Neutral Citation: 1999 ONFSCDRS 38

FSCO A97-000903

BETWEEN:

MARIO ROCCA

Applicant

and

AXA INSURANCE (CANADA)

Insurer

REASONS FOR DECISION

Before:

M. Kaye Joachim

Hearing:

June 1, 2, 3, 4, November 30, and December 1, 1998 at Financial Services Commission of Ontario

Final Submissions were received on February 19, 1999.

Appearances:

Michael J. Henry for Mario Rocca

Mark Greg Abogado for AXA Insurance (Canada)

The Applicant, Mario Rocca, was injured in a motor vehicle accident on August 10, 1995. He applied for and received statutory accident benefits from AXA Insurance (Canada) ("AXA"), payable under the Schedule¹ AXA terminated weekly income replacement benefits on November 7, 1997. The parties were unable to resolve their disputes through mediation, and Mr. Rocca applied for arbitration at the Financial Services Commission of Ontario² under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

What were Mr. Rocca's earnings in the four weeks prior to the accident?
Did Mr. Rocca earn any post accident income?
Is Mr. Rocca entitled to income replacement benefits beyond November 7, 1997?
Is Mr. Rocca entitled to a special award?

Mr. Rocca also claims interest on any amounts owing and his expenses incurred in the hearing.

Mr. Rocca earned $880 per week, plus $812 in commissions in the four weeks preceding the accident.
Mr. Rocca did not earn any post accident income.
Mr. Rocca is entitled to income replacement benefits from November 7, 1997 and ongoing.
Mr. Rocca is entitled to a special award of $10,000.

The Insurer initially paid weekly income replacement benefits at the rate of $538.59, based on the Employer's Confirmation of Income form first submitted by Mr. Rocca, which indicated a gross weekly income of $880. On May 25, 1996, the Insurer reduced weekly benefits to $185 when it learned that Mr. Rocca had been receiving unemployment insurance benefits, both before and after the accident. In light of this information, the Insurer questioned whether Mr. Rocca was in fact employed at the time of the accident. In March 1997, the Insurer advised Mr. Rocca that it was planning to terminate his income replacement benefits effective July 23, 1997. Mr. Rocca requested a DAC assessment, which was not completed until October 31, 1997. The Insurer terminated weekly income benefits effective November 7, 1997.

In opening statements, the parties agreed that the issue before me was whether Mr. Rocca was substantially disabled from carrying out the essential duties of his pre-accident employment at the 104 week mark, August 10, 1997. If so, the parties agreed that income replacement benefits would continue until the date of the decision, and that the Insurer would be obliged to deliver a loss of earning capacity benefit ("LECB") offer. In reply submissions, the Applicant's counsel raised for the first time the argument that the Insurer is obliged to make an LECB offer solely because the Applicant was in receipt of income replacement benefits at the 104 week mark, due to his request for a DAC assessment. I agree with counsel for the Insurer that this is not proper reply argument. In light of the positions taken by the parties in opening statements, I find that the Applicant has waived the right to rely on this procedural argument. In any event, I agree with the comments made by Director Draper in Henry and Allstate Insurance Company of Canada³, that the payment of benefits pending a DAC assessment "does not create an entitlement that is immune from later challenge." Thus, notwithstanding the fact that income replacement benefits were paid past the two year mark, the issue before me is whether Mr. Rocca was substantially disabled from carrying out the essential tasks of his employment from August 10, 1997.

The parties disagree whether Mr. Rocca was a salesman, as the Insurer alleges, or whether he was a paver as well as a salesman.

In addition, the quantum of benefits is in issue. The Insurer paid benefits based on a weekly income of $880. Mr. Rocca alleges that he also earned bonuses and commissions, which should be included in the calculation of his benefits. The Insurer disputes that these sums were earned during the four weeks prior to the accident.

The Insurer asserts that Mr. Rocca earned post accident income of $200 per month from December 1, 1996, which must be deducted from his weekly benefits. Mr. Rocca denies any post accident earnings.

Mr. Rocca seeks a special award based on the Insurer's allegedly unreasonable reduction of weekly benefits to $185 in May 1996.

At the start of the hearing, the Insurer indicated that it was prepared to accept that Mr. Rocca was employed at the time of the accident and increased Mr. Rocca's benefit rate to $538.59, less the $200 post accident weekly income which the Insurer alleges Mr. Rocca has been earning since December 1, 1996.

Background

Mr. Mario Rocca has a history of serious drug and alcohol abuse. He became addicted to cocaine and heroin as a teenager and did not complete high school. At the height of his addiction, he was consuming approximately $10,000 worth of illicit drugs per week. He paid for his addiction by dealing drugs. When heroin was unavailable he would use Percodan, Morphine or Dilaudid. In addition he consumed alcohol and was convicted of impaired driving in the 1970's . He also has several convictions for credit card fraud, minor theft, and assaults in the late 1970's and early 1980's. He worked sporadically as a tile setter, real estate broker, a manager in his uncle's factory, and as a painter and drywaller. He married in 1982 and had a daughter, but was subsequently charged with assaulting his wife. They separated in 1984 and divorced in 1986. He has not seen his daughter in years, because of his poor relationship with his ex-wife and her insistence on being present during access visits. He has not paid child support to his ex-wife for several years. In 1990, he participated in an intensive drug rehabilitation program in Italy for two years. He returned to Canada in December 1992 and tried to turn his life around. He entered into a new relationship and had a son in 1994. Although the relationship did not work out, he continues to see his son.

Upon his return from Italy, Mr. Rocca began working for King City Paving, in the spring of 1993. This is seasonal work, from spring to late fall. He applied for unemployment insurance in the off season. At the same time he did painting, drywall and tile setting for cash, which he did not report to the unemployment insurance office.

In the fall of 1994, Mr. Rocca's unemployment insurance benefits were garnisheed by his ex-wife because of his failure to pay child support for his daughter. Mr. Rocca ceased claiming benefits to defeat this garnishment. When the garnishment order was lifted, he sought to backdate his 1994 claim. His claim was denied. Mr. Rocca testified that he felt cheated out of these benefits and, therefore, continued to claim unemployment insurance even after he commenced working at King City Paving in the spring of 1995. He received benefits from May 7, 1995 to September 24, 1995, while he was working, and while he was in receipt of disability benefits from AXA.

Mr. Rocca was 39 years old at the time of the motor vehicle accident. The accident occurred in the early morning hours of August 10, 1995. Mr. Rocca's car rolled, and he was thrown from the vehicle. He was found beside the road some time later and was taken by ambulance to Georgetown Hospital.⁴ He was transferred to Hamilton General Hospital where he underwent an emergency tracheotomy and spent two weeks in hospital. His initial injuries included broken left ribs, a punctured left lung, neck, and left shoulder and back injuries, a basal skull fracture, multiple fractures on the face, scrapes on the face, a broken right hand, and a left eye contusion.

Although some of his injuries have healed, Mr. Rocca continues to complain of soreness of the left side of his jaw, ringing in his ears, hearing loss, loss of taste, tenseness and pain in his neck, sore chest and ribs, sore left arm, pain down the left arm into his hands, numbness in his fingers, and pain in the right knee. Mr. Rocca's chief complaints are chronic pain in his back, with pain radiating down his left leg, and chronic headaches, as well as difficulties with his concentration, memory and controlling his temper. In addition, he asserts that he has difficulties sleeping and is depressed. He continues to take significant amounts of medication, including narcotic painkillers, anti-inflammatory medication, muscle relaxants and anxiety-depression medication.

Credibility with Respect to Financial Matters

Many of the issues in this hearing, with respect to Mr. Rocca's employment duties and earnings, as well as the disabling effect of his physical and psychological injuries, depend on the reliability of Mr. Rocca's evidence. Therefore, his credibility is an important factor. I have concluded that Mr. Rocca is not a credible witness, either with respect to his financial affairs or with respect to his reports of disability. I will discuss my findings with respect to the reliability of Mr. Rocca's evidence of disability later. My reasons for doubting the reliability of Mr. Rocca's evidence with respect to his financial affairs are as follows:

In the past, Mr. Rocca has earned employment income which he did not report to Revenue Canada in order to avoid paying income tax. He collected unemployment insurance benefits while working. He testified that he voluntarily disclosed this "overpayment" as he euphemistically described it. However, I find that the unemployment insurance office had begun an investigation with his employer and the Insurer had also begun to question this situation before Mr. Rocca contacted the unemployment insurance office to report his "overpayment".⁵ Mr. Rocca attempted to justify his fraudulent claim for unemployment insurance benefits in 1995 on the basis that he had been unfairly denied his 1994 benefits. Further, he failed to report income he conceded earning during the off season. I conclude that Mr. Rocca is prepared to twist the truth about his financial affairs to obtain maximum benefit from whatever system from which he happens to be seeking payment. Where there is documentary or oral evidence contradicting Mr. Rocca's testimony, I have preferred that evidence to Mr. Rocca s.

What are the essential duties of Mr. Rocca's employment?

Mr. Rocca was paving driveways for King City Paving at the time of the motor vehicle accident. King City Paving does residential paving jobs in Metropolitan Toronto and the surrounding areas. The company is owned by Vince Alaimo and his son. Mr. Rocca does not have any interest in the company, although his family and Mr. Alaimo's have known each other for over 20 years.

Paving driveways is physically demanding work. The first step involves removing the old asphalt or grass from the area to be paved. Gravel or crushed limestone is loaded onto the area. After it settles, the area is raked, or rolled with a roller. Hot asphalt is poured onto the area and tamped down by a ride-on machine known as a "Bobcat". The edges of the driveway are usually tamped by hand. The work involves frequent bending, lifting, twisting and carrying, using wheelbarrows, picks, and shovels. Because paving work is dependent on the weather, the hours are long, from ten to fifteen hours per day, Monday to Friday, and additional hours on Saturday.

Mr. Rocca testified that his duties included both sales and heavy labour. The sales part of the job involved canvassing potential customers in the area where the workers were paving, completing the contracts, and obtaining deposits and payments. He was responsible for overseeing the paving contracts which he obtained. The labour part included picking up a work crew and taking them to the job site (or meeting them there once the job commenced), obtaining supplies, loading and unloading equipment, and helping out as needed. Depending on the circumstances, he could be called upon to shovel, rake, or tamp. He agreed that his physical duties were lighter than those of the other crew members. Although the amount of his sales work varied on a day-to-day basis, Mr. Rocca estimated that on a seasonal basis his job consisted of approximately 50 per cent sales and 50 per cent labour.

The Insurer argued that Mr. Rocca was a salesperson. In support of its position, the Insurer relied primarily on Mr. Rocca's income tax claim from 1994, in which the company issued a form T2200, a Declaration of Conditions of Employment, indicating that all of Mr. Rocca's earnings were commissions derived from paving contracts. This declaration enabled Mr. Rocca to claim travel expenses as employment expenses, which reduced his tax liability. Non-sales employees are not entitled to deduct their expenses. In addition, Mr. Rocca's sister conceded she may have advised an insurance representative shortly after the accident that her brother worked in sales. The Insurer also relied on the fact that Mr. Rocca advised the hospital staff that he was a salesperson, and inquired after his pager, an essential piece of equipment for a salesperson.⁶

I do not find any of this persuasive evidence that Mr. Rocca did not perform paving work. Mr. Rocca's statements in the hospital must be viewed in the context that he was in a confused and agitated state for several days. His sister's statement that Mr. Rocca was "in sales" does not preclude the possibility that he also did physical work. The company documents are contradictory. In addition to issuing the T2200, which indicated that Mr. Rocca was a salesperson, the accountant completed the Employer's Confirmation of Income form indicating that Mr. Rocca was a paver.⁷

Despite my concerns about Mr. Rocca's credibility, I am prepared to accept that Mr. Rocca's duties included both sales and physical labour. The most reliable evidence about the amount of time spent in sales versus labour is found in an initial contact form, completed by an insurance adjuster, and signed by Mr. Rocca on August 29, 1995, shortly after the accident.⁸ At that time, before the importance of emphasizing the physical nature of his work became apparent, Mr. Rocca estimated that he worked Monday to Friday from 7:00 a.m. until 7:00 p.m., and Saturday from 9:00 a.m. to 5:00 p.m. He described his essential tasks as including walking, 75 per cent of the time, and also referred to lifting up to 40 lbs, tamping, raking, pushing, bending from the knees, and driving the roller. I interpret the reference to walking 75 per cent of the time, as a reference to sales work. I conclude that Mr. Rocca was primarily a salesperson, who was also responsible for overseeing the paving contracts which he obtained. With respect to the physical aspect, I find that Mr. Rocca's duties as a paver were lighter than most paver's duties. Nonetheless, these duties included lifting, tamping, raking, pushing, bending and twisting, and was moderately heavy work. The fact that this work was performed only 25 per cent of the time does not make it non-essential.

My conclusion with respect to Mr. Rocca's involvement in both sales and labour is consistent with his mother's and sister's evidence that Mr. Rocca sometimes returned from work with his clothes dirtied and other times wore a suit to work. It is also consistent with his employer's testimony that Mr. Rocca did both sales and labour.

1. What did Mr. Rocca earn in the four weeks preceding the accident?

Mr. Rocca alleges that his weekly benefits should be based on his gross weekly earnings of $880, plus the sum of $3,000 which he earned during the four weeks preceding the accident. The Insurer argues that Mr. Rocca has failed to establish that the $3,000 is employment income earned during the last four weeks of employment.

The evidence establishes that Mr. Rocca earned a gross weekly wage of $880. Mr. Rocca's weekly salary cheque was prepared by the bookkeeper, who made the appropriate deductions. The evidence also establishes that Mr. Rocca received two cheques in 1995 from Vince Alaimo, the owner of the company. The first cheque, dated June 26, 1995, in the amount of $5,000 was cashed on June 30, 1995. The second cheque, dated July 20, 1995, in the amount of $3,000 was cashed on July 26, 1995. The company letterhead appeared on both cheques, and both cheques contained the word "bonus". I am satisfied that the two cheques represent employment income from King City Paving.

In my view, the overwhelming inference from the evidence is that Mr. Alaimo paid these amounts to Mr. Rocca "under the table", without either party intending to report these amounts to Revenue Canada as employment income. These cheques do not appear on the payroll records of the company. No deductions are made from these amounts. The bookkeeper was apparently unaware of these payments, as he made no reference to them in the initial Employer's Confirmation of Income. Although these amounts were included in Mr. Rocca's 1995 T4 slip issued in 1996, and the appropriate deductions were eventually made, this was only done after Mr. Rocca's accident, when it became apparent that it was in Mr. Rocca's interest to disclose these amounts as employment income.⁹

Notwithstanding my conclusions that the $8,000 was not intended to be reported income, at the time it was paid, I am satisfied that it was income for work which Mr. Rocca did for King City Paving in 1995. The difficulty is in establishing when the money was earned.

Mr. Rocca elected to base his claim for weekly benefits on the four week period prior to the accident, which runs from July 12 to August 9, 1995. Not surprisingly, Mr. Rocca attempted to characterize the $3,000 cheque dated July 20, 1995 as representing overtime and bonus earnings for the four weeks prior to the accident. This flies in the face of Vince Alaimo's evidence that he would never pay an employee in advance.

Mr. Alaimo, at Mr. Rocca's instigation, wrote several letters attempting to explain the $3,000 cheque as overtime earned in the four weeks preceding the accident. I give no weight to these letters, all of which contradict each other and the payroll records.

In their testimony, Mr. Alaimo and Mr. Rocca both often described the cheques as "bonuses" or "commissions." As Mr. Rocca was primarily a salesperson, I find that the cheques can best be characterized as commissions for paving contracts obtained by Mr. Rocca. The crucial time is when commissions are earned, not when they are paid.¹⁰ Since these commissions were paid unofficially, there are no records connecting specific amounts to specific sales or specific days. In addition, the round numbers suggest that Mr. Alaimo did not make detailed calculations of sales when determining the amount of commission owed. Despite Mr. Rocca's failure to establish the exact day when the commissions were earned, I am satisfied that I can roughly calculate how much should be included in Mr. Rocca's weekly earnings.

I am satisfied that the cheques for $5,000 and $3,000 represent gross commissions earned from the start of the season, May 1, 1995, to the date of the second cheque, July 20, 1995, a period of 80 days. I accept that Mr. Rocca worked six days a week, a total of 69 days during that period. If I prorate the commissions equally throughout this period, this amounts to approximately $116 each working day. I would attribute an additional $116 per day for each of the working days from July 12 to July 20, 1995 (seven days), which fall within the four week period prior to the accident. I conclude that Mr. Rocca earned $812 in commissions during the four weeks preceding the accident. I leave it to the parties to calculate the appropriate amount of weekly benefits.

2. Post Accident Income

The Insurer asserted that Mr. Rocca was earning or eligible to receive $200 per month from December 1, 1996 from an organization known as Scubacan, and the Insurer has deducted this amount from Mr. Rocca's weekly benefits.

Scubacan International organizes scuba diving trips to Cuba. It is owned by Tony Avella and Keith Bolender. Mr. Rocca was an acquaintance of Tony Avella, and shared their interest in Cuba. In November 1996, Mr. Rocca arranged for his mother to invest $20,000 in Scubacan, with the expectation that he would be able to work for the company in the future. In a pre-incorporation agreement between Mrs.Giuseppina Rocca and the owners, the parties agreed to incorporate the business and give Mrs. Rocca 15 per cent of the shares. The agreement also provided that Mario Rocca would be appointed an officer-at-large at a weekly salary of $200 commencing December 1, 1996. The agreement has never been revoked or amended. Mr. Rocca was rewarded with a free trip to Cuba for bringing in the investor. However, Tony Avella testified that Mr. Rocca never worked for the company nor received the $200 weekly salary. Mr. Avella was a credible witness, who did not appear to have any interest in supporting Mr. Rocca's claim for benefits. I note that Mr. Avella's evidence is consistent with a statement given to investigators in July 1997.

While Mrs. Rocca's investment of $20,000 in a scuba diving business, without any practical return to herself or her son, seems illogical, it is consistent with Mrs. Rocca's demonstrated unwavering financial and emotional support for her son. I also conclude that both Mrs. Rocca and her son subjectively believed that Mr. Rocca would be capable of resuming some work in the near future.

I conclude that, despite the pre-incorporation agreement, Mr. Rocca did not work for Scubacan in any capacity, and apart from the trip to Cuba, did not receive any remuneration from the organization. Accordingly, the Insurer is not entitled to deduct $200 per week from Mr. Rocca's benefits.

3. Was Mr. Rocca substantially disabled from performing the essential duties of his employment from August 10, 1997 (the 104 week mark) and ongoing?

Although Mr. Rocca complained of generalized pain in many areas of his body, the primary physical injuries which he claims prevented him from returning to his pre-accident duties in August 1997 were his chronic back pain and headaches. In addition, Mr. Rocca alleges that he was psychologically unable to return to work because of depression, difficulties with anger management, and concentration and memory problems.

Cause of Back Injury

An MRI performed in January 1997 revealed that Mr. Rocca has a small disc herniation at L5-S1, with no impingement on the nerve root and a large herniated disc at L4-L5 on the left side, with impingement on the L5 nerve root. The parties disagree whether these significant physical findings are related to the accident.

In addition, the Applicant argued that the Insurer should be estopped from challenging the cause of Mr. Rocca's back injury on the basis that it paid benefits until November 1997 without raising the issue of causation. However, the existence of the disc herniation did not become apparent until January 1997. In addition, Dr. Frank Lipson clearly questioned the connection between the accident and the disc herniation in his report of March 3, 1997. The Insurer is not estopped from questioning the relationship between Mr. Rocca's disc herniation and the accident.

Mr. Rocca had significant degenerative disc disease in his neck and lower back prior to the accident.¹¹ He experienced bouts of mechanical low back pain and attended a chiropractor periodically in the year prior to the accident.¹² Despite these bouts of sometimes acute back pain, Mr. Rocca worked steadily during three seasons as a salesperson and paver. In addition, the chiropractor was treating a different area than the L4-L5 lumbar spine.

At the time of the accident Mr. Rocca complained of low back pain, but sustained no fractures. By October 1995, Mr. Rocca began complaining of an increase in the low back pain, on the left side, with some minor radiation into the left leg, accompanied by a feeling of numbness.¹³ However, there were no significant neurological symptoms at that time. By the fall of 1996, Mr. Rocca's symptoms of left-sided back pain with radiation and numbness had increased.¹⁴ In December 1996, Dr. Martin Roscoe, an orthopaedic surgeon, found evidence of nerve root irritation and sent Mr. Rocca for an MRI. The MRI taken on January 29, 1997 revealed a small central disc herniation at L5-S1, with no impingement on the nerve root and a large herniated disc at L4-L5 on the left side, with impingement on the L5 nerve root.

The Insurer's expert, Dr. Frank Lipson, testified that disc herniations may occur spontaneously, if there is significant pre-existing degenerative disc disease, as there was in this case. Even relatively minor actions such as coughing can trigger the herniation. Mr. Rocca gave a history of onset of pain after coughing, which is similar to the histories given by other patients. Although trauma to the back may cause disc herniation, the symptoms of the herniation would occur relatively soon after the accident (within weeks), unless the patient was bedridden, in which case symptoms would first appear when the patient became more mobile. Dr. Lipson concluded, based on Mr. Rocca's significant pre-accident degenerative disc disease and the chronology of symptoms, that the herniation occurred in the fall of 1996 and was not related to the accident.

The Applicant's experts, Dr. Roscoe, and Dr. Ogilvie-Harris,¹⁵ orthopaedic surgeons, and Dr. Josephine Sommerville, a rehabilitation specialist with expertise in head and spinal cord injuries, agreed that, based on Mr. Rocca's chronology of complaints of back pain at the time of the accident, and the fact of being thrown from the car, it was more likely than not that Mr. Rocca injured his spinal cord at the time of the accident. Either the disc was partially herniated at the time of the accident or the impact significantly weakened the disc, making it more susceptible to herniation. This accounted for the lack of significant symptoms of nerve root irritation immediately following the accident. Mr. Rocca's complaints of increased pain and radiation in the fall of 1996 indicate that the disc at L4-L5 was likely fully herniated at the time, having been previously weakened in the accident.

I am faced with various possibilities. Mr. Rocca's pre-existing degenerative disc disease at the L4-L5 level may have spontaneously triggered the herniation of the L4-L5 disc in the fall of 1996. Alternatively, an intervening event, such as a slip in the shower, coughing, or a physical altercation during one of Mr. Rocca's trips to Cuba, triggered the herniation. Or, the accident of August 1995 injured the disc at the L4-L5 level and the weakened disc eventually herniated in the fall of 1996. I conclude that the latter scenario is more likely on a balance of probabilities.

In my view, the fact that Mr. Rocca was thrown from his vehicle indicates that his spinal cord likely suffered a significant blow at the time of the accident. Shortly after the accident, by the fall of 1995, Mr. Rocca complained of numbness and some radiation of pain into his lower leg, indicating that there was some injury to his back, probably in the nature of a small herniation which was not sufficient to cause significant symptoms of nerve root irritation. The disc eventually herniated completely on the left side in the fall of 1996. The combination of the significant blow to the spine at the time of the accident, and the signs of some nerve root impingement shortly after the accident, lead me to conclude that the accident played a material role in the ultimate herniation of the L4-L5 disc in the fall of 1996.

Is Mr. Rocca's Back Injury Disabling?

The parties dispute whether, despite the significant pathology in Mr. Rocca's back, he suffers from disabling pain. Disc herniations at the L4-L5 level, which impinge on the nerves lying adjacent to the spine, typically cause pain that travels down the leg and even into the calf and foot. There are various ways to test for this nerve root irritation during a physical examination. Typically, straight leg raising, whether from a sitting or lying position, will compress the nerve and cause radicular pain down the leg. Mr. Rocca did not consistently display these symptoms on clinical examination¹⁶ which raises the question whether Mr. Rocca's complaints of pain are related to his disc herniation.

Dr. Roscoe testified that disc herniations are likely to give rise to the type of pain reported by Mr. Rocca. In addition, Mr. Rocca was given two nerve root blocks, after which he reported relief of his symptoms. In Dr. Roscoe's view, this confirmed that Mr. Rocca's back pain was caused by the herniated disc. However, he also believed that Mr. Rocca had significant pain magnification and would not be a good candidate for surgery to relieve the herniated disc.

Dr. David Etlin, a specialist in behavioural medicine and the director of a chronic pain clinic, contradicted that evidence, testifying that studies have shown that patients with no complaints of back pain have been shown to have disc herniations. He also discounted the significance of Mr. Rocca's subjective reports of relief after nerve root blocks of the L4-L5 level, since studies have shown that patients with chronic pain report relief after any new modality. Whether the patient is really experiencing pain relief or is experiencing a placebo effect should be tested by interspersing real injections with sham injections.

I am satisfied that Mr. Rocca's pain complaints are caused in part by the large disc herniation at L4-L5. Mr. Rocca exhibited classic symptoms of the disc herniation (left sided pain with radiation and numbness down the left leg) in the fall of 1996, prior to the confirmation of the disc herniation in January 1997. It would be an extraordinary coincidence if Mr. Rocca manufactured these symptoms and then turned out to have a physical explanation for those symptoms.

However, I am also satisfied that Mr. Rocca consciously exaggerates the extent of his back pain in order to further his claim for benefits. My reasons for doubting the reliability of Mr. Rocca's pain complaints are as follows:

Credibility with respect to pain complaints

As discussed above, I find that Mr. Rocca consciously and deliberately misrepresented his financial situation in order to fraudulently obtain unemployment insurance benefits and reduce his income tax liability.

I also find that Mr. Rocca deliberately misrepresented to various assessors that he was primarily a physical labourer in the paving business, in order to bolster his disability claim, whereas I find that he was primarily a salesperson, with some paving duties.

I note as well that Mr. Rocca deliberately downplayed his pre-accident back condition, suggesting that he went to the chiropractor as a preventive measure, and as a luxury, rather than for pain. However, Dr. Dies clinical notes and records record "acute" symptoms.

Mr. Rocca reported to various assessors that he could barely walk because of pain, and often presented himself to assessors bent over because of pain. However, the surveillance taken on April 29, October 22 and 30, 1996, and on January 17 and 29, 1997 shows Mr. Rocca walking about freely, moving into and out of his car with relative ease, and bending over his car engine. He did not appear to be in significant pain, although on one occasion he did limp. In particular, Dr. Roscoe, who testified on Mr. Rocca's behalf, stated that he would be surprised if Mr. Rocca could move about freely, since he always appeared in such pain in his office.

Dr. Monte Bail, the psychiatrist scheduled to conduct a psychiatric examination on March 17, 1997, observed Mr. Rocca running approximately 50 metres outside his office. When Mr. Rocca entered the office shortly afterward, he demonstrated an extremely disabled presentation, and reported to Dr. Bail that he could scarcely walk. I have no reason to doubt Dr. Bail's description of these events, whereas I have good reason to doubt Mr. Rocca's version.

Mr. Rocca has made six trips to Cuba since the accident, in October 1995, December 1995, in the spring of 1996, in October 1996, November 1996 and December 1997 to January 1998. Some of these flights have lasted up to five hours. I find that this type of prolonged sitting would be inconsistent with Mr. Rocca's description of his pain.

Mr. Rocca demonstrated very poor effort during a functional capacity evaluation in September 1997.¹⁷

Mr. Rocca stated that as a result of his car accident he is "paranoid" about driving. Yet the investigation reports record Mr. Rocca repeatedly driving aggressively, speeding, failing to signal and not wearing his seat belt.

Conclusions on Physical Disability

In light of my conclusions about the reliability of Mr. Rocca's evidence about his symptoms, I conclude that Mr. Rocca has not established that his generalized complaints of pain and headache disable him from returning to his employment as a salesperson and paver. Despite my finding that Mr. Rocca consciously exaggerates his symptoms, I am, however, satisfied that Mr. Rocca continues to suffer ongoing pain in his back from the accident. I note that some of the video surveillance also shows Mr. Rocca walking stiffly and with a limp, which confirms the existence of some back pain. The Insurer argued that the Applicant's case turns entirely on credibility, and since Mr. Rocca's evidence is so unreliable, he has failed to establish that he is disabled from his pre-accident employment. I disagree that this case rests entirely on the reliability of Mr. Rocca's evidence. The large disc herniation, which I have found to be materially related to the accident, is objective evidence of organic impairment which is consistent with some of Mr. Rocca's reported back symptoms.

Dr. Roscoe, Mr. Rocca's treating orthopaedic surgeon, testified that the MRI results alone would contraindicate heavy physical labour, because the nerve root lying over the disc herniation would likely cause inflammation. Also, Dr. Lipson, the Insurer's medical expert, testified that Mr. Rocca could not return to paving duties because of the disc herniation, although, as discussed above, Dr. Lipson did not believe the herniation was related to the accident. I am satisfied that Mr. Rocca could not perform the physical aspects of the paving duties described above, in light of the documented disc herniation, without significant, disabling pain. Therefore, I conclude he was physically incapable of returning to the essential duties of his pre-accident employment from August 1997 and ongoing.

Mental and Emotional Impairments Resulting from the Accident

Mr. Rocca also asserted that he was not psychologically capable of returning to work as a salesperson/paver because of ongoing depression, anger control problems and cognitive impairments.

Mr. Rocca's reported difficulties with anger management were confirmed by his mother and sister and I accept their evidence that Mr. Rocca often lost his temper with them in the months following the accident.¹⁸ The records from Canadian Rehabilitative Consultants show Mr. Rocca had difficulty controlling his temper in the early days of his rehabilitation.¹⁹ In addition, Mr. Rocca was charged with assault subsequent to the accident for threatening a man in a bar with an exacto knife. Thus, I accept that Mr. Rocca did have difficulties controlling his temper immediately after the accident, although these difficulties appear to have diminished over time.

The Insurer argued that Mr. Rocca exhibited difficulties with anger management prior to the accident and his present difficulties cannot be related to the accident. The neuropsychological reports all confirmed that the head injury likely exacerbated Mr. Rocca's pre-existing difficulties with anger management. It is difficult to determine how much of Mr. Rocca's current difficulties are due to the accident and how much can be attributed to his basic, pre-existing personality. I accept that Mr. Rocca had a pre-existing tendency to be explosive and violent. However, much of the violence he demonstrated in his early life was related to his drug addiction. I am satisfied that from the time Mr. Rocca returned from Italy in 1992, he did not exhibit violent or emotional outbursts. Thus, I find that the head injury played a material role in exacerbating Mr. Rocca's pre-existing difficulties with anger control.

The question is whether his emotional or cognitive problems were disabling from August 1997. Dr. Josephine Somerville, an expert in head and back injury and neurological rehabilitation, examined Mr. Rocca and reviewed his medical history. She concluded that a variety of psychosocial impairments, including his reduced frustration level, emotional lability, impulsivity and chronic pain rendered Mr. Rocca unemployable. She did not administer any independent tests to support her conclusion. I note that her findings are based primarily on the difficulties Mr. Rocca reported to her. In light of my conclusions about the unreliability of Mr. Rocca's description of his symptoms, I give her opinion little weight.

I also give little weight to the psychiatric reports of Dr. Monte Bail, who was more concerned with attributing Mr. Rocca's ongoing symptoms to renewed narcotics abuse, than with addressing the disabling effects of Mr. Rocca's symptoms. I find his oral and written testimony contradictory with respect to disability.

In my view, the most persuasive evidence of psychological impairments resulting from the accident was given by Dr. Michele S. Macartney-Filgate, who was retained by the Insurer to examine Mr. Rocca in June 1997. She reviewed Mr. Rocca's extensive medical history, administered a battery of psychological and neuropsychological tests and interviewed Mr. Rocca. In her written report and evidence, she presented a fair and unbiased account of the evidence. She concluded that Mr. Rocca suffered a moderate head injury, which posed a risk for persisting neuropsychological difficulties. She found that Mr. Rocca did demonstrate some impairments of brain function, with respect to memory, behavioural control and depression. She readily conceded that it was difficult to separate the effects of pre-accident drug abuse and the effects of the accident. Some of her conclusions were at odds with the Insurer's position. However, regardless of the cause of the admitted ongoing impairments, Dr. Macartney-Filgate concluded that Mr. Rocca's impairments did not disable him from returning to work as a paver or a salesperson.

I accept Dr. Macartney-Filgate's opinion, which is consistent with the neuropsychological assessment performed by Dr. Paul L. Wang in December 1995 and the psychiatric DAC assessment performed by Dr. Allyson Harrison in September 1997. I note as well that Mr. Rocca has demonstrated the ability to control his temper during extensive testing and assessment as well as during cross-examination. Mr. Rocca was also able to travel frequently to Cuba without difficulty.

Conclusion on Entitlement to Benefits

I conclude that Mr. Rocca was not substantially disabled by reason of his depression, memory or concentration difficulties or anger control problems from returning to his pre-accident duties as a salesperson/paver from August 10, 1997 and ongoing. However, I find that Mr. Rocca was substantially disabled from performing the physical duties of his job as a salesperson/paver because of his disc herniation, from August 10, 1997 and ongoing. In accordance with the agreement of the parties, based on this finding, Mr. Rocca is entitled to ongoing weekly income benefits from November 7, 1997 and ongoing.

In addition, Mr. Rocca is entitled to interest, in accordance with section 68 of the Schedule.

4. Special Award

Mr. Rocca argued that the Insurer's decision to reduce weekly benefits to $185 effective May 24, 1996 was unreasonable and should attract a special award, despite the fact that the Insurer subsequently reinstated some of the benefits in June 1998.

The Insurer argued that I have no jurisdiction to order a special award, since the Insurer subsequently paid some of the benefits in June 1998. I find nothing in section 282(10) of the Insurance Act which allows an Insurer to defeat the imposition of a special award by making payment just before the commencement of the hearing. The subsection specifically refers to payments which have been "unreasonably withheld or delayed". In my view, a withholding or delaying of benefits until shortly before the hearing can attract a special award, if the Insurer's actions are unreasonable.

James Thompson, the claims adjuster, testified that the Insurer initially paid net weekly benefits of $538.59, based on the original Employer's Confirmation of Income which indicated a gross weekly salary of $880. After receiving an anonymous tip that Mr. Rocca had been receiving unemployment insurance both before and after the accident, he asked Mr. Rocca to sign an authorization to allow the Insurer to obtain his unemployment insurance file. Mr. Rocca confirmed that he had received the unemployment insurance benefits, but initially refused to sign an authorization.²⁰ Accordingly, the Insurer reduced Mr. Rocca's weekly benefits to $185 in May 1996.

Notwithstanding the suspicious circumstances surrounding Mr. Rocca's receipt of unemployment insurance benefits, the evidence does not support a finding that the Insurer had reason to doubt that Mr. Rocca was employed at the time of the accident. The Insurer had engaged an accounting firm in December 1995 to confirm Mr. Rocca's earnings. The accountant, James Hlynski, testified that he had contacted the employer, Vince Alaimo, in an attempt to sort out the conflicting evidence with respect to overtime. A letter sent by Mr. Hlynski to Mr. Alaimo on March 8, 1996²¹ indicates that Mr. Hlynski did not dispute Mr. Rocca's regular earnings, but was merely questioning the additional claim for overtime, bonus and commission.

Thus, despite the fact that Mr. Rocca admitted receiving unemployment insurance benefits prior to the accident, the Insurer had cogent evidence in May 1996 that Mr. Rocca had been employed by King City Paving at the time of the accident and was earning at least a gross weekly salary of $880. The fact that Mr. Rocca might have been improperly collecting unemployment insurance while working did not justify the Insurer's reduction of benefits to $185.

I conclude that the reduction of benefits from $538.59 to $185 from May 24, 1996 to November 7, 1997 was an unreasonable withholding or delaying of benefits.

The Insurer argued that it would have been justified in deducting the $200 post accident income from the weekly benefits of $538.59, since the pre-incorporation agreement was a sufficient basis to assume Mr. Rocca was earning $200 per week from December 1996, regardless of whether that assumption was ultimately proved correct after a lengthy hearing. The difficulty with this argument is that when the Insurer reduced Mr. Rocca's benefits in May 1996, the reason given was the receipt of unemployment insurance benefits. The Insurer never advised Mr. Rocca that an additional reason for reducing benefits was the receipt of post-accident income, thereby giving him an opportunity to explain the documents. In my view, the Insurer's argument that it had reason to believe that the Applicant was receiving $200 per week post-accident income from December 1, 1996 is an after-the-fact justification for its earlier decision to reduce benefits. Regardless of when the Insurer became aware of the pre-incorporation document, there was insufficient reason to reduce Mr. Rocca's benefits, without further investigation into whether Mr. Rocca was in fact receiving post-accident income in accordance with that agreement.

Having found that the Insurer unreasonably withheld or delayed benefits, in accordance with section 282(10) of the Insurance Act, I must order a special award. The amount which was unreasonably withheld amounted to $353.59 per week ($538.59 minus $185), for approximately 75 weeks (May 24, 1996 to November 7, 1997) for a total of $25,458.48. In all the circumstances, I conclude that a special award of $10,000, inclusive of interest, is appropriate in the circumstances.

Expenses

I remain seized of the issue of expenses, if the parties are unable to reach an agreement on this issue.

March 10, 1999

M. Kaye Joachim Arbitrator

Date