Neutral Citation: 1999 ONFSCDRS 151
FSCO A97–001613
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
JOE ANGOLANO
Applicant
and
LIBERTY MUTUAL INSURANCE COMPANY
Insurer
REASONS FOR DECISION
Before:
William Renahan
Heard:
June 8, 9 and 10, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
Leonard H. Kunka for Mr. Angolano
George O. Frank for Liberty Mutual Insurance Company
Issues:
The Applicant, Joe Angolano, suffered a shoulder separation injury in a motor vehicle accident on December 9, 1994. He applied for and received statutory accident benefits from Liberty Mutual Insurance Company ("Liberty"), payable under the Schedule.1 Liberty conceded that Mr. Angolano could not return to his pre-accident work as a self-employed installer of residential aluminum windows and other aluminum products. Mr. Angolano's income tax returns disclosed a loss in each of the three years prior to the accident. However, Liberty paid weekly income replacement benefits at the rate of $185 pursuant to paragraph 10(2)(a) since Mr. Angolano was employed at the time of the accident and since it was satisfied that Mr. Angolano suffered a partial inability to carry on a normal life within the meaning of the Schedule. Liberty paid this weekly benefit for 104 weeks of disability until December 9, 1996 when it was required by Part VI of the Schedule to offer Mr. Angolano a loss of earning capacity benefit. Liberty assessed Mr. Angolano's loss of earning capacity at zero. The parties were unable to resolve their disputes through mediation, and Mr. Angolano applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The issue in this hearing is:
- What is the amount of Mr. Angolano's weekly loss of earning capacity benefit?
Result:
- Mr. Angolano's weekly loss of earning capacity benefit is $251.45.
EVIDENCE AND ANALYSIS:
Mr. Angolano was 60 years old when Liberty made the offer for loss of earning capacity. Mr. Angolano's orthopaedic surgeon did not recommend surgery to repair the left shoulder separation. Mr. Angolano now has an unstable acromion-clavicular joint and some pain and loss of function.
At the time of the accident Mr. Angolano was self-employed as an installer of residential aluminum products. The products included windows, eaves trough, siding and trim. The weekly loss of earning capacity benefit is 90 per cent of the difference between Mr. Angolano's "pre-accident earning capacity" and his "residual earning capacity" as those terms are defined in the Schedule. The parties could not agree on either amount.
Pre-accident earning capacity:
Generally, the pre-accident earning capacity of an employed person is determined on the basis of that person's earnings history. However, under subsection 29(2), the pre-accident earning capacity of a person who was self-employed at the time of the accident is:
. . . the net weekly income determined in accordance with section 81 or 82 using the gross annual income from employment that the person could reasonably have earned at the time of the accident, having regard to the person's personal and vocational characteristics at that time.
Under section 1:
"personal and vocational characteristics" include,
(a) employment history,
(b) education and training,
(c) vocational interests and aptitudes,
(d) vocational skills,
(e) physical abilities,
(f) cognitive abilities, and
(g) language abilities;
Mr. Angolano worked at his installation business for 19 years prior to the motor vehicle accident. He and his wife and his son testified that Mr. Angolano worked as hard as he could during the March to November building season. He worked six or seven days a week starting between 7:00 and 9:00 a.m. and finishing at dusk. He liked his work and did not want to do anything else. I find that what Mr. Angolano could reasonably have earned at the time of the accident having regard to his personal and vocational characteristics at that time is what he actually earned prior to the accident. The difficulty in determining what Mr. Angolano actually earned is that the only documentary evidence of what he earned was the income tax returns prepared and filed by Mrs. Angolano which she admitted were false and did not disclose all of Mr. Angolano's income.
Mr. and Mrs. Angolano testified that about 80 per cent of Mr. Angolano's customers paid in cash and about 20 per cent paid by cheque. They testified that the income tax returns only reflected the sales and cost of sales in the cheque transactions. The tax returns did not include the sales and cost of sales in the cash transactions. They testified that Mr. Angolano deposited the cheques in the bank and paid for supplies for these sales by cheque. They testified that Mr. Angolano did not deposit the cash receipts in the bank. He used the cash to pay personal expenses and to pay for the supplies associated with the cash sales. They testified that Mrs. Angolano prepared Mr. Angolano's personal income tax returns by using the bank statements which showed deposits for the cheque sales and expenditures for corresponding supplies.
The 1991 income tax return shows a net profit of $1,612 from the business. The returns for the next three years before the accident, 1992, 1993 and 1994, each show a loss. The average for the four years is as follows:
Sales
$7,613
Cost of Sales
2,987
Expenses
4,739
Net loss
($ 113)
"Expenses" were for use of a motor vehicle, office, cash for help, depreciation and expenses relating to using a portion of the house for business purposes. I find that these expenses were constant and would not increase if the Angolanos included cash sales in their income tax returns. If I accept the Angolanos' testimony that these average sales figures represented 20 per cent of Mr. Angolano's business, the "sales" and "cost of sales" figures would increase by five times and the "expenses" would remain the same as follows:
Sales
$38,065
Cost of Sales
14,935
Expenses
4,739
Net loss
$18,391
Mr. Angolano testified that for some cash sales, the customer purchased his own supplies. I heard no evidence as to the percentage of customers who did this and therefore make no adjustment to reflect how this would increase net profit.
Mr. Angolano testified that his gross sales in the year before the accident were $28,000 to $30,000 and that his net income was about $20,000. Mrs. Angolano estimated that in 1994, the year before the accident, Mr. Angolano had a net profit of $17,000 on gross income of $27,000 to $35,000. Mr. Remedios, a rehabilitation expert hired by Liberty to perform a loss of earning capacity assessment, estimated that Mr. Angolano would have earned $24,000 to $35,000 in 1994. He reported that a residential and commercial installer earned $23,740 to $41,112 per year and that a construction worker earned about the same.
Mrs. Angolano works as a cleaner in a hospital. She is not a sophisticated business person. The Angolanos did not produce any records other than the income tax returns. I accept Mrs. Angolano's evidence that she prepared the business records on the basis of bank statements and that they only reflect business done by cheque. Mr. Angolano worked at this business for 19 years. At a psychological-vocational assessment in 1997 he reported that he was in financial difficulty without income or benefits. Mrs. Angolano testified that they spent the cash from the business for living, including mortgage payments. I find that Mr. Angolano contributed to the payment of family expenses before the accident and earned income from his business to make this contribution. He obtained all his business through word of mouth. Some of his customers bought their own supplies. I accept that a significant portion of his business was in cash. He and his wife were consistent in testifying that 80 per cent of his business was cash. Although an annual income of $18,391 is about $5,000 less than the amount Mr. Remedios said Mr. Angolano would have earned at a minimum, it is close to what both Mr. and Mrs. Angolano estimated Mr. Angolano's income to be. In the totality of the evidence, I find that Mr. Angolano earned about $18,391 per year in the years before the accident and that this amount is what Mr. Angolano could reasonably have earned at the time of the accident, having regard to his personal and vocational characteristics. This amounts to $353.67 per week gross.
The parties agreed that Mr. Angolano's claim code in the Financial Services Commission "Net Weekly Income Table - Self-employment" referred to in section 82 of the Schedule was "1." According to the Table, a gross weekly income of $354 yields a net weekly income of $279.39, which amount I find is Mr. Angolano's pre-accident earning capacity.
Residual earning capacity:
Residual earning capacity is defined in section 30 as follows:
30.—(1) For the purpose of this Part, the residual earning capacity of a person shall be deemed to be the net weekly income determined in accordance with section 81 or 82 using the gross annual income that the person could earn from the type of employment that best satisfies the criteria set out in subsection (2).
(2) The criteria referred to in subsection (1) are:
- The person,
i. is able and qualified to perform the essential tasks of the employment, or
ii. would be able and qualified to perform the essential tasks of the employment if the person had not refused to obtain treatment or participate in rehabilitation that was reasonable, available and necessary to permit the person to engage in the employment.
The employment exists in the area in which the person lives and is accessible to the person.
It would be reasonable to expect the person to engage in the employment having regard to the possibility of deterioration in the person's impairment and to the person's personal and vocational characteristics.
Nature of disability:
Dr. Faulkner is an orthopaedic specialist who treated Mr. Angolano and interviewed him on several occasions. He reported that elevation of Mr. Angolano's non-dominant arm to shoulder level caused pain and the "very unsettling abnormal movement in the left acromion-clavicular joint."
Mr. Angolano opened his shirt at the hearing and demonstrated how the dislocation became visible when he moved his arm and a bone protruded outwards. He testified that the shoulder is painful and he holds the weight of his arm with his right hand to alleviate the pull on the joint. He said that he cannot lift the arm above the shoulder. An occupational therapist at the North York Rehabilitation Designated Assessment Centre ("REC/DAC") noted that "when walking, he will put his left hand in his pocket to keep his arm from hanging and pulling on the shoulder joint." Mr. Angolano testified that the pain comes and goes and that he takes one or two pills a day to relieve the pain. Mrs. Angolano testified that Mr. Angolano wakes up during the night because of pain and that he can only sleep in two positions. The North York Rehabilitation Centre DAC also performed a medical and rehabilitation assessment and reported on March 29, 1996 that Mr. Angolano could not use the left limb to lift, push or pull against resistance or use it above shoulder height. In April 1997, the REC/DAC performed a residual earning capacity assessment and reported that occupations that would allow Mr. Angolano to work at bench level and offer support to his arm would be most suitable. In October 1997, as part of the residual earning capacity assessment Dr. Pellow reviewed Dr. Faulkner's report and added:
As well, he would be restricted from performing tasks requiring any type of repetitive lifting, twisting or load-bearing on the left arm, even if below shoulder level. As well, any tasks requiring repetitive or continuous arm motion, if [sic] with small loads such as a polishing cloth, would be beyond Mr. Angolano's capabilities.
These medical opinions are consistent with Mr. Angolano's testimony which I accept and I find that Mr. Angolano cannot use his left arm above shoulder level and that he cannot use his left arm below shoulder level on a repetitive basis to lift, twist or bear loads.
Personal and vocational characteristics:
The definition of "personal and vocational characteristics" is set out above.
Mr. Angolano was born in Argentina on December 1, 1936. He completed one or two years of university in Argentina. He said that the Province of Ontario recognized his education as equivalent to grade 12 or 13. He quit school to work as a labourer in construction. He came to Canada in 1973 and continued to work in construction. Spanish is his first language and he learned Italian at work. He also learned some Portuguese and English.
After two years of construction work, Mr. Angolano started his own aluminum installation business and worked at that for 19 years until the motor vehicle accident. Mrs. Angolano testified that Mr. Angolano started his own business because he wanted to work on his own. He did not advertise for business. He got all of his business through word of mouth and that business kept him busy during the building season, six days a week. His agreements with his customers were always verbal.
Mr. Angolano testified that he "really liked" his work, that he liked to work alone, that he liked to make clients happy, that he liked to think about a particular job and that he liked to "create" things. He did not like routine work.
I received conflicting evidence on Mr. Angolano's ability to communicate in English. At the commencement of the hearing I questioned Mr. Angolano in English and determined that he could best participate in the hearing with a Spanish interpreter. He used the interpreter throughout the hearing, occasionally testifying in English. I accept Mr. Angolano's testimony that 75 to 80 per cent of his clients were Italian speaking and that 10 to 15 per cent were Portuguese speaking. He testified that he can make himself understood in English to those who want to understand him and that he cannot write in English. He told the psychologist at the REC/DAC that he "can understand if person speaks at my level." The psychologist reported that although Mr. Angolano can communicate in English at a basic level, enjoys interacting with others and has a good sense of humour, he is significantly affected by his weak English skills. As well, he did not identify a desire to talk to others as a significant job element. The psychologist found that Mr. Angolano was significantly affected by his weak oral English and he used an interpreter. In a letter to Liberty's lawyer, the occupational therapist at the REC/DAC noted that Mr. Angolano completed the week of situational testing without the assistance of an interpreter. I find that Mr. Angolano has a basic ability to communicate in English but that he is more fluent in Spanish and Italian.
The following observations of the REC/DAC psychologist are consistent with Mr. Angolano's evidence and I accept them:
He enjoys working with equipment and following logical procedures and prescribed methods and in-depth problem solving.
He is a very rigid individual, set in his ways and prefers to work on his own as he does not take direction well from others.
He does not want to work inside and prefers a job with "meaning."
The definition of "personal and vocational characteristics" is not limited to the items listed in section 1 of the Schedule. Mr. Angolano was 60 years old when Liberty made the offer for loss of earning capacity benefits and had worked for the previous 19 years at his own business. Dr. Comper is a psychologist who specializes in rehabilitating injured people. He was hired by Mr. Angolano's counsel. He testified that beyond the age of 60 people cannot be retrained. I find that Mr. Angolano's age is a personal and vocational characteristic which I should also take into account to determine whether it would be reasonable to expect Mr. Angolano to engage in any particular employment.
Assessments:
Denys Remedios is a rehabilitation expert associated with Sibley and Associates and Herrold & Vernon. He performed a loss of earning capacity assessment in February 1996 for Liberty. He reported that four occupations satisfied the criteria set out in section 30. They were: a saw operator cutting semiconductor wafers; a pole inspector; a pelletizer in a chemical plant; and, a worker at the start of an assembly line selecting and preparing parts for placement on the assembly line.
Comper and Mitson performed a psycho-vocational assessment in November 1997 and reported to Mr. Angolano's lawyer that Mr. Angolano was not employable and that the Sibley reports ignored the realities of Mr. Angolano's situation.
In April 1997 the REC/DAC reported that Mr. Angolano could work as an estimator for windows and aluminum siding installations, a parking lot attendant or a gas bar attendant and that occupations that allowed Mr. Angolano to work at bench level and offer support to his arm would be most suitable.
On June 2, 1999, Mr. Remedios, in association with Herrold and Vernon performed, a computerized transferable skills analysis and identified a number of occupations which suited Mr. Angolano.
Assessment of Mr. Angolano’s residual earning capacity:
The test in section 30 refers to the type of employment that best satisfies the prescribed criteria. Liberty argued that the test does not require that the proposed type of employment satisfy all the criteria. I reject this interpretation because it leads to the absurd result that such an employment may be one which satisfies all criteria except the criteria that the insured be able to perform the essential tasks of that employment. I therefore reviewed the proposed types of employment to identify those which satisfied all the criteria with the intention of determining which of the identified occupations best satisfied those criteria. I concluded that none of the proposed occupations satisfied all the criteria and therefore determined that Mr. Angolano’s residual earning capacity is nil.
I find the following are significant "personal and vocational characteristics" of Mr. Angolano. He was 60 years old at the time the insurer made the offer for loss of earning capacity benefits and had worked for the previous 19 years at his own business. He started the business because he wanted to work on his own and not under the direction of a supervisor. He enjoyed working outside, thinking about and creating his work and satisfying customers. He obtained all his business through word of mouth. I accept his evidence and that of his son that he was a skilled worker and that his customers were happy with his work. I find that although he can make himself understood in English, he cannot work at a job which requires fluency in English.
Most of the jobs proposed by Liberty are routine, unskilled or require the worker to work under direct supervision. Having regard to Mr. Angolano’s personal and vocational characteristics I find that it is not reasonable to expect him to work at jobs which are routine, unskilled or require him to work under direct supervision.
Dr. Comper's opinion that it is very difficult to retrain someone after the age of 60 is reasonable and I accept it. Although Mr. Angolano can function in English, I find that his ability in English is insufficient to allow him to study in English. For these reasons, I also reject any proposed jobs which are skilled work if they require formal retraining.
For many of the proposed types of employment I did not hear or read evidence of the essential tasks of the employment and, therefore, I could not determine whether Mr. Angolano was able to perform the essential tasks of the employment. For example, I heard no evidence of how a pole inspector performs his job. If the job requires the worker to climb over piles of poles or make measurements over his head, Mr. Angolano could not perform the job because he can not use his left arm to support himself or work over his head..
I now review the types of employment proposed by Liberty.
Sibley and Associates:
The pelletizer position in a chemical plant requires the worker to turn valves to regulate water sprays. I do not know whether the valves are above shoulder level, whether two hands are needed to turn the valves, what strength is required or the frequency. I cannot determine whether Mr. Angolano can perform the work. As well, I find the employment is routine and does not satisfy Mr. Angolano's vocational interests and aptitudes. I heard no evidence of what a pole inspector does and I cannot determine whether Mr. Angolano could physically perform this job. The assembly loader position required the worker to use a hand file to remove burrs. Such a task requires two hands and I find that Mr. Angolano could not use both hands to use a file effectively. The position of saw operator for semi-conductor wafers requires the worker to use tweezers and work at the start of an assembly line. I find that the employment is routine and does not satisfy Mr. Angolano’s personal and vocational characteristics.
REC/DAC:
The REC/DAC suggested that Mr. Angolano could work as an estimator for windows and aluminum siding installations, a parking lot attendant or a gas bar attendant and that occupations that allowed Mr. Angolano to work at bench level and offer support to his arm would be most suitable.
On March 25, 1998, Sibley reported the results of its labour market survey and found no position restricted to estimating for aluminum sidings and windows as the estimating is done in conjunction with the sales process. In a letter from the REC/DAC to Liberty’s lawyer the "vocational evaluator" reported that the position of "Estimator, aluminum siding and windows" exists but that some companies referred to the position as a sales position, however, the main duties include performing and providing customers with estimates. Providing an estimate to a potential customer is part of the sales process and I find that the position of an aluminum siding and windows estimator has a sales component. Although Mr. Angolano’s self-employment contained a sales component, I find that he obtained all his work because of references from satisfied customers and not because of his sales ability. Further, I find that Mr. Angolano's weak verbal English skills, inability to write in English, rigid personality, lack of experience working as a salesman for an organization and lack of interest in working with others make him unsuitable to work for an organization at a job which includes a sales component. I find that it would not be reasonable to expect Mr. Angolano to work at a job which includes a sales component having regard to his employment history, education and training, vocational interests and aptitudes, vocational skills and language abilities.
Mr. Angolano was a skilled tradesman working at a job he enjoyed. The positions of parking lot attendant and gas bar attendant are unskilled and routine and I find that it is not reasonable to expect Mr. Angolano to engage in these employments having regard to his personal and vocational characteristics.
Herrold & Vernon:
On June 2, 1999, Denys Remedios, in association with Herrold & Vernon, performed a computerized transferable skills analysis and identified six groups of occupations which suited Mr. Angolano. At the commencement of the hearing Mr. Angolano's counsel argued that the report was not admissible because he received it late. I deferred hearing submissions on the issue of admissibility until Liberty tendered the report as evidence. Dr. Comper commented on the opinions expressed in the report and Mr. Angolano's counsel did not pursue the issue of admissibility. When the report was tendered as evidence without objection, I accepted it. Following are the jobs proposed by Herrold & Vernon and my reasons for rejecting them.
Jobs classified as "supervisor, recording, distributing and scheduling" were head dispatcher, head shipper, parts supervisor, stock control supervisor, receiving supervisor, supply control co-ordinator and tool crib supervisor. Mr. Angolano has extremely limited experience as a supervisor and no identified interest to supervise. It is not reasonable to expect Mr. Angolano to work as a supervisor having regard to his personal and vocational characteristics.
Occupations classified at storekeepers and parts clerks included material keeper, parts clerk, parts supplier, parts person, storekeeper and tool room attendant. Mr. Remedios did not describe the duties associated with each occupation and I cannot determine if Mr. Angolano is physically capable of performing these jobs with his disability. I heard no evidence of how closely supervised these positions are and I cannot determine whether these occupations suit Mr. Angolano's desire to be independent. As well, I find that these positions are routine and structured and do not offer the creative aspect and lack of supervision Mr. Angolano is used to. It is not reasonable to expect Mr. Angolano to work as a storekeeper or parts clerk having regard to his personal and vocational characteristics.
Occupations classified as retail salespersons and clerks included car rental clerk, retail counter clerk, hardware store clerk and retail salesperson. These occupations include a sales component and for the reasons set out above, it is not reasonable to expect Mr. Angolano to work in sales having regard to his personal and vocational characteristics.
Other elemental service occupations include parking lot attendant, ticket taker, toll booth attendant and usher. Mr. Angolano found creative meaning in his work. These positions are routine and it is not reasonable to expect Mr. Angolano to work at routine jobs having regard to his personal and vocational characteristics.
Other assemblers and inspectors occupations included eyeglass frame assembler, golf club assembler, lamp shade assembler and toy assembler/inspector. I heard no evidence on the physical duties or nature of these positions and I cannot determine whether Mr. Angolano could physically perform these occupations with his disability. Nor can I determine whether these occupations are routine or whether they would provide any meaning to Mr. Angolano. I cannot determine whether it would be reasonable to expect Mr. Angolano to engage in these types of employment having regard to his personal and vocational characteristics.
Other product machine operators included button machine operator, crayon making machine tender, sports ball moulder, stuffing machine tender and tennis ball maker operator. I heard no evidence on the physical duties or nature of these positions and I cannot determine whether Mr. Angolano could perform these occupations with his disability and I cannot determine whether these occupations are routine or whether they would provide any meaning to Mr. Angolano. I cannot determine whether it would be reasonable to expect Mr. Angolano to engage in these occupations having regard to his personal and vocational characteristics.
Conclusion:
The weekly loss of earning capacity benefit is 90 per cent of the difference between Mr. Angolano's net pre-accident earning capacity of $279.39 less his residual earning capacity of zero which amounts to $251.45.
Interest:
At the outset of the hearing, the parties agreed that, except for expenses, the only issue for determination was the amount of the loss of earning capacity benefit. The parties did not identify entitlement to loss of earning capacity benefits as an issue and therefore my order only deals with the issue as defined by the parties. The Applicant claimed interest in his application for arbitration. If the parties cannot agree on the issue of entitlement to interest they may make written submissions.
EXPENSES:
At the outset of the hearing, counsel for Mr. Angolano submitted that Mr. Angolano's legal expenses were rehabilitation expenses recoverable under paragraph 40(4)(e) of the Schedule. Counsel for Liberty objected to the inclusion of this issue. I ruled that since Mr. Angolano had not framed the issue of his legal expenses as a rehabilitation expense at mediation, the parties had not mediated the issue and that I did not have jurisdiction to hear it.
I heard no submissions on the issue of entitlement to expenses incurred in respect of the arbitration proceeding within the meaning of subsection 282(11) of the Insurance Act. If the parties cannot agree on entitlement to expenses of the arbitration proceeding they may make written submissions.
August 6, 1999
William J. Renahan
Arbitrator
Date
Neutral Citation: 1999 ONFSCDRS 151
FSCO A97–001613
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
JOE ANGOLANO
Applicant
and
LIBERTY MUTUAL INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- The amount of Mr. Angolano's weekly loss of earning capacity benefit is $251.45.
August 6, 1999
William J. Renahan
Arbitrator
Date
1 The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94 and 463/96. O.R. 776/93 was extensively modified by O.R. 781/94; accordingly, where necessary, "1994 Schedule "refers to the original O.R. 776/93, and "1995 Schedule "refers to O.R. 776/93 as amended.