Crystal MacAulay v. General Accident Assurance Company of Canada, 1999 ONFSCDRS 199

Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 1999 ONFSCDRS 199

Appeal P98-00010

OFFICE OF THE DIRECTOR OF ARBITRATIONS

CRYSTAL MACAULAY

Appellant

and

GENERAL ACCIDENT ASSURANCE COMPANY OF CANADA

Respondent

Before:

David R. Draper, Director's Delegate

Counsel:

Todd J. McCarthy (for Crystal MacAulay)

J. Claude Blouin (for General Accident)

APPEAL ORDER

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

1. The appeal is dismissed, and the arbitration decision dated February 9, 1998 is confirmed.

2. No appeal expenses are payable.

October 13, 1999

David R. Draper Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This is an appeal by Crystal MacAulay from an arbitration decision dated February 9, 1998. She claims the arbitrator erred in concluding that she does not qualify for weekly income benefits after June 18, 1996. More specifically, she challenges the arbitrator's conclusion that she does not meet the post-156 week test in s.12(5)(b) of the Schedule.¹

II. BACKGROUND AND ANALYSIS

Mrs. MacAulay was injured on November 6, 1991, when she swerved to avoid hitting a deer and lost control of her car. The arbitrator heard evidence that the car rolled or flipped end over end, two to four times, ending on its roof. Books or a briefcase were thrown about and either or both struck Mrs. MacAulay on the head. The arbitrator found, however, that she did not lose consciousness. She freed herself from her seat-belt, crawled out of a window and walked to a nearby house. She was taken by ambulance to the local hospital, where she was treated and released with a diagnosis of soft tissue injuries to the neck and tail bone.

At the time of the accident, Mrs. MacAulay was 34 years old. She had been off work for the past year due to a work-related back injury and the birth of her first child. The arbitrator found that she was planning to return to work as a registered nursing assistant ("RNA"), although the timing is unclear.

General Accident Assurance Company of Canada ("General Accident") paid Mrs. MacAulay weekly income benefits under s.12(1) of the Schedule on the basis that her accident-related injuries prevented her from performing the essential tasks of her pre-accident work as an RNA. These benefits continued for more than 156 weeks, when the test becomes stricter:

12.— (5) The insurer is not required to pay a weekly benefit under subsection (1),

(b) for any period in excess of 156 weeks unless it has been established that the injury continuously prevents the insured from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience.

(emphasis added)

General Accident paid weekly income benefits until June 18, 1996, roughly 19 months beyond the 156-week mark. Mrs. MacAulay disputed the termination, claiming ongoing weekly income benefits and various other benefits. She conceded that she was not physically disabled, but said she could not return to any suitable employment due to accident-related cognitive and psychological problems.

The arbitrator accepted some of Mrs. MacAulay's claims, ordering General Accident to pay care benefits and various supplementary medical and rehabilitation benefits. However, he rejected her claim for weekly income benefits after June 18, 1996. Mrs. MacAulay appeals from this decision, acknowledging that she can only appeal on questions of law.²

A. Cognitive impairments

In reaching his conclusion, the arbitrator rejected Mrs. MacAulay's contention that she suffered a head injury in the accident. Mrs. MacAulay claims, however, that this issue was not before him. In her submission, the dispute was whether her cognitive and psychological problems prevented her from returning to work, not whether the underlying cause was a head injury. She argues, therefore, that the arbitrator erred in law in focusing on this causation question.

In support of her position, Mrs. MacAulay points to the documents identifying the issues in dispute. General Accident's Assessment of Claim form, dated June 6, 1996, states: "No further benefits payable after June 18, 1996 as per report from Dr. H. Seiden." Mrs. MacAulay notes that Dr. Seiden is not a specialist, but a general practitioner retained by General Accident to evaluate her functional abilities. However, his reports go beyond a simple evaluation of her performance. He questions the extent of her cognitive difficulties, referring to opinions from Dr. Allan Rosenbluth, a psychiatrist he asked to do a follow-up assessment, and Dr. David Conn, Mrs. MacAulay's treating psychiatrist.

Mrs. MacAulay also argues that the Report of Mediator, dated November 8, 1996, does not mention the causation question. It states her position that she continues to meet the s.12(5)(b) test after June 19, 1996. In her application for arbitration, Mrs. MacAulay simply refers to the issues set out in the Report of Mediator. Most important, she contends, is General Accident's response:

With respect to income replacement, the insurer has paid to Ms. MacAulay benefits at the rate of $547.75 per week from November 13, 1991 through to June 18, 1996. Thereafter, it was clear that Ms. MacAulay was not continuously prevented from engaging in any occupation or employment for which she is reasonably suited by education, training or experience.

Based on this response, Mrs. MacAulay claims the issue was whether her condition had improved to the point she could return to work, not whether she suffered a head injury in the accident. I am unable to agree. While the documents could have defined the dispute more specifically, formal pleadings are not required in the dispute resolution system. The real question is whether Mrs. MacAulay was unfairly surprised by the causation question. After reviewing the record, I am not persuaded there was any surprise.

Mrs. MacAulay was represented, at least from the mediation stage, by experienced counsel. She and her lawyers were provided with extensive medical information showing ongoing inquiries and differing views about the nature and extent of her accident-related injuries. Dr. William A. Fulton, the psychologist upon whom she relied, specifically addressed this issue in his final report, prepared just before the arbitration hearing. He states that his opinion regarding Mrs. MacAulay's neurocognitive status is "quite at odds with those of Drs. Seiden and Rosenbluth."

If there was any question about the scope of the dispute, it should have been resolved at the opening of the arbitration hearing when the arbitrator provided the following explanation of the issues to be decided:

There's two broad issues that I have to decide: Whether you're disabled from suitable employment or disabled from engaging in suitable employment and then the second broad issue is if you are disabled from engaging in suitable employment whether that disability was caused by or significantly contributed to by the car accident you were in.³

Not only did Mrs. MacAulay's lawyer not object to the arbitrator's characterization of the issues, he made the following comments in his opening statement:

There is clearly an issue between the claimant and the insurer as to the effects of the accident and there clearly will be, I suspect, raised a question of the extent to which Mrs. MacAulay sustained a head injury in the accident. The evidence is somewhat confusing in that regard and contradictory.⁴

General Accident's counsel then presented the insurer's position clearly and forcefully:

Firstly, with respect to weekly income benefits, the evidence will show that there was no complaint made of striking her head in the initial period, there was no loss of consciousness. She was able to extricate herself from the vehicle, she was able to walk to a nearby farmhouse.

Police attended. She was seemingly coherent with the police. Ambulance attended. . . . There's a clear notation in the ambulance call report of no loss of consciousness. There is a clear notation at the hospital and she was treated appropriately. There is no suggestion of any head injury at the hospital. There is no head injury routine sheet given to her.

She doesn't seem to have any medical attention until some days later. She tells that doctor she had no loss of conscious.

There's no suggestion of head injury until it is planted, in my submission, by people who see an opportunity to bill insurance companies a lot of money.

And then it starts self-referral and cross-referral and the certifying of necessity of clearly inappropriate treatment leading to mounting up of bills in the hundreds of thousands of dollars.⁵

There was no objection to General Accident's obvious challenge to the existence of an accident-related head injury. Further, Mrs. MacAulay's lawyer questioned the witnesses on matters related to causation. For example, when the relevance of a handwriting sample was challenged, counsel responded as follows:

. . . What I'm suggesting is that since it's a significant issue, as you [apparently referring to opposing counsel] stated during your opening, regarding whether or not this lady sustained a blow to the head or not, whether or not she had a head injury, that her inability to properly write her own name to the police officer half an hour after the accident is an issue and is some facts as to her state of mind and ability to handle herself following the accident.⁶

While I accept that Mrs. MacAulay raised this issue in good faith, the record overwhelmingly supports General Accident's position that the causation question was squarely before the arbitrator.

I also agree with the arbitrator that this was the central issue. During the year following the accident, there was little suggestion that Mrs. MacAulay suffered any serious, long-term injuries in the accident. The EEG and CT scans done in August 1992 were negative, and her family doctor and physiatrist felt she could return to light duty work in the fall. However, she did not return to work, leading to a series of medical referrals that significantly complicated the picture. The key question was whether she suffered a head injury and, if so, how that affected her treatment and rehabilitation needs, and her ability to return to work. The medical opinions were far from unanimous. Not only did the experts retained by General Accident question the diagnosis and the treatment she was receiving, there was disagreement among her treatment team.

The medical evidence presented at the arbitration hearing was extensive and complex. The various experts were involved at different times, had different levels of information and familiarity, and focussed on different aspects of Mrs. MacAulay's situation depending on their own expertise and the nature of their involvement. It was up to the arbitrator to assess this evidence and make the findings needed to determine Mrs. MacAulay's entitlement to weekly income benefits after June 18, 1996. This is what he does on pages 7-17 of the decision, concluding that Mrs. MacAulay had not established that she suffered a head injury in the accident. Instead, he found that her symptoms were better explained as a response to the more serious diagnoses she was given. While another arbitrator might have viewed the evidence differently, the findings are within the arbitrator's authority and, therefore, I have no basis for interfering.

B. Psychological problems

Although the arbitrator did not accept that Mrs. MacAulay suffered a head injury, he found that she suffered from emotional stress and depression as a result of the accident.⁷ The question was whether these problems prevented her from engaging in some type of suitable employment. On appeal, Mrs. MacAulay challenges the arbitrator's conclusion that they did not.

1. Hearsay evidence

In reaching his decision, the arbitrator accepted the opinion of Dr. Conn, Mrs. MacAulay's treating psychiatrist, that she was psychologically capable of resuming work on a graduated part-time basis. The problem is that he had no direct evidence from Dr. Conn. The source of Dr. Conn's opinion was Dr. Seiden, who contacted him by telephone and reported as follows:

He [Dr. Rosenbluth] felt there was nothing from a psychiatric point of view that would interfere with her gradual return to work as a nurse. As Ms. MacAulay had signed a Consent Form to allow me to obtain information from her treating physicians, I took the liberty of calling Dr. Conn her treating psychiatrist. He is seeing her as you know approximately once every six weeks or so.

He described her overall pattern as being very anxious, very scattered and he indicated that at times she had difficulties focusing her attention. He felt that she continued to suffer from depression and anxiety although he did indicate that she had somewhat improved.

He felt that it would be appropriate to have her vocationally assessed. He felt that she was capable of resuming work on a graduated basis.

The role of this kind of hearsay evidence has been considered in recent appeal decisions.⁸ While hearsay is admissible under s.15 of the Statutory Powers Procedure Act, R.S.O. 1990, c.S.22, arbitrators must carefully consider its limitations. Because hearsay evidence cannot be tested on cross-examination, it may be unfair to assume its accuracy — particularly if it is the only evidence on a crucial finding. However, in a system where hearings are to be quicker, more informal, and cheaper than the courts, hearsay evidence is inevitable. There is no fixed rule. Each case must be considered on its particular facts.

In this case, there was an obvious gap in Mrs. MacAulay's evidence. She claimed to be disabled by depression and emotional stress, but presented no evidence from her treating psychiatrist, Dr. Conn. When Dr. Seiden and Dr. Rosenbluth did their assessments in the spring of 1996, they found no evidence that Mrs. MacAulay was suffering from any serious psychological or psychiatric impairment. However, they felt that Dr. Conn, who had been treating her for over a year, was in a unique position to comment on her condition. It was in this context that Dr. Seiden contacted Dr. Conn and reported his views. Therefore, rather than serving as the only evidence against Mrs. MacAulay's claim, Dr. Conn's opinion was presented in support of the findings of Dr. Seiden and Dr. Rosenbluth.

I also note that Dr. Seiden's report was prepared 17 months before the arbitration hearing. There is no suggestion that Mrs. MacAulay and her lawyers were unaware of it. Despite this, they did not present any reports from Dr. Conn or call him as a witness. In a case involving so much medical evidence, this is surprising. The arbitrator could have drawn an adverse inference, but took the less drastic step of relying on the only evidence of Dr. Conn's views he had—the unchallenged hearsay evidence of Dr. Seiden. In the circumstances, I am not persuaded this was an error.

2. Return to full-time employment

The arbitrator agreed with Mrs. MacAulay that because she worked full-time before the accident, her entitlement to weekly income benefits turned on her ability to work full-time, not part-time. However, Mrs. MacAulay argues that he then erred by ignoring the fact that Dr. Conn did not say she was ready to return to full-time employment, but recommended a vocational assessment and a gradual return to work.

I am not persuaded that the arbitrator erred. Previous arbitration and appeal decisions have held that an insured person's participation in rehabilitation and return-to-work initiatives can be a factor in assessing the degree of his or her disability and its connection to the accident.⁹ In Vandevyvere and AXA Insurance (Canada), (OIC P96-00060, December 12, 1997), I put it as follows:

An insured person who does not attempt to return to work or make a sincere effort at rehabilitation not only runs the risk that his or her condition will not improve, but also that an arbitrator may find that the ongoing problems result from inactivity, not the accident-related injuries.

I am satisfied that the arbitrator followed this analysis. He found that the obstacle preventing Mrs. MacAulay from returning directly to full-time employment was fatigue, not depression. Further, he found that her fatigue problems resulted from her decision not to pursue the kind of active rehabilitation and return to work recommended by her family doctor and physiatrist. For example, she refused to participate in the physiatrist's rehabilitation program and, as a result, was discharged in the spring of 1994.

As the arbitrator states, Mrs. MacAulay chose to follow the advice of those doctors who discouraged her from attempting to work. While I accept that insured persons generally should not be criticized for following medical advice, benefits are not payable simply because the insured person has medical support for his or her position. Many arbitration hearing involve conflicting medical views about whether an insured person who has not returned to work was prevented for doing so as a result of his or her accident-related injuries. In this case, Mrs.

MacAulay exercised a level of choice that, in my view, justifies the arbitrator's decision. She cannot refuse to take steps recommended by key members of her treatment team without accepting the consequences if her actions are later found to have been inappropriate.

I do not accept Mrs. MacAulay's submission that this approach is inconsistent with decisions holding that the accident need not be the direct or sole cause of the insured person's injuries, as long as it materially contributes to the person's condition. Mrs. MacAulay clearly was involved in an "accident," within the meaning of s.1 of the Schedule. She suffered both physical and psychological injuries. The arbitrator did not accept, however, that her fatigue problems resulted from the accident, either directly or indirectly. The problem was her inactivity, a situation not required by the accident and that members of her treatment team encouraged her to avoid.

Mrs. MacAulay also argues that the arbitrator's decision on weekly income benefits is inconsistent with his acknowledgement that she suffered from depression as a result of the accident and needed psychological counselling after June 1996.¹⁰ I do not agree. There is nothing contradictory about finding, as the arbitrator did here, that the insured person has an injury that requires treatment or rehabilitation, but does not prevent him or her from working. For example, the injury might interfere with some aspect of the person's personal activities or affect the level of his or performance at work, without being disabling.

3. Suitable employment

Finally, Mrs. MacAulay submits that the arbitrator failed to deal with the insurer's obligation to identify suitable job options. Instead, he simply accepted Dr. Jonathan Siegel's opinion that working as a customer service representative in a retail environment would be suitable employment for Mrs. MacAulay, without doing the kind of analysis required to determine suitability.¹¹

This argument ignores the manner in which the case was presented at arbitration. Mrs. MacAulay's position was that she could not return to any type of work, not that the jobs suggested were inappropriate. General Accident did not concede that she was unable to return to work as an RNA, but also provided two assessments setting out possible employment options: a transferrable skills analysis done by Crawford & Company in February 1996, and Dr. Siegel's assessment done in March 1996. Although Mrs. MacAulay did not attack the suitability of the jobs suggested in these reports, the arbitrator satisfied himself that at least one—customer service representative in a retail environment—was a suitable option. In the circumstances, I am not convinced he had to go any further.

In summary, this arbitration raised difficult issues, involving conflicting medical evidence about the nature and extent of Mrs. MacAulay's accident-related injuries. I am satisfied, however, that the decision, including the disposition of the other benefits, reflects a thorough consideration of the evidence. There is adequate evidence to support the arbitrator's conclusions and, therefore, no basis for my intervention.

III. EXPENSES

Mrs. MacAulay asks that General Accident be ordered to pay her reasonable appeal expenses. General Accident disagrees, suggesting that if her appeal does not succeed, Mrs. MacAulay should be required to pay its expenses. General Accident particularly objects to paying for the transcript of the arbitration hearing—a substantial expense. It notes that Mrs. MacAulay's previous lawyers, who represented her at the arbitration hearing and filed the Notice of Appeal, did not plan to order the transcript. The implication, General Accident suggests, is that her new lawyer needed the transcripts to familiarize himself with the case, an expense it claims it should not be expected to bear.

The rules for awarding expenses changed in November 1996, with expenses now available to either party. The criteria are set out in R.R.O. 1990, Reg. 664, as amended by O.Reg. 464/96:¹²

12.- (2) An arbitrator may award expenses to an insurer or insured person under subsection 282(11) of the Act if the arbitrator is satisfied that the award is justified, having regard to the following criteria:

1. Each party's degree of success in the outcome of the proceeding.

2. Conduct of the insurer or the insured person that tended to shorten or facilitate the proceeding or that tended to prolong, obstruct or hinder the proceeding, including failure to comply with undertakings or orders.

3. Whether the proceeding or any position taken by the insurer or the insured person during the proceeding was manifestly unfounded, frivolous, vexatious, fraudulent or an abuse of process.

4. The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.

5. If the insurer or the insured person requests, any written offers to settle made after the conclusion of mediation and before the conclusion of the arbitration in accordance with the rules of practice and procedure applicable to the proceeding, including the terms of the offers, the timing of the offers and the responses to the offers, having regard to the result of the proceeding.

6. Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.

Although these new provisions signal a change, they do not reflect a move to the kind of strict, results-based approach used by the courts.¹³ Therefore, General Accident is not entitled to its expenses simply because it was successful in resisting Mrs. MacAulay's appeal. The other criteria, including issues of access to the dispute resolution process, must be considered.

Mrs. MacAulay appropriately limited her arguments to specific errors of law that she claimed undermined the decision. However, for reasons set out above, I did not find them particularly significant or persuasive. Nor did she need the transcript to make them. Her written submissions did not include any references to the transcript, while her oral submissions included very few. In fact, General Accident relied relied more heavily on the transcript because it generally did not help Mrs. MacAulay's case.

The appeal had sufficient merit that I am not prepared to order Mrs. MacAulay to pay General Accident's appeal expenses. However, I am not persuaded that General Accident should be required to bear Mrs. MacAulay's expenses, including the transcript. Therefore, each party will bear its own appeal expenses.

October 13, 1999

David R. Draper Director's Delegate

Date

Footnotes

1. 1R.R.O. 1990, Reg 672/90, as amended, the Statutory Accident Benefits Schedule—Accidents before January 1, 1994.
2. 2Insurance Act, R.S.O. 1990, c.I.8, s.283(1).
3. 3Arbitration transcript, Volume 1, p.2. The arbitrator repeated the issues at Volume 2, p.2.
4. 4Arbitration transcript, Volume 1, p.21.
5. 5Arbitration transcript, Volume 1, p.27.
6. 6Arbitration transcript, Volume 1, p.45.
7. 7Arbitration decision, pp. 17, 21 and 22.
8. 8See, Khazaei and Canadian General Insurance Company, (FSCO P98-00026, September 26, 1999); Movahedi and State Farm Mutual Automobile Insurance Company, (FSCO P96-00050, September 1, 1999); and Salvaggio and Simcoe & Erie General Insurance Company, (FSCO P97-00062, January 21, 1999).
9. 9For example, see Pavljuk and Canadian General Insurance Company, (FSCO P97-00055, September 7, 1999); Caron and General Accident Assurance Co. of Canada, (OIC A95-000264, February 24, 1998); Puopolo and Wellington General Insurance Company, (OIC P-006445, July 25, 1996); Knott and Dominion of Canada General Insurance Co., (OIC A-951779, May 6, 1996); Fricke and Allstate Insurance Company of Canada, (OIC A-008892, September 28, 1995); and Audisho and State Farm Mutual Automobile Insurance Company, (OIC A-004981, November 7, 1994).
10. 10The arbitrator ordered General Accident to pay for psychological services provided by Dr. Gottfried from June to December 1996.
11. 11Mrs. MacAulay refers to the arbitration decision in Rodway and Royal Insurance Company of Canada, (OIC A-007593, June 12, 1995, as a example of the proper approach.
12. 12Rule 73 of the Dispute Resolution Practice Code makes these criteria applicable to both arbitrations and appeals.
13. 13See, Gray and Zurich Insurance Company, (FSCO P98-00047, June 11, 1999).