Neutral Citation: 2000 ONFSCDRS 183
FSCO A99-000403
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
DANNA LACKSTONE
Applicant
and
LUMBERMENS MUTUAL CASUALTY COMPANY
Insurer
REASONS FOR DECISION
Before:
Joyce Miller
Heard:
May 29, 30 and 31, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto.
Written submissions were received on were received from both parties by June 16, 2000.
Appearances:
Robert A. Besunder for Ms. Lackstone
Lisa Trabucco for Lumbermens Mutual Casualty Company
Issues:
The Applicant, Danna Lackstone, was injured in a motor vehicle accident on June 28, 1995. She applied for and received statutory accident benefits from Lumbermens Mutual Casualty Company ("Lumbermens"), payable under the Schedule.1 Lumbermens terminated weekly income replacement benefits on November 25, 1996. The parties were unable to resolve their disputes through mediation, and Ms. Lackstone 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 Ms. Lackstone entitled to receive a weekly income replacement benefit pursuant to section 7 of the Schedule from November 26, 1996 and ongoing?
Is Ms. Lackstone entitled to supplementary medical expenses pursuant to subsection 36(1) of the Schedule?
Is Lumbermens entitled to a repayment pursuant to subsection 70(1) of the Schedule?
Is Lumbermens liable to pay a special award pursuant to subsection 282(10) of the Schedule?
Is Lumbermens liable to pay Ms. Lackstone's expenses in this arbitration hearing pursuant to subsection 282(11) of the Insurance Act?
Is Ms. Lackstone liable to pay Lumbermens' expenses in this arbitration hearing pursuant to subsection 282(11) of the Insurance Act?
Result:
Ms. Lackstone is not entitled to a weekly income replacement benefit pursuant to section 7 of the Schedule from November 26, 1996.
Ms. Lackstone is not entitled to supplementary medical expenses pursuant to subsection 36(1) of the Schedule.
Lumbermens is entitled to a repayment of $20,166.25 pursuant to subsection 70(1) of the Schedule.
Ms. Lackstone is not entitled to a special award pursuant to subsection 282(10) of the Schedule.
If needed, I may be spoken to on the issue of expenses.
Background:
The Accident
Ms. Lackstone is 42 years old, married, a native of Toronto and works as a travel agent. On June 28, 1995 Ms. Lackstone was driving in the centre lane on Avenue Road when a car cut in front of her. Ms. Lackstone stated that she was able to stop in time without hitting the car. The car behind her, a Jeep, was also able to stop. However, the car behind the Jeep hit the Jeep and pushed it into Ms. Lackstone's car.
Ms. Lackstone testified that her head went forward, but the air bag did not deploy. Her first reaction was shock. She stated that she felt shaky and upset but felt no pain. She called her father who drove her home.
Ms. Lackstone stated that the next morning she had neck pain and her shoulders were sore. She called her family doctor, but he was away. She went to see his replacement, Dr. Simon Colla. Dr. Colla gave her an injection for the pain. He told her she had a whiplash injury and that she would be fine in a month.
Ms. Lackstone testified that she did not get better after the accident, and that as a result of the accident she now suffers from neck spasms and severe headaches of such an intensity that at times she becomes incapacitated with the pain. Sometimes the pain is so intense she becomes nauseous and vomits continuously. When this happens she has to attend the emergency department for an injection of Demerol to stop the pain and vomiting. Ms. Lackstone stated that to cope with the pain she takes pain medication, undergoes nerve blocks, and attends chiropractic treatments and massage.
Ms. Lackstone testified that despite the pain she can still do the tasks of her job, however, she cannot sustain her work over a long period of time. She stated that prior to the accident, because of a facial pain condition, she was absent from work approximately once a month, but since the accident her pain has been exacerbated and she misses work at least once a week.
The Essential Tasks of Employment
Ms. Lackstone testified that she is a 50 per cent partner with her father in a travel agency business called East West Travel Agency. Ms. Lackstone stated that although she is a partner in the business she works as an employee and is paid and treated as an employee.
Ms. Lackstone testified that her father began the business about 20 years ago and that initially it was geared to holiday and corporate sector clients. She stated that she joined the business after she finished university. She stated that when she began the job she took bookings and assisted her father with his clients. She also travelled a lot for the business.
Ms. Lackstone stated that about five years ago there was a significant shift in the type of business the agency was servicing. Their holiday business, which was a large part of their travel business, began to decline, and in its place the agency began to service the entertainment business.
Ms. Lackstone stated that the shift in business came about through a serendipitous contact she had made with a film director sometime before the accident in either 1994 or 1995. This film director gave her some business and from that beginning, as a result of "word-of-mouth," she was able to get the majority of the travel work for the major film, commercial and entertainment companies based in Toronto. Ms. Lackstone testified that in the last three years their travel agency has grown to have the largest share of the entertainment industry's travel business in Toronto.
Ms. Lackstone testified that presently the business has four full-time employees and one part-time employee. She stated that 90 per cent of the employees' work is what she assigns to them. They do not work independently.
Ms. Lackstone stated that her job is sedentary and that most of the work is done on the phone. She often multi-tasks by working on the computer or writing while on the phone. Ms. Lackstone stated that before the accident she worked from 9 a.m. to 7 p.m., Monday to Friday, and sometimes returned to work at 10 p.m. to "punch in" tickets for another time zone. She also took work home with her. As well, she would come in on Saturday from 1 p.m. to 4 p.m. to catch up on her work and sometimes on Sunday for an emergency.
Ms. Lackstone stated that since the accident she can only work from 9 a.m. to 6 p.m. and this includes taking breaks when needed. Ms. Lackstone testified that she still does all her own work and does not delegate it. When she misses a day because she is sick, her work load on her return is increased and she has to work twice as hard to catch up when she gets back. She stated that the pain is wearing her down and while she has not lost any existing business accounts she is not taking on any new ones.
Ms. Lackstone's father, Alan Lackstone, testified that Ms. Lackstone is solely responsible for the success of their business. He stated that he looks after the financial aspect of the travel agency and other businesses he owns, while Ms. Lackstone services the clients. He stated that Ms. Lackstone provides an excellent service, and as a result there is a high demand for her personal attention.
Mr. Lackstone stated that since the accident there has been no change in Ms. Lackstone's performance and that when she is at work she puts in a consistent effort. However, because of her pain and the effect it has on her, she misses work at least one day a week. He stated that because clients only want to deal with her, unless it is an emergency, if Ms. Lackstone is away ill, customers are asked to call back the next day. According to Mr. Lackstone the growth of the business has stopped because of the effect that Ms. Lackstone's absences are having on the business.
Evidence and Findings on Weekly Income Replacement Benefits:
(i) Submissions
Ms. Lackstone submits that as a result of the accident on June 28, 1995 she suffers from incapacitating occipital headaches and neck spasms that substantially disable her from performing the essential tasks of her employment.
Lumbermens submits that Ms. Lackstone had a severe pre-accident chronic pain condition and that any increase in the severity of her headaches in the last few years is not related to the accident. Lumbermens submits that any increase in pain Ms. Lackstone may be experiencing is more likely related to the stress of handling the increased volume of business, than as a result of the accident. As well, Lumbermens submits that Ms. Lackstone does not suffer a substantial inability to perform her employment tasks as she has continuously worked since the accident.
Lumbermens submits that it terminated Ms. Lackstone's weekly income replacement benefits on November 26, 1996 based on a Designated Assessment Centre ("DAC") report of September 9, 1996 including a functional abilities evaluation of October 22, 1996 which concluded that Ms. Lackstone was not disabled and was able to meet her job requirements as a manager of a travel agency.
(ii) The Law
Subsection 7(1) provides that where an insured person sustains an impairment as a result of an accident and is employed at the time of the accident, the insured person is entitled to a weekly income replacement benefit if within two years of the accident the insured person suffers a substantial inability to perform the essential tasks of that employment.
The burden of proof rests with Ms. Lackstone to prove on a balance of probabilities that she is substantially disabled from performing the essential tasks of her employment.
(iii) Findings
Causation
I have no hesitation in accepting that Ms. Lackstone genuinely believes that the source of her present chronic pain is a result of the car accident on June 28, 1995. The objective evidence, however, shows otherwise.
Ms. Lackstone had a very minor car accident. Damage to her vehicle was to the cover of the bumper on the car and cost $341 to repair.
Prior to this accident Ms. Lackstone had a significant chronic pain condition, for which the origin has never been determined. It is speculated that the pain originated from a dental procedure Ms. Lackstone underwent in 1992.
Ms. Lackstone testified that in a routine filling of a cavity in her upper right tooth she believes the dentist hit a nerve when he injected the freezing. She stated that after the dental procedure was completed the area around the tooth began to feel sensitive and eventually escalated to a "fiery sharp pain" that was constant.
Ms. Lackstone was diagnosed as having a facial neuralgia, called trigeminal neuralgia. She was told by one doctor that it would take two to four years for the pain to disappear.
To get assistance in relieving her pre-accident pain, Ms. Lackstone testified that she saw many different doctors and used various modalities including acupuncture, nerve blocks, chiropractic treatment and pain medication. Ms. Lackstone's pain was so severe that she took morphine (MS Contin) on a regular basis. However, sometimes the pain would become so intense that not even the morphine helped. The severity of the pain made Ms. Lackstone nauseous and caused her to vomit continuously. The only thing that relieved this attack was a visit to the hospital emergency department where she received an injection of Demerol.
Although Ms. Lackstone testified that prior to the June 28, 1995 car accident she was feeling 90 per cent better, the objective, contempraneous, evidence does not support this. The medical evidence from 1992 until two weeks before the accident shows that Ms. Lackstone was suffering from the symptoms of a severe long-standing chronic pain problem, which included facial pain as well as migraine headaches. For example, the medical evidence from March 1995 until just before the accident shows that:
On March 2, 1995 Ms. Lackstone saw her family doctor, Dr. Freedman. His clinical notes for that date state that Ms. Lackstone "has [sic] nerve block - neck 2 days ago - now has severe pain ++ left side of face." Morphine (MS Contin) and Gravol were prescribed;
On March 15, 20, 28, 1995; April 14, 17, 1995; May 19, and June 12, 1995 Ms. Lackstone saw Dr. Freedman. Pain was the primary reason for these visits. His records indicate that at theses visits he gave Ms. Lackstone prescriptions for morphine, Gravol, Leritine and Demerol injections for her pain;
On March 21, 1995 Ms. Lackstone had three nerve blocks;
On April 1, 1995 Ms. Lackstone was seen in the emergency department for trigeminal neuralgia and was given an injection of Demerol;2
On April 14, 1995 Ms. Lackstone was seen in the emergency department for idiopathic periphera neuritis and was given an injection of Demerol;
On April 26, 1995 Ms. Lackstone was seen by Dr. Freedman for a migraine headache and was given an injection of Demerol;
In April 1995 Ms. Lackstone had 11 chiropractic treatments, averaging about three times a week;
In May 1995 she had 12 chiropractic treatments, again averaging about three times a week;
On May 31, 1995, Ms. Lackstone had another nerve block;
On June 1, 1995 Ms. Lackstone was seen in the emergency department. Her symptoms were not diagnosed but she was given an injection of Demerol;
On June 14, 1995 (two weeks before the accident) Ms. Lackstone was seen at The Pain Institute by Dr. H. Jacobs and was given a supra orbital block and a prescription for morphine.
It is very clear from the above brief summary that the type of treatment Ms. Lackstone testified she has been receiving because of the car accident, namely, nerve blocks, extensive chiropractic treatment, morphine and Demerol injections, is exactly the same treatment she was receiving for her chronic pain and migraine headaches for a number of years before the accident.
As a general rule, an accident need not be the sole cause of an applicant's disability, but it must make a "significant" or "material" contribution. Arbitrator Makepeace in the case of Moschonissios and York Fire3, summarized a number of factors to consider when deciding whether there is a sufficient causal connection between an accident and the disability claimed. These factors include: "the insured person's symptoms and functional level before the accident, the severity of the accident, the mechanism of injury, any delay in the onset of symptoms, the nature of the injuries claimed, and any unrelated causes of injury before or after the accident." I agree with these factors and have taken them into consideration in coming to my decision.
I accept the fact that Ms. Lackstone has suffered from severe debilitating headaches since her car accident. However, I do not find that the car accident caused or significantly contributed to the severity of her headaches.
In Dr. Freedman's report of December 18, 1996 he stated that Ms. Lackstone "... complained for the first time about occipital headaches" on April 2, 1996. Dr. Freeman also noted that "they were becoming more severe. There was no aura associated with them but they were migraine like in that they were pounding and associated with nausea and vomiting."
According to Dr. Freedman's report of March 1, 2000, the severity of these headaches are as a result of the accident. In his view these attacks are different from her pre-accident attacks and that Ms. Lackstone "... is severely disabled by these attacks."
In reading Dr. Freedman's report, I find that he significantly downplays Ms. Lackstone's pre-accident condition. He sums up her pre-accident medical history in two sentences which I think are worth quoting:
Pre-dating the accident there is no doubt that this lady suffered from some sort of facial neuralgia which gave her attacks from time to time. There is also no doubt that she suffered from muscle contraction headaches at various times but these were neither very frequent nor severely disabling.
No mention is made of the fact that prior to the accident Ms. Lackstone was taking morphine daily, undergoing chiropractic treatment three times a week, receiving nerve blocks for the pain, and that she needed to attend at the emergency department or his office for Demerol injections when her pain would get so severe that morphine did not help.
Most importantly, Dr. Freedman does not mention the fact that Ms. Lackstone's severe occipital headaches did not begin until April 1996.
I prefer the opinions of Dr. Michael Devlin, a physiatrist, who examined Ms. Lackstone for a Disability DAC, and Dr. Michel Reux, a chiropractor, who examined Ms. Lackstone for a medical/rehabilitation DAC, to that of Dr. Freedman. In their opinion Ms. Lackstone's occipital headaches are not related to the accident.
Dr. Devlin testified that medically it was not plausible for there to be such a lengthy lapse of time between the accident and the onset of Ms. Lackstone's symptoms. In his view, if the accident was the cause of these symptoms, then normally the symptoms would have appeared between 12 to 24 hours post-accident and not, for example, four or five months after the accident.
Like Dr. Devlin, Dr. Reux stated that he had never heard of a case where an occipital headache would develop so late after a whiplash injury. In his report of November 26, 1996 Dr. Reux noted that "Ms. Lackstone complained of severe subocciptial headaches which she claimed began five months ago." He went on to note that almost three months after the accident "... in the September 21, 1995 initial rehabilitation assessment by Total Rehabilitation Management there was no complaint of headaches." [emphasis added]
Dr. Marcel Reux, testified that while an occipital headache is commonly associated with a whiplash, the type of occipital headache that Ms. Lackstone has is different than the typical whiplash headache. Dr. Reux also testified that while a whiplash injury could aggravate facial neuralgia, this was not the case with Ms. Lackstone. Dr. Reux stated that when he examined Ms. Lackstone she told him that her facial neuralgia was 70 per cent better and that her main concern was her severe headaches.
I find Dr. Devlin's and Dr. Reux's opinion that Ms. Lackstone's occipital headaches are not related to the accident to be more persuasive than Dr. Freedman's opinion.
I also find that the medical evidence does not support Ms. Lackstone's submission that after the accident the frequency of her pain attacks increased and she needed more treatment. For example, the OHIP summary shows that:
In the six months before the accident Ms. Lackstone had 12 Demerol injections for pain.4The last one was on June 1, 1995. In the six months after the accident she did not have any injections.
In the six months before the accident Ms. Lackstone was seen in emergency six times. In the six months following the accident she was seen in the emergency department only once and that was on August 20, 1995. The next time she is seen in the emergency department is on April 5, 1996.
In 1994 Ms. Lackstone had 145 chiropractic treatments. In 1995 in the six months before the accident she had 23 chiropractic treatments and these treatments were all in the months of April and May. In the six months following the accident she only had nine chiropractic treatments. It is not until April 1996 that she begins to have a significant increase in chiropractic treatment.
In summary, I find that the accident Ms. Lackstone was involved in was a minor one; that she had a severe chronic pain condition prior to the accident; that if she had a whiplash injury as a result of the accident it had a minimal effect on her pre-accident condition; and that the length of time, of almost a year, between the onset of Ms. Lackstone's severe occipital headaches and the accident is too remote in time for the accident to have been a cause or to have significantly contributed to her occipital headaches.
In short, I find that the minor car accident on June 28, 1995 did not cause or significantly contribute to Ms. Lackstone's present chronic pain syndrome. Accordingly, I find that pursuant to subsection 7(1) of the Schedule Ms. Lackstone is not entitled to weekly income replacement benefits from November 26, 1996 and ongoing.
Substantial Disability
Even if the accident is the cause of Ms. Lackstone's severe occipital headaches, and I am wrong in my conclusion on the issue of causation, for the following reasons I find that Ms. Lackstone is not substantially disabled from performing the essential tasks of her employment.
The test in subsection 7(1) is not some inability to perform essential tasks, but a substantial or sizeable inability to perform these tasks.5 The experience of pain itself is not compensated under the Schedule, except in a case where pain impairs function to such a degree that the person is substantially unable to perform his or her essential tasks.6
Ms. Lackstone's own evidence is that she continued to work almost full-time after the accident and after her benefits were terminated.
Ms. Lackstone testified that after the accident, depending on how she was feeling, if she could not work a full week, she worked as full a week as possible. However, if she missed work she did not delegate her work, but worked extra hard to catch up. According to Ms. Lackstone, in order to be fair to the other employees, and not to appear to be receiving special treatment when she missed a day of work, her salary was reduced by $50 a week.
Both Ms. Lackstone and her father's evidence is that before the accident their business was declining because of a significant decrease in airline commissions. However, their business began to grow after the accident when they began to service the film, commercial and entertainment industry. At that time Mr. Lackstone withdrew from the day-to-day activities of the business, except for managing the finances, and Ms. Lackstone took complete charge of running the business. Their evidence is that the clients only want to deal with Ms. Lackstone and that Ms. Lackstone is solely responsible for the success of the business.
I accept that Ms. Lackstone suffers from a great deal of pain. Nevertheless, her evidence is clear that since the accident she alone manages the business, does not delegate her work and that post-accident she is responsible for the success of the business. I find that any reduction in Ms. Lackstone's salary is not reflective of a substantial inability to do her job.
Accordingly, I find that Ms. Lackstone does not suffer a substantial inability to perform the essential tasks of her employment and, therefore, is not entitled to a weekly income replacement benefit from November 26, 1996 and ongoing.
Medical Rehabilitation Benefit:
Pursuant to subsection 36(1) of the Schedule7 Ms. Lackstone claims expenses for the following items: $3,970.35 for massage and $6,096.95 for chiropractic treatment pursuant to paragraph 36(1)(b); $3,904.58 for medication pursuant to paragraph 36(1)(c); and $946.95 for a muscle stimulator pursuant to paragraph 36(1)(h).
Lumbermens terminated Ms. Lackstone medical benefits on March 31, 1997 based on a Medical-Rehabilitation DAC assessment by Dr. Michael H. Ford, an orthopaedic surgeon, and Lisa Margolese, a physical therapist, dated November 18, 1996; and Dr. Marcel J. Reux, a chiropractor, who saw Ms. Lackstone on November 26, 1996. Dr. Ford and Ms. Margolese presented a combined report, signed by Dr. Ford, on November 18, 1996. In this report Dr. Ford made the following comments and recommendations:
Impression:
As a result of the motor vehicle accident Ms.Lackstone may have incurred some soft tissue injuries to her cervical spine. Presently, her ongoing headaches (her major symptom) which began a year post-accident, are unlikely related directly to the accident. Her headaches appear to be of a migrainous origin. Further migraine therapy such as the use of Imitrex has been suggested. Review of her migraine headaches by Dr. Edmeads at Sunnybrook Hospital has been recommended. Her positive neck pain and suboccipital pain may be as a result of the suboccipital muscle tightness.
Her x-rays demonstrated pre-existing degenerative changes which were fairly extensive and in excess of what one would expect, given her age. Persistent neck symptoms will most likely be on the basis of her pre-existing cervical degenerative pathology. She also has a prior history of left sided neurologic facial pain which is unrelated to the motor vehicle accident.
Opinion and Recommendations:
...it is recommended that Ms. Lackstone begin to stretch her tight suboccipital muscles to reduce any hypertonicity. She stated that only her chiropractor can relieve her headaches. It is therefore recommended that her chiropractic treatments be reduced while she engages in a neck stretching program in conjunction with migraine medication (Imitrex) in an attempt to control the pain herself. After 3 months, her chiropractic treatments should be discontinued to discourage dependency on passive treatments and promote independence and self management.
Under normal circumstances, the cervical pain typically secondary to soft tissue injuries associated with this mechanism injury is one of resolution without significant long-term sequelae. We do not expect any serious consequences as a result of the motor vehicle accident. She may continue to go on to have continuous symptomatology secondary to her migraines, pre-existing cervical degenerative change and facial neuralgia.
In his report of November 26, 1996 Dr. Reux made the following findings and recommendations:
Ms. Lackstone did suffer soft tissue injuries to the cervical spine as a result of the motor vehicle accident of June 28, 1995. These injuries appear to have been mild to moderate if one looks a the paucity of objective findings. The main region of the cervical spine affected appears to be the suboccipital region. The pain appears to have worsened significantly in June 1996, a year post trauma, and increased suboccipital muscle tension seems to reproduce the pain symptoms. Significant upper cervical hypomobility was noted which is surprising since Ms. Lackstone has been receiving chiropractic care for more than a year. The trigeminal neuralgia does not appear to have any effect on the suboccipital headaches. These headaches however are not typical in that they usually refer to the vertex of the head (Arnold's neuralgia) or to the supra or retro-orbital part of the eyes.
Ms. Lackstone claimed that only her chiropractor can give her relief when she has these violent attacks. I recommend therefore that Ms. Lackstone continue to see Dr. Vardi but on a reduced frequency of once a week for the next 3 months. ... Ms. Lackstone should be encouraged to reduce her dependency on her chiropractor and be taught how to control the pain herself through regular exercise.
At the hearing Dr. Reux testified that he had never heard of a case where headaches developed that late after a whiplash. He went on to comment that any relief Ms. Lackstone would get from chiropractic treatment for her severe headaches would not be curative but palliative. He stated that if no other modality can relieve the pain then he would recommend chiropractic treatment for pain relief.
Ms. Lackstone submitted that her severe headaches are a result of the accident and that based on Dr. Reux's testimony I should accept that chiropractic treatment is both reasonable and necessary for pain relief.
Findings
I accept that Ms. Lackstone had a mild to moderate whiplash as a result of the accident. I accept that Ms. Lackstone has debilitating headaches. I also accept Dr. Reux's testimony that chiropractic treatment in certain cases can be a legitimate form of pain control. However, I do not accept that Ms. Lackstone requires any further medical benefits as a result of the accident.
As I stated above, Ms. Lackstone had a minor accident which I find had very little effect on her chronic and debilitating pre-accident pain condition. I was not presented with any cogent medical evidence which would lead me to conclude that in April 1996, when Ms. Lackstone started to have severe headaches, that the accident had caused or had significantly contributed to these headaches. I prefer the opinions of Dr. Devlin and Dr. Reux that Ms. Lackstone's occipital headaches are not related to the accident.
Accordingly, I find that pursuant to subsection 36(1) of the Schedule Ms. Lackstone is not entitled to her expenses for any further medical benefits after March 31, 1997.
Overpayment:
Pursuant to subsection 70(1), Lumbermens is claiming a repayment of $20,166.25.
Ms. Lackstone's weekly income replacement benefit was based on her income earned in the 52 weeks prior to the accident. According to the Employer's Confirmation of Income, which was provided by Ms. Lackstone's father, Ms. Lackstone earned $41,050 in the 52 weeks prior to the accident. From this amount Ms. Lackstone's weekly income replacement benefit was calculated to be $517.19.8 From this amount, in accordance with section 10 of the Schedule, Lumbermens deducted 90 per cent of Ms. Lackstone's net post-accident income from July 6, 1995 to November 25, 1996.
Ms. Lackstone, who continued to work after the accident, provided Lumbermens with her weekly pay cheque stubs. Based on these stubs, Lumbermens paid Ms. Lackstone the difference between $517.19 and her claimed net weekly salary. In 1995, Lumbermens paid Ms. Lackstone weekly income replacement benefits of $7,463.08. In 1996 it paid her weekly income replacement benefits of $13,298.05.
As part of the productions for arbitration Ms. Lackstone produced copies of her income tax returns and Revenue Canada Summaries for the years 1992 to 1998. According to the 1995 tax summary Ms. Lackstone's gross income from employment was $40,796. In 1996 her tax return shows gross income from employment of $35,934. Lumbermens submits that based on the amount of the employment income reported to Revenue Canada it has overpaid weekly income replacement benefits by $7,463.08 for 19959 and $12,703.17 in 1996,10 for a total of $20,166.25.
Both Ms. Lackstone and her father testified that the amount claimed as employment income in her tax returns is incorrect. According to their evidence, a portion of the amount of income reported in the tax return was not income from employment, but a gift from Mr. Lackstone to his daughter to help her out with medical and housing expenses. The fact that it was included in her tax return as income from employment was simply a bookkeeping matter and was not income earned or even available from employment.
Ms. Lackstone submitted that I should accept her pay cheque stubs and her explanation regarding the higher income amount in her tax return as a basis to finding that there has been no overpayment.
Lumbermens on the other hand submitted that all monies reported as employment income to Revenue Canada are prima facie evidence of employment income and must be treated as such. In support of its position it relies on the decision of Arbitrator VanderBent in Zirger and Commercial Union.11 In that case, Arbitrator VanderBent summarized some of the principles which have been applied by arbitrators regarding the determination of employment income earned by an insured person within the context of a closely-held corporation and/or family-run business.
These principles include the following: that the insurer bears the onus of establishing that an insured has received income in respect of employment subsequent to the accident; and that an insured person's income tax returns are prima facie proof of income, but they are not conclusive of the issue of whether payments received are indeed employment income. The insured person bears the onus to present reliable and cogent evidence to overcome the prima facie presumption. I agree with these principles.
In weighing the evidence, I find Ms. Lackstone's tax returns for 1995 and 1996 to be the most objective evidence of what Ms. Lackstone's employment income actually was for 1995 and 1996. The fact that Ms. Lackstone's father may have given her a gift of money for housing and medical expenses, in my view, does not take away from the fact that she received this money as part of her income for employment. She declared it as income from employment and most importantly she paid taxes on the amount as income from employment.
Ms. Lackstone submitted that the gift's inclusion into her income was "simply a bookkeeping matter." However, Ms. Lackstone did not provide any objective evidence such as bookkeeping records, bank statements or other financial records to support her submission that the gift was not income from employment. Neither, did Ms. Lackstone call her bookkeeper or an accountant to explain why a gift would be paid as employment income and subject to being taxed. Nor did she give any other accounting explanation that would provide an objective basis for me to accept the alleged gift as something other than employment income.
Accordingly, I accept Lumbermens' submission that Ms. Lackstone's income tax returns for 1995 and 1996 represent her employment income for 1995 and 1996. I further accept that these amounts are higher than the amounts Ms. Lackstone submitted to Lumbermens when claiming her weekly income benefit for those years. I accept that Ms. Lackstone misinformed Lumbermens as to what her employment income was for 1995 and 1996 by only providing Lumbermens with her pay cheque stubs which showed a lesser amount of employment income than her tax returns. As a result of this misinformation I find that Ms. Lackstone contributed in a material way to Lumbermens overpaying her benefits in the amount of $20,166.25. Accordingly, I find that pursuant to subsection 70(1) of the Schedule Ms. Lackstone is required to repay Lumbermens the sum of $20,166.25.
Special Award:
Pursuant to subsection 282(10) of the Schedule Ms. Lackstone is claiming a special award on the basis that Lumbermens unreasonably terminated her accident benefits.
A special award may be awarded only in the case where benefits have been ordered. In this case I have denied Ms. Lackstone's claim for disability benefits and medical benefits. Even if I am wrong in my conclusion, I do not find that a special award is warranted in this case. Lumbermens terminated Ms. Lackstone's benefits based on an Insurer's Examination and a DAC Assessment. In my view, based on the medical reports it had, Lumbermens' denial of Ms. Lackstone's accident benefits was not unreasonable.
Accordingly, I find that Ms. Lackstone is not entitled to a special award.
EXPENSES:
If needed, I may be spoken to on the issue of expenses.
September 29, 2000
Joyce Miller Arbitrator
Date
Neutral Citation: 2000 ONFSCDRS 183
FSCO A99-000403
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
DANNA LACKSTONE
Applicant
and
LUMBERMENS MUTUAL CASUALTY COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Ms. Lackstone's claim for weekly income replacement benefits, medical benefits and a special award is dismissed.
Ms. Lackstone shall pay Lumbermens $20,166.25 pursuant to subsection 70(1) of the Schedule.
September 29, 2000
Joyce Miller Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule —Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98.
- While the OHIP summary does not state what kind of injection Ms. Lackstone received I, nevertheless, conclude from her testimony that it was Demerol.
- Moschonissios and York Fire & Casualty Insurance Company, (FSCO A97-002196, December 23, 1999).
- Although the OHIP report does not indicate what kind of injections Ms. Lackstone received, however, based on Ms. Lackstone's testimony I conclude that the injections were Demerol.
- Steele and Zurich Insurance Company (OIC A-001024, December 3, 1992)
- Downs and Allstate Insurance Company of Canada (OIC A-000064, July 18, 1991)
- Subsection 36(1) of the Schedule provides that if an insured person sustains an impairment as a result of an accident, the insurer shall pay for all reasonable expenses incurred by or on behalf of the insured person as a result of the accident outlined in paragraphs (a) to (h).
- Lumbermens does not dispute that this is the correct amount of Ms. Lackstone's weekly income replacement benefit.
- Pursuant to section 81 of the Schedule and based on the information reported by Ms. Lackstone to Revenue Canada, Lumbermens calculated Ms. Lackstone's average net weekly income in 1995 to be $620.12. This base amount was not disputed by Ms. Lackstone.
- Pursuant to section 81 of the Schedule and based on the information reported by Ms. Lackstone to Revenue Canada, Lumbermens calculated Ms. Lackston's average net weekly income in 1996 to be $558.11. This base amount was not disputed by Ms. Lackstone.
- Zirger and Commercial Union (FSCO A97-001386, September 16, 1999)