Ronald McTague v. Allstate Insurance Company of Canada, 2000 ONFSCDRS 149

Neutral Citation: 2000 ONFSCDRS 149

FSCO A99-000489

BETWEEN:

RONALD MCTAGUE

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before: K. Julaine Palmer

Heard: June 5, 6, 7 and 8, 2000 at Whitby

Appearances:

David J. Gillespie for Mr. McTague

Kenneth J. Bialkowski for Allstate Insurance Company of Canada

Issues:

Ronald McTague was injured in a motor vehicle accident on November 10, 1992. He received weekly income benefits from Allstate Insurance Company of Canada ("Allstate"), payable under the Schedule¹ until June 23, 1997. Mr. McTague disputed the termination of his weekly income benefits. After the parties were unable to resolve their dispute through mediation, Mr. McTague applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

Is Mr. McTague entitled to ongoing weekly income benefits after June 23, 1997?
If so, what is the correct amount of his weekly income benefit?
Is Mr. McTague entitled to his expenses of this arbitration?

Result:

Mr. McTague is entitled to ongoing weekly income benefits after June 23, 1997.
The correct amount of his income benefit is $475.65 per week.
Mr. McTague is entitled to his expenses of this arbitration.

EVIDENCE AND ANALYSIS:

On November 10, 1992 Ronald McTague was a pedestrian crossing a street in downtown Toronto when he was hit by a motor vehicle. Mr. McTague was then 55 years old and a full-time employee of the Canadian Forces reserves. He was admitted to the Toronto Hospital, Western Division, for six days. He suffered minimally displaced fractures of his left tibia and fibula (lower leg bones) just below his left knee, which were treated with a long leg cast. He also was treated for a partial left pneumothorax (collapsed lung), fractured ribs and soft tissue injuries to his shoulders and left knee. Mr. McTague remained in a long leg cast until December 23, 1992 when a patellar tendon bearing lower leg cast was applied. He remained in that cast until February 3, 1993 when he was allowed to bear weight on his left leg and he began physiotherapy to help strengthen it.

Mr. McTague developed serious gastrointestinal problems and had to be hospitalized in March 1993. Later that month, his left knee and right shoulder were injected with cortisone. By mid-April 1993, Mr. McTague's treating physicians suspected that he was developing reflex sympathetic dystrophy (RSD) in his left leg, since he continued to experience significant pain and his leg was developing changes in colour and temperature. He was referred to Dr. Angela Mailis, a pain specialist with a particular interest in RSD.

Mr. McTague had arthroscopic surgery on his left knee in December 1993 and again in June 1996. At that time the surgeon found tears in his left medial meniscus as well as degenerative changes in his knee. He underwent surgery to his right shoulder on July 7, 1994—anterior acromioplasty and resection of the subacromial bursa as well as debridement and soft tissue releases. On March 21, 1996 he had surgery to his left shoulder in which debridement, subacromial decompression and distal clavicle resection was carried out. During 1994 and 1995 Mr. McTague participated in some group psychotherapy sessions.

Since June 1997, Mr. McTague's health has deteriorated. In late 1996, Mr. McTague was walking his dog about two miles daily, albeit at a slow pace. At the arbitration hearing, Mr. McTague testified that if he walks 300 feet, he has to stop because of pain. He has a low level of energy. Mr. McTague stated he has lost about 53 pounds since the accident, 30 pounds of that since January 1999. He stands five feet, six inches tall and weighs now just 103 pounds. The cause of this weight loss has been investigated; however, the cause remains undetermined. In May and August 1998 he had two surgeries to remove kidney stones. In late 1998 and early 1999 he had three esophageal and duodenic operative procedures. In May 2000, he underwent a procedure to stretch and straighten his esophagus. In addition, since mid-1999 he has suffered from an undiagnosed disorder that causes sores on both hands and requires him to use a prescription salve and wrap his hands with gauze bandages, from time to time.

Mr. McTague testified at the hearing that he presently feels sick all the time. He stated he has a tendency to faint in public. He takes a large number of analgesic medications. He can no longer go for his daily walk. He is restricted by pain in his low back from lifting heavy items. He can only use his shoulders for a short period of time. The muscle relaxant prescribed to help him swallow causes him to be tired. His current medications include non-prescription acetaminophen, Gravol, Prepulsit, and the muscle relaxant.

The Law

Allstate paid Mr. McTague 198 weeks of income benefits after the accident. Under the provisions of the Schedule, after 156 weeks, Allstate must pay a weekly benefit to Mr. McTague only if he establishes that the injuries he received in the accident continuously prevent him from engaging "in any occupation or employment for which he ... is reasonably suited by education, training, or experience." Under this Schedule of statutory accident benefits, a qualifying injury means physical, psychological or mental injury caused directly or indirectly by the accident.

For Mr. McTague to recover further weekly income benefits under the Schedule, the injuries he suffered in the accident do not have to be the sole cause of his disability; however, they must significantly or materially contribute to his condition.²

Allstate did not suggest that Mr. McTague's disability is an intermittent one, which would not qualify as a continuous disability. I find Mr. McTague's disability is continuous in nature, although it does fluctuate to some degree.

Education, Training and Experience

Mr. McTague is now 62 years old. At age 17, in 1954, he joined the Canadian Armed Forces and remained part of the regular military until 1981. He served with the Third Canadian Regiment, the Royal Canadian Ordinance Corps and the Airborne Regiment in several provinces in Canada and in Germany, Cyprus, Egypt, Syria, and Lebanon. He completed Grade 13, by correspondence, during his first two years with the army. After his release from the regular forces, by which time he was a sergeant, Mr. McTague worked for a year with Brinks Security, collecting and delivering cash in an armoured vehicle. In 1982 he returned to the military environment, this time with the Reserves, but as a full-time reservist. At the time of the accident, his rank was that of a Master Warrant Officer and he was in charge of training and standards for his unit in Toronto, performing the duties of a Regimental Sergeant Major.

In his last position with the Reserves, Mr. McTague was responsible for many facets of the training of his reserve unit. He was responsible for maintaining training records, coordinating the use of two rifle ranges at the Fort York Armoury, and verifying the operational readiness of his unit's vehicles and equipment. A written job description was filed as an exhibit at the arbitration. Mr. McTague testified that during the day he supervised the work of one person, but on parade nights, he supervised 150 reservists. He frequently helped to plan and participated in field exercises, such as one held in Meaford for 17 days just prior to the accident. During field exercises, he was responsible for all the administrative arrangements involved in deploying the unit to the field, including arranging for additional vehicles, ensuring the training area was prepared for the unit, assignment of quarters, requisitioning rations and ammunition, issuing weapons and ensuring the clean up of the training area at the end of the exercise.

Generally, Mr. McTague worked a five day week. Physical training began at 7:30 a.m. and his day ended at 4:30 or 5:00 p.m. On Tuesdays and Thursdays, which were parade nights, Mr. McTague worked until 10:30 p.m. Mr. McTague testified that at the time of the accident he was paid the daily rate of a warrant officer, incentive pay class two, or $85.86 per day. He was paid 365 days per year, even during compulsory time off.

Not much detail was provided of Mr. McTague's training and experience in the regular military. He testified that he had maintained the books for "petrol, oil and lubricants" during a tour of duty in Germany in the 1950s. He had a short stint of conducting inductees to the personnel selection officer in Toronto. In Alberta, his role was base defence. In the Middle East, his role was patrolling the line between warring factions. In Cyprus, he helped guard the international airport. During his time with the Airborne Regiment, he completed over 400 parachute jumps. According to the report of the rehabilitation manager dated February 14, 1994, Mr. McTague indicated that he was an expert with infantry weapons. He also has training driving military vehicles and dealing with dangerous cargo.

Medical Evidence

No health care practitioners testified at the hearing. However a large number of medical and rehabilitation reports were filed. Mr. McTague received the services of a rehabilitation consultant from January 1994 until April 1997. He was assessed by East Oshawa Physiotherapy Health Services in March 1994 and attended that facility in the spring of 1994, throughout the spring and summer of 1995, resuming again in July 1996 until at least November 1996, after surgeries to his left shoulder and left knee.

At Allstate's request, Mr. McTague was examined by Dr. Ezra A. Silverstein, Dr. Harvey C. Stancer and Dr. Neville H. Bayer between January and June of 1997. Dr. Silverstein, an orthopaedic surgeon, reviewed reports of Mr. McTague's course of treatment since the accident and examined him. He also read a vocational evaluation report prepared by Mr. David Antflick, who testified at the arbitration hearing. Dr. Silverstein was of the opinion that Mr. McTague would face a challenge in competing for light sedentary work, since he was then 59 years old and had not worked since the accident. However, he thought he could return to sedentary work, working at a work bench, as Mr. McTague was then doing as a hobby, mounting military medals. Dr. Silverstein did not feel Mr. McTague was "totally disabled."

Dr. Stancer, a psychiatrist, could find no clinical evidence to support the presence of Mr. McTague suffering from any significant psychiatric disorder. He thought that any limitations on his ability to return to work would be primarily due to physical problems.

Dr. Bayer, a neurologist, could find no evidence either clinically, from Mr. McTague himself, or from the medical reports that had been provided to him, to substantiate any cognitive dysfunction arising from a traumatic brain injury in the accident of November 10, 1992. Dr. Bayer felt Mr. McTague should be able to undertake any occupation for which he was suited by his previous education and experience.

These three specialist reports are helpful to clarify their authors' observations and opinions of Mr. McTague's medical complaints, within their respective areas of expertise, at the time they examined him. Unfortunately, however, the opinions offered by each of them do not answer the question at issue in this arbitration, which is whether Mr. McTague is continuously prevented from engaging in any occupation or employment for which he is reasonably suited by education, training, or experience, as a result of injuries he received in the accident. Accordingly, their opinions have varying degrees of persuasiveness as to the issue in this arbitration. For example, Dr. Silverstein is of the opinion that Mr. McTague is not "totally disabled." He says he cannot return to work that requires a great deal of standing, walking or athletic activities, but he can work at the jobs outlined by Mr. Antflick (a vocational assessor) and he can work at medal mounting activities.

I accept Dr. Silverstein's opinion about Mr. McTague's inability to return to his previous job. I also agree that he is not totally disabled. "Total disability" is not the test in cases under the Schedule. With respect to whether he can perform the jobs outlined by Mr. Antflick, that is also not the question at issue in this arbitration. Mr. McTague may well be physically capable of performing the jobs. The question in this arbitration is whether Mr. McTague is "reasonably suited" for those jobs by reason of his education, training, or experience, not simply whether he is physically capable of performing the jobs. I return to this in more detail below.

Mr. McTague is not claiming an inability to work due to psychiatric disability. Accordingly, Dr. Stancer's comments are of little relevance here. Mr. McTague has also not advanced a theory of significant cognitive dysfunction arising from a traumatic brain injury in this accident, so that Dr. Bayer's comments are of little interest with respect to the issues as well.

Dr. Mark C. Mason is Mr. McTague's treating specialist in physical medicine and rehabilitation. He has assessed Mr. McTague 15 times since February 1995. He wrote a comprehensive report dated April 25, 2000 which was filed at the hearing. Dr. Mason notes that he has determined that Mr. McTague indeed suffered an injury to his sural nerve at the time of his lower left leg fractures, and possibly a mild injury to components of the sciatic nerve. Dr. Mason's opinion is that it is highly likely that these nerve injuries contribute to his leg pain, although they have not resulted in significantly weakening his leg. Unfortunately, Dr. Mason has no suggestions for the treatment of this problem. Dr. Mason also believes that some of Mr. McTague's leg pain is attributable to the residual effect of reflex sympathetic dystrophy.

Dr. Mason believes Mr. McTague has been left with chronic shoulder pain and limitations of tolerance for use of both shoulders as a result of the accident. In Dr. Mason's view, Mr. McTague's chronic low back pain is probably not directly related to injuries sustained in the accident, except that the presence of the left leg pain probably contributes to the degree of disability that occurs with the back pain. (Mr. McTague injured his back in 1978, while in the military, after falling about 20 feet. A CT scan in 1997 and plain x-rays in 1999 showed degenerative changes but no treatable lesion in the back.) Dr. Mason feels that Mr. McTague's underlying gastrointestinal problems have been exacerbated by his use of medications for the pain of the injuries sustained in the motor vehicle accident. These comments echo the opinion offered by Dr. C. Lion, Mr. McTague's family doctor, to the rehabilitation manager and recorded in her initial report of February 14, 1994.³

Dr. Mason is of the view that Mr. McTague could not return to his previous work, but discusses the more relative nature of the issue of his ability to work at other jobs. Dr. Mason ultimately is of the opinion that the likelihood that Mr. McTague will be able to achieve successful employment is low, given "his age, and his limited transferable skills." He considers it reasonable to state that "he will not be suitable for full-time gainful employment, as a result of the injuries sustained in the accident of November 10, 1992."

Like the physicians whose opinions I commented on above, the words in which Dr. Mason has couched his final opinion are not wholly responsive to the question in issue in this arbitration. In my view, Dr. Mason has taken a realistic look at Mr. McTague's age, injuries, and background and predicted he will not be able to successfully reintegrate into the workforce as a full-time worker. Since Dr. Mason has significant expertise in the area of physical medicine and rehabilitation over the past 13 years since he achieved his fellowship, and he has followed Mr. McTague's case closely over several years, I feel his opinion deserves significant weight. His words are, in my view, carefully chosen, although he has not addressed the question of "reasonably suitable employment."

"Reasonably suited" or Suitable Employment

Mr. David Antflick, a certified vocational evaluation specialist, was hired by Allstate to provide a vocational assessment for Mr. McTague. In August 1996, he performed this assessment, investigating Mr. McTague's personal and vocational characteristics, through a combination of interview and psychometric testing. He learned about Mr. McTague's education and training and formulated an opinion about his transferable skills. He reviewed medical, psychological and rehabilitation reports dating between September 1993 and June 1996. Mr. Antflick's goal was to arrive at a vocational plan for Mr. McTague, stating what occupations he found suitable for him and what training was necessary to achieve those occupational goals.

Mr. Antflick felt Mr. McTague had the ability to compete for light sedentary work, such as that of a mail order clerk, collection clerk, gas bar cashier, billing clerk, auto parts salesman, vehicle service scheduler, dispatcher, customer service and information clerk, sales clerk or security guard. Mr. Antflick clarified that the job of security guard would have to be of a sedentary nature, like that of an apartment building security person, as opposed to a warehouse watchman with an extensive area to patrol. He felt Mr. McTague would have to be "persistent, dedicated and lucky" in a job search to find such work as mentioned, since he would need to find "the most tolerant of employers" to give him a chance to prove himself, since he has been out of work since the accident. He also felt Mr. McTague would have to compete against many younger, better educated and healthier candidates.

Mr. Antflick also commented on Mr. McTague's idea of starting a medal mounting business. He felt Mr. McTague had sufficient equipment, knowledge and skills to convert his hobby into a business. He felt he had sufficient contacts in the army to foster such a business. However, Mr. Antflick felt the potential business would be better marketed as a mail order or catalogue business, rather than the retail shop that Mr. McTague had considered. Mr. Antflick felt that Mr. McTague had little business experience, poor financing, no real business plan and insufficient endurance to run a storefront operation.

In cross-examination, Mr. Antflick admitted that most of the occupations listed would not produce an income of $30,000 per year at entry level for full-time employment, which was the level of income Mr. McTague's witnesses testified he was earning at the time of the accident. He agreed that Mr. McTague's former employment with the military carried with it a respect and a certain stature in the community. He agreed that the stature of a gas bar attendant was probably not the same as that of a career military officer. Mr. Antflick also emphasized that in vocational rehabilitation terminology "suitable employment" means the candidate possesses the capability, from a physical point of view, to perform the work. Hence, here "light, sedentary work is suitable for Mr. McTague."

I was impressed with Mr. Antflick's testimony, his qualifications, and his impartiality as an assessor of vocational matters. However, it became apparent in the course of his testimony that he had not used the same criteria to evaluate Mr. McTague's potential for prospective employment as called for by the language of the Schedule, and as interpreted by arbitrators and the courts. Mr. Antflick noted in his report that he was asked to "identify suitable employment he is capable of carrying out, given his education and experience, interests, aptitudes, and transferable skills." Mr. Antflick's field of inquiry would, at first glance, appear to be broader than that of an arbitration, in that he considers the client's interests and aptitudes. However, Mr. Antflick also emphasized that in his vocabulary, "suitable" work means work for which Mr. McTague is physically capable. On the other hand, in an arbitration under the Schedule, an applicant must prove that his injuries continuously prevent him from engaging in any occupation or employment for which he is reasonably suited by education, training, or experience.

The concept of reasonable suitability encompasses much more than mere physical capability. In the case of Wigle and Royal Insurance Company of Canada, (OIC A-012312, January 12, 1996), Arbitrator Seife outlined some of the interpretation guidelines he had gleaned from court and arbitration decisions interpreting this language. For example,

In deciding suitable employment, one must consider such factors as the nature and status of the work compared with what the applicant did before, the hours of work and level of remuneration, the applicant's employment experience and length of time spent in different jobs, his or her age, and his or her qualifications and technical training and know-how.

At the time of the accident, Mr. McTague was employed in a job that demanded a good level of physical fitness. Major C. Haydar, Mr. McTague's supervisor, stressed this point in his interview with the rehabilitation consultant. It was also clear from Mr. McTague's testimony about his duties. He worked both indoors and outdoors and for long hours. He performed a variety of responsible tasks and supervised the work of others. As he himself testified, he was not a "clerk." He had spent more than 35 years in a similar military environment. None of the evidence in this arbitration suggested that Mr. McTague could return to his duties with the Reserves and I do not find that he could substantially perform the essential tasks of that employment.

In June 1997 when Allstate terminated his weekly income benefits, Mr. McTague was nearly 60 years old. His residual physical capabilities, as a result of the accident, dictate that he may perform only a light, sedentary job. However, his training and experience up until the early 1990s provided him with the background to assume a vigorous and demanding role with a large variety of responsibilities in a particular organization. In deciding what is reasonably suitable employment for him, we must consider whether the proposals are appropriate alternatives.

Although Mr. McTague has many skills that may be transferable, his level of formal education is only high school level. This limits his possibilities for re-employment. Some of his abilities, like accomplishment at parachuting and shooting, have only a very narrow application outside the military, especially when combined with his residual physical capabilities. Mr. McTague is not obliged to prove there is no job he could do. At present, he does not believe he could perform any job, to a reasonable standard, in a reasonable time frame.

In the Canadian Surety and H.K. case, Director's Delegate Naylor commented on the onus of proof in this type of case and the sufficiency of evidence required of the parties. She wrote:

The appropriate approach is a flexible, fact-based one, in which, while the legal onus always remains on the insured, the sufficiency of the proof depends on what is reasonable in the circumstances. This involves consideration of the evidence presented by both parties, including the nature of the individual's condition and extent of the disability, the efforts the insured has made to position himself or herself to return to the workforce, the vocational assistance made available by the insurer and the options for alternative work that have been put forward.⁴

I find that none of the jobs listed by Mr. Antflick that he thought Mr. McTague would be physically capable of performing come close to the nature or the status of his former job, viewed fairly and realistically in the context of his employment background. In my view, Mr. McTague is not reasonably suited by his education, training, or experience for any clerk, sales, or cashier job. The status and level of responsibility in these jobs is not sufficiently close to that of Mr. McTague's former employment. In addition, the nature of this work is far different from that of Mr. McTague's former employment and has not been the subject of his training, being the sedentary or "light sedentary" work that Mr. Antflick felt he was physically capable of performing. I find similarly for the vehicle service scheduler, the dispatcher, and the security jobs suggested by Mr. Antflick. Although the remuneration for the vehicle service scheduler might approximate Mr. McTague's former earnings, that job like that of the dispatcher and the apartment security guard do not approximate the status, responsibility, or nature of Mr. McTague's former work.

Accordingly, I do not find Mr. McTague to be reasonably suited to these positions. With respect to possible self-employment in a medal mounting business, I have no evidence that Mr. McTague possesses the entrepreneurial, business, and marketing skills that would transform such a hobby into a practical, income-producing venture at which he could earn remuneration close to his former employment earnings.

I find that Mr. McTague's health has deteriorated since mid-1997, principally as a result of gastroenterological conditions that may or may not be indirectly caused by the accident. No reports from the specialists that have been treating him recently for the gastrointestinal problems were produced. Dr. Mason has suggested that on his review of the documents and his understanding of the condition, that underlying gastrointestinal problems have been exacerbated by the medications used to treat Mr. McTague's accident injuries.

Mr. McTague suffers intermittently with low back pain. His medical history includes treatment for a low back injury following a fall in 1978, from which he subsequently recovered. Dr. Mason's opinion is that while he could hypothesize that this low back condition was worsened by the 1992 motor vehicle-pedestrian accident, he can find no direct connection between Mr. McTague's increasing problems with his low back and his injuries sustained in the 1992 accident.

Nevertheless, even taking into consideration only the residual chronic pain and decreased physical tolerance from the injuries to his shoulders and legs in the 1992 motor vehicle accident, I find that Mr. McTague has proven that he has been continuously prevented from returning to any job for which he is presently reasonably suited by his education, training, or experience, since the termination of his weekly income benefits in June 1997. I find that these injuries from the accident significantly and materially contribute to his condition, even though he has other health problems that have not been proven to arise directly or indirectly from the accident.

Amount of Benefit

According to the provisions of paragraph 12(4)(b) of the Schedule, Allstate must pay Mr. McTague a weekly income benefit of 80% of his gross weekly income, less certain allowable deductions. To calculate his gross weekly income, Mr. McTague is permitted to take the higher of his gross weekly income from his employment for the four weeks or the 52 weeks before the accident.

The evidence with respect to Mr. McTague's earnings as a full-time reservist with the Canadian Armed Forces, during the four weeks or 52 weeks preceding the accident is complicated, contradictory and incomplete. I heard evidence from Mr. McTague, two reserve personnel and two accountants. Neither accountant was familiar with reserve or regular army payroll or pension matters.

The quantum dispute arose in 1997, more than four years after the accident. By that time some documents were misplaced and personnel had changed. The military continued to pay Mr. McTague his daily rate after the accident until August 31, 1993. In 1993, Mr. McTague's daily rate appears to have increased to $93.50. In October 1993, Allstate paid Mr. McTague his initial weekly income benefits of $588 per week, without any confirmation from his employer. Based on an Employer's Confirmation of Income which Allstate received on December 15, 1993, Allstate recalculated Mr. McTague's benefit to $523.60 per week. The Employer's Confirmation document was not signed or dated, although it would appear the information came from Major C. Haydar of the Toronto Scottish Regiment, Mr. McTague's supervisor. The rate of pay specified on this Employer's Confirmation is the rate Mr. McTague was receiving during the summer of 1993, not, it would appear, what he received prior to the accident, as the Schedule provides. That amount also equates to the amounts recorded on the Record of Employment issued to Mr. McTague, dated October 28, 1993. A second Employer's Confirmation form, also unsigned and undated, was subsequently received by Allstate in January 1998 with a different weekly income amount specified. That form included a second sheet explaining that the amount of income had been calculated by extrapolating the daily rate to 365 days' income.

I find that at the time of the accident, full-time reservists were paid according to their rank and incentive pay level. Pay was calculated as a "daily rate," paid seven days a week, although the working week was about five days per week owing to compulsory time off. A document known as a Route Letter and Attendance Report detailed the dates of the reservist's contract and his pay rate. Reservists could agree to work at a lower rank or incentive pay level, because of their unit's budget. The route letter covering Mr. McTague's contract for the period of four weeks before the accident could not be produced. Other route letters for different periods were produced.

Documents purporting to be photocopies of Mr. McTague's payroll ledger were produced. Two sets of copies, both certified as true copies of the originals by the same reserve finance officer, but containing different figures, were produced covering the same time period. No evidence at the hearing suggested either Mr. McTague or his counsel had any role in preparing any purported official documents from the militia. I do not hold them responsible for the conflicting evidence. However, in these circumstances the photocopied pay records cannot be considered to be reliable.

Further complication arose because of Mr. McTague's status as an annuitant or pensioner of the regular Canadian Armed Forces. Mr. McTague and others testified, and documents were produced, indicating that a reservist could not serve more than 335 days each year without taking a 30-day break; otherwise they are deemed to be re-enrolled, with consequent effects on their pensions.

At the hearing, although unfortunately not earlier, Mr. McTague produced monthly cheque stubs from his pension income during 1992 from the Canadian Forces, then paid by Supply and Services Canada. He testified that while his reserve pay was deposited directly into his bank account twice per month, he received a single monthly cheque in the mail for his pension. Mr. McTague also testified that, at the time, reservists did not receive any pay deposit advice so he had no written record of the additions or deductions to each semi-monthly bank deposit. This lack of written record was confirmed by the reserve personnel who testified. I accept Mr. McTague's evidence as to the origin of his twice monthly automatic bank deposits and with respect to his pension cheques. I find that in October and November 1992, Mr. McTague received net pension income of $793.13 each month.

Since 1997, Allstate was concerned about the apparent discrepancies between Mr. McTague's earnings as reported on his two 1992 T-4s from the Department of National Defence and his claims about his gross weekly earnings in the four weeks preceding the accident. Allstate postulated that pension income had been added to Mr. McTague's reserve earnings to produce a higher gross weekly income.

Elaine Vegotsky, a litigation forensic accountant, testified for Mr. McTague. Ms. Vegotsky used bank statements from September to December 1992, obtained directly from Mr. McTague's bank's archives, to estimate his gross weekly income. Working backward from the net deposits made November 13, 1992 and October 30, 1992 Ms. Vegotsky estimated that before income tax deduction at 15%, CPP, and UIC, Mr. McTague earned an average of $594.57 in gross weekly income in the four weeks before the accident. This equated to roughly $84.94 per day, which is in the same range as Ms. Vegotsky's understanding of Mr. McTague's daily rate ($85.86). Under the Schedule, Mr. McTague would be entitled to 80% of that gross weekly income, which Ms. Vegotsky calculated as $475.65 per week. Ms. Vegotsky admitted that since Allstate paid Mr. McTague $523.60 per week, on her calculations they had overpaid him by $47.95 per week, or approximately $9,494.10 for 198 weeks paid to termination in June 1997.

Ms. Vegotsky testified that in her opinion, the bank records were the best evidence available in this case, as they were wholly independent records. She rejected the DND records since they appeared to have been created post-accident and did not reconcile, and concluded that dividing the 1992 T-4s into 52 weekly amounts did not accurately reflect Mr. McTague's weekly income at the time of the accident. I find that the T-4s do not show the number of weeks worked in a year, only the amount earned and various deductions.

Debra McRae Chiasson, a chartered accountant, testified for Allstate. One of Ms. Chiasson's scenarios relied on the accuracy of the payroll records. Another scenario was based on the 1992 T-4 records reflecting employment income for 365 days. In both cases, Ms. Chiasson calculated that Allstate had overpaid Mr. McTague by more than $40,000.

Since I have rejected the purported payroll records as reliable documents and I accept Mr. McTague's evidence that the automatic deposits to his bank account twice monthly represented his reserve employment income during the latter part of 1992, I do not accept either of Ms. Chiasson's scenarios.

Mr. McTague is entitled to the benefit of paragraph 12(7)1.i. of the Schedule, which allows his gross weekly income to be based on his average gross weekly income from his employment for the four weeks preceding the accident. I find that Mr. McTague earned $594.57 per week in gross income in the four weeks before the accident. Under the Schedule, Mr. McTague would be entitled to 80% of that income, or $475.65 per week.

Since Allstate paid Mr. McTague $523.60 per week, based on my findings in this arbitration, they overpaid by $47.95 per week, or approximately $9,494.10 for 198 weeks prior to termination in June 1997. Allstate submitted that they should receive a credit of this amount in calculating any benefits owed to Mr. McTague to the date of this decision. By the close of the hearing, however, Allstate submitted that they were no longer suggesting that any error on Mr. McTague's part contributed to the amount of the overpayment. Allstate also undertook that if I should find that Mr. McTague was not entitled to further weekly income benefits, that they would not pursue him for any repayment.⁵

The issue of the correct amount of weekly income benefit was added by agreement of the parties to the issues in dispute at mediation in October 1997. It was re-identified as an issue in dispute between them at the pre-hearing discussion held before the arbitration hearing.

Even though Mr. McTague has not proved he was entitled to the amount of weekly income benefits Allstate paid him, I am not going to order him to credit the $9,494.10 against outstanding payments Allstate must make to him. I do this because Allstate has decided not to continue in its proposition that Mr. McTague contributed to the error on which they based their weekly income payments. Accordingly, there is no basis to require Mr. McTague to set off the amount against further benefits, because subsection 27(1) of the Schedule would not apply. That is the subsection that requires an insured person to repay to the Insurer any benefits received "through error or fraud."

Even if Allstate had not discontinued its claim that Mr. McTague contributed to the erroneous income information, I would not have found in their favour. I accept Mr. McTague's evidence that Allstate got his income information directly from Major Haydar, his supervisor.

As Director's Delegate Draper wrote in the appeal decision in Lunn and State Farm Mutual Automobile Insurance Company (OIC P-013860, April 30, 1997):

I share the view underlying Levenson that an "innocent" insured person should be able to rely on the benefits he or she receives without being left vulnerable to a later claim for repayment based on new calculations or a different interpretation of the Schedule.

Accident benefits are meant to respond to the immediate financial consequences of automobile accidents, covering basic needs such as medical treatment, transportation, and income replacement for those who are unable to return to work. To achieve the purposes of the accident benefits scheme, both parties have obligations. The insured person must notify the insurer of the accident and provide medical and financial information. The insurer must promptly evaluate the claim and pay benefits if the person is eligible. In my view, the fact that a later reevaluation leads to a different conclusion does not necessarily mean that the benefits were paid "through error."

The determination of whether benefits were paid "through error" will depend on the particular facts of each case. The focus, however, should be on the situation at the time the benefits were paid. If the insured person materially contributed to the overpayment, it must be repaid. However, if the overpayment is based on information that legitimately was not available earlier, or on later arbitral or court decisions affecting the interpretation of the Schedule, repayment is not required, although the insured person's ongoing benefits could be affected.

Accordingly, although Mr. McTague will not have to repay any overpayment made to him prior to the termination of his weekly income benefits, outstanding and ongoing weekly income benefits will now be paid at the rate determined in this arbitration.

EXPENSES:

Mr. McTague requested his expenses of the arbitration. Allstate submitted that although it would not request their expenses of Mr. McTague, neither should Allstate be expected to pay his expenses. Allstate submitted that Mr. McTague could have shortened the proceeding considerably. Allstate submitted that the difficulties in the economic evidence should be visited on the Applicant by a denial of his expenses.

The calculation of Mr. McTague's gross weekly income from employment in this case should have been a relatively simple exercise. However, that was not the case, given the circumstances with regard to lack of pay stubs, duplicate irreconcilable supposedly certified copies of payroll ledgers, and a lack of understanding on the part of all parties as to how Mr. McTague's pay was calculated. None of those circumstances can be attributed to Mr. McTague. Allstate contributed to this difficulty by not questioning the initial Employer's Confirmation of Income forms until years after they had been submitted. In the interim, records had been lost and personnel changed.

I have considered the criteria set out in section 12(2) of Ontario Regulation 664, R.R.O. 1990, as amended by O.R. 464/96, with respect to the awarding of expenses. Mr. McTague has been largely successful here. I consider that an award of expenses to Mr. McTague is justified in all of the circumstances of this arbitration.

August 17, 2000

K. Julaine Palmer Arbitrator

Date