Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 1998 ONFSCDRS 87

Appeal P98-00017

OFFICE OF THE DIRECTOR OF ARBITRATIONS

PERSONAL INSURANCE COMPANY OF CANADA

Appellant

and

JAMES BRADY

Respondent

Before:

David R. Draper, Director's Delegate

Counsel:

Eric K. Grossman (for The Personal)

Anne Marie Frauts (for James Brady)

APPEAL ORDER

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

The appeal is dismissed and the arbitration order dated March 16, 1998 is confirmed.
James Brady is entitled to his reasonable appeal expenses.

November 26, 1998

David R. Draper Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This is an appeal by Personal Insurance Company of Canada ("The Personal") from an arbitration decision dated March 16, 1998. It challenges the arbitrator's order that it must pay James Brady additional weekly income benefits and a special award of $5,000. More specifically, it contends that the arbitrator erred in admitting and relying on oral evidence from Dr. Kevin P. White that was presented without adequate notice.

II. BACKGROUND

On June 29, 1993, Mr. Brady was hit by an automobile while riding his bicycle. He suffered a ruptured urethra and pelvic fractures. As a result of his injuries, he was unable to return to his job at the 52nd Street Bar, where he worked as a bouncer and general labourer.

The Personal paid Mr. Brady weekly income benefits under s.12(1) of the Statutory Accident Benefits Schedule - Accidents before January 1, 1994, O.Reg. 672/90, as amended ("the Schedule") based on his inability to perform the essential tasks of his pre-accident employment. However, in March 1996, almost three years after the accident, The Personal terminated benefits based on information that Mr. Brady was working. Later, these benefits were paid, but only up to June 29, 1996.

Mr. Brady disagreed with the termination of his benefits, claiming he met the stricter, post-156 week test in s.12(5)(b) of the Schedule. Before the arbitration hearing started, he began doing some part-time work at Kohn's Meat Market. However, this was casual employment for which he did not receive a salary, but only gas money and discounts at the store. The question at the hearing was whether Mr. Brady was capable of performing any occupation or employment that was reasonably suitable based on his education, training and experience.

The arbitration hearing took place over four days in mid-October 1997. The exhibits included two reports from Dr. White, dated October 1996 and October 1997. Dr. White also testified, along with Mr. Brady and two rehabilitation workers, all called by Mr. Brady. The Personal did not call any witnesses.

The hearing focussed on the types of work suggested by two rehabilitation consultants, one retained by each party. In the summer of 1997, The Personal retained Ms. Debora Freeman, a vocational rehabilitation specialist, to conduct a transferable skills analysis and labour market survey to find jobs Mr. Brady could do without additional training. She identified four positions: security guard, parking lot attendant, car jockey, and driving instructor. In response, Mr. Brady retained Ms. Debra Shugar, a rehabilitation counsellor, to do a similar assessment. She looked at a number of jobs, including school bus driver, welder, and courier/messenger.

At pages 9 - 11 of the decision, the arbitrator sets out his reasons for concluding that none of the jobs were suitable for Mr. Brady. The Personal only challenges his findings where they are based on the testimony of Dr. White. With respect to the driving jobs (driving instructor and school bus driver), the arbitrator relied on Dr. White's opinion that Mr. Brady's use of prescription narcotics (Dilaudid) and his low back pain would make him an unsuitable candidate. He also relied on Dr. White's opinion that Mr. Brady should avoid night work due to his problems sleeping, ruling out many security guard positions.

The Personal objects to Dr. White's testimony, claiming he unfairly went beyond the opinions expressed in his reports. In its submission, Mr. Brady's lawyer should not have led this evidence and the arbitrator should have excluded it, whether or not its counsel objected. Without this evidence, The Personal argues that the outcome would have been different.

After it filed its appeal, The Personal retained new lawyer who prepared its written submissions. The submissions added a request for variation/revocation as an alternative to the appeal. Mr. Brady objected and on September 10, 1998, I ruled that The Personal was not entitled to proceed with both an appeal and an application for variation/revocation at the same time. The Personal decided to continue with its appeal, abandoning the variation/revocation application, at least for the present.

III. ANALYSIS

The Personal acknowledges that it can only appeal on questions of law. However, its appeal is framed as a question of law. The Personal contends that the arbitrator erred in law by allowing Dr. White to testify on issues not raised in his reports, preventing it from adequately assessing and responding to his evidence.

I accept that parties to an arbitration should not be ambushed by unanticipated evidence, particularly if it is central to the decision. The principles of fairness and natural justice demand otherwise. However, I agree with Mr. Brady that this case does not come close to crossing that line.

Both parties have been represented by counsel since mediation, and the issues in dispute have been clear throughout. Unlike many other cases, it appears there were no problems with productions. By the time of the pre-hearing in July 1997, the parties had already exchanged documents. Dr. White had not yet done his assessment, but the pre-hearing makes it clear that Mr. Brady intended to see a rheumatologist, either Dr. White or Dr. Harth. No objection was taken and I presume Dr. White's report was provided promptly to The Personal. It was filed without objection at the beginning of the arbitration hearing as part of Exhibit 2.

The pre-hearing letter lists Dr. White as a potential witness. Therefore, The Personal knew that he might be attending to present his views on Mr. Brady's ability to return to work. Dr. White's attendance was confirmed by Mr. Brady's lawyer in her opening statement. Again, there was no objection.

The Personal's complaint is that some of Dr. White's testimony came as a surprise. It points to his reports, claiming they do not mention any work restrictions based on Mr. Brady's inability to sit for extended periods, his sleep problems, or his use of Dilaudid. Given the importance that the arbitrator gave to Dr. White's testimony, The Personal argues that the process was unfair.

I am not persuaded there was any undue surprise in Dr. White's testimony. The medical reports and clinical records include repeated references to Mr. Brady's low back pain and sleep disturbances. For example, a relatively early report from Dr. David B. Boyd, the treating internist, suggests that Mr. Brady should look for work that would allow him to rest periodically and not require him to maintain any particular posture.¹ Mr. Brady's difficulty sitting for extended periods is also mentioned in Ms. Shugar's employability assessment as an impediment to his working as a courier/messenger.²

There is also considerable discussion in the medical records about Mr. Brady's medication. Ms. Shugar specifically identifies it as a possible barrier to employment as a bus driver.³ In addition, the report of Dr. John C. Clifford, a specialist in Physical Medicine and Rehabilitation, is of interest. Dr. Clifford was retained by The Personal to do an assessment in August 1994, approximately one year after the accident. At pages 3 and 6 of his report, Dr. Clifford expresses concerns about Mr. Brady's use of Dilaudid, recommending that it be reduced and then discontinued as soon as possible.

In his October 1997 report, Dr. White mentions Mr. Brady's low back pain, his interrupted, non-restorative sleep, and his use of medication, including 10 Dilaudid tablets per day (4mg.). He also notes that Mr. Brady frequently stood up and stretched during the assessment. Dr. White found Mr. Brady credible and did not feel he was exaggerating his symptoms "in any way." While he did not review any specific job options in detail, Dr. White provided a general opinion about Mr. Brady's employability. After noting that Mr. Brady was doing some part-time work and had been able to play baseball, he states:

Hence, I would be somewhat loath to say that he is totally disabled at this time. Clearly in my mind he is significantly disabled. Given his limited training that basically would qualify him only for manual labour, and his physical limitations, I really do not think he is employable in any meaningful way, and certainly not more than half-time based upon his description of the pain and fatigue he experiences after returning from his current part-time work. I think he has proven to us that he is motivated to return to the workforce in some capacity, and he should be commended for this. I would recommend that he be retrained so that he can ultimately obtain remunerated part-time non-manual labour.

At the hearing, Dr. White was simply asked to expand on this opinion. Not surprisingly, he was asked to comment on the crux of the issue in dispute - was Mr. Brady capable of doing the jobs identified by others as possible options? I find nothing improper in the questions asked by Mr. Brady's lawyer. In fact, much of the evidence The Personal complains about came in cross-examination by its own lawyer. The evidence certainly was not so far afield that the arbitrator should have intervened on his own initiative.

Both parties referred me to the decision of the Court of Appeal in Thorogood et al. and Bowden et al. (1978), 1978 CanLII 1367 (ON CA), 21 O.R. (2d) 385. In that case, the insurer objected to the testimony of the plaintiffs medical expert, claiming it was surprised by his contention that the plaintiff could develop arthritis and might need a hip replacement if the arthritis became severe enough. The trial judge refused to order a mistrial and the Court of Appeal, in a 2-1 decision, dismissed the appeal.

Mr. Brady claims that Thorogood stands for the proposition that a medical expert is not narrowly confined to the contents of his or her medical report, but has a right to explain and amplify it. The Personal argues that the majority made a factual finding that the expert's testimony was not a surprise because he referred in his report to the possibility of deterioration. In its submission, the dissent presents the guiding principal that full disclosure is required and that surprise should not be allowed.

For reasons set out above, I am not convinced that Dr. White's testimony should have taken The Personal by surprise. However, even if there was some surprise, the striking difference is that in Thorogood, insurer's counsel objected to the expert's testimony and asked for a mistrial. In this case, there was no objection. Instead, counsel challenged Dr. White through cross-examination, asking about Mr. Brady's ability to return to work, including questions about medication and sitting. It is clear, therefore, that he realized the relevance of this evidence. While he may have underestimated its importance to the arbitrator, this is the kind of assessment that counsel must make all the time. Second-guessing one's strategy after reading a negative decision may be common, but generally does not provide grounds for rescinding the decision or reopening the hearing.

The timing of Dr. White's testimony is another consideration. Mr. Brady was the first witness, but his examination-in-chief was interrupted to allow Dr. White to testify. This gave The Personal ample opportunity to respond. Not only could Dr. White be cross-examined on the issues he raised, but so could Mr. Brady and his other witnesses. The Personal also had a chance to call its own witnesses. In the pre-hearing letter, Dr. Clifford is listed as a potential witness. I see no reason that he could not have been called to respond to Dr. White's opinions, even if that required him to go beyond the scope of his reports.

As the physician who prescribed Dilaudid, Dr. Boyd's testimony also might have been helpful. However, I am not persuaded that Mr. Brady was obliged to call him. The Personal did not suggest that his attendance was required, nor is there any indication that it took steps to call him as part of its case.

If counsel did not anticipate some of Dr. White's testimony, it was his obligation to deal with it at the hearing. He could have objected or asked for time to call evidence in response, but did not. As Mr. Brady contends, the best explanation is that there was no undue surprise. The hearing concluded with no suggestion that the process was unfair. In the circumstances, I am unable to find that The Personal was treated unfairly. While there may be some situations where the evidence is so tainted that the decision cannot stand despite the losing party's failure to object at the hearing, this is not that case.

IV. APPEAL EXPENSES

Given the outcome, Mr. Brady should receive his reasonable appeal expenses. The calculation of these expenses is another matter. The parties indicated that they disagree on how the expenses should be determined, particularly the appropriate hourly rate. However, because the arbitrator is currently considering this issue with respect to arbitration expenses, I told the parties that I would not deal with it here. If they are unable to agree on the amount of Mr. Brady's appeal expenses within a reasonable time after receiving the arbitrator's decision on expenses, an assessment can be arranged by contacting the Registrar.