exercised in accordance with this objective, having regard to the individual circumstances of each case.
Accordingly, it is appropriate to award an applicant his or her expenses, unless, in the circumstances of the particular case, it is determined that the application for appointment of an arbitrator was manifestly frivolous or vexatious, or that the applicant's conduct unreasonably prolonged the proceedings.
The Director of Arbitrations approved this statement of the principles guiding an award of expenses, in the main, in the appeal decision in Calogero and The Co-Operators General Insurance Company, February 13, 1992, File P-000251.
The Applicant is entitled to his expenses as set out in Schedule F of the Dispute Resolution Practice Code–1995 Release. In the event that the parties cannot agree as to the total amount of expenses, a party may apply for assessment of the expenses through the Office of the Registrar.
Order:
Mr. Ierullo is not entitled to further weekly income benefits as a result of the accident of August 10, 1991.
The $30,000 management fee should not be included in Mr. Ierullo's income for the 52 weeks preceding the accident.
Mr. Ierullo is entitled to the expenses that he has incurred in respect of this arbitration.
June 6, 1996
K. Julaine Palmer Arbitrator
Date