Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 1999 ONFSCDRS 58

Appeal P98-00045

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ZURICH INSURANCE COMPANY

Appellant

and

JOSE HERNANDEZ

Respondent

Before:

David R. Draper, Director's Delegate

Counsel:

Kenneth M. Wright (for Zurich Insurance Company)

William A. Garay (for Jose Hernandez)

APPEAL ORDER

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

The appeal is allowed and paragraphs 1, 2 and 3 of the arbitration order, dated August 28, 1998, are rescinded.
Unless the parties agree otherwise, a new arbitration hearing will be held before a different arbitrator appointed by the Director.
Mr. Hernandez is entitled to his reasonable appeal expenses, payable by Zurich Insurance Company.

April 12, 1999

David R. Draper Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This is an appeal by Zurich Insurance Company ("Zurich") from an arbitration decision dated August 28, 1998. Zurich claims the arbitrator erred in fact and law in concluding that Jose Hernandez is entitled to income replacement benefits ("IRBs") from February 27, 1996, and in ordering a special award on the basis that it unreasonably withheld or delayed the payment of benefits.

II. BACKGROUND

The claim arises out of an accident on November 15, 1994, when Mr. Hernandez was hit by an automobile while riding his bicycle. At the time, he was 32 years old and working approximately 50 hours a week at four part-time jobs. His two main employers were the Mayflower II Restaurant ("the Mayflower"), where he worked as a dishwasher, bus boy and general cleaner, and Laurier Manor, a nursing home where he worked as a general kitchen helper, dishwasher and cleaner. Three months before the accident, Mr. Hernandez also started working as a bouncer/doorman at a club on Friday and Saturday nights. Finally, he worked from time to time as a personal trainer, using his experience as a weight lifter and body builder.

Following the accident, Mr. Hernandez returned to work for a few days, but stopped due to pain in his back, left shoulder and neck. His insurer, Zurich, paid IRBs under Part II of O. Reg. 776/93, as amended, the Statutory Accident Benefits Schedule - Accidents after December 31, 1993 and before November 1, 1996 ("the SABS-1994"). However, by December 1995, approximately one year after the accident, Zurich notified Mr. Hernandez that it planned to stop paying IRBs. This decision was based, at least in part, on the opinion of Mr. Hernandez' family doctor, Dr. Serge Jabouin, that he could be released to all of his pre-accident activities.

Mr. Hernandez asked for an assessment by a Designated Assessment Centre ("DAC"), as he was entitled to do. Zurich met its obligations by continuing to pay IRBs pending the outcome. The DAC assessment was conducted at Capital Vocational Specialists by Dr. Lynn MacGregor, a physiatrist, and Mr. Marc Gignac, a kinesiologist. Based on their conclusion that Mr. Hernandez was capable of performing the essential tasks of his pre-accident employment, Zurich terminated his IRBs effective February 27, 1996.

Mr. Hernandez then applied for mediation. When the dispute was not resolved, he applied for arbitration. During this process, Mr. Hernandez started seeing a new family doctor, Dr. Juan Escudero, and a number of specialists whose evidence he relied upon at the arbitration hearing.

The arbitration hearing started in June 1997, approximately 15 months after IRBs were terminated. Mr. Hernandez claimed ongoing benefits from the termination. The hearing continued for four days and was then adjourned until October 1997 for four more days. Following these hearing dates, counsel filed a partial transcript and lengthy written submissions that extended the proceedings into March 1998.

I note that the record includes repeated references suggesting that the only relevant question was whether Mr. Hernandez met the test for IRBs at the time they were terminated. This is troubling. In claims for ongoing benefits, arbitrators regularly consider whether the insured person was entitled to benefits at the time they were terminated and whether the evidence supports his or her continuing entitlement up to the time of the hearing. In my view, this is the proper approach.

As Dr. Escudero stated during his testimony, this was not a typical or simple claim. Mr. Hernandez was able to exercise and work out with weights, although not at his pre-accident level. He claimed, however, that his ability to work was severely compromised by pain, primarily in his lower back and left leg. The medical evidence presented at the arbitration hearing was extensive, with the physicians and other health care professionals providing differing opinions about the nature of Mr. Hernandez' accident-related injuries, the extent of his limitations and how they affected his ability to perform the essential tasks of his pre-accident employment. The arbitrator released her decision on August 28, 1998. Despite Zurich's arguments to the contrary, she found Mr. Hernandez to be a credible witness and preferred the medical evidence supporting his claim. As a result, she ordered Zurich to pay ongoing IRBs from February 27, 1996, plus interest. In addition, she ordered Zurich to pay a special award of $5,000, plus interest, on the basis that it unreasonably withheld or delayed the payment of benefits. Zurich appeals from these orders.

III. THE APPEAL

Zurich's appeal can be divided into three parts. It submits that the arbitrator erred,

(a) in making factual findings not supported by the evidence;

(b) in refusing to hear from Dr. Maureen Baxter after adjourning the hearing to allow her to prepare a report before testifying; and,

For the following reasons, I am persuaded that the appeal must be allowed.

A. Factual Findings

Appeals are now limited to questions of law. However, this restriction applies only to arbitrations commenced on or after November 1, 1996, when the amendment came into effect.¹ Because Mr. Hernandez' application for arbitration was received before this date, the appeal is not limited to questions of law. Previous decisions make it clear, however, that even under the earlier provisions, factual findings will not be disturbed lightly on appeal.

Zurich acknowledges my limited role, but contends that the decision does not reflect a fair or adequate analysis of the evidence. After reviewing the record, including a complete transcript of the arbitration hearing, I agree. Arbitrators have a broad authority to evaluate the evidence, including expert opinions, but they must provide the parties with a reasonable explanation of their findings. I conclude that the decision here does not meet this standard.

The most significant problem, in my view, is the arbitrator's general assessment of the medical evidence. At page 19, she states her preference for Mr. Hernandez' medical evidence over Zurich's, adding that she gives very little weight to the conclusions of the DAC. The reason given is that Mr. Hernandez' experts had a more detailed understanding of the essential tasks of his pre-accident employment and analysed his condition more thoroughly from both a physical and psychological perspective. The notion that Mr. Hernandez' experts were more familiar with his pre-accident employment is repeated a number of times, making it clear that it was an important factor in the arbitrator's decision. The record, however, does not support this assessment.

Shortly after the accident, Zurich retained a rehabilitation company, Interact Rehabilitation Management Inc. ("Interact"). In January 1995, just two months after the accident, the Interact consultant met with the manager of the Mayflower and prepared a four-page "Job Analysis," describing Mr. Hernandez' duties and analysing the physical demands of the job. As the consultant explained in her report to Zurich, she focused on this job because Mr. Hernandez said it was more demanding than his work at Laurier Manor.

Although the Job Analysis was provided to the various assessors, the arbitrator makes no specific reference to it in her decision. Instead, she says at page 6 that she prefers Mr. Hernandez' evidence about his pre-accident employment to Zurich's. She then adds that "Zurich had an opportunity both at the hearing and in its written submissions to present evidence to challenge Mr. Hernandez' detailed description; however, it failed to do so."

It is not clear how Zurich could have presented evidence in written submissions filed after the evidentiary portion of the hearing was completed. More importantly, however, there is little disagreement between the Job Analysis and Mr. Hernandez' description of his duties at the Mayflower. One of the few differences relates to the extent of the lifting and carrying involved. The Job Analysis states that Mr. Hernandez occasionally had to lift and carry items weighing 76 to 100 pounds, but never had to lift or carry more than 100 pounds. In contrast, the arbitrator found as follows:

As well, he had to unload deliveries made to the restaurant such as beer and soft drink containers and carry them down the stairs to the basement. Some of these containers weighed 80 to over 150 lbs. Sometimes he had assistance in carrying the heavier container; however, for the most part he was able to carry the deliveries on his own. (p.7)

The transcript confirms that Mr. Hernandez said that he carried beer and soft drink containers weighing over 150 pounds. However, his testimony was significantly qualified. Contrary to the arbitrator's finding that he had to carry the containers down the stairs, Mr. Hernandez agreed that they used a slide to move the containers into the basement. What is most important, however, is his acknowledgement that this was not part of his job, but something he did to help.² According to the remainder of his evidence, his job duties involved lifting and carrying items weighing up to approximately 80 pounds - the amount recorded in the Job Analysis.

In my view, the accuracy of the Job Analysis blunts the arbitrator's criticism of the experts who relied on it, including Dr. Baxter and the DAC assessors. Further, the superior knowledge of Mr. Hernandez' experts is far from obvious.

At page 15 of the decision, the arbitrator states that Dr. Escudero and Dr. Tejeda "both showed a detailed knowledge of Mr. Hernandez' pre-accident background, as well as the essential tasks of his four part-time jobs." Dr. Escudero prepared only one report, which makes no reference to the pre-accident employment. At the hearing, he testified that Mr. Hernandez "was working as a dish washer, as a busboy, then again as a dish washer in two restaurants and in a hospital. And also sometimes he told me he had up to three jobs at the same time."³ This is not a particularly accurate or complete description. Further, when he spoke about the demands of restaurant work, Dr. Escudero relied on what he had seen in other restaurants, conceding that he had no knowledge of the set-up where Mr. Hernandez worked.⁴

Similarly, Dr. Tejeda’s familiarity with Mr. Hernandez' pre-accident employment cannot be described as detailed. He prepared two reports. Neither includes any specific reference to the pre-accident employment, focusing instead on the effect the accident had on his dream of becoming a body builder and trainer. During his testimony, Dr. Tejeda was able to say that Mr. Hernandez worked as a dishwasher and carried small trays of food, but displayed little additional knowledge about his work. When Zurich's lawyer asked him about the pre-accident work situation, Dr. Tejeda answered that he "didn't attach much significance to it" because his task was to do a broader assessment.⁵

Finally, the arbitrator found that Dr. Gillen "demonstrated that he had a good understanding of Mr. Hernandez' background and essential tasks of employment at the time of the accident and that he had reviewed all of the medical documentation" (p.16). While there is evidence to support this finding, it is clear that Dr. Gillen relied heavily on the Job Analysis for his understanding of Mr. Hernandez' duties at the Mayflower. In his initial report, he describes the Mayflower job in precisely the same language used in the Job Analysis. Although Dr. Gillen also mentions Laurier Manor, he notes that it was a less demanding job. Consequently, there appears to have been little difference in the knowledge base of Dr. Gillen and the other experts, including Dr. Baxter and the DAC assessors, with respect to Mr. Hernandez' most demanding pre-accident employment.

Reading the decision broadly, the arbitrator seems to have been concerned that some of the experts concentrated on Mr. Hernandez' job tasks without considering the multi-tasked, cumulative demands of his employment. I have no difficulty with the idea that entitlement to IRBs is not based simply on the injured person's ability to perform the component tasks of his or her employment. In my view, however, the decision is overly dismissive of assessment techniques, such as functional capacity evaluations, that are commonly used as tools for evaluating a person's ability to return to work or participate in rehabilitation. While desirable, it is not always possible to assess the person in his or her pre-accident work environment. In this case, for example, Mr. Hernandez did not attempt to return to work, other than working occasionally as a doorman, at any point after he started seeing Dr. Escudero, Dr. Tejeda and Dr. Gillen.

If this were the extent of the appeal, I might be hesitant to interfere. However, as discussed below, I am also persuaded that the arbitrator failed to deal adequately with the medical evidence, particularly the evidence of Dr. Baxter.

B. Dr. Baxter's Evidence

Dr. Baxter is an orthopaedic surgeon who examined Mr. Hernandez and provided a report in September 1995, ten months after the accident. As I understand the situation, Zurich planned to call her as a witness on the final day of the arbitration hearing - October 23, 1997. This is consistent with the pre-hearing letter which lists her as a possible witness, and with the apparent understanding of Mr. Hernandez' counsel.⁶ The objection was to Dr. Baxter testifying about the surveillance videotape showing Mr. Hernandez working out in a park. Although the tape was filed as an exhibit, counsel argued that this was outside the scope of Dr. Baxter's report and came as a surprise.

After hearing submissions, the arbitrator adjourned the hearing to allow Dr. Baxter to prepare a report dealing with the surveillance evidence before testifying. The hearing was scheduled to resume one month later, on November 21, 1997, for Dr. Baxter's testimony and, presumably, final argument. However, on November 14, 1997, the arbitrator wrote counsel as follows:

I have recently reviewed my notes for the resumption of the hearing in Hernandez and Zurich Insurance Company which is set for Friday, November 21, 1997. My understanding from my notes is that just before the hearing was concluded Mr. Wright stated that he wished to call one more witness to comment on the video surveillance and that is why we had to resume.

Despite Mr. Garay's objections I agreed that Mr. Wright could call his witness. I also agreed that Mr. Garay had the right to reply. It strikes me now that this will most probably entail another resumption and would further prolong the conclusion of the hearing. In my view, the resumption would also place an unnecessary burden on the Applicant, since Mr. Wright had ample time before the commencement of the hearing to have advised Mr. Garay that he would be calling this witness.

I have, therefore, concluded that the best way to proceed in this case is not to resume the hearing on November 21, 1997. Instead, I find that if Mr. Wright wishes to present expert evidence on the video surveillance that this shall be done through a written report. Mr. Garay can respond with his own expert's written report.

Accordingly, unless the parties find it necessary to cross-examine the other's expert, I expect that the parties shall exchange their expert's reports and written submissions between themselves, with copies to the OIC [Ontario Insurance Commission], by January 30, 1998 at which time I will proceed to make my decision.

(emphasis added)

Dr. Baxter then prepared a report dated January 6, 1998. Mr. Hernandez' counsel requested additional details and, therefore, she prepared a second report dated January 26, 1998. Following the directions in the arbitrator's letter, Dr. Baxter limited her comments to the surveillance videotape. In her opinion, the activities shown on the tape were inconsistent with "any type of sciatica symptoms," and with Mr. Hernandez' complaints of low back pain. In reply, Mr. Hernandez filed a report from Dr. Gillen. He claimed Dr. Baxter's comments about sciatica were irrelevant because that was never the diagnosis.⁷ Further, he did not find the workout inconsistent with Mr. Hernandez said he could do, or with the capabilities he demonstrated in clinical settings such as the functional capacities evaluations.

Zurich claimed in its written submissions that if Dr. Baxter had been allowed to testify, she would have said that Mr. Hernandez' disc abnormalities were not caused by the accident and would have questioned the legitimacy of his complaints. Mr. Hernandez responded that he "would be quite happy to postpone Judgment to allow Dr. Baxter to 'testify' in person," subject to cross-examination. Despite this invitation, the arbitrator did not reopen the hearing.

While arbitrators have a broad authority to control the process, I agree with Zurich that reversing a ruling without hearing from the parties is a questionable practice. Unfortunately, there seems to have been some confusion about the scope of Dr. Baxter's testimony. The arbitrator's letter suggests that she was under the impression that Dr. Baxter was being called just to comment on the surveillance evidence. However, Zurich's written submission clearly indicate otherwise and should have alerted the arbitrator to the problem.

Mr. Hernandez argues that Zurich did not object at the time and, therefore, cannot pursue this issue on appeal. In my view, however, it is hard to criticize Zurich for not contesting the ruling more vigorously. Because the ruling did not finally determine the issues in dispute, it did not have a right to appeal.⁸ The option presented to Zurich was written submissions, which it used to express its objection to being denied the opportunity to call Dr. Baxter as a witness.

Having restricted Zurich to filing reports from Dr. Baxter, it is particularly striking that the arbitrator makes no reference to them in the decision. In its written submissions, Zurich urged the arbitrator to reject Mr. Hernandez' evidence about his limitations as not credible, relying heavily on Dr. Baxter's evidence in support of this argument. Despite this, the arbitrator assessed the importance of the surveillance evidence without reference to Dr. Baxter:

I give very little weight to the surveillance evidence which shows Mr. Hernandez exercising in a park in October 1995 over a period of three days as evidence of Mr. Hernandez' lack of credibility. In fact the surveillance report of October 31, 1995 confirmed that Mr. Hernandez was not engaging in his pre-accident workouts and that he was concerned about conditioning his back which he had injured in a car accident. I accept Mr. Hernandez' evidence that he was performing exercises which had been recommended by the CBI and Action + Physiotherapy, to strengthen and condition his back. [p.18, footnote omitted]

Arbitrators are not expected to refer to every piece of evidence. That would be unrealistic and probably undesirable. However, they should acknowledge the key evidence and explain how conflicts in that evidence were resolved.⁹ It is particularly important to explain to the losing party why the critical components of its case were not accepted. In this case, it is my view that the arbitrator could not adequately assess the surveillance evidence without referring to Dr. Baxter's later two reports. Not only did Dr. Baxter specifically comment on the inconsistency between Mr. Hernandez' reported complaints and the activities shown on the videotape, her reports were produced for this very purpose in response to the arbitrator's ruling.

I also find some inconsistency in the arbitrator's acceptance that Mr. Hernandez was relying on the advice of CBI and Action + Physiotherapy. Both organizations felt he could return to work, a view he disagreed with and which the arbitrator criticizes in other parts of the decision.

The only reference to Dr. Baxter is at page 10 of the decision, where the arbitrator sets out the following excerpt from her earlier, September 1995 report:

In summary, I feel Mr. Hernandez most likely suffered a muscular injury to his low back and shoulder in November of 1994. I do not feel that the changes noted on the CT scan are a direct result of the motor vehicle accident. And finally, the changes seen on the CT scan may not be the cause of his pain. The only further investigation I would propose is a consideration of discography by a spine surgeon.

Mr. Hernandez is currently prevented from returning to work due to persistent pain near the end of his shift. The exact etiology of his discomfort at those times remains unclear. There is no contraindication for him to perform his duties despite the abnormal CT scan result. However, given his persistent symptomatology, further investigation via discography would be all that I would have to propose. I doubt further conditioning or physiotherapy will make any significant difference in this gentleman's discomfort. The use of a lumbar corset may. ... Mr. Hernandez's prognosis for return to work in his previous capacity still remains guarded. I would favour the use of a lumbo-sacral corset if he chooses another work trial. Otherwise, I would recommend further investigation if he feels persistently disabled by his pain.

[Emphasis added by the arbitrator]

The sentences emphasized by the arbitrator suggest that Dr. Baxter had concerns about Mr. Hernandez' ability to return to work, concerns that were later confirmed by his doctors. However, this ignores Dr. Baxter's doubts about whether the accident caused the disc abnormalities and whether that was the source of his pain. It also ignores her specific statement that there was no contraindication to his performing his pre-accident duties despite the abnormal CT scan results. Most seriously, however, it ignores Dr. Baxter's later reports in which she clearly questions the legitimacy of Mr. Hernandez' claim. Put bluntly, the decision does not fairly present Dr. Baxter's evidence.

Based on the reasons presented to this point, I would allow the appeal. However, I am also persuaded that the arbitrator failed to deal with the complexity of the medical evidence. As noted above, she states a general preference for Mr. Hernandez' medical evidence over Zurich's, setting out her more specific assessment at page 20:

I accept the evidence, in the form of reports and testimony of Drs. Komesch, Escudero, Tejeda, Dennery, Da Silva and Gillen, which are all consistent in their conclusions, that Mr. Hernandez cannot return to his pre-accident employment and should be retrained in a "non-physical" job.

I agree with Zurich that this overstates the opinions of some of the experts. Even more importantly, it ignores the significant differences in their opinions. As a result, it is unclear whether the arbitrator based her decision on soft tissue injuries, disc injuries or psychological impairments.

Dr. Dennery and Dr. Da Silva, both neurosurgeons, based their opinions on Mr. Hernandez' disc abnormalities, with Dr. Dennery specifically referring to sciatica.¹⁰ There is no indication, however, that they were asked to address the causation question or were provided with the background information needed to make that assessment. The reports of Dr. Komesch, the chiropractor, are difficult to follow, but he also seems to rely on a diagnosis of sciatica.¹¹

In contrast, Dr. Gillen did not feel that sciatica was the proper diagnosis. On clinical examination, he found no evidence of nerve root compromise.¹² This is similar to the findings of both Dr. Baxter and Dr. MacGregor, the DAC assessor, whose opinions the arbitrator rejects. In Dr. Gillen's opinion, Mr. Hernandez suffered a musculoligamentous injury to his back, resulting in chronic back pain. He also believed there was a "progressive discopathic component" attributable to the accident, although this was not the principal cause of the pain.¹³

Dr. Gillen makes it clear that in his opinion, Mr. Hernandez was not physically prevented from working, including performing the essential tasks of his pre-accident employment.¹⁴ However, he felt there were two obstacles that needed to be addressed. First, Mr. Hernandez genuinely equated pain with damage to his back, making him reluctant to engage in activities that caused pain. Second, although Mr. Hernandez was physically capable of heavy work, there was some risk due to his disc abnormalities.

Dealing with the first obstacle, pain cases are difficult. Medical professionals take different approaches to the diagnosis and treatment of pain-based complaints. The arbitrator's duty, however, is to apply the legislation. The question is whether Mr. Hernandez suffered an impairment (as defined in s.1 of the SABS-1994) as a result of the accident that left him substantially unable to perform the essential tasks of his employment. Many decisions have held that pain is not compensable unless it is disabling. In other words, the pain must be sufficiently serious that it would be unreasonable to expect the person to perform the essential tasks of his or her pre-accident employment. This is not a purely subjective test. As I held in Bertsouklis and Liberty Mutual Fire Insurance Company, (P-006499, May 28, 1996), the person's own views about his or her limitations, no matter how sincerely held, are not determinative.

My concern is that Dr. Gillen seems to have based his opinion largely on Mr. Hernandez' view of his own limitations. When asked about addressing Mr. Hernandez' pain-focused belief system and getting him back to work, Dr. Gillen answered as follows:

. . . in my opinion, this gentleman has the potential for returning to work. It requires a methodology of having him engage in a type of work which he believes is safe for him to do. (emphasis added)

This might be a legitimate approach to treatment, but does not provide much assistance in deciding whether Mr. Hernandez is entitled to IRBs. As I read the decision, the arbitrator focused on whether Mr. Hernandez' claim was fraudulent, finding it was not. In my view, however, she did not adequately address the question of whether Mr. Hernandez' pain, while genuine, prevented him from performing the essential tasks of his pre-accident employment.

With respect to the second obstacle - Mr. Hernandez' disc abnormalities - Dr. Gillen disagreed with Dr. Baxter. He pointed to the lack of any evidence of pre-accident leg pain and the nature of the impact, stating that it "could be consistent with developing a disc change."¹⁵ While this evidence deserved consideration, so did Dr. Baxter's conflicting view. This highlights the unfairness involved in not hearing from Dr. Baxter or referring fully and fairly to her reports.

Dr. Escudero, the family doctor, also felt that Mr. Hernandez was physically capable of returning to work. In his opinion, Mr. Hernandez suffered soft tissue injuries of the lumbar region that were likely the cause of his chronic low back pain.¹⁶ With respect to the disc abnormalities, he stated that the relative contributions of the accident and Mr. Hernandez' weight lifting were unclear,¹⁷ although he acknowledged in cross-examination that he was unaware of any pre-accident back problems or other incidents that might have caused Mr. Hernandez' disc abnormalities.¹⁸ Dr. Escudero felt that the problem was Mr. Hernandez' dysfunctional perception of and reaction to pain - his inability to make the distinction between hurt and harm.¹⁹That is why he made the referral to Dr. Tejeda, a psychiatrist.

Dr. Tejeda addressed Mr. Hernandez' non-physical problems, providing diagnoses of chronic pain syndrome, reactive depression and acute stress disorder. He clearly felt that these conditions affected Mr. Hernandez' activities, including his ability to work. It is less clear, however, that he was able to state, as the arbitrator finds at page 16, that Mr. Hernandez was prevented from carrying out the essential tasks of his pre-accident employment. As discussed above, Dr. Tejeda had little information about Mr. Hernandez' pre-accident work. Also, like Dr. Gillen, he was extremely accepting of Mr. Hernandez' self-imposed limits. For example, he described Mr. Hernandez as having a psychological block about returning to work:

And whether it is real or imaginary, in psychiatry the truth is what the patient believes. If I believe that by performing an action I am going to harm myself, I will not perform the action even though it is not true that if I do the action I will not harm myself. Because the truth is what you believe in these issues. And that's basically what a psychological block is.

Q. And here what was the activity that he wouldn't do that his psychological block was?

A. Returning to work that he has as a dish washer, for instance. I saw that it was something that he perceived bad because of the form of the movement he had to perform, that he was not going to get involved in that.²⁰

A treating psychiatrist must deal with the dysfunctional symptoms presented by his or her patient. The insurer, however, is only obliged to pay IRBs if the person is unable to perform the essential tasks of his or her employment. While psychological or psychiatric impairments can lead to the payment of weekly benefits, the person's credibility is critical. Again, this is why it was important for the arbitrator to hear from Dr. Baxter and deal with the opinions expressed in her reports.

I agree with the arbitration decisions holding that the arbitrator's focus is on the insured person's functional capabilities, not the specific diagnosis. However, where there is conflicting medical evidence about the nature of the injuries resulting from the accident and their impact on the person's ability to return to work, the arbitrator must clarify the basis of his or her decision by making more specific findings. In my view, that was required here.

For these reasons, I conclude that the decision cannot stand. However, I am not in a position to substitute my own decision. Not only is it important to hear from the witnesses where credibility is an issue, but Zurich should be given a chance to present testimony from Dr. Baxter. Therefore, unless the parties are able to resolve the dispute, which I encourage them to attempt to do, a new hearing before a different arbitrator will be required. I would hope that if another hearing is needed, the transcript can be used to help reduce costs.

C. Special Award

The arbitrator ordered Zurich to pay a special award of $5,000, plus interest. This order cannot stand in the face of the conclusions set out above. However, there are additional reasons to rescind the special award.

Zurich had ample grounds for terminating Mr. Hernandez' IRBs in February 1996. It followed the proper procedure by continuing to pay benefits until the DAC assessors concluded that Mr. Hernandez was capable of performing the essential tasks of his pre-accident employment. At that point, it was entitled stop paying IRBs. The arbitrator does not suggest otherwise. She held, however, that Zurich should have reconsidered its position based on the later reports of Dr. Escudero, Dr. Tejeda and Dr. Da Silva, and if it had done so, the hearing might have been avoided.

I accept that insurers have an obligation to consider new evidence. However, the DAC plays an important role in the process. Its assessment determines whether benefits must be paid pending the resolution of any further proceedings. While I would not state it as an absolute rule, insurers should generally be able to rely on a DAC assessment without risking criticism. I note that the Minister's Committee on the Designated Assessment Centre System recently suggested that if new information becomes available that might affect the DAC assessment, the parties can ask for an updated report.²¹

The key is that insurers must act reasonably. In this case, the new information came in shortly before the hearing from physicians who were not involved when the Mr. Hernandez' IRBs were terminated. Dr. Escudero first saw Mr. Hernandez in November 1996, almost a year after the IRBs were terminated and four months after he applied for arbitration. His report is dated April 13, 1997, two weeks before the arbitration hearing was scheduled to start (although it was subsequently adjourned until June 2, 1997). Mr. Hernandez started seeing Dr. Tejeda even later - in February 1997. His medical-legal report is also dated April 13, 1997. Dr. Da Silva did not see Mr. Hernandez until after the original hearing dates, approximately one month before the hearing actually started.

When an insurer receives information this late in the process, I do not believe it can be faulted for proceeding with the hearing unless the information is overwhelmingly conclusive. The evidence in this case falls far short of that test.

IV. APPEAL EXPENSES

Insured persons responding to an insurer's appeal have generally been awarded their expenses whatever the outcome. I see no reason to depart from that practice here.