Neutral Citation: 1997 ONICDRG 118

OIC A95-000659

BETWEEN:

LINDA ARBEAU

Applicant

and

PILOT INSURANCE COMPANY

Insurer

DECISION

The Applicant, Linda Arbeau, was injured in a motor vehicle accident on May 6, 1994. She received statutory accident benefits from Pilot Insurance Company payable under the Schedule.[1]Mrs. Arbeau claimed income replacement benefits, various supplementary medical and rehabilitation benefits, interest on overdue benefits, a special award and her expenses in respect of the arbitration. The parties were unable to resolve their disputes through mediation and Mrs. Arbeau applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

Is Mrs. Arbeau entitled to income replacement benefits between May 13, 1994 and October 31, 1995?
What is the amount of Mrs. Arbeau's income replacement benefit?
Is Mrs. Arbeau entitled to various supplementary medical and rehabilitation benefits claimed?
Is Mrs. Arbeau entitled to a special award under section 282(10) of the Insurance Act because Pilot unreasonably withheld or delayed payment of benefits?
Is Mrs. Arbeau entitled to interest on overdue benefits, and her expenses incurred in respect of the hearing?

Mrs. Arbeau is entitled to income replacement benefits from May 13, 1994 to October 31, 1995.
Pilot Insurance Company shall pay Mrs. Arbeau $438.32 per week for each of 20 weeks between May 13, 1994 and September 30, 1994, totalling $8,766.64. Pilot may deduct from this amount, post accident net income of 90% of ($4,401.91, less applicable deductions for income tax, Canada Pension Plan and Unemployment Insurance premiums). After September 30, 1994, Mrs. Arbeau's post-accident earnings exceed her entitlement to income replacement benefits. The Schedule does not permit me to award the loss of profits claimed by Mrs. Arbeau.
Mrs. Arbeau is entitled to supplementary medical and rehabilitation benefits as detailed in the decision.
Mrs. Arbeau is entitled to interest on overdue benefits.
Mrs. Arbeau is entitled to a special award.
Mrs. Arbeau is entitled to her expenses in respect of the arbitration. This includes the outstanding accounting invoice in the amount of $884.

Background:

Linda Arbeau is a certified pedorthist. She makes and fits footwear and appliances in order to alleviate foot, leg, knee and hip pain. At the time of the accident Mrs. Arbeau was self-employed. She was the sole proprietor of Quality Footcare Management/ operating from a building adjacent to her home in Domville, north east of Brockville. There she saw patients who had been referred to her by physicians. She also worked one day a week in a physician's office, providing footcare to about 20 patients.

Mrs. Arbeau received her certificate as a pedorthist in 1992. She built up her business over a period of years, making house calls, working in doctors' offices and making presentations to various groups. Patients travelled to see her from the surrounding community and from Montreal, Toronto and Vermont.

Henry Arbeau, the Applicant's husband, operated a welding business, in a different building, adjacent to their property in Domville. In the evenings and on weekends he would help Mrs. Arbeau while she fabricated orthotics. Mrs. Arbeau, in turn, provided bookkeeping services to Henry's Welding. Chris Arbeau, one of the Applicant's sons, also did bookkeeping for Quality Footcare Management in 1993.

In September 1993, Mrs. Arbeau's accountant, Kenneth Durand, suggested that her business would be more profitable if she expanded the sale of orthotics and orthopaedic shoes. This would require moving to a downtown location, increasing her inventory of orthopaedic shoes, and obtaining bank financing to support the increased inventory.

Mrs. Arbeau decided to implement her accountant's recommendations. She found a downtown location with lots of space and windows, which she described as "absolutely perfect." I find that based on Mrs. Arbeau's testimony, which is corroborated by the lease and the supporting documents," that on May 3, 1994, she agreed to a five year lease of the premises, with possession commencing June 1, 1994. Once renovations were completed, the business opened at the new location as scheduled, on July 1, 1994.

On May 6, 1994, Mrs. Arbeau was a passenger in the front seat of a car driven by her husband. Mrs. Arbeau removed her seatbelt and bent forward to pick up some food which had fallen to the floor of the car. While she was retrieving the food, a car backed out of a driveway into the path of their vehicle. The highway was wet, and her husband warned her that a collision was imminent. As she sat up, a "T" collision occurred. Mrs. Arbeau broke the rear view mirror with the left side of her head, struck the windshield with her forehead, and struck her knees and chest against the dashboard. She was taken by ambulance to hospital. Her skull x-rays were normal and she was discharged home.

Mrs. Arbeau saw her family physician, Dr. Redekopp, the next day. He noted muscle spasm in her neck and diagnosed a whiplash injury. He prescribed physiotherapy and painkillers, and, at a later date, massage therapy. Dr. Redekopp initially anticipated that she would be able to return to work in one to two weeks. In June 1994, he revised this to a one to two month period of disability. In August 1994, he referred Mrs. Arbeau to a physiatrist because there had been no significant improvement in her condition. Dr. Stolee diagnosed soft tissue injuries to Mrs. Arbeau's cervical spine, upper back and left shoulder regions, and a mild closed head injury, as the sources of Mrs. Arbeau's ongoing problems.

Entitlement to income replacement benefits:

Mrs. Arbeau claimed she was entitled to weekly income replacement benefits between May 6, 1994 and October 31, 1995, under section 7(1) of the Schedule, because she was substantially unable to perform the essential tasks of her employment.

Essential tasks

Mrs. Arbeau was the sole proprietor and primary employee of her pedorthic business, prior to the motor vehicle accident. She booked appointments, consulted with referring physicians, performed biomechanical assessments of the lower limbs, fabricated and made adjustments to orthotics, assessed footwear needs, fitted shoes, modified footwear, performed footcare and gave reflexology treatments. She monitored patient response to interventions, interacted with insurance companies on behalf of patients, maintained a stock of orthotic materials and footwear, paid bills, and maintained equipment.

Mrs. Arbeau was responsible for managing her business. She understood the characteristics of orthotic materials and continued her education in assessment and treatment techniques. As pedorthics is largely a self-taught profession, a pedorthist relies on reading professional literature in order to keep up with current techniques/" Mrs. Arbeau worked 70 to 80 hours per week. She testified that she was devoted to her business, as her children were grown up. Prior to the accident she typically saw patients during the day while she did paperwork and made orthotics during evenings and weekends.

In order to manage the business she used organizational and managerial skills. These required the ability to read, process and retain information, grasp global concepts, understand financial statements, analyse information and exercise judgment in making decisions.

In order to conduct assessments, make and adjust orthotics, she needed to be able to bend to do walking impressions, cast impressions and shoe fittings, while using her hands and flexing her neck and shoulders. In conducting assessments, and in manufacturing and adjusting orthotics, Mrs. Arbeau needed good visual spatial relations skills, that is to say, she needed to be able to judge the position of an object in space, and to have a keen sense of angles and their position in relation to other angles. She needed to accurately record her findings, select appropriate material to make an orthotic and fabricate an orthotic which would assist the patient and be cosmetically acceptable. She also needed to work long hours, productively.

Mrs. Arbeau returned to work at her pedorthic business one week after the accident. She claims income replacement benefits, based on a substantial inability to perform the essential tasks of her pre-accident pedorthic business.

Post-accident condition:

Mrs. Arbeau testified that following the accident she had headaches, pain through the neck area, and problems with memory, attention and concentration. She also suffered from disrupted sleep, and mental and physical fatigue. She could no longer do simple arithmetic. She had trouble remembering names, faces and telephone numbers. She would misplace and lose things.

Mrs. Arbeau had difficulty keeping track of her appointment schedule, performing assessments on patients, recording and remembering the details of her assessment, or any recommendations she had made. She would repeatedly ask the same question and had difficulty following conversations in which topics changed rapidly. She also had difficulty with abstract thinking. Because of her difficulties with visual-spatial relations, she had difficulty fabricating orthotics which were functionally or cosmetically acceptable. In order to maintain the goodwill she had developed over the years and because of her errors, Mrs. Arbeau began to offer her patients a money back guarantee or a replacement orthotic.

Routine tasks required the type of mental effort and concentration ordinarily used for performing new tasks. Her rate of performance suffered. She did not notice errors, was unable to find objects sitting in front of her, and would forget to do routine things like turning on the vacuum before grinding the orthotic. Her errors increased in frequency when she tired or if there was a change in routine. She had difficulty pacing herself. She lacked the energy to see patients during the day and make orthotics in the evening as she had done prior to the accident.

The Applicant's husband, and her son, Stephen stepped in to assist her in performing her essential tasks. For example because of her cognitive deficits, Mrs. Arbeau could not remember her patients. Mr. Arbeau and Stephen Arbeau would take photographs of patients and attach them to the charts. Because of Mrs. Arbeau's neck and shoulder pain, her husband and at times her son or the receptionist did all the activities which involved bending over the patient's foot, including walking impressions, casting the feet, moving height adjustment plates for leg length discrepancy testing and fitting shoes.

During assessments, Mr. Henry Arbeau would made small talk with patients, as Mrs. Arbeau was unable to do this while completing her assessments. Mr. Arbeau could better detect errors in Mrs. Arbeau's orthotic prescription when he was present during the assessment. He assists in the fabrication of the orthotics and maintains the business' inventory. As Mrs. Arbeau put it, "together we make one person."

Dr. Stolee, Mrs. Arbeau's physiatrist, testified at the hearing. She diagnosed Mrs. Arbeau's mild head injury and attributed it to the motor vehicle accident of May 6, 1994. Mrs. Arbeau's cognitive deficits are corroborated by the neuropsychological assessment performed at the request of Dr. Stolee on October 24, 31 and November 6, 1994 by Dr. Karen C. Smith.iv Dr. Smith concluded that Mrs. Arbeau showed the symptoms of the diffuse axonal tearing and shearing that accompanies a mild head injury.

In December 1994, Dr. Stolee noted that Mrs. Arbeau's productivity was 50% of normal due to her injuries. She also warned that Mrs. Arbeau should not increase her workload beyond 8-11 patients a day, as it would prolong her recovery.v Prior to the accident, Mrs. Arbeau typically saw 20 patients a day. In Dr. Stolee's opinion Mrs. Arbeau continued to be substantially disabled into middle to late fall 1995.

Mrs. Arbeau testified that she thought that she was managing the business as she had in the past. In fact, she was unable to process her financial statements, monitor errors in invoicing, organize invoices, order materials, read price sheets and analyse the information required to manage a small business. She discounted her son's complaints to her about her management of the business. She believed she had ordered orthopaedic shoes for $200, when in fact she had placed a $5,000 order. She was quite surprised and distressed when she was informed in February 1995 that she had not paid her suppliers and that her business was in financial difficulty. She realized that she had not been managing her business, since not even the bank statements had been reconciled. She testified that she asked her rehabilitation worker and occupational therapist to request Pilot's help but was told no such help was available."vi

Following this, one of Mrs. Arbeau's friends, who is also an accountant, travelled from Toronto on weekends. Her friend worked with Mr. Durand, Mrs. Arbeau's accountant, to get things back in order and to determine whether the business could be saved. Her occupational therapist recommended to Mrs. Arbeau that her husband take over the management of the business.vii Mr. Arbeau did so.

Mrs. Arbeau's level of functioning, her progress over time and the role of her husband and son in assisting her in the business following the accident are well documented in the reports of Nancy McFadyen,viii an occupational therapist with a background in podiatry and in the making of orthotics.ix

Mrs. Arbeau's cognitive deficits are also supported by the neuropsychological assessments performed by Dr. Denton Buchanan in August 1995 and in July 1996, as part of two assessments performed by a Designated Assessment Centre (DAC), which Pilot requested. Dr. Simard, a physiatrist who assessed Mrs. Arbeau as part of a medical and rehabilitation DAC conducted in August 1995 commented "Amazingly, the patient still works in her own business." Dr. Buchanan, testified that in his opinion, Mrs. Arbeau was disabled on psychological grounds in August 1995 when he first assessed her, but no longer disabled on that basis when he next assessed her in July 1996. He was unable to say when she stopped being psychologically disabled.

Dr. Buchanan testified that he had some "serious process issues" around the gaps in some of the information with which he had been provided. I find that these gaps could affect his opinion. For example Dr. Buchanan noted that Mrs. Arbeau showed an increase of five IQ points in 1996, when compared against her 1995 test results. Given the consistency of the scores, and in the absence of any independent verification that Mrs. Arbeau had completed two years of university, he concluded that Mrs. Arbeau was at the lower end of average intelligence, and that the results were likely reflective of her pre-accident general intellectual levels. In his opinion, Mrs. Arbeau would experience considerable difficulty in university.

At the hearing, Mrs. Arbeau provided copies of her transcripts from Concordia University. According to this documentation, she completed four courses in the 1976-1977 fall semester, in which she received two As and two Cs.x In September 1977, she was admitted to the Bachelor of Commerce program, with a major in Administrative Management. In that semester, she completed four more courses with an overall average of 70.75%.xi Mrs. Arbeau testified that she graduated with distinction in the two year gerontology program from St. Lawrence College. Copies of her marks show that she received nine As, eight Bs and two Cs. She also provided a certificate with respect to her high school education showing that in 1965, she received an average of 78.7%. Because of these gaps in the information available to Dr. Buchanan, I am not satisfied that he fully understood Mrs. Arbeau's pre-accident capacities and abilities.

Dr. Sitaram, a physiatrist who examined Mrs. Arbeau as part of the DAC in August 1996, testified at the hearing. He acknowledged that he did not deal with head-injured patients on a regular basis. In his examination-in-chief he was asked whether he had been provided with a package of documents put together by a rehabilitation worker, Sarah Emery, at the request of the Insurer. Dr. Sitaram replied: "That is not what was given to me." He testified that he had the history from the Applicant, his physical and neurological examinations and his observations.

Dr. Sitaram testified that he also reviewed the reports of other members of the DAC team, namely, the neuropsychological assessment of Dr. Buchanan, the functional capacity evaluation performed by Ms. Michalchuk-Lucas, the occupational therapist, and the conclusions of the kinesiologist. He also spoke with the team members. He concluded that Mrs. Arbeau had mild residual soft tissue pain and subjectively reported mild cognitive difficulties. He was of the opinion that Mrs. Arbeau was not substantially disabled.

According to Ms. Michalchuk-Lucas' report, at the time of her assessment in August 1996, Mrs. Arbeau was working 37.5 hours a week, performing assessments of 8-11 clients daily and was responsible for 15-20% of the manufacture of orthotics. I find that prior to the accident Mrs. Arbeau worked 70-80 hours a week, assessed 20 patients a day, and made most of the orthotics. She also managed the business. I find that the reports of the DAC assessors do not demonstrate that they fully understood the nature and extent of Mrs. Arbeau's pre-accident work.

Where there is a difference between the opinions provided by the DAC assessors, and that of Dr. Stolee, the physiatrist who treated Mrs. Arbeau, I prefer the opinion of Dr. Stolee. Dr. Stolee testified that she is a very pro-active rehabilitation specialist and a strong proponent of getting patients back to work as soon as possible. Dr. Stolee testified that she has dealt with a number of patients who, like Mrs. Arbeau, had acquired brain injuries. Dr. Stolee's file with respect to Mrs. Arbeau, is extensive.xii She had the benefit of seeing Mrs. Arbeau on eight occasions between 1994 and 1996, followed her progress, and was in a better position to see the changes in Mrs. Arbeau's abilities over time. In particular, I accept Dr. Stolee's evidence that it was sometime in mid to late fall 1995 that Mrs. Arbeau ceased to be substantially disabled.

Although Mrs. Arbeau was back in the work setting one week after the accident, it took two people to do her job, and her productivity was significantly impaired. Mrs. Arbeau required the assistance of her husband and son to complete the essential components of her job. Mr. Arbeau became a full-time employee of the business shortly after the motor vehicle accident, and put in many overtime hours. The pre-accident business plan contemplated that he would work on a part-time basis only, until 1995.

I accept Mrs. Arbeau's testimony that she was substantially disabled from performing her essential tasks until the end of October 1995. Mrs. Arbeau's testimony is supported by the evidence of her occupational therapist, her physiatrist, and, at least up to August 1995, to a significant degree, by the opinions of Dr. Simard and of Dr. Buchanan.

I conclude that under the provisions of the Schedule, Mrs. Arbeau was entitled to receive an income replacement benefit from one week following the accident,xiii i.e from May 13, 1994 to October 31, 1995.

Quantum

The parties agreed that Mrs. Arbeau was entitled to a weekly income replacement benefit under section 10(1) of the Schedule of $438.32, based on her earnings in the 52 weeks prior to the accident.xiv Because Mrs. Arbeau's business continued after the accident, subsections 10(3) and 10(4)(b) of the Schedule allow Pilot to deduct 90% of her post-accident net income from self-employment from the $438.32 amount.xv

Prior to the accident, Mrs. Arbeau had planned to expand her business. The plan was to change the sales mix and volume as well as the location of the business, and to increase her debt to generate higher revenues. Mrs. Arbeau's claim for an income replacement benefit has three components: the first is a loss of income, the second is a loss of profits, and the third is compensation for time off work in order to attend massage and physiotherapy appointments.

The parties interpret the provisions of the Schedule which deal with the calculation of post-accident net income differently. They disagree whether many of Mrs. Arbeau's post-accident expenses can be deducted from her post-accident revenues when calculating her post-accident net income from self employment under the Schedule. The parties also disagree whether the Schedule permits Mrs. Arbeau to claim for a loss of profits and for time lost from work while attending physiotherapy and massage treatments.

Law

The scheme governing the calculation of an income replacement benefit of a self-employed person is primarily contained in sections 5, 7, 10, 81, 82, 83 and 85 of the Schedule. Section 10 of the Schedule is entitled "Amount of Benefit," and is set out as Appendix B. Of particular importance in this arbitration are sections 10(3), (4), (5) and (6) which deal with post-accident net income and expenses, and sections 10(7) and (8) which deal with post-accident losses.

(a) The claim for loss of income:

Mrs. Arbeau's fiscal year end is September 30. She claimed an actual loss of income of $8,940 for the 21-week period between May 13, 1994 and September 30, 1994.

Each party retained an accountant with respect to Mrs. Arbeau's claims for income replacement benefits. Mr. Durand, Mrs. Arbeau's accountant, and Mrs. Brace, the accountant retained by Pilot ("Pilot's accountant"), agreed that in the 21-week period between May 13, 1994 and September 30, 1994, both the revenues and expenses of the expanded business were higher than they had been prior to the accident.

Mrs. Arbeau's accountant was of the opinion that all of the post-accident expenses of the business were reasonable and necessary to prevent or reduce any losses resulting from the accident, and should be deducted from post-accident revenue under section 10(6)(c) of the Schedule. In his opinion, if the additional expenses had not been incurred, the higher sales volumes would not have been achieved, and her loss would have been higher. Since the expenditures helped prevent a greater loss, he was of the opinion that they were reasonable.

Pilot's accountant was of the opinion that $20, 978 of the post-accident expenses should be disallowed under sections 10(6)(b) and (c) of the Schedule, because they were excessive salary expenses, or expenses which were "different in nature or greater than the non-salary expenses incurred prior to the accident." According to Pilot's accountant, it initially seemed that Mrs. Arbeau's business had a shortfall of $16,802, when compared against her pre-accident earnings. However, in her opinion, if the increased expenses had not been incurred, the business would have shown a profit of $560 for the period rather than a loss.

I find that the Schedule permits the deduction of the following expenses from post-accident revenues from self-employment, when calculating post-accident net income:

Expenses which are reasonable or necessary to prevent a loss of revenue™
Reasonable salary expenses to replace a person's active participation in the business'™"
Non-salary expenses which are different in nature or greater than the non-salary expenses incurred prior to the accident, but only to the extent that they were necessary to prevent or reduce any losses resulting from the accident.™"

There was no suggestion that Mrs. Arbeau should have attempted to extricate herself from the lease to which she had already committed. Mrs. Arbeau's initial medical advice was that she would be able to return to work in one to two weeks, then in one to two months. I find that on the basis of the information available to her, she acted reasonably and prudently in attempting to move forward with the expanded stage of a business she had built up over a period of years. Prior to the accident, Mrs. Arbeau and her accountant prepared a budget for the expanded business.xix Mrs. Arbeau's accountant testified that the budget was a conservative estimate of the sales volumes required to meet the increased operating and financing costs of the business expansion for a two year period, ending March 31, 1996. This budget was the basis upon which bank financing was obtained. Pilot's accountant acknowledged in cross-examination that she had not been aware of the planning which had gone into the post-accident business. Based on the testimony of Mrs. Arbeau's accountant, a review of the budget and financial statements which were provided, I accept that there was a planned relationship in the post-accident expanded business, between the increased expenses and the increased revenues.

Pilot's accountant testified that the intention of the legislation was to deal with the insured person's actual cash position following the accident. I accept this view. I also find that the Schedule restricts those expenses which can be deducted from post-accident revenues from self-employment when calculating post-accident net income. This prevents an insured person from artificially inflating expenses, reducing net income and causing an increase in the amount of the income replacement benefit to be paid by the insurer.

I find that where there is a clear and planned relationship between increased expenses and revenues, I should initially have regard to the document which sets out that planned relationship in determining if the expenses incurred meet the criteria for deduction under section 10(6) of the Schedule. In this case, that document is the budget which was prepared in March 1994, prior to the accident. I find that where there is a variance in the revenue or expenses from the budget, I need to determine if this has occurred as a result of the accident or whether it is a reflection of other factors.

It makes no sense to relate the expenses of the expanded business to a different business, i.e. Mrs. Arbeau's home-based rural business. This offends a basic accounting principle; it ignores the link between revenues and expenses. It would also mean that Mrs. Arbeau alone bears the burden of the increased expenses, and in addition is penalized for generating additional gross revenues. Pilot would get the benefit of her gross revenue, without the corresponding burden of the increased expenses. This offends the legislative intention that the post-accident net income calculation should address the insured person's actual cash position post-accident in comparison to what it would have been had the accident not occurred.

I will now deal with those post-accident expenses which Pilot's accountant indicates should be disallowed under the Schedule.xx

Lease expenses

Mrs. Arbeau's home based rural business did not attract a rental expense. The expanded business was located in leased premises with a rent of $600 per month, commencing June 1, 1994. Pilot's accountant argued that this expense was different in nature from the expenses in the home based business and should be disallowed. Pilot's accountant argued that if this lease was in force and could not be cancelled then the rent and property taxes (less pre-accident taxes already allowed ) were "expenses...necessary to prevent or reduce any losses resulting from the accident."xxi In light of my earlier findings with respect to the lease, I accept the latter opinion. I find that the sum of $3,460 is a deductible expense in calculating post-accident net income.xxii

Salary expenses

Mrs. Arbeau anticipated hiring reception/clerical help, but allowed only $3,000 for this amount in the budget. The amount of $5,919 was expensed in the 21-week period. The variance is $2,919. Prior to the accident, Mrs. Arbeau had not hired reception/clerical staff in her business. Pilot's accountant disallowed wages and benefits in the amount of $5,919, as she concluded they were different in nature from the pre-accident business expenses.

I find that the budgeted amount of $3,000 is to be deducted in calculating her post-accident net income. In addition, because of the physical and cognitive impairments which resulted from the accident, Mrs. Arbeau required more assistance in performing her essential tasks as detailed earlier in the decision. For example, the person performing the reception function would assist Mrs. Arbeau by taking photographs so that she could identify patients, would position clients' feet for the making of casts, and in other ways.xxiii

Initially, Mrs. Arbeau's son, Stephen, performed the reception function, but left to attend university. The receptionist who was hired to replace him was paid at the same rate. While there may be some degree of poor budgeting reflected in this item, on balance I find that the additional expense was incurred to replace Mrs. Arbeau's active participation in the business due to her physical and cognitive impairments. I conclude that $5,919, reflecting both the budgeted amount and the variance, is to be deducted as an expense in calculating net post-accident income.

The financial statements reflect a salary expense for Mr. Henry Arbeau of $18,500 in the 21-week period. Mrs. Arbeau's budget anticipated that Mr. Arbeau would begin to work in the business on a full-time basis in 1995. The variance from the budgeted figure for Mr. Arbeau's full-time salary is $6,385. Pilot contends that $6,385 of the salary paid to Mr. Arbeau was excessive and unreasonable having regard to the budget, his experience, and his 1993 earnings.

I find that Mr. Arbeau brought a combination of managerial and entrepreneurial skills, as well as skills in fabricating orthotics, to the business. He helped to replace Mrs. Arbeau's active participation in the business. He took on greater responsibilities than he would have if the accident had not occurred. I accept Mr. Durand's opinion that the sales volume would not have been achieved and the loss would have been higher, if Mr. Arbeau had not stepped in to do what was necessary to hold the business together.

I accept Mrs. Arbeau's testimony that Mr. Arbeau worked many hours of overtime in the business. If Mr. Arbeau worked an additional eight hours per week, I do not view the amount of his compensation as unreasonable. While the amount of Mr. Arbeau's salary may not reflect his 1993 earnings, I accept the evidence of Mrs. Arbeau and of Mr. Durand that Mr. Arbeau had been ill and unable to work for several months in 1993, and that between 1990 and 1992 Mr. Arbeau earned between $36,000 to $38,000 per year. Mrs. Arbeau testified that at the time of the accident, Mr. Arbeau had a job offer to work at Tackaberry Homes doing welding and lost that opportunity in order to help mitigate her losses and preserve her business.

Pilot raised a further concern that Mr. Arbeau's 1993 income tax return and his T4 from Quality Footcare Management showed earnings from employment of $8,000. I accept Mr. Durand's evidence that the business lacked sufficient cash to pay Mr. Arbeau more than $8,000 and the expense was accrued. Pilot's accountant acknowledged in cross-examination that this was a legitimate way of treating the expense.

Accordingly, I find that the entire amount paid to Mr. Arbeau represented reasonable salary expenses. A portion of these expenses were budgeted. The remainder reflected reasonable expenses to replace Mrs. Arbeau's active participation in the business. I find that the entire amount of $18,500 represented reasonable salary expenses, and is to be deducted in calculating net post-accident income.

Non-salary expenses greater than budgeted based on a percentage of sales

Pilot's accountant submitted that portions of the expenses for advertising and promotion, bank charges and interest, including interest on long-term debt, and for miscellaneous and office expenses, should be disallowed as they reflect a greater percentage of sales than had been budgeted. Pilot's accountant testified that setting such figures as a percentage of sales when drawing up a budget was a common practice. She acknowledged in cross-examination that it was also possible that these amounts could have been set on a global basis.

Percentages of sales are mathematically neat. However where there is a decrease in sales, the allowable amount of the expense, if calculated on a percentage basis, will also decrease. I find that it is more appropriate in the circumstances of this case to consider the actual amounts in question.

Advertising and promotion

The advertising and promotion expense was budgeted at $1,200. The actual expense incurred was $1,847. The variance is $647. Pilot's accountant allowed $907 for these expenses on a percentage basis. I was provided with no evidence which would indicate that the variance resulted from the accident, and therefore find that only the budgeted amount of $1,200 is to be deducted in calculating post-accident net income.

Bank charges and interest

Bank charges and interest, including interest on long-tem debt were budgeted at $2,350. The actual charges incurred were $2,944. This was a variance of $594. Pilot's accountant allowed $2,350 for these expenses on a percentage basis. There was evidence that Mrs. Arbeau was not paying suppliers, balancing bank statements and generally not managing her business as a result her injuries, as was detailed earlier in this decision.

Mr. Durand testified that some of the additional debt was incurred to replace the car which had been written off as a result of the accident. While there may also be a component of poor budgeting to this variance, on balance, I am satisfied that this variance results from the accident. The entire expense of $2,944 is to be deducted in calculating post-accident net income.

Miscellaneous and office

Miscellaneous and office expenses were budgeted at $3,000. The expenses actually incurred were $4,005. The variance is $1,005. Pilot's accountant allowed $2,293 for these expenses on a percentage basis. I was provided with no evidence which would connect this amount with the motor vehicle accident. I find that only the budgeted amount of $3,000 is to be deducted in calculating net post-accident income.

Repair and maintenance

Repair and maintenance was budgeted at $600. The actual cost incurred was $1,919. The variance is $1,319. Pilot's accountant allowed $480 for this expense on a percentage basis. I heard no evidence which would connect this variance with the motor vehicle accident. I find that only the amount of $600 is to be deducted in calculating post-accident net income.

In summary I have found that $17,478 of $20,978 in post-accident expenses which were disallowed by Pilot's accountant as deductible expenses, are correctly deducted in calculating Mrs. Arbeau's post-accident net income under the provisions of the Schedule. The difference between these two amounts is $3,500.

As neither of the accounting opinions entirely addressed the requirements of the Schedule, I have used the net income analysis of Mrs. Arbeau's actual earnings and expenses for the 21-week period between May 7, 1994 and September 30, 1994, prepared by Pilot's accountant, for the remainder of my calculations.xxiv In that analysis, the $20,978 in post-accident expenses were included as expenses, leaving a net income before depreciation of -$2,606. The amount of $3,500 is to be added back. I have also added back the gain on disposal of assets expense of $3,728, as the Schedule requires assets to be treated at cost. This results in an adjusted net income before depreciation of $4,622. This income was averaged over a period of 21 weeks, although Mrs. Arbeau was away from the work setting for the first of those weeks. The Schedule provides that no income replacement benefit is payable during the week of disability.

Section 10(3) permits an insurer to deduct a percentage of the net income received by the insured person in respect of any employment, including self-employment, subsequent to the accident. Since no income replacement benefit is payable under the provisions of the Schedule for the first week of disability, I do not accept that the legislature intended an insurer to deduct earnings during the first week of disability when no income replacement benefit was payable. I have therefore adjusted the post-accident earnings by deducting one week. This reduces the post accident net-income by $220.09, leaving an amount of $4,401.91, from which income tax deductions, Canada Pension Plan and Unemployment Insurance premiums are to be subtracted. Pilot may deduct 90% of this amount from Mrs. Arbeau's income replacement benefit entitlement calculated under section 10(1).

Accounting expenses

Pilot's accountant testified that she disallowed the accounting fees of $884, on the basis that Pilot’s adjuster had informed her that Pilot had paid these expenses. Mrs. Arbeau testified that the adjuster had agreed to pay for the accounting expenses incurred to prepare accounting and financial documentation with respect to her claims for loss of income, but then refused to pay the expense. I accept Mrs. Arbeau’s testimony that the amount was not paid by Pilot.

I find it more appropriate that this item be considered as part of Mrs. Arbeau's arbitration expenses rather than an expense of the business and therefore do not allow the deduction of this item as an expense of the business.

Mrs. Arbeau did not claim a loss of income in 1995.

(b) The claim for loss of profits

Mrs. Arbeau's fiscal year end is September 30. Counsel for the Applicant submitted that Mrs. Arbeau had a loss of profit for the 21-week period from May 13, 1994 to September 30, 1994 of approximately $16,000. He submitted that Mrs Arbeau also had a loss of profit of $17,000 between October 1, 1994 and September 30, 1995.

Mrs. Arbeau's accountant testified that since Mrs. Arbeau's business was about to expand in order to generate increased revenue, it was also necessary to compare the budgeted profit with the actual profit, if any, for each of the two periods in determining her actual loss. Counsel for the Insurer submits that section 10(7) of the Schedule is not designed to compensate Mrs. Arbeau's claims for loss of profits.

Section 10(7) of the Schedule provides that where the insured person was self-employed at the time of the accident and incurs losses from self-employment as a result of the accident, the insurer is required to add 90% of the losses from self-employment incurred as a result of the accident. The question I must decide is whether the Schedule contemplates a payment for loss of profits to Mrs. Arbeau, because she achieved a lower than anticipated profit or net income in 1994 and in 1995.

What is a loss under section 10(7) of the Schedule?

A loss, as ordinarily understood in a business context, can mean:

a lower profit or net income, (as claimed by Mrs. Arbeau), or
going from a profit to a loss situation, or
an increase in the amount of an anticipated loss.

Section 10(8) of the Schedule provides: that "... losses from self-employment shall be determined in the same manner as losses from the business in which the person was self-employed would be determined under subsection 9(2) of the Income Tax Act (Canada) and the Income Tax Act (Ontario), without making any deductions for" certain types of expenses and losses.

The Income Tax Act, S.C. 1970-71-72, c.63, s. 9(2) as amended provides:

"Subject to section 31, a taxpayer's loss for a taxation year from a business or property is the amount of his loss, if any, for the taxation year from that source computed by applying the provisions of this Act respecting computation of income from that source mutatis mutandis"

The Income Tax Act, R.S.O. 1990, c.I.2 , s. 1 provides that "loss" means a loss as determined in accordance with and for the purposes of the Federal Act."

I was provided with no evidence of the manner in which such losses were calculated under the provisions of the federal income tax legislation. Except for disallowing capital losses and losses deductible under section 111 of the Income Tax Act, the Schedule does not define which losses are intended.

Pilot relied on Bress and Bress and State Farm Insurance Company, (March 23, 1992), OIC A-000191 and A-000192,xxv and on Jambor and Dominion of Canada General Insurance Company, (August 14, 1995), OIC A-003703, in which Bress was followed, as authority for the proposition that the Schedule was not designed to compensate for loss of potential income.

Those cases interpret provisions of the Statutory Accident Benefits Schedule - Accidents Before January, 1, 1994, Ontario Regulation 273/90, and not the Schedule before me. They deal with the question of pre-accident earnings in calculating initial entitlement to a weekly income benefit. Mrs. Arbeau's claim is one for loss of post- accident profits, and is made under the provisions of the Statutory Accident Benefits Schedule —Accidents after December 31, 1993, and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulation 635/94.

The legislation under which Mrs. Arbeau claims makes specific provision for a self-employed person to be compensated for "losses" from self-employment in a post-accident context. Therefore the cases cited do not assist me in determining which losses are intended by the Schedule under which Mrs. Arbeau claimed benefits. I was provided with no other authorities or other submissions from either party with respect to the meaning to be given to those losses which an insurer is required to reimburse under section 10(7) of the Schedule.

My review of the income tax legislation suggests that losses under the Income Tax Act are calculated in the following manner. First, gross revenue for a period is calculated, then allowable expenses and deductions for the period in which the gross revenue was earned are subtracted. A loss results when the figure obtained is less than zero. If this is correct, then this type of loss is described by the second and third possible meanings set out above, but not by the first. Mrs. Arbeau's claim, for loss of profits falls under the first definition. I conclude that there is no provision under section 10(7) of the Schedule, for compensation for a loss of profits, in the sense of a reduction of profits claimed by Mrs. Arbeau.

Under section 83 of the Schedule, a person's income from self-employment is determined in the same manner as the person's profit from the business in which the person was self-employed. This is the way in which the Schedule takes profit into account. The difficulty which Mrs. Arbeau faces is that while the amount of the income replacement benefit under the Schedule is calculated based on the pre-accident earnings from her business, she was about to expand her business and generate more income.

If Mrs. Arbeau was an employee who was injured in an accident, and was about to move on to a higher paying job two months after the accident, she would be permitted to claim a higher income replacement benefit from the time the new contract of employment would have taken effect under section 7(1) 3.i. of the Schedule. Section 5 of the Schedule defines employment as including self-employment, and it is conceivable that Mrs. Arbeau's claims, framed as "a loss of profit" might be addressed in a similar manner. However, I do not believe that Mrs. Arbeau’s situation can be dealt with under this section, since Mrs. Arbeau would be required to make a contract with herself in order to qualify.

(c) The claim for reimbursement for time off work

Mrs. Arbeau claims that she lost approximately $5,000.00 per month because she lost time from work in order to attend physiotherapy and massage treatments. I was provided with no authority, nor am I am aware of any provision of the Schedule which specifically provides for reimbursement under such a head. Instead, such compensation is factored into the income replacement benefit provided under the Schedule, as it is based on a previous period when no time was lost for medical treatment arising from an accident. I conclude that Mrs. Arbeau is not entitled to additional reimbursement for this claim, under the provisions of the Schedule.

Claims for supplementary medical and rehabilitation expenses

(a) Counselling:

In November 1994, Dr. Stolee, Mrs. Arbeau's physiatrist, recommended that Mrs. Arbeau receive counselling. Dr. Stolee's recommendation was based on the fact that Mrs. Arbeau had sustained a closed head injury. The lack of achievement following such an injury can be a tremendous blow and produce quite significant depression. As time went on Dr. Stolee also became concerned about Mrs. Arbeau’s stress levels and depression.

Dr. Stolee's concerns are echoed in the report of the neuropsychological assessment performed by Dr. Smith in November 1994. Dr. Smith noted that it "appeared she is someone who is very worried about what has happened to her." While Dr. Smith assessed Mrs. Arbeau's general disposition to experience anger as being in the normal range, she noted: "She feels anger at times because she doesn't understand about her head injury."

Ms. McFadyen, Mrs. Arbeau's occupational therapist testified that she submitted monthly reports to Pilot, commencing in October 1994 and ending in June 1995. She testified that in each of those reports she requested counselling for Mrs. Arbeau. Ms. McFadyen testified that she also spoke with the adjuster, explained what was meant by supportive counselling, why it was required for Mrs. Arbeau, and suggested names of appropriate persons to provide the counselling. Pilot did not provide the requested counselling for Mrs. Arbeau. During this time Pilot had no medical evidence to indicate that Mrs. Arbeau did not require counselling.

In about July 1995, Pilot referred the question of Mrs. Arbeau's entitlement to counselling to a DAC. Mrs. Arbeau was concerned about a number of issues around the DAC. Among other things, she wished confirmation from Pilot that they would abide by the DAC's recommendations. Pilot wrote to Mrs. Arbeau and confirmed: "That we will abide by the DAC results. Yes, we will."

The recommendation of the DAC was that Mrs. Arbeau required psychological counselling on an urgent basis. [emphasis added] Dr. Buchanan's report of August 1995, states that Mrs. Arbeau's clinical scales were showing "a distress state of mixed depression and anxiety. Her overall profile is commonly seen after motor vehicle accidents. ...She is significantly depressed ...I would urge that this be undertaken immediately as her overall condition will improve if her mood is addressed." Mrs. Arbeau also displayed some suicidal thoughts.

Dr. Buchanan testified at the hearing. He testified that he meant treatment by a psychologist. This is clear from reading the reports of the DAC. He stated that by urgent he meant within one month of the date of his report. He also stated that in his opinion the failure to provide that treatment prolonged Mrs. Arbeau's period of disability. He was unable to quantify this in days, weeks, or months.

Pilot failed to follow through with the recommendation of the DAC until June 1996, and this, only after repeated prompting from Dr. Stolee and Ms. McFadyen. Pilot has an obligation under the Schedule to pay for services which the DAC recommends as reasonable and necessary. Pilot had taken on the role of case manager for Mrs. Arbeau's treatment since February 1995. As case manager, Pilot would ordinarily arrange for psychological counselling. I find that Pilot specifically undertook to Mrs. Arbeau to comply with the DAC recommendations, one of which was psychological counselling on an urgent basis. In addition Pilot also undertook to make these arrangements to Ms. McFadyen, verbally, following the DAC assessment, and again on December 21, 1995 in writing. The referral for psychological counselling was eventually made on June 7, 1996 to Dr. Gow, a clinical neuropsychologist, and Mrs. Arbeau's counselling commenced on June 20, 1996. I find that Mrs. Arbeau was entitled to receive counselling from the time that it was recommended by Dr. Stolee and that Pilot is required to pay Mrs. Arbeau for those services from that time forward.

In July 1996, approximately one month after the long delayed counselling was commenced, Pilot again referred the question of Mrs. Arbeau's counselling to a DAC. Dr. Buchanan, the neuropsychologist who assessed Mrs. Arbeau in 1995 and again in October 1996 as part of the DACs, concluded that Mrs. Arbeau was no longer clinically depressed. In his opinion further psychological treatments were unnecessary.

Mrs. Arbeau claimed additional counselling sessions with Dr. Gow. Pilot disputed that these were reasonable or necessary, and relied on Dr. Buchanan’s opinion. At the hearing, Dr. Buchanan acknowledged his recommendation. He explained that his the test results indicated that Mrs. Arbeau was no longer depressed. He was concerned that Mrs. Arbeau continued to display behaviours of a person who was recovering from her head injury, due to an as yet unexplained phenomenon seen in many people who suffer head injuries. He confirmed that Mrs. Arbeau was not malingering. He was concerned that Mrs. Arbeau was now connected with a group of people who counselled persons with permanent brain injuries, and that this was not appropriate for her. Dr. Buchanan wanted to get Mrs. Arbeau out of that milieu, and have her focus on wellness, rather than on disability.

Dr. Buchanan was unaware that the treatment which he recommended in 1995 had not been provided until June 1996. He also had not been informed that one of the goals of Dr. Gow's treatment plan was to help Mrs. Arbeau re-focus on her achievements and abilities. He was unaware that Dr. Gow had discussed and re-educated Mrs. Arbeau about the nature of head injuries.

Dr. Buchanan testified that he had serious "process issues" around the gaps in the information with which he had been provided, and questioned how a DAC could reasonably be performed in the absence of information such as Dr. Gow's report. Once he was provided with the additional information, Dr. Buchanan agreed that the further treatment contemplated by Dr. Gow would be reasonable.

Dr. Gow's treatment plan is focused and time limited. She anticipates an additional one to two months of active therapy and up to four follow up monitoring sessions. Dr. Stolee testified that Mrs. Arbeau was receiving a great deal of benefit from her treatment with Dr. Gow in addressing the emotional aspects of her head injury. I am satisfied that these counselling sessions as recommended by Dr. Gow are reasonable and necessary, and that Pilot should also pay for the additional treatment and monitoring sessions contemplated by Dr. Gow.

(b) Massage therapy

Mrs. Arbeau claimed massage therapy on an ongoing basis at a frequency of once every two weeks. Dr. Stolee, Mrs. Arbeau's physiatrist, recommended that these treatments were reasonable and necessary. Pilot paid these treatments up to December 1995.

Both Dr. Stolee and Dr. Sitaram, a physiatrist who examined Mrs. Arbeau as part of a DAC in 1996 testified at the hearing. Both agreed that massage was recognized as a useful measure for controlling pain in soft tissue injuries, like heat, ice, or medication, which helps patients cope with pain. Both physicians recognized that it would not change the outcome of Mrs. Arbeau’s injury.

Dr. Sitaram was concerned that too frequent treatment on a long term basis could lead to dependency on massage therapy. He agreed, however, that Mrs. Arbeau's attending physiatrist could appropriately determine the frequency of massage therapy. I accept Dr. Stolee's recommendation and find that Pilot should continue to pay for Mrs. Arbeau’s massage therapy up to once every two weeks.

(c) Treadmill

Dr. Stolee recommended that Mrs. Arbeau walk daily for regular aerobic conditioning and to help speed her recovery from her cognitive impairments. It would improve her balance and co-ordination and assist in increasing her energy levels. In the evenings after she returned home from her business, Mrs. Arbeau walked along a gravel road near her home. On a few occasions she fell and had difficulty getting back up. Nevertheless, she progressed to 3 km a day.

In the fall and winter, it was dark by the time Mrs. Arbeau got home from work. Since the gravel road did not have street lights and because of inclement weather, there were concerns for Mrs. Arbeau's safety. In November 1994, Dr. Stolee recommended that Mrs. Arbeau use a treadmill in her home. This would promote regular use throughout the year and allow her to conserve the energy she required for work, rather than in travelling to a community facility on a daily basis.

Despite the recommendations of Dr. Stolee and follow up by the occupational therapist, Pilot did not provide the treadmill. In March 1995, Mrs. Arbeau applied for mediation with respect to this and other claims. Pilot agreed to pay for a four month rental of a treadmill. Pilot then wrote to Mrs. Arbeau inviting her to save the four month treadmill rental until the winter months in 1995. Mrs. Arbeau agreed to this.

In August 1995, Pilot referred the question of Mrs. Arbeau's request for the purchase of a treadmill to a DAC. The DAC assessors recommended that she use a treadmill in a fitness centre and that no purchase was necessary. The DAC assessors' recommendation was based on general principles, that is to say, compliance with a regular walking program was more likely if she used a treadmill at a community based facility, and that Mrs. Arbeau would experience some benefit from the interaction in a social setting.

I find that Mrs. Arbeau was experiencing fatigue at the end of a business day because of her physical and cognitive impairments. Because of her cognitive impairments she was encountering significant stress orienting herself to new places, remembering new people, and operating in any social setting. The rehabilitation management or exercise management principles applied by the DAC assessors may well apply to most individuals. However, the opinion of Dr. Stolee addressed and accommodated Mrs. Arbeau's specific impairments and circumstances.

In January 1996, Mrs. Arbeau had the benefit of the 4 month treadmill rental which had been agreed to at mediation in March 1995. After experiencing the benefit of using the treadmill at home, she purchased her own treadmill in June 1996.

The amounts involved in the rental and in the purchase were modest. I find that the treadmill was necessary to assist Mrs. Arbeau in her recovery from her cognitive deficits in a safe manner which did not increase her stress levels. I find that Pilot is required to pay rental payments and delivery charges between November 1994 and April 1995 together with taxes, and to reimburse Mrs. Arbeau for the cost of the treadmill, being $664, together with any taxes paid by Mrs. Arbeau.

(d) Prescription expenses

During submissions, I was advised by counsel for the Insurer that Pilot had paid the prescription expenses the previous day. Counsel for the Applicant advised that some prescription expenses remained outstanding. In the absence of more specific submissions, or evidence as to which of the prescriptions were paid, I will deal with all of the prescription expenses which were claimed by Mrs. Arbeau.

There were three medications which were prescribed for Mrs. Arbeau which were in issue. One is Paxil, an antidepressant which was initially prescribed for her in October 1995. The other is for Cyclobenzaprine, a skeletal muscle relaxant. Both were prescribed by Mrs. Arbeau's family physician and relate to her post-accident complaints. Pilot provided no opinion evidence that these prescriptions were either unnecessary or unreasonable. I find that Pilot is required to pay for these prescriptions.

The third prescription is for Cyanocobalamin for B-12 injections. Mrs. Arbeau was given B-12 injections by her family physician three times a week to assist in restoring her cognitive function. He relied upon the studies of Dr. Adams, of Kingston General Hospital, who specializes in the treatment of persons who have suffered head traumas. In his report of April 1, 1996, Dr. Redekopp stated that in clinical trials, B-12 had been shown to restore some cognitive function. He noted that it was an inexpensive treatment with a very safe profile, and that they were of assistance to Mrs. Arbeau.

In July 1996, Pilot referred the question of Mrs. Arbeau's entitlement to B-12 injections to a DAC. The DAC did not support a continuation of these treatments. At the hearing Dr. Sitaram, a physiatrist who examined Mrs. Arbeau as part of the DAC, testified that as far as he knew there was no relationship between B-12 injections and a head injury. He acknowledged that he did not deal with head-injured patients on a regular basis. Based on his recollections from his readings a few years ago on the effect of B-12, its use for this purpose could be considered experimental. He opined that perhaps the improvement which Dr. Redekopp was attributing to B-12 injections was the result of the normal recovery process, or the result of physician patient interaction. He doubted that the B-12 injections were necessary. Dr. Sitaram stated that he considered these injections as "fine for short term use only."

Section 36(2) of the Schedule, provides:

The insurer is not liable to pay any expense under subsection (1) for goods or services that are experimental in nature.

Neither the Act nor the Schedule defines "experimental," and I was provided with no authority for defining this term. In Caruso and General Accident (March 27, 1997), OIC A96-000644, Arbitrator Makepeace considered the meaning of "experimental in nature." She stated "I do not accept that the drafters of section 36(2) intended to give insurers an absolute right to refuse a medical benefit claim just because medical experts disagree about the therapeutic value of the benefit claimed. Such a broad interpretation of the term "experimental" could apply to many treatment modalities for which insurers currently pay benefits." I agree with and adopt the conclusions of Arbitrator Makepeace.

I do not agree that treatments which have been the subject of clinical trials are "experimental in nature" within the meaning of the Schedule. The consequences of a head injury are serious; the cost of these injections is modest. I find that it was reasonable for Mrs. Arbeau to pursue these treatments during a period in which they might contribute to her recovery. According to Dr. Gow, a clinical neuropsychologist who treated Mrs. Arbeau, the recovery period may be up to two years, i.e. up to March 1996. I find that Pilot is also required to pay for Mrs. Arbeau's B-12 injections until she was provided with a copy of the contrary opinion from the DAC. Pilot is also required to pay the cost of needles at the claimed rate of 7 cents per needle.

(e) Rehabilitation case manager

Pilot retained the services of Medex Vocational Management to act as a rehabilitation case manager in 1994. Pilot terminated those services in February 1995. The case closure report provided by Medex is a detailed eight-page summary of recommendations to assist Mrs. Arbeau. The report clearly states that Mrs. Arbeau "continued to be in the early acute stages of her overall recovery process." [emphasis added]

In June 1996, Dr. Stolee recommended the intervention of a rehabilitation case worker to provide timely intervention and direction in Mrs. Arbeau’s treatment, to ensure that her treatment goals were met, that she remains focussed on her gains, and to act as a buffer between Mrs. Arbeau and Pilot.

Dr. Stolee testified that she has treated hundreds of patients and dealt with dozens of insurers and had never seen as acrimonious a relationship as developed in this case. In Dr. Stolee's opinion the termination of the services of a rehabilitation case manager in February 1995 had a detrimental effect on Mrs. Arbeau particularly in regard to her rehabilitation care. Dr. Stolee testified that she had been very pleased with Pilot's initial early involvement of a rehabilitation manager. In Dr. Stolee’s opinion there was no change in Mrs. Arbeau’s condition in February 1995 which justified Pilot's decision to terminate the services of a rehabilitation case manager. I find that Mrs. Arbeau continued to be entitled to the services of a rehabilitation case manager from February 1995 forward.

Mrs. Arbeau's involvement with medical and rehabilitation intervention is tapering. In such a situation I would ordinarily decline to order further case management services. However when I consider the nature of the relationship which developed in this case, the need for a buffer, and the delays in Mrs. Arbeau's treatment while Pilot has acted as case manager, I do not feel that Mrs. Arbeau's continued treatment or recovery should be placed in jeopardy. Many arbitrators have noted the need for a cooperative approach in rehabilitation. I would prefer that the parties agree on a suitable rehabilitation manager, failing which Mrs. Arbeau can choose the rehabilitation case manager.

(f) Housekeeping

Mrs. Arbeau claimed housekeeping services once a week for 6 hours to do the vacuuming and some of the heavier chores for another 6 - 12 months, as recommended by Dr. Stolee. Dr. Stolee was of the opinion that Mrs. Arbeau could not both work at home and do the housekeeping. Pilot disputed that they were reasonable or necessary based on the DAC recommendation. Dr. Stolee agreed with the DAC recommendation for the tapering of these services before they were stopped

I accept Mrs. Arbeau's testimony that prior to the accident she did her own housekeeping, but hired cleaning help for her business. The priority has been for Mrs. Arbeau to function at work. Over time, Mrs. Arbeau has been able to take back on lighter chores in her home, after learning again how to do them. However in Dr. Stolee's opinion she still needs this assistance. For the reasons given earlier, I prefer Dr. Stolee's opinion and find that Mrs. Arbeau is entitled to further housekeeping services for a minimum period of 6 months, and an additional period of up to 6 months. I also accept the DAC recommendation that these services should be tapered before they are terminated.

(g) Occupational therapy

Ms. McFadyen, Mrs. Arbeau’s occupational therapist testified that a strong priority for Mrs. Arbeau was obtaining her recertification in Pedorthics. This would involve assisting Mrs. Arbeau with study strategies, test taking strategies, and stress management. Dr. Stolee testified that this area needed to be addressed by an occupational therapist. I accept Dr. Stolee’s opinion for the reasons given earlier. I also accept Ms. McFadyen’s opinion, and find that Mrs. Arbeau is entitled to receive further occupational therapy for this purpose.

(h) Planner refills, Transportation expenses, and lunches at the DAC

Mrs. Arbeau also claimed for Franklin planner refills. She used these as an organizational and memory aid, as recommended by her occupational therapist and physiatrist. Pilot relied on the DAC assessors recommendation that these were no longer required. I find that Mrs. Arbeau is entitled to be reimbursed for the planner refills until the date on which she was provided with the contrary opinion from the DAC assessors that she no longer needed the planner refills.

The remaining items are for lunch expenses at the DAC in Ottawa, and mileage expenses. There was no suggestion by the Insurer that these expenses had not been incurred or that the amounts claimed were unreasonable. I allow these expenses as claimed.

Interest

Mrs. Arbeau claimed interest on overdue benefits. I find that Mrs. Arbeau is entitled to interest on overdue benefits under section 68 of the Schedule.

Special Award

Section 282(10) of the Insurance Act provides for the payment of a special award where an arbitrator is of the opinion that an Insurer has unreasonably withheld or refused to pay benefits.

(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 statutory accident 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.

Mrs. Arbeau wrote to the adjuster in the branch office, and also to the head office with respect to her concerns regarding the delays in responding to her claims. Pilot was aware that a special award claim was being advanced from the pre-hearing conducted on March 27, 1996. No representative from Pilot testified at the hearing with respect to Mrs. Arbeau's allegation that Pilot unreasonably withheld or delayed benefits.

I accept Mrs. Arbeau's evidence that she experienced a great deal of frustration in the course of the handling of her claim. Dr. Stolee characterized the relationship between Mrs. Arbeau and Pilot as acrimonious. Dr. Gow's report reflects that Mrs. Arbeau's anger at Pilot in the handling of her claim needed to be addressed during her treatment.

I find that Pilot unreasonably withheld or delayed payment of benefits for psychological counselling, for prescription expenses, for transportation expenses, for the rental of a treadmill, and for the services of a rehabilitation case manager.

Pilot's withholding and delays with respect to the provision of benefits have already been detailed in the decision. The delays occurred despite repeated recommendations and prompting from Mrs. Arbeau's health practitioners, and in the absence of any opinion to the contrary, until the DAC assessments. I consider as particularly serious the repeated delays in providing psychological counselling.

I find that Pilot has seriously and repeatedly breached its obligations to Mrs. Arbeau. Some of the items, such as prescriptions and psychological counselling are items which an insurer is required to pay pending resolution of the dispute. A breach of this "pay pending resolution of the dispute" provision alone has been considered by arbitrators as sufficient to attract a special award.

Pilot is required to pay a special award with respect to those five benefits which I have found Pilot unreasonably delayed or withheld. I accept the evidence of Ms. McFadyen, Dr. Stolee and Dr. Buchanan that the effect of Pilot's delays has been to delay Mrs. Arbeau's recovery.. I find it appropriate in the circumstances of this case to make a special award in the amount of 35 per cent of the amount to which Mrs. Arbeau was entitled at the time of the award together with interest on all amounts then owing to her, (including unpaid interest) at the rate of two per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule. In the event that counsel are unable to agree on the amount, I remain seized of this issue.

I do not find that Pilot unreasonably withheld or delayed the payment of Mrs. Arbeau's income replacement benefits. There were differences in the interpretation of the provisions of the Schedule. To date there have been no arbitration decisions which address these provisions which might have assisted the parties in resolving the dispute.

Expenses:

There was no suggestion that Mrs. Arbeau should not be granted her expenses. I exercise my discretion having regard to the circumstances of this case, to award Mrs. Arbeau her expenses in respect of the arbitration, including the accounting fees in the amount of $884. In the event the parties are unable to agree on the amount of Mrs. Arbeau's expenses, either party may request an assessment via the Registrar's office.

Order:

Mrs. Arbeau is entitled to an income replacement benefit between May 13, 1994 and October 31, 1995.
Pilot Insurance Company shall pay Mrs. Arbeau $438.32 per week for each of the 20 weeks between May 13, 1994 to September 30, 1994, or $8,766.64. Pilot may deduct from this amount, post-accident net income of 90% of ($4,401.91, less applicable deductions for income tax, Canada Pension Plan and Unemployment Insurance premiums).
Mrs. Arbeau is entitled to psychological counselling, massage therapy, the cost of a treadmill rental between November 1994 and April 1995, reimbursement for the purchase of a treadmill, prescription expenses and needles, the services of a rehabilitation case manager, housekeeping services, occupational therapy, transportation expenses, planner refills, and lunch expenses incurred at a DAC requested by Pilot, as detailed in the decision.
Mrs. Arbeau is entitled to interest on overdue benefits calculated under the provisions of section 68 of the Schedule.
Mrs. Arbeau is entitled to a special award in respect of benefits for psychological counselling, prescription expenses, transportation expenses, the rental of a treadmill, and for the services of a rehabilitation case manager. The award is 35 per cent of the amount to which she 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.
Mrs. Arbeau is entitled to her expenses in respect of the arbitration. This includes the outstanding accounting invoice in the amount of $884.

June 27, 1997

Suesan Alves

Arbitrator

Date

APPENDIX A

Hearing:

The hearing was held in Smiths Falls, Ontario, September 15, 16 and 17, 1996, before me, Suesan Alves, Arbitrator.

Present at the Hearing:

The Applicant, Linda Arbeau, was present and was represented by James I. Minnes, Barrister and Solicitor.

The Insurer, Pilot Insurance Company, was represented by Martin Tiidus, Barrister and Solicitor

Witnesses:

Dr. Stolee

Ms. Nancy McFadyen

Mr. Paul Goodyer

Dr. Gow

Mrs. Linda Arbeau

Dr. Sitaram

Dr. Buchanan

Mr. Kenneth Durand

Mrs. June Brace

Exhibits:

Exhibit 1: Applicant's brief, volume I, with tabs 1-45

Exhibit 2: Applicant's brief, volume II, with tabs 46-69

Exhibit 3: Applicant's brief, volume III, with tabs 70 - 100

Exhibit 4: Applicant's brief, volume IV with 2 tabs (B,C)

Exhibit 5: Applicant's brief, volume V with 8 tabs

Exhibit 6: Insurer's Accident Benefits Brief, with 20 tabs

Exhibit 7: Insurer's Supplementary Medical Brief with 35 tabs

Exhibit 8: Progress report of Dr. C. Gow, psychologist

Exhibit 9: Final grade report for summer and fall 1987, St. Lawrence College

Exhibit 10: Certificate of Elementary Studies, Grade 7, June 1961

Exhibit 11: Certificate from Department of Education, 1965

Exhibit 12: Unofficial transcripts from Concordia University

Exhibit 13: Page 1, Occupational therapy assessment dated October 18, 1994

Exhibit 14: Employer's Confirmation of Income

Exhibit 15: Explanation of Assessment by Insurer

Exhibit 16: Application for Accident Benefits

Exhibit 17: Net income analysis, prepared by June Brace

Exhibit 18: Quality Footcare Management Income Statement dated September 30, 1995 and net income analysis

Appendix B

Section 10 of the Schedule provides:

Amount of Benefit

10.—(1) The amount of a weekly income replacement benefit shall be 90 per cent of the insured person’s net weekly income from employment determined in accordance with section 81 or 82.

(2) Subject to subsection (3) and section 75, the amount of a weekly income replacement benefit shall not be less than $185 if, during the week in respect of which the benefit is payable,

(a) the insured person is suffering a partial or complete inability to carry on a normal life as a result of the accident, if 104 weeks or less have elapsed since the person first qualified for weekly income replacement benefits or weekly caregiver benefits; or

(b) the insured person is suffering a complete inability to carry on a normal life as a result of the accident, if more than 104 weeks have elapsed since the person first qualified for weekly income replacement benefits or weekly caregiver benefits.

(3) The insurer may deduct from the amount of the weekly income replacement benefits payable to an insured person a percentage of the net income received by the insured person in respect of any employment subsequent to the accident.

(4) The percentage mentioned in subsection (3) shall be,

(a) 75 per cent, if the insured person started the employment more than twenty-six weeks after the onset of the disability in respect of which the weekly income replacement benefits are paid and has been engaged in the employment for less than twenty-six weeks; and

(b) 90 per cent, in any other case.

(5) Subject to section 82, for the purpose of subsection (3), the net income received by a person in respect of an employment subsequent to the accident shall be determined by subtracting the following amounts from the gross income received by the person in respect of the employment subsequent to the accident:

The premium payable by the person under the Unemployment Insurance Act (Canada) on the gross income.
The contribution payable by the person under the Canada Pension Plan on the gross income.
The income tax payable by the person under the Income Tax Act (Canada) and the Income Tax Act (Ontario) on the gross income.

(6) For the purpose of subsection (3), net income from self-employment for a person who was self-employed at the time of the accident shall be determined without making any deductions for,

(a) expenses that were not reasonable or necessary to prevent a loss of revenue;

(b) salary expenses that were paid to replace the person's active participation in the business, except to the extent that those expenses were reasonable for that purpose; and

(c) non-salary expenses that were different in nature or greater than the non-salary expenses incurred before the accident, except to the extent that those expenses were necessary to prevent or reduce any losses resulting from the accident.

(7) If the insured person was self-employed at the time of the accident and the person incurs losses from self-employment as a result of the accident, the insurer shall add to the amount of the weekly income replacement benefits payable to the person 90 per cent of the losses from self-employment incurred as a result of the accident.

(8) For the purpose of subsection (7), losses from self-employment shall be determined in the same manner as losses from the business in which the person was self-employed would be determined under subsection 9(2) of the Income Tax Act (Canada) and the Income Tax Act (Ontario), without making any deductions for,

(a) expenses that were not reasonable or necessary to prevent a loss of revenue;

(b) salary expenses that were paid to replace the person’s active participation in the business, except to the extent that those expenses were reasonable for that purpose;

(d) expenses that are eligible for capital cost allowance or an allowance on eligible capital property; or

(e) losses deductible under section 111 of the Income Tax Act (Canada).

(9) The weekly amount paid to a person under this Part shall not exceed $1,000 after making any deductions permitted by subsection 75(1).

ENDNOTES

i. Mrs. Arbeau testified that the business was subsequently incorporated in December 1995.

ii. Tab 93, Exhibit 3. In particular fax dated May 3, 1994 stating "Please be advised, client has agreed to a long term lease, and wishes to occupy offices as of 1st June/94"

iii. Occupational Therapy Assessment performed September 28, 1994 and October 4, 1994, dated October 18, 1994, prepared by Nancy J. McFadyen, Tab 8, Exhibit 1, and progress report of Ms. McFadyen dated June 16, 1995 at Tab 27, Exhibit 1.

iv. November 10, 1994 report at Tab 9, Exhibit 1

v. Tab 12, Exhibit 1, dated December 5, 1994.

vi. Dr. Stolee's notes, at page 132, Tab 46, Exhibit 1

vii. Tab 27, Exhibit 1, dated June 16, 1995.

viii. Reports of September 28, 1994 and October 4, 1994

ix. Testimony of Dr. Stolee

x. Courses in Fundamental Concepts of Algebra and Perspective on Business: A, courses in Intro to Administration and Elementary Functions: C

xi. Courses in Fundamental Mathematics II: A-, Fundamental Mathematics I and Intro to Macroeconomics: C+, Intro to Microeconomics: C

xii. Tab 46, Exhibit 2 (193 pages)

xiii. Section 8(3) of the Schedule

xiv. I inquired but was not informed whether Pilot had made such an election under section 82(1)(b)

xv. Section 10(3)(4)(b)

xvi. Section 10(6)(a)

xvii. Section 10(6)(b)

xviii. Section 10(6)(c)

xix. Tab 11, Exhibit 6

xx. Neither accountant specifically addressed the treatment of any overlapping expenses from the old and new businesses in May and June 1994. The impact of those expenses on the overall picture is therefore likely to be of a sufficiently minimal nature, that neither found it worthwhile to specifically address this point.

xxi. Tab 18, Exhibit 6

xxii. Since the property taxes were omitted from the budget, the budgeted net income should be reduced by the amount of the property taxes, i.e.$1,415

xxiii. "Linda's support staff at work is also aware of her difficulties and provides concrete support as she assists Linda in her work." Report of Ms. McFadyen at Tab 27, Exhibit 1

xxiv. Exhibit 17

xxv. In that case the applicants renovated a cottage as a business venture. They planned to sell the property to realize the profit. For a variety of reasons, the venture was unsuccessful and the property was foreclosed. The Applicants claimed they were entitled to have the value of their services taken into account in determining their gross weekly income from their occupation or employment in the 52 week period prior to the accident. The arbitrator concluded that she had no jurisdiction to award compensation for loss of potential or future business profits, or for future economic loss.

Footnotes

The Statutory Accident Benefits Schedule — Accidents after December 31, 1993, and before November 1, 1996, called "the Schedule" in this decision. The Schedule is Ontario Regulation 776/93, as amended by Ontario Regulation 635/94.