Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 1999 ONFSCDRS 122

Appeal P98-00057

OFFICE OF THE DIRECTOR OF ARBITRATIONS

A.K.

Appellant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Respondent

Before:

David R. Draper, Director's Delegate

Counsel:

Juan F. Carranza (for A.K.)

Ian D. Kirby (for Allstate Insurance)

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 October 29, 1998 is confirmed.
No appeal expenses are payable.

June 28, 1999

David R. Draper

Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This appeal involves the post-156 week test for weekly benefits under s.13(8) of R.R.O. 1990, Reg. 672, as amended, the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994 ("the Schedule"). The appellant, A.K., claims the arbitrator erred in concluding that he does not meet the test. In addition, he contends that Allstate Insurance Company of Canada ("Allstate") should have been ordered to pay a special award under s.282(10) of the Insurance Act.

II. BACKGROUND

On January 27, 1993, Mr. K. was hit by a car while crossing the street. He suffered various injuries, including a broken left arm and mild brain injury. Because he was not employed, he was considered for weekly benefits under s.13 of the Schedule, not s.12. Allstate accepted the claim and paid weekly benefits.

Mr. K. continued to receive weekly benefits until July 6, 1995. By that time, his arm had healed and no longer substantially affected his activities. However, he had developed serious psychiatric problems. The question was whether this condition resulted from the accident.

Mr. K. claimed that he suffered from a bipolar affective disorder caused by the brain injury he sustained in the accident. He and the witnesses called in support of his claim testified that before the accident, he was healthy, functioning at a high level and respected in the community. After the accident, he was a different person, ostracized in his community and living a marginal existence. Allstate accepted that Mr. K. had a psychiatric disorder, but argued it was unrelated to the accident.

By the time the dispute reached arbitration, the 156-week mark had passed. This meant that the arbitrator had to deal with two periods:

July 7, 1995 (the termination date) to February 3, 1996 (the 156-week mark) – based on the pre-156 week test in s.13(1):

s.13.- (1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident, a weekly benefit during the period in which the insured person suffers substantial inability to perform the essential tasks in which he or she would normally engage . . .

February 3, 1996 (the 156-week mark) and onwards – based on the post-156 week test in s.13(8):

s.13.- (8) The insurer is not required to pay a weekly benefit under this section,

(b) for any period in excess of 156 weeks unless it has been established that the injury continuously prevents the insured person from engaging in substantially all of the activities in which the person would normally engage.

Mr. K. also argued that Allstate should be ordered to pay a special award under s.282(10) of the Insurance Act because it unreasonably withheld or delayed the payment of his weekly benefits.

The arbitrator released her decision in October 29, 1998, following a three-day hearing. In the decision, she reviews the evidence on causation, rejecting Allstate's contention that Mr. K.'s psychiatric disorder was unrelated to the accident. At page 15, she states that she does not "find it probable that this serious mental illness would begin to manifest itself within a period of three weeks following a frontal lobe brain injury, without significant connection to the accident."

The arbitrator then considers the extent to which Mr. K.'s injuries, including his psychiatric condition, affected his activities. For the pre-156 week, "substantial-inability test," this meant she had to identify his essential tasks. At page 16, she states that Mr. K. "was single man, unemployed for almost eight months at the time of the accident, who needed to cook, clean his apartment, shop for groceries, do laundry and carry out other ordinary activities of daily life." Although she accepted that he had a life beyond his household chores, she characterizes the evidence about what he was doing as "meagre." As a result, Mr. K.'s entitlement to weekly benefits was based primarily on his personal and household tasks.

The arbitrator found that although there were occasions when Mr. K. was able to perform his essential tasks, most of the time he could not. As a result, she ordered Allstate to pay weekly benefits from July 7, 1995 to February 3, 1996. Allstate did not appeal this part of the order.

The arbitrator reached a different conclusion with respect to the post-156 week test. As she notes, this is a stricter test, requiring Mr. K. to establish that he is continuously prevented from engaging in substantially all of the activities in which he would normally engage. At page 21, the arbitrator states that "to be entitled to these benefits, continuity of symptoms and a very high degree of compromised activity must be shown." Looking at Mr. K.'s situation since February 4, 1996, she concludes as follows:

Mr. K has developed a psychiatric condition resulting from the accident of January 27, 1993. His treating psychiatrist calls his illness "episodic and chronic." Although I do not doubt that, from time to time since February 1996, Mr. K has been seriously debilitated and prevented from engaging in substantially all his normal activities, the evidence does not support a finding that Mr. K has been continuously, or is presently, continuously impaired to this extensive degree. (pp.22-23, footnote omitted)

The arbitrator also refused to order Allstate to pay a special award. Although she found that Ms. K. was entitled to some additional weekly benefits, she was not persuaded that Allstate acted unreasonably. More specifically, she rejected Mr. K.'s contention that Allstate failed to provide complete records to the medical assessors.

III. THE APPEAL

A. Weekly Benefits

The current version of the Insurance Act governs this appeal, limiting appeals to questions of law. Mr. K. claims, however, that the arbitrator erred in law in the following respects:

(a) In determining Mr. K.'s normal activities, she ignored essential evidence about his work, business, literary and community activities. Part of this error was her refusal to look back more than eight months before the accident.

(b) In evaluating Mr. K.'s ability to engage in these activities, she took an unduly narrow approach, failing to consider the quality of his performance.

Allstate submits that there are serious questions about the arbitrator's conclusion that Mr. K.'s psychiatric disorder results from the accident. However, it contends that even accepting this part of the decision, the arbitrator considered Mr. K.'s condition after February 4, 1996, concluding that he did not meet the s.13(8) test – he was not continuously prevented from engaging in substantially all of the activities in which he would normally engage. There is no basis, Allstate claims, for disturbing this decision on appeal.

For reasons that follow, I find no error of law. The arbitrator made factual findings supported by the evidence and properly applied the legislation to those facts. The resulting decision was not a clear-cut victory for Allstate. Despite impressive support from a number of medical experts for Allstate's position that Mr. K.'s psychiatric problems were not caused by the accident, the arbitrator found a sufficient link. Allstate did not challenge this conclusion by filing its own appeal.¹ If it had, it would have been met, likely successfully, with the argument that because there was evidence to support the arbitrator's decision, it should not be disturbed on appeal.

In my view, Mr. K. faces the same problem. Although his appeal raises legal issues, I am left with the arbitrator's assessment of the evidence. She found that although Mr. K.'s psychiatric disability was sufficiently serious that he met the test "from time to time since February 1996," he did not establish that he was, or had been, continuously prevented from engaging in substantially all of his normal activities. In my opinion, this conclusion was available to the arbitrator.

1. Activities

Mr. K. claims the arbitrator erred in considering only his ability to engage in basic activities, such as cooking, cleaning, grocery shopping, laundry and other activities of daily life. In his submission, this ignores his extensive work history and his community involvement.

The pre- and post-156 week differ in the scope of activities to be considered. For the first 156 weeks, the test involves the insured person's ability to perform the essential tasks in which he or she would normally engage. It then changes to all the activities in which he or she would normally engage. The post-156 week test clearly involves a broader range of activities, with a stricter test being applied. As the arbitrator states, the insured person must be continuously prevented from engaging in those activities, as opposed to substantially unable, the language used in the pre-156 week test.

At pages 16-17 of her decision, the arbitrator acknowledges that even the narrower term, "essential tasks," involves more than the insured person's basic personal tasks. However, she found little evidence establishing what Mr. K. was doing at the time of the accident:

The evidence is meagre as to other essential tasks Mr. K was carrying out at the time of the accident. Certainly, he had a life beyond the most mundane household chores. I heard repeated evidence of plans Mr. K had for his future, but little on what his key tasks actually were, beyond household duties, at the time of the accident. For example, the evidence does not disclose whether Mr. K was still compiling proverbs in January 1993, using his computer on a regular basis, or whether this task or activity was in suspension or completed. Mr. K's own evidence was that he was "weighing a lot of options" for his future and doing casual library research and reading to upgrade his English. He was not involved in a vigorous job search, but was "considering applying for a job." The duties Mr. K might have had as president of his clan organization were not explained at all. (p.17)

Having reviewed the appeal record, including a transcript of the arbitration hearing, I am satisfied there is a reasonable basis for the arbitrator's characterization of the evidence. It is implicit in the decision that the arbitrator had the same problem with respect to the post-156 week test – there was little evidence about Mr. K.'s broader activities at the time of the accident. As a result, I am not persuaded that the arbitrator defined his activities too narrowly.

Mr. K. also contends that the arbitrator erred in not considering his ability to work. In his submission, she should have looked at his long work history, including the fact that he ran his own company in his home country for many years. However, at the time of the accident, Mr. K. had not been employed or self-employed for almost eight months.

Arbitration and appeal decisions have consistently held that the insured person's activities are evaluated at the time of the accident.² While the inquiry is not limited to a "snapshot" of what he or she happened to be doing just before the accident, it does not involve speculation about what the insured person might have done. The earlier decisions have stopped well short of holding that job tasks are a relevant consideration for someone who has been unemployed for nearly eight months.³ I agree with this approach. As Allstate submits, assessing Mr. K.'s entitlement based on his ability to work would undermine the distinction between sections 12 and 13 of the Schedule.

Mr. K. relies on the arbitration decision in Ms. G. and Allstate Insurance Company of Canada, (OIC A-013283, December 7, 1995), claiming that the arbitrator considered Ms. G.'s ability to work although she had not been employed full-time for more than a year and a half before her accident. However, the arbitrator also found that Ms. G. held several part-time jobs within six months of the accident and was looking for work. There are no such findings here. As set out above, the arbitrator heard evidence of "plans," but nothing sufficiently certain to rely upon. Her assessment of the evidence is supported by the record and, in my opinion, distinguish this case from Ms. G.

2. Disability

The arbitrator's decision turns on the episodic nature of Mr. K.'s psychiatric disorder. She found that although he was seriously disabled from time-to-time, he did not establish that he had been, or currently was, continuously disabled to the extent required by s.13(8) of the Schedule. Mr. K. claims that the decision reflects an unduly narrow approach to the post-156 week test, ignoring the dramatic change in the quality of his life.

I would be concerned about the decision if it suggested that an insured person with an episodic disorder can never meet the post-156 week test. However, that is not how I read it. In my view, the arbitrator properly looked for evidence about the frequency and severity of Mr. K.'s bad periods, and his functional ability during his better times. She was unable to find on the evidence before her that he met the test. This is essentially a factual finding that I am not prepared to second-guess.

Mr. K. also submits that the arbitrator failed to consider the quality of his activities. I agree that quality is a factor. Recently, I addressed this issue in C.L. and Zurich Insurance Company, (FSCO P98-00043, March 24, 1999):

. . . I agree that the quality of the activity and the need for assistance are considerations. At some point, a person's ability to engage in an activity may be so limited, or so dependent on assistance, that it cannot be realistically said that he or she is capable of engaging in that activity. However, the wording of s.13(8)(b) must be respected. "Continuously prevented" imposes a higher standard than "substantial inability," the wording used in the pre-156 week test in s.13(1). I agree with the analysis in Urquhart, followed in Sheppard, that any qualitative analysis of the person's ability to engage in an activity must be done against the backdrop of the ultimate question - whether he or she is continuously prevented from engaging in that activity.

The test in s.13(8)(b) is a strict one. This is reflected, properly in my view, in decisions such as Urquhart and Marchildon. As a general approach, I accept the following analysis from Marchildon:

While the pre-156 test focuses only on essential tasks, the post-156 test focuses on substantially all activities in which the insured would normally engage. Thus, an applicant must establish inability, not only with respect to his or her essential tasks, but with substantially all the activities in which he or she would normally engage. The degree of functional impairment is also stricter. Pre-156, the applicant must establish that he or she suffers a substantial inability to engage in the essential tasks. Post-156, the applicant must establish that he or she is continuously prevented from engaging in the relevant activities.

While the post-156 test is strict, it should not be read so strictly as to make it virtually impossible for anyone to qualify. (pp.8-9)

The question here was whether Mr. K.'s psychiatric disorder continuously prevented him from engaging in the limited activities the arbitrator was able to identify. I am satisfied this is the question the arbitrator addressed, concluding that, apart from periodic flare-ups, Mr. K. was not prevented from engaging in his pre-accident activities. As she states in her decision, there are long periods during which the objective evidence of his condition is sparse. Again, I find that her findings are supported by the evidence and, therefore, have no basis for interfering.

B. Special Award

According to s.282(10) of the Insurance Act, an insurer that unreasonably withholds or delays the payment of benefits is liable to pay a special award. Mr. K. argued at the arbitration hearing that an award was warranted because Allstate failed to provide important information to the medical assessors it retained to provide opinions. He made serious allegations about the conduct of the case manager who arranged the assessments, claiming she selectively provided information that affected the assessments. The arbitrator did not accept his position, finding no evidence that the caseworker had hospital records that she withheld from the assessors.

On appeal, Mr. K. repeats his allegations. However, he specifically refers to the report of Dr. A.I. Margulies, a psychiatrist retained by Allstate to conduct an assessment. In Mr. K.'s submission, Allstate unreasonably relied on this report in terminating his weekly benefits despite the fact that Dr. Margulies clearly indicated that the hospital records were needed to deal with the causation question.

I am unable to accept Mr. K.'s argument. I agree with the arbitrator that there is an absence of evidence about what happened with the hospital records. The record does not support the conclusion that Allstate had them, or had a positive obligation to obtain them, but failed to do so. As the arbitrator suggests, this issue would have been better addressed by calling the case manager as a witness and dealing with it directly.

IV. APPEAL EXPENSES

Although Mr. K. was unsuccessful in his appeal, I am satisfied that he raised issues of sufficient merit that he should not be required to pay Allstate's expenses. Therefore, each party will bear its own appeal expenses.