Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 1999 ONFSCDRS 249 Appeal P99-00031 OFFICE OF THE DIRECTOR OF ARBITRATIONS

NINA LAZAREVA Appellant

and

ROYAL INSURANCE COMPANY OF CANADA Respondent

Before: David R. Draper, Director's Delegate

Counsel: Edward Goldentuler (for Ms. Lazareva) Shelley Timms (for Royal 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 decision dated May 28, 1999 is confirmed.
No appeal expenses are payable.

December 17, 1999

David R. Draper Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This is an appeal by Nina Lazareva from an arbitration decision dated May 28, 1999. She claims the arbitrator erred in concluding that she is not entitled to income replacement benefits after February 21, 1996, and in denying her claims for housekeeping expenses, transportation expenses, the cost of a case manager, prior approval of medical expenses and full arbitration expenses.

II. BACKGROUND

On January 26, 1996, a friend was driving Ms. Lazareva to her ESL (English as a second language) class. As their car slowed behind a stopped vehicle, it was hit from behind and pushed into the vehicle ahead. Ms. Lazareva testified that her head was thrown back, things went black and then she was struck in the right temple area. Nevertheless, she was able to continue to her class by subway, although she said she did not feel well.

When her condition did not improve over the weekend, Ms. Lazareva went to see her family doctor, Dr. Oleg Livshin, complaining of blurry vision, severe headaches, neck pain and stiffness, and shooting pain in the right temple area. Over the next few months, she participated in a rehabilitation program at Integrated Health Recovery and continued to see Dr. Livshin. Although the physical findings were minimal, Ms. Lazareva continued to report disabling symptoms. This led to many referrals over the next two years, with conflicting medical opinions about the nature and extent of her injuries.

At the time of the accident, Ms. Lazareva was in her late 50s and working as a live-in housekeeper for Mr. David Muir, an 80-year-old man living alone due to a separation from his wife. The housekeeping arrangement was governed by a written contract signed in August 1995. The contract was drafted by a lawyer to clarify that Ms. Lazareva's services would not give rise to any claims for support or inheritance:

AND WHEREAS MUIR has determined that he can no longer look after the cleaning and ordinary maintenance of the house, cooking and provision of meals for himself and requires assistance in respect of certain household chores and errands, including his personal safety in being in the house by himself (all of which are hereinafter referred to in general as "household assistance") . . .

NINA agrees to provide household assistance as described above to Muir at the house.

The arbitrator found that the contract described Ms. Lazareva's essential tasks. In exchange, she received $100 per month, a room in Mr. Muir's house and board.¹ Ms. Lazareva also relied on social assistance from the municipality, adjusted to reflect her arrangement with Mr. Muir.

Although the contract was signed in August 1995, Ms. Lazareva did not start working until sometime in October or November 1995, when she moved into Mr. Muir's house. Shortly after she moved in, Mr. Muir left for an extended stay in Florida. As a result, Ms. Lazareva was alone in the house until her accident on January 26, 1996.

After the accident, Ms. Lazareva continued to live in Mr. Muir's house. She claimed, however, that she was unable to do her usual work and, therefore, asked her friend, Ms. Catherine Block, to come in to take care of her and do the cleaning, cooking and shopping. Mr. Muir returned from Florida on February 21, 1996, but only stayed for about a week to see his doctors. According to Ms. Lazareva's written statements, she managed her own personal care during the period, although with difficulty, and Mr. Muir assumed responsibility for many of the household chores.

Mr. Muir then went back to Florida. While there, he reconciled with his wife and in April or May 1996, they returned to Toronto. Ms. Lazareva moved out of the house at about the same time, taking residence in a subsidized apartment she had applied for a year earlier, before she agreed to work for Mr. Muir. According to Ms. Lazareva, it was always her preference to have a decent apartment of her own.²

Ms. Lazareva acknowledged that after her move, she continued to work for Mr. Muir. She claimed, however, that she was unable to do many of the housekeeping tasks and, therefore, stopped after three or four attempts. Other evidence contradicted Ms. Lazareva's version, suggesting that she stopped working for reasons unrelated to the accident.

Ms. Lazareva contacted Royal Insurance Company of Canada ("Royal"), the insurer of the vehicle in which she was a passenger, shortly after the accident. She provided written statements dated February 14 and 27, 1996, and also met with Ms. Margarete Sagebiel, an occupational therapist sent by Royal to do an assessment.

The meeting with Ms. Sagebiel took place on February 26, 1996 at Mr. Muir's home, with Mr. Muir present throughout. An interpreter was also present. Ms. Lazareva reported that due to the pain in her neck radiating into her head, blurred vision and dizziness, Mr. Muir had assumed many of her duties. Ms. Sagebiel concluded, however, that Ms. Lazareva was able to perform all the movements required for her various personal and household tasks, but was self-limiting due to dizziness.

Ms. Lazareva applied for accident benefits on February 27, 1996, represented by Mr. Henry Goldentuler. The application was supported by a Health Practitioner's Certificate completed by Dr. Livshin. This medical form states that Ms. Lazareva suffers from injuries to her neck and upper back, identifying the nature of the injuries as soft-tissue strain, concussion and vertigo/dizziness. Dr. Livshin also states that it is unknown when she will be able to return to her normal activities or employment.

The date of the accident means that Ms. Lazareva's benefits are determined under O.Reg. 776/93, as amended, the Statutory Accident Benefits Schedule —Accidents after December 31, 1993 and before November 1, 1996 ("the SABS-1994"). This legislation includes four types of weekly benefits: income replacement benefits ("IRBs"), education disability benefits ("EDBs"), caregiver benefits ("CGBs") and other disability benefits ("ODBs"). If the insured person qualifies for more than one type of benefit, he or she must make an election. Ms. Lazareva elected EDBs, claiming she was unable to continue her ESL classes.

When Royal refused to pay EDBs, Ms. Lazareva applied for mediation. Despite her election, the claim at mediation was for income replacement benefits ("IRBs"), not EDBs. This may reflect an acknowledgement that her ESL class would not qualify as the kind of full-time educational programme required by s.15 of the SABS-1994. In addition to IRBs, Ms. Lazareva claimed housekeeping expenses from the date of the accident, and requested prior approval of medical expenses and a case manager under s.69 of the SABS-1994.

The dispute was not resolved at mediation and, therefore, Ms. Lazareva applied for arbitration. The arbitration hearing was unusually long, taking 14 days over a 15-month period from January 1998 to April 1999. In his decision, released on May 28, 1999, the arbitrator accepted some of Ms. Lazareva's claims, but rejected the bulk of them. Most significantly, he concluded that she was only entitled to IRBs until February 21, 1996, when Mr. Muir first returned Toronto for his medical appointments.

On appeal, Ms. Lazareva challenges the arbitrator's conclusions about the extent of her limitations and his resulting refusal to order many of the benefits she claimed. Specifically, she seeks an order that she is entitled to ongoing IRBs, housekeeping expenses, transportation expenses, the cost of a case manager, prior approval of medical expenses, and full arbitration expenses.

III. ANALYSIS

Ms. Lazareva submits that because she applied for arbitration before November 1, 1996, her appeal is not limited to questions of law. I agree. However, even under the old, broader appeal provisions, considerable deference is given to an arbitrator's factual findings. After reviewing the record and considering the submissions of counsel, I am not persuaded there is any basis for interfering with this decision. In my view, it reflects a careful analysis of the evidence, with an appropriate application of the law to the facts as found.

A. Evaluation of the Evidence

Ms. Lazareva objects to the arbitrator's evaluation of the evidence, including issues of credibility. She claims that her complaints have been consistent throughout, although the physical basis of her pain was not established until quite recently, when diagnostic nerve blocks showed facet joint problems at the C2-3 and/or C3-4 level. In Ms. Lazareva's submission, the arbitrator failed to re-evaluate the evidence in light of this objective confirmation of her injuries.

Ms. Lazareva's argument reflects the unusual way in which the evidence arose in this case. As explained below, the medical evidence developed over the course of the hearing. I am not persuaded, however, that the arbitrator made findings before the close of the hearing that he should have re-evaluated after hearing from the final witness, Dr. Nikolai Bogduk.

At the pre-hearing in May 1997, the parties dealt with the exchange of documents and discussed the witnesses they intended to call at the hearing. On January 9, 1998, ten days before the hearing was scheduled to start, Mr. Goldentuler provided a report from a new doctor, Dr. Howard P. Jacobs, dated the previous day. In this report, Dr. Jacobs includes a new diagnosis, cervicogenic pain, suggesting a procedure involving diagnostic nerve blocks to determine the specific site of the injury.

Dr. Jacobs testified on January 21, 1998, the third day of the hearing. However, he was not cross-examined because the arbitrator held that his frequent references to medical articles and studies not mentioned in his report compromised the ability of Royal's counsel, Ms. Timms, to conduct a proper cross-examination. Therefore, the arbitrator ordered production of the material mentioned by Dr. Jacobs and put off the cross-examination until March 1998. In the meantime, the hearing continued with non-medical witnesses.

Following her cross-examination of Dr. Jacobs, Ms. Timms indicated that she wanted to present medical evidence in response. Mr. Goldentuler objected, arguing that he complied with the Dispute Resolution Practice Code by providing Dr. Jacobs' report ten days before the hearing and that it was too late for the insurer to produce new medical evidence. After hearing submissions, the arbitrator provided his ruling in a letter dated April 22, 1999. Royal was given one month to submit a report from the medical expert it intended to call as a witness when the hearing resumed on June 12, 1998. The arbitrator also required Royal to engage a court reporter to prepare a transcript of this witness's testimony. Mr. Goldentuler was then given two weeks from receipt of the transcript to advise whether he intended to call any reply evidence.

Royal consulted Dr. C. Peter N. Watson, who prepared a report dated May 16, 1998. Based on his review of the medical evidence and the transcript of Dr. Jacob's testimony, Dr. Watson was not convinced that Ms. Lazareva suffered any physical injury to the brain or optic nerves, or that her symptoms were generated by problems in her neck. He accepted that she might have positional vertigo as a result of peripheral vestibular dysfunction, an inner ear problem, but noted that this condition usually is not a long-term problem. Dr. Watson specifically expressed doubts about Dr. Jacobs' diagnosis of cervicogenic headaches, stating that this is a contentious area.

According to the arbitrator, Dr. Jacobs conceded during his testimony that the diagnosis of cervicogenic headaches remained a differential diagnosis until confirmed by diagnostic nerve blocks. After both Dr. Jacobs and Dr. Watson testified, Ms. Lazareva decided to undergo the nerve block procedure, administered by Dr. Gary Shapero in August and September 1998. Dr. Shapero reported positive results, indicating that the pain resulted from problems in the C2-3 facet joint.

Ms. Lazareva presented Dr. Shapero's report, although he did not testify. Royal was then allowed to respond by way of a second report from Dr. Watson. In this report, dated October 21, 1998, Dr. Watson disagrees with Dr. Shapero's conclusions, expressing concerns that he did not follow the protocol developed by Dr. Bogduk, an Australian physician whom both parties accepted as an expert in this area.

The matter did not end there. Ms. Lazareva obtained a report from Dr. Bogduk responding to Dr. Watson's concerns. In this report dated March 4, 1999, Dr. Bogduk agrees that there were problems with Dr. Shapero's procedures. He concludes, however, that the tests were sufficient to establish that, on a balance of probabilities, Ms. Lazareva has a genuine source of pain in her C2-3 and/or C3-4 joints. Ms. Timms was allowed to cross-examine Dr. Bogduk by telephone on March 18, 1999. The hearing closed with final submissions on April 23, 1999.

The arbitrator clearly considered the medical evidence, summarized in his decision, concluding that Ms. Lazareva suffered from vertigo (although with some uncertainty about the source), cervicogenic pain and post-traumatic stress disorder. However, as he correctly states at page 26, the fact that she suffered injuries does not establish her entitlement to IRBs. Ms. Lazareva had to prove that as a result of her injuries, she was substantially unable to perform the essential tasks of her pre-accident employment as a housekeeper.

I also agree with the arbitrator that the types of injuries Ms. Lazareva suffered do not, in themselves, establish her inability to work as a housekeeper. Therefore, it was for him to evaluate her functional capabilities based on all the evidence presented. This included opinions from some of the doctors about Ms. Lazareva's ability to work. While this is important evidence, it is limited by each doctor's understanding of her pre-accident tasks and post-accident activities. Most importantly, they had to rely on Ms. Lazareva's own reports about her condition. Therefore, as in many cases, the reliability of the information she provided was a critical question for the arbitrator.

Starting at page 27 of his decision, the arbitrator explains his unwillingness to accept Ms. Lazareva's description of the limitations imposed by her injuries. In my opinion, he provides an adequate explanation, supported by the evidence, that should not be second-guessed on appeal.

Ms. Lazareva's more specific arguments are addressed below.

B. The Cut-Off Date

As noted above, the arbitrator accepted that Ms. Lazareva was injured in the accident. He also accepted that her injuries prevented her from working until Mr. Muir's return from Florida on February 21, 1996. In fact, he felt strongly enough about her initial entitlement that he ordered Royal to pay a special award of 50 per cent of the amount owing. However, since Ms. Lazareva applied for EDBs, not IRBs, the arbitrator ordered that interest only be calculated from June 13, 1996, the date of the mediator's report. In effect, he found it unreasonable that Royal did not re-evaluate its position at the mediation and pay IRBs for some period following the accident.

In Ms. Lazareva's submission, there is no magic in the cut-off date chosen by the arbitrator. She claims that having accepted she was injured, the arbitrator had no basis for finding that her condition improved when Mr. Muir returned from Florida.

In my view, the arbitrator's decision turns on Ms. Lazareva's obligation to prove her claim. He was persuaded that she presented evidence sufficient to establish an initial period of entitlement.

However, the evidence of what happened when Mr. Muir returned from Florida was inconsistent, leading him to conclude that she had not proven her ongoing entitlement. While the special award is somewhat unusual, I find that the evidence supports the arbitrator's conclusion. As stated in previous appeal decisions, it is often hard to determine the period of disability precisely.³ Therefore, arbitrators must be given scope to consider all of the evidence and reach a result that is fair in the particular circumstances of the case. I am satisfied that is what happened here.

C. Refusal to Qualify Expert

At the start of Dr. Jacobs' testimony, Mr. Goldentuler asked that he be qualified as an expert in chronic pain. Ms. Timms objected, arguing that Dr. Jacobs' educational background was limited to that of a family physician and, in any event, chronic pain has not been recognized in Canada as a medical specialty. The arbitrator held that it was unnecessary to qualify Dr. Jacobs, confirming this ruling in a letter dated April 22, 1998:

I ruled that it was unnecessary for the Applicant [Ms. Lazareva] to qualify Dr. Jacobs as an expert in the field of chronic pain, a field which has not, in any event, been recognized as a medical specialty. I accepted that as a doctor who had examined the Applicant, Dr. Jacobs was qualified to express a medical opinion in relation to her condition, subject to my duty, after hearing submissions, to assess the weight of his medical opinion.

The transcript confirms that Dr. Jacobs was allowed to give opinion evidence, without any limitation on his ability to comment on the source and impact of Ms. Lazareva's pain. Ms. Lazareva submits, however, that by not recognizing Dr. Jacobs' expertise, the arbitrator undervalued his evidence.

I am not persuaded that the arbitrator erred. First, he was consistent in his approach. Dr. Watson, who also has a long-involvement with issues of chronic pain, was qualified as a neurologist, not an expert in chronic pain. However, like Dr. Jacobs, he was allowed to express his opinion on the pain issues raised by this claim. Second, on the main disagreement between the two doctors—the diagnosis of cervicogenic pain—the arbitrator accepted Dr. Jacobs' view. This does not suggest an under-valuation of his evidence. Third, I do not read the decision as a repudiation of Dr. Jacobs' evidence on employability. The arbitrator recognized that the various experts, including Dr. Jacobs, based their opinions on Ms. Lazareva's reported limitations. Therefore, the arbitrator considered the reliability of the information she provided, finding it inaccurate.

D. Surveillance Evidence

Ms. Lazareva submits that the arbitrator placed too much reliance on the surveillance evidence of Aston Associates Limited. In her submission, the key videotape of May 29, 1996 clearly shows that it was edited, compromising its integrity. Further, she claims that the evidence of the investigator, Ms. Jo-Ann Armstrong, was undermined by witnesses who denied making statements attributed to them in her reports. After reviewing the videotapes and arbitration transcripts, I agree with Royal that the surveillance evidence was not as successfully discredited as Ms. Lazareva claims.

Although Ms. Armstrong testified at the arbitration hearing, she was not the investigator who took the surveillance videotape. That was done by other investigators at Aston Associates. As required by the Dispute Resolution Practice Code, Royal provided a copy of the tapes to Ms. Lazareva. At the hearing, Ms. Lazareva did not raise any issue of identification or ask that the investigators be made available for cross-examination. As a result, the videotapes were accepted into evidence without objection. They were not even viewed during the hearing. Mr. Goldentuler agreed that the arbitrator could review the tapes outside of the hearing, and counsel could address them during final submissions.⁴

The surveillance videotape from May 29, 1996 shows Ms. Lazareva working in Mr. Muir's garden. The tape includes a time display. I accept Ms. Lazareva's contention that the tape covers only about half of the 292 minutes of running time indicated on the time display, with 22 gaps. I do not accept, however, that this shows the tapes were surreptitiously edited to remove evidence of her disability. More likely, the filming was not continuous. While this raises questions about the periods not filmed, it does not negate what is shown. The problem for Ms. Lazareva is the discrepancy between her reported limitations and the movements seen on the tapes. In my view, it was within the arbitrator's authority to rely on this evidence in support of his finding that Ms. Lazareva was not as disabled as she claimed.

Royal also relied on the surveillance reports of Aston Associates in support of its position. Its investigator, Ms. Armstrong, testified at the arbitration hearing. On cross-examination, she was aggressively challenged by Mr. Goldentuler on the accuracy of her reports. This was based, in part, on the testimony of three people she interviewed, who denied making statements attributed to them. As I read the transcript, however, Ms. Armstrong effectively defended her procedures, denying any suggestion that she fabricated or distorted evidence to assist Royal's position. In the circumstances, I am not persuaded that the arbitrator was obliged to reject Ms. Armstrong's evidence, particularly in respect of interviews with other witnesses.

E. Evidence of Richard Muir

By the time of the arbitration hearing, Mr. Muir had passed away. Royal called his son, Richard Muir, to testify about the arrangements between Ms. Lazareva and his father. In reaching his decision, the arbitrator accepted Richard Muir's testimony that his father told him the employment relationship ended when Ms. Lazareva wanted to be paid more, including travel time.

In support of her argument, Ms. Lazareva relies on three recent appeal decisions commenting on the use of hearsay evidence.⁵ I considered these decision in MacAulay and General Accident Assurance Company of Canada, (FSCO P98-00010, October 13, 1999), a case involving a similar argument:

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, Mr. Muir was unavailable. His son, Richard Muir, had information relevant to the issue in dispute, including things he observed personally and information he received through his father. Richard Muir was presented as a witness, without objection. As a result, Mr. Goldentuler was able to test his evidence through cross-examination. However, Richard Muir did not waver in his evidence, stating his understanding that Ms. Lazareva stopped working for his father for reasons unrelated to her accident.

I am not persuaded that the arbitrator erred in relying on this evidence. In part, this is because it was not the only evidence leading the arbitrator to doubt Ms. Lazareva's claim that she was physically unable to continue working as a housekeeper. Her evidence was contradicted by a number of other sources. Even her friend, Ms. Block, presented a different scenario, testifying that she continued to assist Ms. Lazareva with her work after Mr. Muir returned from Florida. The arbitrator considered all the evidence, as he should have done, concluding that Ms. Lazareva had not established her inability to work beyond the brief period between the accident and Mr. Muir's initial return from Florida. Again, this was within the arbitrator's authority and, therefore, I am not prepared to interfere.

F. Alternative Argument - Entitlement to ODBs

Ms. Lazareva submits that after deciding she was not entitled to IRBs, the arbitrator should have considered whether she was entitled to ODBs. I am unable to agree. First, the claim she presented at the arbitration was for IRBs, with no indication that she was making an alternative claim for ODBs. Second, and even more important, she does not qualify for ODBs. According to s.19(1) of the SABS-1994, an insured person only qualifies for ODBs if he or she never qualified for IRBs under s.7(1). Because Ms. Lazareva was employed at the time of her accident, she qualifies for IRBs under s.7(1)1 and, as a result, does not qualify for ODBs.

G. Arbitration Expenses

The arbitrator ordered Royal to pay two-thirds Ms. Lazareva's arbitration expenses. The reduction was based on the additional hearing time resulting from Ms. Lazareva's late decision to pursue the diagnostic nerve blocks.

Previous appeal decisions have held that the expense provisions create a broad discretion that should not be lightly disturbed on appeal.⁶ In my view, this appeal falls well short of meeting the standard for intervention. The arbitrator applied an appropriate criterion, delay, to the facts as he found them. I agree with Royal that the reduction of one-third is reasonable in the circumstances.

IV. APPEAL EXPENSES

Although unsuccessful appellants are sometimes granted their expenses, this appeal does not involve the kind of significant or novel issue of general importance that would justify such an order. Therefore, the parties will bear their own appeal expenses.