Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 1998 ONFSCDRS 40

Appeal P96-00087

ROCCO and LINDA GIOSA

Appellants

and

Respondent

Before:

Frederika Rotter, Director's Delegate

Counsel:

Mark H. Fonseca (for Rocco and Linda Giosa)

Guy Farrell (for Alpina Insurance Company Limited)

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

The appeal is allowed in part. Paragraphs 1 and 2 of the arbitrator's order dated November 5, 1996 are rescinded, and the following paragraphs are substituted:
Mr. Giosa shall pay Alpina $32,475.23 plus interest, from the date of the appeal decision, in accordance with section 27 of the Schedule.
Alpina shall pay Mrs. Giosa $8,953.54 plus interest according to the Schedule.
Paragraph 3 of the arbitrator's order, allowing Mr. Giosa one half of his arbitration expenses, subject to set off by the repayment order is confirmed.
Paragraph 4 of the arbitrator's order allowing Mrs. Giosa her arbitration expenses is confirmed.
Mr. and Mrs. Giosa are entitled to their reasonable appeal expenses.

September 25, 1998

Frederika Rotter

Director's Delegate

Date

Rocco and Linda Giosa, who are husband and wife, were both injured in a motor vehicle accident on February 10, 1991. Their car was rear ended, at high speed, while stopped at a traffic light. Mr. Giosa had been driving the car, and Mrs. Giosa was the front-seat passenger. Both Mr. and Mrs. Giosa qualified for weekly income benefits from Alpina Insurance Company Limited ("Alpina") under section 12 of the Statutory Accident Benefits Schedule - Accidents before January 1, 1994, R.R.O. 1990, Reg. 672, ("the Schedule").

Mrs. Giosa's injuries were not as severe as her husband's. She received weekly income benefits from Alpina until August 27, 1991, when she returned to work. Her benefits were based both on her earnings from her employment and her share of the earnings from her and her husband's business, in which Mr. Giosa was self-employed. Her dispute with Alpina relates only to the issue of the quantum of the earnings from the business.

Mr. Giosa was seriously hurt in the accident. His injuries included a pelvic fracture and a closed head injury. He subsequently experienced headaches, neck, back and thigh pain, neurological problems in both arms and problems with hearing, concentration, memory and sleep.

Mr. Giosa's disputes with Alpina concerned the amount and duration of his weekly income benefits. Alpina terminated Mr. Giosa's benefits on June 20, 1993. In a decision dated November 5, 1996, the arbitrator found that Mr. Giosa was only able to resume his employment as of December 14, 1994 and ordered ongoing benefits until that date. Mr. Giosa initially sought to appeal this aspect of the arbitrator's award (claiming ongoing disability) but did not pursue it at the appeal hearing.

Mr. Giosa was both employed and self-employed before the accident. He worked full-time as a technical support specialist for Rogers Cantel Incorporated ("Cantel"). He also worked evenings and weekends in his own business, installing security alarms, intercoms, cable and satellite TV systems and doing other electrical work. As found by the arbitrator, Mr. and Mrs. Giosa were partners (60/40 percent) in the pre-accident business, Comtech Communications ("Comtech"). Mr. Giosa performed all of the technical and physical work. Mrs. Giosa helped out with record keeping and answering the telephone.

Mr. and Mrs. Giosa based their weekly income benefit on their earnings in the four week period prior to the accident, as they were entitled to do under section 12 of the Schedule. The major issue on appeal concerns the determination of the Giosas' earnings from the Comtech partnership in the relevant period.

The business records of Comtech were neither full nor complete. The Giosas presented evidence of the expenses of the business in and about the four weeks before the accident. They also submitted invoices billing customers for work done in that period.

However, they were not able to present clear and objective evidence about exactly when all of the invoiced work was done. The arbitrator found that some of their claimed income was earned outside of the four-week period prior to the accident and therefore could not be included for the purpose of calculating weekly income benefits. The arbitrator also rejected Mr. Giosa's testimony about profits earned on materials used in the Comtech work. Finally, the arbitrator found that Mr. Giosa had failed to report income from his self-employment earned after the accident, which was deductible from any accident benefits paid.

The arbitrator concluded that Mr. Giosa had not been candid about either his pre- or post-accident earnings, and that this materially contributed to an overpayment of benefits by Alpina. The arbitrator found that Mr. Giosa had been overpaid by $94,347, less $2,161 in landscaping expenses, which he allowed. Accordingly, the arbitrator ordered Mr. Giosa to repay the difference of $92,244, and awarded Mr. Giosa only one half of his arbitration expenses.

Mr. and Mrs. Giosa appeal the arbitrator's order concerning the quantum of benefits and Mr. Giosa also appeals the amount of the overpayment, the repayment order and the arbitrator's order regarding the expenses of the arbitration hearing. In his appeal documents he also raised other issues which were abandoned in oral submissions.

Mr. Giosa submits that the arbitrator made various errors in calculating the amount of the weekly income benefit and the resultant overpayment. Alpina does not dispute that the arbitrator made some errors in this regard.

A. Undisputed Items

First, Mr. Giosa submits that the arbitrator erred in finding that Mr. Giosa's salary from Cantel was $903.03 weekly. While this was his base weekly salary, Mr. Giosa also received an additional $161.17 weekly for on-call pay and a tax credit. Receipt of this amount was documented in a letter before the arbitrator as an exhibit.¹ No evidence was led to contradict it at the hearing. On appeal, Alpina did not dispute that Mr. Giosa's total weekly income was $1,064.20.

Second, it is not disputed that the arbitrator erred in calculating the weekly income benefit. Subsection 12(4)(b) of the Schedule provides that the benefit is calculated by taking 80% of the combined average weekly earnings from employment and self-employment, and then deducting any collateral benefits received, to arrive at a maximum benefit. In Mr. Giosa's case, this was $1,050 per week.

However, the arbitrator reversed the order in which the various operations of the calculation are performed. He arrived at a maximum weekly income benefit of $1,050 and then deducted the collateral benefits payable. These errors are addressed in the Appendix, setting out on the calculation of the benefit.

B. Start Date of Duguid Jobs

Mr. Giosa submits that the arbitrator made serious errors in his assessment of the evidence regarding his income from his self-employment with Comtech in the four weeks prior to the accident.

The first issue raised was in connection with the start date of work performed by Comtech. The arbitrator held that some of the income which Mr. Giosa claimed was earned in the four-week period immediately before the accident, was actually earned outside that period. The dispute concerns the start date for $5,000 worth of labour billed in an invoice dated January 21, 1991.

The work involved the installation of an alarm system, outdoor and indoor lighting and wiring at the residence of Mr. John Duguid. Mr. Giosa claimed he performed all the work billed in the four weeks immediately preceding the motor vehicle accident. However, he provided no contemporaneous records or documents proving when the work was done, or showing with any certainty that it was done in the four-week period prior to the accident. The only evidence in this regard was the testimony of Mr. and Mrs. Giosa and Mr. Duguid.

The evidence before the arbitrator was that Mr. Giosa negotiated the Duguid job in December 1990, and ordered certain materials and parts used for the work that month. Mr. and Mrs. Giosa both testified that the Duguid work was commenced in mid-January 1991. Mr. Giosa gave family and personal reasons explaining why he could not have started the work any sooner than about January 12 or 13, 1991. Mr. Duguid, in his testimony, could not recall exactly when the work commenced but suggested he would have started to "crack the whip" early in January 1991, immediately after the end of the holiday season. Alpina's accountant proceeded on the assumption that the Duguid job commenced January 1, 1991.

In his reasons, the arbitrator expressed his concern about the lack of any independent verification that the Duguid work commenced in mid-January. He concluded, based on the fact that the contract was negotiated and the materials for the job purchased in December 1990, that the work was begun during the week between Christmas and New Year 1990, and not in the week of January 12, 1991 as Mr. and Mrs. Giosa claimed. Thus he credited only $1,250 of the labour charge (one quarter of the $5,000 billed) to the four-week period prior to the accident. Mr. and Mrs. Giosa argue that this conclusion was arbitrary and there was no evidence to support it.

The arbitrator chose not to believe the Giosas' testimony about the start date. Rather than relying on any of the witnesses, he referred to the documentation before him. The difficulty with this approach is that the documentation itself does not point to a specific start date. Although some materials used in the job may have been purchased in December 1990, this fact alone does not suggest a start date of December 25, 1990 or any other date.

The witnesses in this case agreed that the work started some time in January 1991. Alpina assumed a start date of January 1, 1991. In the circumstances, I find that the arbitrator erred in concluding that the work started on December 25, 1990 in the absence of any evidence to support that particular finding of fact. I do not find it logical or sensible to assume that Mr. Giosa, a married man with young children, would start work on a new project on one of the most important family holidays of the year.

The arbitrator had difficulties with the Giosas' credibility. However, even disregarding their statements, the preponderance of the evidence (including the testimony of Mr. Duguid himself) suggests that the work started early in January 1991. This is what was proposed by Alpina's accounting witnesses. Allowing a start date early in January would result in approximately one half of the work falling within the four week period before the accident. This increases the weekly income benefits payable (and accordingly reduces the overpayment) as it results in an additional $1,250 worth of labour credited to the relevant four-week period.

C. Mark-up on Materials

Mr. Giosa submits that the arbitrator erred in concluding there was no mark-up on materials billed in connection with the Duguid job.

Mr. Giosa testified at the arbitration hearing that the charges for the materials used on the Duguid job would have included a mark-up, but he was not able to give a precise percentage. He indicated that it would vary depending on the nature of the materials used.

Mr. Malcolm Allman, Mr. Giosa's accountant, testified that he met with Mr. Giosa to identify the hardware and other materials used in the Duguid job. He did this to determine the cost of the materials and the appropriate mark-up, or profit, to include in Mr Giosa's earnings from the job, as Mr. Giosa maintained no formal inventory control system. Mr. Allman testified that in arriving at a figure for profit on materials, he reviewed various original documents including bank statements, bank deposit books, cancelled cheques, invoices, cash receipts, and credit card payments. He also considered what he felt would be an appropriate mark-up for materials in an ordinary business situation.

The arbitrator did not accept Mr. Allman's evidence regarding the mark-up. Instead, he relied on evidence from Alpina's accounting expert, Mr. Greg Hocking, which suggested that the cost of materials used for the job equalled the amounts charged to Mr. Duguid.

Mr. Hocking relied on a letter dated July 8, 1991 from Ms. Raf Betro, Mr. Giosa's bookkeeper. Ms. Betro wrote, "It appears that the bulk of the materials used for this job ($4,345.99) were purchased in November and December of 1990."² At the hearing, Ms. Betro testified that she was not sure where this number came from. She agreed that it must have been determined with the assistance of Mr. Giosa, as she herself could not identify what materials went into the job.

Mr. Hocking also reviewed the Comtech ledger for January and February 1991, finding expenses for materials amounting to $1,637.93. He noted that the total of $4,345.99 (the figure produced by Ms. Betro) and $1,637.93 (the purchases in January and February 1991) amounted to $5,983.92, which is the exact amount, to the penny, Mr. Giosa billed Mr. Duguid for materials. Mr. Hocking accordingly concluded that Mr. Giosa had charged no mark-up for materials on the Duguid job.

Mr. Giosa submits that the arbitrator erred in accepting Mr. Hocking's conclusion. He submits that there are no entries in the ledgers for November and December 1990, and no combinations of figures, which add up to the exact amount of $4,345.99, the figure cited by Ms. Betro. Mr. Giosa submits that the total payments recorded for supplies and materials during November and December 1990, in the business ledgers only amounts to $1,904.29. Further, he submits that the November "purchases" relate to a credit card payment in November 1990, for items purchased in October 1990, well before the Duguid contract was negotiated. Accordingly, he submits, those purchases cannot be related to work completed in the four weeks prior to the accident. Finally, Mr. Giosa submits that it is both unrealistic and arbitrary to disallow any profit on materials.

To support this argument, Mr. Giosa sought to introduce new evidence at the appeal hearing, consisting of further pages from the business ledgers of Comtech and an additional explanatory letter from Ms. Betro dated December 11, 1996. I have declined to accept this evidence. The ledgers could have been adduced at the original arbitration hearing if they were relevant. The letter from Ms. Betro purports to explain her earlier letter of July 1991. Ms. Betro testified at the hearing and had ample opportunity to explain her position, including the letter of July 1991. The material tendered does not meet the well-established test for the admission of new evidence on appeal.³

The arbitrator found Mr. Giosa's evidence regarding his margin of profits unsatisfactory and unpersuasive. He noted the absence of any firm proof tying materials purchased to materials used in the job, which might demonstrate a profit margin. No clear documentation was produced to identify the materials used on the job and what they cost, compared to what was charged to Mr. Duguid. Mr. Giosa's own testimony about his mark-up was hopelessly vague. His accounting experts' evidence was based on information received from Mr. Giosa about the cost of the materials (which changed over time) combined with their own "guesstimates" about a reasonable mark-up.

In the circumstances, the arbitrator chose to rely on Alpina's accounting evidence. Although I agree that it may be unusual for a contractor not to charge a mark-up, in this case it was up to Mr. Giosa to prove to the satisfaction of the arbitrator what that mark-up, or profit, was. He failed to do this. The arbitrator had reasonable grounds for determining that no mark-up was charged.⁴ The charges for materials in the invoices in question were specific amounts, calculated to the cent, and not rounded off as would be expected if Mr. Giosa had added in some amount for profit. This is in contrast with the rounded-off sums Mr. Giosa charged for labour.

Also, the figures are based on a relatively early report by Ms. Betro which, she testified, could have only been obtained from information provided by Mr. Giosa, combined with figures legitimately derived from the ledgers. This is persuasive evidence and the arbitrator was entitled to rely on it.

As stated in numerous appeal decisions, it is not my function to second-guess the arbitrator's assessment of the evidence. The arbitrator had the benefit of hearing the witnesses and evaluating their testimony in light of all the evidence before him. He is entitled to draw his own conclusions from that evidence unless it can be shown that he made an error so serious that the decision cannot stand. I find no such error here.

D. Deduction of Post-Accident Income

Mr. Giosa submits that the arbitrator erred in concluding that he earned post-accident income from LNR Alarms and, in any event, the arbitrator erred in his method of deducting the post accident earnings.

The arbitrator found that Mr. Giosa never actually stopped working in his electrical and alarm installation business. Comtech continued to operate for three months after the accident, with Mr. Giosa contracting out the labour on a few small jobs. The arbitrator considered four Comtech invoices dated between March 29 and May 15, 1991. He concluded that the total post-accident earnings from these contracts amounted to $489, which he attributed 60/40 to Mr. and Mrs. Giosa. Pursuant to section 15 of the Schedule, the arbitrator deducted 80 per cent of the attributed post-accident earnings from the benefits payable to Mr. and Mrs. Giosa.

Since the arbitrator found that Comtech continued to operate as a business, he held that he did not have to account for ceasing expenses in dealing with the amount of the weekly benefit. His conclusion that the business continued to operate was reinforced by the finding that in 1992, Mr. Giosa started working under the style of LNR Alarms (LNR). That business was subsequently incorporated in 1993. The arbitrator formed the impression that Mr. Giosa never stopped working at his own business, although there was a hiatus in reported earnings between the time that Comtech ceased operations (May 15, 1991) and LNR was started (June 25, 1992).

In arriving at the pre-accident earnings, the arbitrator in effect deducted only the material and outside labour expenses of Comtech. He did not deduct any business expenses of a variable or periodic nature, such as rent, transportation, telephone, bank charges, accounting expenses and the like. This resulted in a higher figure for income than would otherwise have been the case.

The arbitrator then used the same approach in dealing with Mr. Giosa's post-accident earnings, both from Comtech and LNR. Basically, he deducted expenses only for contract labour and materials, and considered the resultant "gross margin" to be income to Mr. Giosa. He did not allow deductions for any other business expenses of the sort listed above. Using this method, he found that LNR had total earnings of $47,784 for the three years, 1992, 1993 and 1994. The arbitrator then deducted 80 per cent of these total earnings from the total benefits payable to Mr. Giosa.

Mr. Giosa submits that the financial statements of LNR show that it did not "earn" income in either 1992 or 1993.⁵ The financial statements for both those years show a net loss. The financial statement for the year ending December 31, 1994 shows a net profit of $3,320. Therefore Mr. Giosa submits that the arbitrator erred in attributing earnings of $47,784 to him over that three-year period.

I note that Mr. Giosa does not appeal or question the arbitrator's calculation of pre-accident income. He does not propose that any deductions for fixed, variable or periodic expenses (other than expenses for contract labour and materials) be deducted from the pre-accident earnings. I agree with the arbitrator and Alpina that in such a case, the fairest approach is to treat pre-accident and post-accident "earnings" in a similar fashion. Accordingly, using this approach would result in a finding that LNR "earned" income starting in 1992.

Mr. Giosa also points out that section 15 of the Schedule provides that "the insurer may deduct from any benefit payable under this part, 80 per cent of any income received or available from any occupation or employment subsequent to the accident" (my emphasis). Mr. Giosa submits that there was no evidence before the arbitrator proving that he actually received or had made available to him income from LNR. The financial statements of LNR, the only evidence in this regard, do not show any income was received by or made available to Mr. Giosa. Further, Mr. Giosa submits that LNR is an incorporated company. As such, he was its employee, and there is no evidence that he received income from the company.

LNR was initially operated by Mr. Giosa as a sole proprietorship, which was then rolled into an incorporated company. Mr Giosa is the only shareholder of the company. In the circumstances of this case, I find the arbitrator properly looked beyond the corporate structure, and attributed income earned by LNR to Mr. Giosa. I am not prepared to interfere with the arbitrator's findings of fact in this regard.

I am concerned, however, by the method used to deduct the income earned. Weekly income benefits are meant to be periodic, and not lump-sum payments. The Schedule contemplates bi-weekly payments for as long as a person continues to be eligible for a benefit. Under the scheme, income earned in a particular weekly or bi-weekly period should be deducted from the benefits payable in that same period and not from benefits payable either before or after.

Thus, Alpina may deduct 80 per cent of income "earned" by Comtech post-accident in the seven-week period March 29 to May 15, 1991 from the benefits payable to Mr. and Mrs. Giosa in that time period. They are entitled to an unreduced benefit for the remainder of that year.

Then, Mr. Giosa's benefits after June 25, 1992, when LNR started operating, should be reduced by 80 per cent of the company's "earnings." Mr. Giosa is entitled to an unreduced benefit during the period January 1 to June 25, 1992.

During 1993, Mr. Giosa received weekly income benefits and also "earned' income from LNR, 80 per cent of which may be deducted from the benefits payable in that calendar year.

LNR's "earnings" for 1994 are deductible from the benefits payable in 1994, but must be pro-rated over the entitlement period as benefits were only payable until December 14, 1994.

E. Calculation of Benefits

Applying my findings, Mr. Giosa's benefits are calculated based on his weekly earnings from Cantel of $1,064.20. To this is added his share (60 per cent) of the weekly earnings from Comtech.

The weekly earnings from Comtech are $2,500 in respect of the first labour charge (one half, based on a start date in early January 1991). In addition, the other labour charges of $1,200 and $517.68 are allowed, for a total of $4,217.68 billed during the four weeks prior to the accident, or $1,054.42 weekly. Mr. Giosa's 60 per cent share of this is $632.65 weekly. Mrs. Giosa's share is $421.77 weekly. Accordingly, Mr. Giosa's total weekly earnings are $1,064.20 + 632.65 = $1,696.85. His weekly income benefit is 80 per cent of this amount ($1,357.48) less any collateral benefits (to a maximum of $1,050). Detailed calculations of the amounts payable yearly during the period of Mr. Giosa's entitlement are set out in the Appendix to this decision.

According to the calculations, Mr. Giosa is entitled to benefits as follows:

Year

Amount

1991

$29,885.65

1992

$29,240.16

1993

$25,699.36

1994

$10,048.60

Total

$94,873.77

The arbitrator found that Alpina paid Mr. Giosa a total of $129,510 in weekly income benefits. Accordingly, by my calculations, Mr. Giosa was overpaid by $34,636.23. The arbitrator allowed $2,161 for landscaping expenses, which I apply here, reducing the overpayment to $32,475.23.

Mrs. Giosa was entitled to weekly income benefits for 27 weeks. She earned $585 per week from her employment at L & M Truck Parts. She is entitled to a 40 per cent share of the Comtech earnings, or $421.77 weekly.This brings her total weekly earnings to $1,006.77. Her weekly income benefit is 80 per cent of this amount, or $805.42.

Her total benefits come to 27 x $805.42 = $21,746.34. From this must be deducted her share (40 per cent) of the Comtech profits of $489, or $196. The total deduction (80 per cent) is $156.80. The total benefits owing to Mrs. Giosa is $21,589.54.

Based on the arbitrator's understanding that Alpina paid Mrs. Giosa a total of $12,636, she is owed an additional $8,953.54.

F. Repayment and Arbitration Expenses

Mr. Giosa submits that the arbitrator erred in ordering a repayment. He relies on subsection 27(1) of the Schedule which provides:

A person must repay to the insurer any benefit received under this Schedule that is paid to the person through error or fraud.

Mr. Giosa submits that the arbitrator did not find that the overpayment resulted from fraud. He also submits that if he was overpaid as a result of error, it was not the result of his actions. He says he responded fully to repeated requests for information by Alpina and the information he provided was correct and accurate to the best of his knowledge. He was not personally responsible for calculating either his pre-accident income or the benefits to be paid. Accordingly, he submits that he cannot be held responsible for any errors made with respect to these calculations and should not be penalized by having to repay any resultant overpayment.

In Levenson and The General Accident Assurance Company Of Canada, (OIC A-000260, February 18, 1992) Senior Arbitrator Naylor reviewed the meaning of the term "error" used in the context of a claim for repayment. She held :

To give meaning to the terminology of the section, the stipulation that benefits be paid "through error" in order to be recoverable must require that responsibility for the payment be attributable in some material way to the actions of the applicant.

This view has been consistently adopted in subsequent decisions.

Here, the arbitrator found Mr. Giosa had been neither candid nor honest in presenting his claim to Alpina. He found Mr. Giosa's evidence about his pre-accident earnings unsatisfactory. He also concluded that Mr. Giosa deliberately failed to advise Alpina about the existence of his new company, LNR, and his post-accident earnings. The arbitrator held that, because of this lack of candour, Mr. Giosa materially contributed to the overpayment by Alpina.

I find no basis for disturbing this conclusion. As indicated earlier, the arbitrator had the opportunity to assess the weight and credibility of all the evidence and witnesses during a lengthy hearing. He was in a far better position than I am to evaluate the quality of the evidence, and to make crucial findings about credibility.

I make the same observations with respect to Mr. Giosa's submission that the arbitrator erred in awarding him only half of his arbitration expenses. The arbitrator has the discretion to make an award of expenses, bearing in mind the merits of the case and the parties' conduct. I am satisfied that the arbitrator considered the appropriate factors. He took into account that Mr. Giosa was entitled to ongoing weekly benefits and also that his lack of candour contributed to an overpayment. I see no basis for interfering with the arbitrator's discretion in this regard, notwithstanding that some of the arbitrator's orders were successfully challenged on appeal.

In Allison and Markel Insurance Company of Canada (OIC P-001231, August 21, 1996) Director's Delegate Naylor commented on the discretion to award expenses, as follows:

An award of expenses is a matter within the discretion of the arbitrator, although the discretion must be exercised reasonably. Because the discretion is given to the arbitrator, it should not be interfered with lightly on appeal. The arbitrator is able to consider the evidence in totality, including observing and hearing any witnesses, and usually is in the best position to assess the merits of the case and the way it was handled by the parties. Generally his or her determination should not be disturbed unless the party appealing the order can point to a serious error in the exercise of the discretion: for example, the arbitrator adopted a wrong approach, based the decision on irrelevant considerations or inadequate evidence, or failed to look at the merits of the individual case by inappropriately fettering his or her discretion.

I agree. This aspect of the appeal is dismissed.

III. EXPENSES

Mr. Giosa was successful in a number of issues raised on appeal and is entitled to his reasonable appeal expenses.

September 25, 1998

Frederika Rotter

Director's Delegate

Date

APPENDIX

1991:

February 17 - May 12, 1991

Mr. Giosa received a higher disability benefit from Cantel for the first 12 weeks for which weekly benefits were payable i.e. $903 per week.

Mr. Giosa's weekly income benefits for the 12 weeks:

Total weekly earnings

$1,696.85

80% of total weekly earnings

1,357.48

Collateral benefits (Cantel)

(903.00)

Subtotal

454.48

Total payable ($454.48 x 12)

$5,453.76

Less deduction for post-accident earnings March 29 to May 15, 1991:

Earnings

$489.00

Mr. Giosa's share (60% of $489.00)

293.00

Deductible amount (80% of $293.00)

(234.43)

Total benefits for 12 weeks ($5,453.76-$234.43)

$5,219.33

May 12 - December 31, 1991 (34 weeks):

Effective May 12, 1991 Mr. Giosa received a disability benefit of $632 for 34 weeks.

80% of total weekly earnings

$1,357.48

Collateral benefits

(632.00)

Weekly income benefit

725.48

Subtotal ($725.48 x 34)

$24,666.32

Total benefits payable for 1991 (12 weeks + 34 weeks)

$29,885.65

1992:

Weekly income benefit

$725.48

Total yearly benefit ($725.48 x 52)

37,724.96

LNR's gross marginal profit

10,606.00

Deductible amount (80% x $10,606)

(8,484.80)

Total annual benefit ($37,724.96-$8,484.80)

$29,240.16

1993:

Total yearly benefit ($725.48 x 52)

$37,724.96

LNR's gross marginal profit

15,032.00

Deductible amount (80% x $15,032)

(12,025.60)

Total annual benefit ($37,724.96 - $12,025.60)

$25,699.36

1994 (50 weeks):

Total yearly benefit ($725.48 x 50)

$36,274.00

LNR gross marginal profit

34,093.00

Deductible amount (50/52 x 34,093 x 80%)

(26,225.40)