Gary Jensen v. GAN Canada Insurance Company, 1999 ONFSCDRS 52

Financial Services Commission Commission des services financiers de l’Ontario

Neutral Citation: 1999 ONFSCDRS 52 File No.: P96-00079

OFFICE OF THE DIRECTOR OF ARBITRATIONS

GARY JENSEN Appellant

and

GAN CANADA INSURANCE COMPANY Respondent

Before: Susan Naylor, Director's Delegate

Counsel: Ava Hillier (for Gary Jensen) Larry Kielbowich (for GAN Canada)

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 arbitrator's order dated September 24, 1996 is confirmed.
2. Mr. Jensen is entitled to his appeal expenses.

March 31, 1999

Susan Naylor Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF APPEAL

Gary Jensen was injured in a snowmobiling accident on January 18, 1992. At the time, he was on disability leave from his employment and receiving temporary total disability benefits ("WCB benefits") under the Workers' Compensation Act, R.S.O 1990, W. 11. The appeal concerns the amount of his weekly income benefits. It also involves whether GAN Canada can and should be ordered to pay a special award.

Under the rules in force at the time of Mr. Jensen's accident, the weekly income benefit is calculated by taking the lesser of $600 or 80% of the person's gross weekly income from his or her occupation or employment less payments for loss of income from certain sources. The regulation dictates how gross weekly income is to be determined. It is Mr. Jensen's average gross weekly income from his occupation or employment for the four or the 52 weeks preceding the accident, or a set minimum of $232, whichever is more advantageous to him.

For many people, the 52 week time-frame may be reasonably representative of their usual earnings picture; others may benefit from the shorter snapshot of four weeks. Because Mr. Jensen was disabled from work for much of the time, however, his total employment earnings for the year were substantially reduced, but the reduction was made up, at least in part, by his WCB benefits. He argues that unless the lost time or the replacement income is factored into the income equation, the level of compensation he receives will not fairly reflect his real earnings picture.

There are three possible scenarios under consideration:

A. Divide the total income (not including WCB benefits) by the full four and 52 weeks, including periods of disability.

This is the Vo approach¹ and the one adopted by the arbitrator. It requires all 52 weeks to be included, whether worked or not. It would result in a benefit of $180.60, once Mr. Jensen's WCB benefits stopped.

B. Divide the total income (not including WCB benefits) by the number of weeks actually worked in the four and 52 weeks, so excluding periods off-work in the averaging period.

This the Scavuzzo approach² and Mr. Jensen's preferred result. It essentially allows income to be extrapolated over the weeks worked. It would result in a benefit of $593.72 once his WCB benefits stopped.

C. Divide the total income (including WCB benefits) by the full four and 52 weeks including periods of disability.

This is Mr. Jensen’s fall-back position, which would leave him with a gross weekly income of $391.94, once his WCB benefits stopped.

Because there was a conflict in the cases, Mr. Jensen’s appeal was put on ho[d until the appeal in Vo and several other cases were concluded. No arbitration or appeal decision to date has treated temporary total disability benefits as income from employment.

II. BACKGROUND

Mr. Jensen, who was 36 years old at the time, suffered multiple injuries in the accident, including serious bilateral knee injuries. Despite medical and rehabilitative intervention, he has been left with significant residual disability in both knees and a disheartening prognosis of further degenerative changes.

Mr. Jensen worked for a welding company called O'Rourke Welders. On May 22, 1991, he crushed his great left toe in an on-the-job accident when he dropped a heavy weight on it. He attempted to go back to restricted duties between August 26, 1991 and September 3, 1991. Other than that, he was on disability leave for the eight months up until the automobile accident and receiving WCB benefits of $463.77 (subject to indexation) a week. He remained an employee of the company throughout this time.

Mr. Jensen was scheduled to have reconstructive surgery on his toe in early February 1992, but it was put off because of his injuries from the automobile accident. He continued receiving full temporary total disability benefits for several weeks, but the Workers Compensation Board then cut them in half under a Board policy that allows benefits to be reduced if the worker is unable to participate in rehabilitation for non-work-injury-related reasons. In December 1992, Mr. Jensen's WCB benefits were cut off altogether. The Board explained its decision in a letter dated December 7, 1992, which said:

Medical reports from your doctor have indicated that your compensable injury will be 100% with surgery. Your non-compensable surgery [Mr. Jensen's right knee operation] did not occur until November 9, 1992. The delay in treatment does not appear to be reasonable and therefore, I have decided to terminate your benefits as of one week from the date of this letter. Please advise the Board as soon as you are available for treatment of your compensable condition.

In 1990, the last full year he worked, Mr. Jensen earned just over $32,0000. In the 52 weeks before the accident, he received $34,538.22. Of this only $9,648 was paid by his employer in respect of the four months worked. Mr. Jensen also received $9,062.00 in unemployment insurance benefits.³ His WCB benefits over the eight months came to $15,828.22.

GAN Canada initially calculated Mr. Jensen's income base by dividing his pay from O'Rourke Welders by the number of weeks he worked there in the year before the accident (i.e. the Scavuzzo approach)⁴ This left him with maximum accident benefits of $600 once his workers' compensation benefits stopped.⁵ GAN Canada cut off his statutory accident benefits altogether as of March 22, 1995 on the basis that he did not meet the stricter post-156 week disability test, (this decision forms the basis of his claim for a special award). GAN Canada later changed its mind about his entitlement and reinstated benefits around the first week of June, 1996, but it changed the calculation to the Vo approach of averaging the income over the full year. This left Mr. Jensen with only $185.60 a week, based on the set statutory minimum. The arbitrator agreed with GAN Canada's new calculation, but refused to allow it to recover any benefits that had been already paid. This latter ruling has not been appealed.

III. ANALYSIS AND CONCLUSION

A. The Rules

The rules governing the payment of weekly income benefits are set out in s. 12 of the Statutory Accident Benefits Schedule - Accidents before January 1, 1994, R.R.O. 1990, Reg. 672 ("the Schedule"). Subsection 12(4) provides that the weekly benefit will be the lesser of $600 or

b) 80 per cent of the insured person's gross weekly income from his or her occupation or employment, less any payments for loss of income, except Unemployment Insurance benefits,

(i) received by or available to the insured person under the laws of any jurisdiction or under any income continuation benefit plan, or

(ii) received under any sick leave plan.

Under s. 12(7) 1,⁶ a person’s gross weekly income is deemed to be the greatest of the three figures:

i. his or her average gross weekly income from his or her occupation or employment for the four weeks preceding the accident,

ii. his or her average gross weekly income from his or her occupation or employment for the fifty-two weeks preceding the accident,

iii. $232.

Income benefits under s. 12 cover those who meet set employment-related qualifications and suffer a substantial inability to perform the essential duties of their employment or occupation. Subsections 12(2) and (3) set out the qualifications:

(2) 1. He or she must have been at the time of the accident,

i. employed or self-employed,

ii. on a temporary lay-off, or

iii. entitled to start work within one year under a legitimate offer of employment made before the accident and evidenced in writing.

2. ....

(3) A person who was unemployed and who was not self-employed at the time of the accident is qualified to receive a weekly benefit under subsection (1) if he or she was employed or self-employed for any 180 days in the twelve-months period before the accident, and if he or she as a result of and within two years of the accident has suffered a substantial inability to perform the essential tasks of the occupation or employment in which he or she spent the most time during the twelve-month period before the accident.

Under these rules, a person must have been employed or self-employed, on a temporary lay-off, or have had a definite offer of employment at the time of the accident. Persons who are unemployed also qualify if they have been employed or self-employed for 180 days in the year before the accident.

Those who do not qualify under s. 12 are eligible for disability benefits under s. 13 ("benefit if no income"). These benefits are not related to an inability to perform job duties, but to the performance of the person’s normal, essential tasks. They are not earnings-related but paid at a flat $185, less deductible payments.

This appeal has two parts: firstly, what is the period over which Mr. Jensen’s income from employment for the four and 52 weeks before the accident must be averaged (the denominator in the equation); secondly, what is included in his income from employment and attributable to the four and 52 weeks before the accident (the numerator).

In construing the provisions, the usual principles of statutory construction apply. Mr. Justice Laskin summarises the applicable principles in Bapoo v. The Co-operators General Insurance Company, (1997), 1997 CanLII 6320 (ON CA), 36 O.R. (3d) 616 (C.A) at page 620:

The modern approach to statutory interpretation calls on courts to interpret a legislative provision in its total context. The court’s interpretation should comply with the legislative text, promote the legislative purpose and produce a reasonable and just meaning...

The statutory accident benefits scheme set out in the Schedule is part of a broader package of reforms, in which access to damages in tort was restricted in return for more generous accident benefits.⁷ [Since then, the automobile accident compensation scheme has undergone two fundamental changes affecting both the fault and no-fault dynamic. However these later changes do not apply to this case].

Income benefits under s. 12 are intended to provide those injured in automobile accidents with speedy, adequate and secure income maintenance when they are unable to work. In Bapoo, Justice Laskin identified a number of legislative purposes underlying the rules determining the level of benefit. These included: ensuring a fair or adequate level of income replacement, seeing that applicants are not overcompensated and that automobile insurers pay last by taking other sources of income replacement into account, and ensuring that benefits will be delivered quickly and efficiently by means of a system that is administratively manageable.

The rules balance these objectives. They make concessions for the sake of administrative simplicity. Unlike fault-based damages in the courts, the rules do not provide an individualised assessment of loss. Income benefits are broadly intended to replace income likely lost as a result of the accident within certain parameters. However, the loss is fixed strictly by reference to the person's earnings track-record in the four and 52 weeks before the accident. It is only in limited circumstances - where the person qualifies through a future job offer - that benefits are based on prospective income.

B. The Period Over Which Income Must Be Averaged

The arbitrator’s decision must be seen in the context of the conflict in the case-law about the averaging rules. Since her decision, decisions in several Commission appeals, one proceeding to judicial review, have become available. In my view, those cases largely dispose of the conflict.

In McCormi'ck and subsequently Scavuzzoj s. 12(7) was viewed as being open to two possible meanings: (a) income from employment or self-employment averaged over the four and 52 weeks, and (b) the average of the person’s income from employment or self-employment within the four and 52 weeks. At the arbitration level, the latter approach was seen as preferable because it best served the objectives of the legislation - providing an income base for calculating benefits that reflected the employment income the person likely would have earned but for the accident (up to the allowed amounts). This construction was upheld in Scavuzzo on appeal.

Scavuzzo involved someone who had been unemployed for much of the year but started a permanent job the week before the accident. In McCormick - a case involving very similar facts to those here - the claimant was on disability leave and receiving workers compensation temporary total disability benefits while awaiting surgery to repair a deteriorating shoulder injury. He was expected to make a full recovery until his automobile accident intervened. In both cases, it was felt that the claimant’s wages over the period worked provided a realistic gauge of what he would have earned in the following year but for the accident, and so of the loss resulting from it.

In Vo, the arbitrator approached the provisions from a different perspective. Mr. Vo had been employed for 33 weeks out of the 52, but was then indefinitely laid-off and receiving unemployment insurance benefits. The arbitrator distinguished Scavuzzo on the basis that Mr. Vo was unemployed and had no prospects of employment at the time of the accident but it is fair to say that his analysis of the statutory language suggests a broader application than the facts before him. In his view, the ordinary meaning of the words used and the context in which they appeared indicated that periods of unemployment were to be included, not disregarded. In particular, he noted that a few weeks' less employment would have disqualified Mr. Vo from s. 12 benefits altogether, leaving him to claim s. 13 benefits. Rather than focusing on "realistic" compensation, the central concern in Scavuzzo, the arbitrator viewed the language in the context of the scheme’s objectives to encourage prompt payment of benefits through relatively clear administrative rules, albeit at the cost of some arbitrariness.

In several previous cases,⁸ the arbitrator who determined Mr. Jensen’s case sensibly pointed out that neither the Vo or Scavuzzo approaches worked fairly in every case. Her solution was to interpret the regulation as allowing either approach to be adopted on a case-by-case basis. Time off-work within the four or the 52 weeks could be disregarded if that calculation provided the most accurate representation of the individual’s particular pre-accident circumstances, but not otherwise.

The arbitrator held however that Mr. Jensen could not disregard his disability leave. She explained her thinking at pages 10-11 of her decision:

Unfortunately, the Schedule does not compensate insured persons for loss of earning capacity, but only for loss of income. In any event, the medical evidence suggests that by the time of the motor vehicle accident, the Applicant had sustained a significant loss of earning capacity as a result of his workplace accident. The evidence suggests that the Applicant’s work-related disability is likely to be long-term, if not permanent.

The Applicant’s workers compensation benefits were reduced and subsequently terminated because he had postponed surgery on his toe. The Board’s Adjudicator implied in her February 1992 letter that benefits would be restored to the full level once the Applicant recovered sufficiently from his car accident to proceed with surgery. The Applicant has not appealed the termination of workers compensation benefits, and may still have that option, since there are no time limits on workers compensation appeals. Moreover, the seriousness of the toe injury may well warrant a non-economic loss and future economic loss award from the Workers' Compensation Board. Restoration of the Applicant’s workers compensation benefits would go some way towards fairly recognising the relative contribution of the Applicant’s workplace injury and motor vehicle accident to his current disability.

Mr. Jensen is puzzled by these findings. He submits that the arbitrator wrongly assumed that his earning capacity was seriously diminished by his workplace accident and that his recourse was with the Workers Compensation Board. However, it was never in dispute that he would have been able to perform his regular duties shortly following the planned surgery had the automobile accident not intervened. Both parties proceeded to arbitration on this assumption and as a result did not file much evidence about the toe injury.

I suspect the arbitrator was trying to make sense of the relationship between the two benefit systems and to be constructive in pointing out other possible avenues of redress. Nonetheless, Mr. Jensen’s concerns are understandable in light of the parties' understanding going into the hearing and the limited evidence that was presented. The arbitrator’s conclusions are not obvious from the documents before me⁹ and I note that GAN Canada did not attempt to defend them.

However, even if the arbitrator’s factual findings in this regard are wrong, I ultimately arrive at the same outcome about the calculation of Mr. Jensen’s benefits.

Mr. Jensen points to an acknowledged ambiguity in the statutory language and argues that such ambiguity entitles an adjudicator to apply the "weeks-worked" formula in appropriate cases. He submits that he was employed up to the time of the automobile accident and would have been able to work but for it. Therefore, like McCormick but unlike Vo and the cases that follow it, his average income for the months he worked provides a fair and reliable basis for calculating his compensation. He further submits that if the approach adopted in Vo is not distinguishable on the facts, I should find that it is wrong.

In most cases, arbitrators have favoured the Vo approach of dividing the person’s total gross income for the relevant periods by the full four and 52 weeks immediately before the accident. Court cases have gone the same way. In Descarie v. Personal Insurance Co. (1995), 1995 CanLII 7051 (ON CTGD), 23 O.R. (3d) 457 (Gen. Div.), Justice Forget commented "if the legislature had meant "weeks actually worked" these words could have very easily been used by the drafter of the Schedule" (p. 463). In Youden v. Economical Insurance Co. (1996), 1996 CanLII 8010 (ON CTGD), 29 O.R. (3d) 411 (Gen. Div.) Cameron J. stated "there is no indication of the number to be used in the denominator in determining the average other than the four or the fifty-two."

The arbitrator’s decision in Vo was subsequently upheld on appeal. Although the Director of Arbitrations (like Justices Forget and Cameron) viewed the wording of the provision as ambiguous, she preferred the arbitrator’s construction to that adopted in Scavuzzo. At page 14 of her decision, she explained:

The section refers to income "for the" 52 weeks. It does not qualify the time period in any way. It is an earnings based picture: an individual’s circumstances, employed or not at the time of the accident (or as here on lay-off) are subsumed by the intent to provide compensation in the future on a reasonable historical perspective.

The argument that it is only the "income from employment" in those weeks during which a claimant is engaged in employment are averaged, requires a reading in of a limiting factor which I do not accept: namely, the further subdivision of the time period into categories of employment and unemployment. When coupled with the qualifying subsection 12(3) and the provisions of section 13, it is my view that the objects of the Schedule are best met, and the wording of the section given its most obvious meaning, when the gross weekly income of the period is divided by 4 or 52 weeks, as may be the case.

The Director specifically rejected the view that s. 12(7) 1. allowed an individualised determination in which the formula to be applied varied on a case-by-case basis. Justice Cameron expressed a similar view in Youden. They felt that the provision simply was not susceptible to that construction.

The Director subsequently applied the Vo reasoning in State Farm Mutual Automobile Insurance Company and Kotsiakos (OIC P-002354, January 18, 1998) rev'g (OIC A-002354, June 21, 1995) and in Alpina Insurance Company and Mouawad (OIC P-003226, April 7, 1998) aff'g (OIC A-003226, June 30, 1994).¹⁰

Kotsiakos involved similar facts to those in Scavuzzo - an applicant who had started work a week before the accident. The Director of Arbitrations reversed the arbitrator who concluded that Mr. Kotsiakos could base his benefits on his week’s average earnings.

In Mouawad, the applicant was injured in a work-related accident about two months before his automobile accident. He continued receiving temporary total disabilty benefits, as well as other payments, and ultimately was awarded a future economic loss award by the Workers' Compensation Board. On appeal, the Director agreed with the arbitrator that Mr. Mouawad could not average his earnings over the weeks he actually worked in the previous year or use the last four complete weeks' worked. She adopted her reasoning in Vo. In January 1999, the Ontario Court (Divisional Court) (Mouawad v. Ontario Insurance Commission et. al (Jan. 4, 1999), Court File No. 980/98) upheld this decision on judicial review. Its endorsement reads that, regardless of the applicable standard on review, the Director was correct in her interpretation.

The fact that the statutory wording in issue may be capable of more than one meaning does not relieve an adjudicator from determining, when the language is viewed in its total context, which of those meanings is correct. It is always necessary to address whether principles applied in one case apply in another factual context. However, I agree that the statutory language cannot be stretched so far as to make the formula to be applied a matter of discretion. I also cannot see how the language of s. 12(7) 1. is susceptible to an interpretation that provides for a different basis of calculation in Mr. Jensen’s case than Mr. Mouawad's.

Mr. Jensen’s position is consistent with the approach taken in Scavuzzo and essentially on all fours with the facts in McCormick. However, these were early cases. I now have the benefit of the cumulative reasoning in later cases, including cases that were not available to the arbitrator. While I am free to disagree with decisions at the Commission appeal level even if they cannot be distinguished, Mr. Jensen has not persuaded me that the reasoning adopted in those cases is faulty or inapplicable here. It gives the statutory language its most obvious and straightforward meaning. I also accept that it is consistent with the statutory context and with the overall legislative objectives that the rules attempt to balance. Those objectives include speedy and efficient benefit delivery through manageable and generic administrative rules.

Therefore, while I disagree with some aspects of the arbitrator’s reasoning, I agree with the ultimate result requiring Mr. Jensen to average his income from employment over the full four and 52 weeks before the accident, not the lesser period worked.

C. Temporary Total Workers' Compensation as Income from Employment

The issue of whether the temporary total disability benefits Mr. Jensen received in respect of the four and the 52 weeks before the accident can be viewed as income from his employment for those periods under s. 12(7) is, perhaps, more difficult. Mr. Jensen does not dispute that the benefits he received in respect of periods after the accident are properly deductible as payments for loss of income pursuant to s. 12(4)(b)(i).

Mr. Jensen did not raise this issue at the arbitration level; in fact he took the position that his WCB benefits were not income from employment. Like many cases, the focus was on the Vo-Scavuzzo issue. Reasoning in the arbitration decisions that have commented on the issue has been relatively brief; in some of those cases, like this one, it was not strictly in dispute.

Workers compensation benefits are paid under a statutory scheme intended to protect employees against the consequences of injuries in the workplace including an inability to work. They are a form of social insurance,¹¹ administered through the Workers Compensation Board. The scheme covers employees who have been injured in an accident arising out of their employment. Benefits are funded by employers collectively through payroll assessments and, and in the case of certain large employers, individually. The funding arrangement is the trade-off for giving employers immunity from tort liability.

The benefits include the payment of compensation to employees who suffer temporary total disability.¹² The amount is fixed at 90% of the worker’s net average earnings. Temporary total disability benefits are paid for a limited period of time. After twelve months of temporary disability or if there is a permanent impairment, the person becomes eligible for a future economic loss award.¹³ Workers who suffer permanent impairment are also entitled to a non-economic loss award.

The Schedule does not define the term "income from employment". Neither it nor the terms "employment," "employed," "self-employment," or "occupation" are defined. "Income from [the person's] occupation or employment" is broader in scope than the words "wages," "profits," "earnings," or "remuneration", although it undoubtedly encompasses all those things. In a number of decisions, arbitrators have described the term as denoting a return for work rendered or income earned through employment or self-employment. In Bress and State Farm Insurance Companies (OIC A-000191 & A-000192, March 23, 1992) it was stated that "income from occupation or employment" should be broadly defined

"so as to capture the real return from employment or self-employment generated to an applicant in these periods...... the word income implies that something - money, money's worth, a thing of some value, greater command over goods and services - comes into an applicant's hands or accrues to him or her in return for their employment or occupational endeavours."(p. 14)

This statement was approved at the appeal level in Croke and Wawanesa Mutual Insurance Company (OIC P003692, October 11, 1992) and has been cited in numerous arbitration decisions. It echoes the definition of "income" in Black's Law Dictionary as the "return of money [inter alia] from one's business or labour... gain, profits, salary, wages, etc."

It is acknowledged that Mr. Jensen was employed throughout the period he was receiving temporary total disability benefits. Those benefits were intended to continue his income stream while he was unable to work and they are income he received during the period he was employed. Given the criteria for benefits, there clearly is a very strong connection between workers compensation benefits (and especially temporary total disability benefits) and employment. They can be viewed as paid in respect of employment and ultimately part of the return for it. Mr. Jensen argues that failing to recognise his benefits as income from his employment ignores the reality of his situation. This is all the more so since he would have been able to perform the duties of his employment but for the automobile accident. He also argues that his WCB benefits should be included as income from employment if they are to be deducted as a payment of loss of income. Otherwise, the result is unfair.

Mr. Jensen referred to the treatment of workers compensation under the federal Income Tax Act in support of his position; however, I do not find those provisions particularly helpful. Workers' compensation is included in the income of the person who receives it by virtue of s. 56(1)(v) of the Income Tax Act, dealing with miscellaneous items including pension benefits, unemployment insurance, scholarships and social assistance under the heading "other sources of income". It is deducted under s. 110(1)(f) so no tax is payable on those amounts. It is not clear to me that this adds anything to the analysis.

Although WCB benefits might not fall within the obvious meaning of the term "income from employment," as commonly used, I agree that it would not be stretching the language unreasonably if the context supported such a reading. The problem is that this version of the regulations gives few clues that is what was intended.

Temporary total disability benefits are in the nature of income replacement. They have been held to be deductible under the terms of s. 12(4)(b)(i) whether they relate to the automobile accident or to a previous condition.¹⁴ In Mouawad, the Divisional Court confirmed that a future economic loss award under the WCA is also deductible. However a permanent disability pension based on the degree of physical impairment, - the pre-1990 system of compensation for permanent injuries - is not,¹⁵ nor is a vocational supplement intended to encourage an injured worker to participate in an authorised rehabilitation program.¹⁶ The subsection specifically exempts unemployment insurance benefits from being deductible.

In a number of decisions, arbitrators have declined to include sources of income replacement such as workers' compensation in income from employment for the purposes of s. 12(7), in light of these provisions.

Jolin and Jevco Insurance Company (A-002187, October 27, 1993), supplementary decisions issued on March 31, 1994 and April 14, 1994), involved an applicant who had been injured in three accidents over two years. It was agreed that he remained employed and so qualified for benefits under s. 12. The arbitrator held that his temporary total disability benefits and Schedule C accident benefits from the first two accidents could not be treated as income from employment in calculating his statutory accident benefits from the third. In her view, the legislative scheme clearly distinguished revenue which is treated as "income" from the kind of revenue characterised as "payments for loss of income", and that treating a benefit as both was "not a logically consistent outcome." She acknowledged that the outcome might appear harsh or inequitable but concluded that it was mandated by the regulation. Other cases dealing with WCB benefits have adopted the same approach.¹⁷ Unemployment insurance benefits likewise have been held not to be "income from employment"¹⁸ as have statutory accident benefits.¹⁹

The distinction between compensation for services and income replacement has been made in other statutory contexts. In Minister of National Revenue v. Visan (1983) 46 F.C. 820, (F.C.C.A.), the issue was whether someone who was on long term disability benefits through an employment benefit plan was eligible for special severance benefits under the Unemployment Insurance Act. The discussion turned on whether the benefits were "remuneration" under that Act, a narrower term than the one under consideration here. After looking a dictionary definitions of the word, the court held they were not. It said at page 23:

..the character of the payment is determined by its nature. Applying that test to the payments made to the respondent it is clear that they were not made for services rendered but, in a sense, were the opposite of payments of that kind, viz., to compensate the respondent in part, for the loss of payments for services which he would have rendered had he not been prevented from doing so by his disability. As was said in R. v. Postmaster General [1876] 1 Q.B.D. 658 at 663, "remuneration ...means a quidpro quo. If a man gives his services, whatever consideration he gets for giving his services seems to me a remuneration.

I agree that the regulatory scheme seems to distinguish between income from employment and payments like workers compensation indemnifying a loss of income from employment or an occupation. While it is not necessarily a compelling indication of legislative intent, the apparent distinction makes it more difficult to read the regulations in the way Mr. Jensen suggests.

Mr. Jensen submits that he should be allowed to include his WCB benefits as income from employment because the payments received after the accident are deductible and because the calculation, otherwise, does not fairly reflect his earnings loss. I have considerable sympathy for his position. It is tempting to view the regulation as he suggests. However, such a reading must be compatible with the contextual framework. Also, the determination of gross weekly income under s. 12(7) and the calculation of deductions from gross weekly income under s. 12(4)(b) speak to different time-frames. The first is retrospective and fixed at the date of the accident; the second is prospective and can be adjusted. There are many fact situations to which the rules must apply and the interplay of the provisions affects cases differently.

Case-law under Schedule C to the 1980 Insurance Act, the predecessor to the 1990 reforms, provides some support for Mr. Jensen’s position. In Pineda v. The Co-operators Group Ltd. (1985), 1985 CanLII 2094 (ON HCJ), 12 C.C.L.I. 275 ( H.C.J.) the plaintiff had been disabled in a prior workers' compensation accident. Cromarty J. confirmed that she qualified for a loss of income payment because she was employed at the date of the accident even if she was not at work. He held that continuing workers compensation benefits were deductible as a "payment received by or available to [her] from... employment or occupation subsequent to the... accident", to avoid double indemnity. Pineda was followed in Ciolfi v. The Continental Insurance Company 1988 CanLII 4763 (ON HCJ), [1989] ILR 1-2396 (S.C).

However, the language and statutory context is different under Schedule C. Under its terms, benefits are paid for the loss of income from employment while the person is disabled and is based on the lesser of $140 or 80% of the person’s gross weekly income from employment, less deductible payments for loss of income. "Gross weekly income" is not defined, hence judges applying those rules have more flexibility. In Pineda, the plaintiff’s benefits were fixed by reference to her contract rate, not the workers compensation benefits. I also note that, under Schedule C, post-accident employment payments are deducted from gross weekly income. The result is essentially the same as it would be under the collateral benefit deduction. That is not the case under the Schedule, where post-accident income is deducted from the benefit and not from gross weekly income, and at 80%.

The fact that Mr. Jensen remained under a subsisting contract of employment cannot be determinative of the character of the payments he received. Temporary total disability benefits are paid whether or not an employment relationship continues. A person in receipt of such benefits may or may not be employed, it all depends on the circumstances.²⁰ They may qualify for s. 12 benefits, but receive temporary total disability benefits in respect of periods within the four and 52 weeks when they are unemployed.

There are also those who fail to meet the qualifications for eligibility for s. 12 benefits.²¹Including WCB benefits as income under s. 12 results in a significant difference in treatment as between persons who otherwise may have received the same WCB benefits under the same conditions for the same period of time. The regulations clearly do not treat those eligible under s. 12 and s. 13 equally. They are very different benefits. They specifically contemplate that insureds who have the requisite record of 180 days employment or otherwise qualify may include income from any employment or self-employment for the full 52 weeks in calculating their benefit, whereas those who fall short of the qualifications do not get credit for any earnings. Therefore, differences in treatment are not necessarily significant. However, the degree of difference in the treatment of temporary total disability benefit recipients bears some consideration in trying to decipher legislative intent.

I conclude that the version of the Schedule that applies to Mr. Jensen does not contemplate treating temporary total disability benefits received in respect of the four and 52 weeks before the accident as income from employment for the purposes of s. 12(7). In my view, the arbitrator was right when she described the effect of the statutory provisions on Mr. Jensen’s statutory benefit rate as reflecting "his pre-accident employment income but not the workers' compensation or unemployment insurance benefits he received in the year before the accident" (p.11).

The Scheduler drafters, in successor regulations, addressed some of the problems raised in this case in the way benefits are calculated under the rules. However, Mr. Jensen cannot take advantage of these rules because they only apply to accidents which occurred on or after January 1, 1994. The statutory accident benefits regime applying to accidents after December 31, 1993 and before November 1, 1996²² specifically allows the inclusion of temporary total disability benefits in calculating a person’s income from employment. It also allows some extrapolation of earnings and changes the deduction rules. The rules were changed again for accidents applying on or after November 1, 1996.²³ These more recent rules provide another set of definitions and provisions. I stress that, because of the different statutory context, the reasoning in this case does not apply to a case falling under these later rules.

IV. Special Award

Mr. Jensen also appealed the denial of his claim for a special award under s. 282(10). That provision allows for the payment of up to 50% of any benefits awarded, plus compound interest, if the insurer is found to have unreasonably withheld or delayed benefits. It reads:

If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the ....Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.

Mr. Jensen’s claim for a special award relates to the suspension of his benefits for fourteen months between March 22, 1995 and the first week in June 1996. Mr. Jensen was sent an Assessment of Claim form dated April 12, 1995, notifying him of the reasons for the stoppage. It indicated that medical reports and tests (which were unspecified) confirmed that Mr. Jensen did not meet the post-156 week disability test. Although GAN Canada's representative testified at the hearing, her testimony did not apparently bear on the reasons for the termination.

Several days before the arbitration hearing into Mr. Jensen’s continued entitlement, GAN Canada conceded that Mr. Jensen qualified for ongoing benefits and agreed to reinstate them. Therefore, this aspect of the hearing did not proceed. Shortly after the hearing concluded, Mr. Jensen received a lump sum payment bringing his benefits up to date at the $185.60 rate together with interest.

Mr. Jensen pressed his claim for a special award at the arbitration on the basis that his benefits had been unreasonably withheld or delayed during the period of the suspension. The arbitrator agreed that the termination was unreasonable. She noted the absence of medical evidence to support it. She also stated that even though she rejected Mr. Jensen’s position in respect to the averaging period, the suspension could not be justified as a set-off of benefits because repayment was not available where an overpayment was based on a legitimate dispute between an applicant and an insurer. She concluded, however, that she had no jurisdiction to order a special award because GAN Canada agreed to pay arrears and ongoing benefits, together with interest, shortly before the hearing. She relied on the words "in addition to awarding the benefit and interest to which an insured person is entitled under the Schedule", saying since she awarded no benefits and interest, she was unable to order a special award.

GAN Canada defends the arbitrator’s reading of the provision. It takes the position that unless the arbitrator finds that there are benefits owing at the time of his or her disposition of the case and orders them to be paid, he or she has no jurisdiction to order a special award. This is because a special award can only be made in addition to an award of benefits and interest to which the person is entitled and it is based on the amount to which the person was entitled at the time of the award plus interest on all amount then owing.

GAN Canada relies on reasoning in numerous cases starting with Whitney and the Co-Operators (OIC A-001005, March 31, 1993) aff'd (OIC P-001005, July 11993) in which it has been said that no special award is payable unless the applicant has been found entitled to benefits. GAN Canada also relies on Bapoo and the Co-operators General Insurance Company, (OIC A-006212, October 3, 1994), which held that the applicant’s claim for a special award "cannot be maintained in arbitration in the absence of a substantive claim for benefits".

A closer review indicates that many of the cases are either distinguishable or do not stand for an absolute rule. In most of the cases cited, no underlying entitlement was found; therefore there was no basis on which to grant an award that is premised on benefits having been unreasonably withheld or delayed.²⁴

In this case, however, it is conceded that benefits are owing.

Special awards have been ordered where the insurer conceded entitlement in the middle of the hearing. In Quarrington and Jevco Insurance Company (OIC A-010804, July 17, 1995) the insurer agreed to pay a claim for dental expenses the day before the hearing. The arbitrator concluded that she had authority to grant a special award and awarded a lump sum of 40% of the expense. That approach has been followed in several other cases.

The meaning of s. 282(10) is not straightforward. It is capable of being read a number of ways. The threshold inquiry is whether payments have been unreasonably withheld or delayed. In ordinary parlance, payments "withheld" means payments not granted, payments "delayed" means payments paid late. It is difficult to see how the addition of "delayed payments" can be given any content if late payment strips the arbitrator of jurisdiction to make an award.

A special award under s. 282(10) is not part of the schedule of benefits.²⁵ It is an aspect of an arbitrator's authority in relation to adjudication of a person’s right to benefits or the amount of benefits. However, cases dealing with a party’s right to withdraw an application or appeal have held that a party is not free unilaterally to end a proceeding.²⁶ It would seem to follow that the unilateral action of GAN Canada in agreeing to pay the benefits in issue does not necessarily dispose of the question of a special award. It is, of course, different if the parties mutually enter into a legitimate settlement which terminates all or part of the proceeding.

Whether or not the arbitrator unnecessarily restricted her jurisdiction, this is not an appropriate case to intervene on appeal. Defining the subject of a special award, particularly where entitlement ceases to be an issue, is critical. The material before me indicates that Mr. Jensen sought a special award based on the continuing dispute over the proper method of calculation. It assumed that benefits were owing either because the method of calculation used was wrong or because GAN Canada was prevented from changing it. The arbitrator’s decision seems to have been directed towards this position. This brings her refusal to order a special award more in line with the reasoning in cases like Whitney in which no underling entitlement was found. In the circumstances, there is insufficient reason to interfere with her conclusion that no special award is payable in the particular circumstances of the case or to order a special award under my own authority to do so.

V. Expenses

Mr. Jensen’s appeal is unsuccessful but had merit. In accordance with the usual principles governing appeal expenses in such cases, he is entitled to his appeal expenses.

March 31, 1999

Susan Naylor Director's Delegate

Date

Footnotes

1. 1The approach first taken in Vo and Maplex General Insurance Company (October 4, 1993, OIC A-002777) aff'd in part (OIC P-002777, December 12, 1997)
2. 2The approach first taken in McCormick and Economical Mutual Insurance Company (A-00139, October 2, 1991) and endorsed, on different facts, at the appeal level in Scavuzzo and Canadian Home Assurance Company, (OIC P-000626, June 19, 1992), aff'g (OIC A-000626, March 18, 1992)
3. 3Documents indicate these were apparently repaid
4. 4The arbitrator notes that the calculation should have been on the basis of 13 weeks worked, rather than 12, when the isolated week at the end of August is taken into account. She details Mr. Jensen's payment history, including the various adjustments that were made to his benefits.
5. 5The arbitrator notes that this should have been $593.72, once the extra week worked was taken into account.
6. 6Subsection 12(7)2 allows someone with an offer of future employment to use the gross weekly income payable under the contract of employment if greater than that derived under the formula in s. 12(7) 1.
7. 7Meyer v. Bright (1993), 1993 CanLII 3389 (ON CA), 15 O.R. (3d) 129 (C.A.)
8. 8Singh and Wellington Insurance Company, (OIC A-004139, June 24, 1994); Ferrari and Royal Insurance Company (OIC A-007313, September 8, 1994).
9. 9I do not have the benefit of a transcript but it is not suggested that the arbitrator's conclusions rested on Mr. Jensen’s testimony. Although he had been off work for a substantial period of time following his workers compensation injury, by December 1991 surgery had been booked which according to his surgeon's letter of December 11, 1991, would have corrected any impediment to his returning to work. In a letter the following year, the same consultant (who also treated Mr. Jensen’s automobile injuries), described the proposed surgery as minor and confirmed that the plan to operate was shelved because of the severity of Mr. Jensen’s subsequent injuries. This appears to be consistent with the WCB adjudicator’s view that Mr. Jensen’s toe injury would be fully corrected with surgery. The WCB letters suggest that the WCB benefits might be re-instated for the surgery and a post-operative recovery period. However, I do not think they can be read as going any further than this. In contrast, the medical evidence indicates that the automobile accident left Mr. Jensen seriously injured, with the probability of degeneration over time and the prospect of permanent limitations.
10. 10See also Lunn and State Farm Mutual Automobile Insurance Company (Appeal Order #2) (OIC P-96-00070, December 8, 1998) following Vo.
11. 11T.G. Ison, Workers' Compensation in Canada, 2d ed.,( Toronto: Butterworths, 1989)
12. 12WCA s. 37 (1)
13. 13WCA s. 43
14. 14McCormick; Morin and The Personal Insurance Company of Canada (OIC P-000468, February 26, 1993) (application for judicial review dismissed). Morin dealt with the deduction of CPP benefits under s. 13. The case was decided before Cugliari v. White et al (1996), 1996 CanLII 11778 (ON CTGD), 31 O.R. (3d) 42 (Ont. Div. Ct.) upheld 1998 CanLII 5505 (ON CA), 38 O.R. (3d) 641 (C.A.) which ruled that CPP payments are not payments "for loss of income" under s. 267(1) of the Insurance Act. That point was not argued in Morin. See also Levata v. Simcoe and Erie General Insurance Company [1992] I.L.R. 1-2868 (Ont. Gen. Div.).
15. 15Pallotta and Alpina and Zurich Insurance Company (OIC A-000808, April 22, 1992); Caringi and Wawanesa Mutual Insurance Company (OIC P-000860V, November 4, 1996); Shehadeh and The General Accident Assurance Company of Canada (OIC P-01177A, February 21, 1996); Raickovic v. Gore Mutual Insurance Company (OIC A-002533, May 26, 1993).
16. 16Mouawad, aff'd on this point as correct on appeal.
17. 17e.g. Mouawad; Thorning and Allstate Company of Canada, (OIC A-010617, October 9, 1996)
18. 18Vo (this aspect of the decision was not appealed); Boodhai and Allstate Insurance Company, (OIC A-004002, November 21, 1994)
19. 19Jolin (supra); Nand and State Farm Mutual Automobile Insurance Company(OIC A-001893, May 28, 1993); Natana and Zurich Insurance Company, Natana and Allstate Insurance Company of Canada, OIC A-003297 and A-003280, November 15, 1993); Gibson and York Fire & Casualty Insurance Company, OIC A-006150, January 4, 1995)
20. 20Raickovic and Gore Mutual Insurance Company, (OIC A-002533, May 26, 1993); Thorning and Allstate Insurance Company, (OIC A-010617, October 9, 1996); Moussali and Allstate Insurance Company of Canada, (OIC A-July 23, 1997).
21. 21There is a limited "unpaid, principal housekeeper" benefit but no equivalent to the s. 13 benefit under Schedule C.
22. 22Statutory Accident Benefits Schedule - Accidents after December 31, 1993, O.Reg. 776/93, as amended.
23. 23Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996 O.Reg. 403/96 , as amended.
24. 24Whitney is a case in point. In that case, I criticised the insurer's refusal to release a psychiatric report to the applicant or to follow-up on, its recommendations, stating that I would have found it acted unreasonably for the purposes of s. 282(10) but had no authority to make such an award since I found no benefits were owing. However, there was no link between the insurer’s conduct in withholding the report and the withholding of benefits since the applicant was found to have no further entitlement to s. 13 benefits and the claim being advanced did not involve a claim for expenses for specific treatment that had been withheld. Bapoo is also distinguishable. The applicant had chosen to go to court on the issue of his entitlement to benefits, while pursuing a stand-alone application for a special award and interest at the Commission. Clearly, the claim could not succeed because it depended on the successful outcome of adjudication on the merits of his right to benefits.
25. 25Leitgeb and Allstate Insurance Company of Canada, (November 16, 1995, OIC P-012407)
26. 26Chapman and Allstate Insurance Company of Canada; Chapman and Wellington Insurance Company, (OIC P-001897 & P-001989, June 10, 1994)