Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2000 ONFSCDRS 42 Appeal P98-00041 OFFICE OF THE DIRECTOR OF ARBITRATIONS

CANADIAN SURETY COMPANY Appellant

and

H. K. Respondent

Before: Susan Naylor

Counsel: Terry R. Shillington (for Canadian Surety) L. Scott Smith (for H.K.)

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 dismissed and the arbitrator's order dated August 11, 1998 is confirmed.
H.K. is awarded her appeal expenses.

February 29, 2000

Susan Naylor Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL AND BACKGROUND

These proceedings arise out of a horrifying accident on July 30, 1992. Mrs. K. was driving through Kentucky en route from a Florida vacation. She had a full car. Her teenage daughter was sitting in the back seat with two other passengers. A close friend was in the front seat. An oncoming vehicle veered across the median and crashed into Mrs. K.'s car head-on at high speed. The driver of that vehicle was killed as was Mrs. K.'s front seat passenger. The other passengers were seriously injured. Her daughter suffered brain damage. Mrs. K. suffered multiple rib fractures, a fractured nose, concussion and soft tissue injuries to her neck and back.

Mrs. K. was able to go back to work after a six-month recovery period, but continued to experience difficulties. She ultimately stopped work in September 1994 because of pain and emotional distress developing in the aftermath of the accident and heightened by the ever-present worry about her daughter's condition. The doctors agree upon a diagnosis of chronic pain syndrome and depression. The arbitrator found that Mrs. K. was also suffering from post-traumatic stress disorder and the consequences of a head injury, although neither finding was central to the outcome.

The questions on appeal are whether the arbitrator erred in deciding that Mrs. K. was entitled to benefits beyond the 156 week mark, and in imposing a special award.

Mrs. K.'s entitlement to statutory accident benefits is governed by the Statutory Accident Benefits Schedule - Accidents before January 1, 1994, R.R.O 1990, Reg. 672 ("the Schedule”). Initially, under the terms of s. 12(1) of the Schedule, eligibility depends upon the insured's inability to do his or her own job. After 156 weeks, the focus shifts to the person's inability to do other suitable work. Section 12 (5)(b) relieves an insurer from paying benefits "for any period in excess of 156 weeks unless it has been established that the injury continuously prevents the insured from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience." In this case, the 156 week mark was reached on January 30, 1997.¹

The arbitrator found that Mrs. K.'s condition rendered her incapable of engaging in any line of work for which she was reasonably suited. He defined the scope of the occupational options available to her narrowly. At page 14 he said:

I find that "suitable employment" for H.K. for the period since January 31, 1997 would entail full-time employment approximating her remuneration at [her pre-accident employer]. The employment would require her to be competitively productive. Such employment would require little facility in English, which would essentially restrict her to the more physical type of work she was performing prior to the accident.

Mrs. K.'s job involved assembly-line work at a poultry processing plant. Job conditions were demanding. Mrs. K. had been employed there since shortly after coming to Canada in 1985.

Canadian Surety argues that the arbitrator's findings as to what constituted suitable employment are seriously flawed. It complains that Mrs. K. did not offer any evidence to prove there was no suitable work she could do or that the physical type of work she did before was her only option. Canadian Surety did not present any vocational rehabilitation evidence of its own. Relying on some Commission decisions, it asserts that "it is an express requirement of the post 156 week test that the insured produce evidence of some sort of suitable employment and the insured failed to do so."

II. WEEKLY INCOME BENEFITS - ANALYSIS AND CONCLUSION

There is a considerable body of decisions by judges and arbitrators addressing the meaning of "suitable employment" under the Schedule and similarly-worded disability policies. While there are no fixed criteria, a number of factors are considered. At page 12 of his decision, the arbitrator summarised some principal considerations, recognising, first and foremost, that the test involves an individualised assessment relating to the background, experience, circumstances and realistic prospects of that particular claimant.

No objection can be taken to the arbitrator's conclusion that suitable work for Mrs. K. involves full time employment approximating her pay level at her former job, and that to be judged capable of a job, she must be able to keep up with the work required. The arbitrator clearly considered the facts in light of appropriate considerations.

Canadian Surety's objection is that the arbitrator should have required more from Mrs. K. in the way of proof of other potentially suitable jobs or lines of work to show she was unable to manage them. It complains that, instead, the arbitrator assumed, without evidence, that she was limited to the type of work she did before the accident. Canadian Surety relies on reasoning in a line of Commission cases, particularly, Caruso and Guarantee Company of North America, (OIC A-006856, May 9, 1996); Gagnon and Jevco Insurance Company, (OIC A-015357, January 1, 1996) upheld (OIC P96-002213, June 9, 1997) and Wigle and Royal Insurance Company, (OIC A-012312, January 12, 1996) upheld (OIC P96-0000ZS, April 9, 1998). Canadian Surety argues that the arbitrator correctly summarised the principles articulated in these decisions but failed to apply them to Mrs. K.'s case.

In Caruso, the arbitrator said: "unless the applicant is able to adduce strong medical evidence that he or she is totally disabled, [he or she] must present some evidence that he or she has made a bona fide effort to identify, try to find or attempt some sort of suitable employment but failed because his or her injuries continuously prevent him or her from engaging in such employment." In concluding that Mrs. Caruso had failed to establish disability, the arbitrator took into account that she was capable of full-time work but had not pursued appropriate alternative occupational options either on her own initiative or through the vocational rehabilitation program the insurer had put in place.

Canadian Surety argues that Mrs. K.’s claim must also fail because she did not identify any work for which she might be qualified, and there was no finding that she was totally disabled.

In Wigle, the arbitrator gave the applicant the benefit of the doubt in concluding that he was restricted from his own job duties; however, he was not willing to rule out other suitable work given the nature of the medical evidence and the fact that Mr. Wigle had made no efforts at positioning himself to return to the workforce in any capacity. The arbitrator said:

while the applicant is not required to prove the impossible.....at the very least, the applicant must identify some sort of suitable employment, describe the physical demands of the work and demonstrate with credible evidence that his/her injuries continuously prevent him from engaging in such employment.

Canadian Surety takes reference to these remarks in the course of the appeal decision as approval of an across-the-board requirement that insureds must "identify some suitable employment" as part of the onus of proof. With respect, this takes the reference out of context. The arbitrator's remarks were cited in the appeal decision in the course of setting out Mr. Wigle’s principal ground of appeal, namely, that insufficient weight was given to expert evidence to the effect there were no comparable jobs in the labour market. It was held that, given that Mr. Wigle was capable of returning to the workforce and had not made any effort to do so, it was reasonable for the arbitrator to expect something more in the way of proof of his eligibility. This reasoning indicates that the outcome rested squarely on the particular facts.

In Gagnon, the arbitrator suggested there was a "positive obligation on insureds," explaining:

...as part of discharging the onus of proof, applicants must explore career options that take into consideration their remaining capacity and establish that these options are somehow unsuitable. This burden could possibly be met by the applicants demonstrating that the occupations suggested by the insurers are unsuitable. The insurers then have to establish that their suggestions are suitable: merely listing a number of possible occupations without further evidence would be insufficient.

In that case, the insured had cooperated in rehabilitation efforts and was keenly pursuing retraining. Subsequent vocational testing relied on by the insurer had come up with a number of possible alternative options, none of which, it was found, the insured could step into. The arbitrator ruled that the applicant had adequately answered the onus of proof, while the insurer had failed to show that there was a suitable occupation he could return to. On appeal, the Director's Delegate agreed, in the circumstances of the case, that it was up to the insurer to identify some suitable occupation or employment that the applicant could do.

The onus of proof in accident benefits cases and under other disability policies has been the subject of much jurisprudence. The ultimate, or legal, burden of proving eligibility for statutory accident benefits resides with the insured. The insured will lose the case, when all is said and done, if he or she does not establish the requisite level of disability to the usual civil standard. But how much evidence is enough? In the oft-cited case, Campbell v. Canada Life Assurance Co. (1990), 45 C.C.L.I. 79, the Manitoba Court of Appeal framed the question in these terms (p.78):

Accepting that the onus rests upon the plaintiff to establish on a preponderance of evidence that he comes within the provisions of .. the policy, the question arises how much evidence must be presented by the plaintiff to satisfy that onus. The plaintiff is not required to prove every possible negative - that is, that he is unable to perform any and every conceivable job.

The question boils down to what is reasonable. The cases indicate that neither the insured nor the insurer should be held to unreasonable requirements.

In my view, the arbitration decisions on which Canadian Surety relies simply reflect the longstanding recognition that sincere but unsuccessful rehabilitation efforts go a long way towards proving disability. Conversely, failure to take such steps is likely to work against a claimant unless there is some explanation such as evidence of total disability. I do not view the decisions as establishing a rigid proposition that insureds must "provide evidence of suitable employment" to prove their claim. 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.

Mrs. K. adduced substantial evidence that her psychological problems presented a significant impediment to any kind of gainful employment. The strength of her evidence was reinforced by the testimony of her doctors and by the doctors called by Canadian Surety who qualified their previous opinions in important respects.

In April 1995, Dr. Iezzi, the psychological expert Canadian Surety itself retained, reported that it was uncertain whether Mrs. K. would ever be capable of full-time work. He felt she would be able to do part-time employment but this was contingent on her emotional status improving. He also recommended psychological treatment and vocational rehabilitation services.

Mrs. K.’s longtime family doctor, Dr. Ragula, agreed with Dr. lezzi’s report, but thought that Mrs. K.’s symptoms were even more serious and deep-rooted than Dr. lezzi appreciated.

Canadian Surety did not follow up on any of Dr. lezzi’s recommendations nor did it reinstate Mrs. K.’s weekly income benefits which had been terminated the previous month.

Dr. MacDonald, Mrs. K.'s psychologist, concluded in mid-1996 that Mrs. K. was totally disabled for the foreseeable future and testified that, as of the date of the hearing, she remained incapable of any appropriate employment.

Dr. Nowicki, Mrs. K.'s treating psychiatrist, diagnosed major affective disorder and unipolar depression, giving a guarded prognosis as of December 1997 in part because of the constant stress Mrs. K. was under.²

Against a substantial body of evidence from doctors qualified to assess and treat Mrs. K.'s psychological problems, Canadian Surety relied, in regards to psychological disability, on the evidence of Dr. Clifford, a physical medicine and rehabilitation specialist, and of Dr. Kuiack, a psychologist who conducted a neuropsychological assessment in 1998. Dr. Clifford, who saw Mrs. K. well before the 156 week stage, deferred to the expertise of Dr. Iezzi with respect to the psychological issues. Dr. Kuiack's focus was on the assessment of Mrs. K.’s neurocognitive functioning and she conceded that she had no basis to disagree with Dr. Iezzi’s conclusions as to Mrs. K.’s emotional state.

The evidence shows Mrs. K. was motivated and, despite her difficulties, tried to do what she could to position herself to return to the workforce. She struggled to stay at work in circumstances that her doctor said would have defeated other people. Shortly after she stopped work, she was described as being in a state of "total collapse." She tried to upgrade her skills by returning to school, but her problems forced her to stop. Indeed, her difficulties were of such significance that the school ended up referring her to a psychologist.

After April 1995, Canadian Surety did nothing to help with Mrs. K.'s vocational rehabilitation. They terminated the services of her caseworker and left her to fend for herself. This was even though both Dr. Iezzi and, later on, Dr. Kuiack, the doctors Canadian Surety itself retained, identified a need for vocational help.

Canadian Surety did not introduce any evidence about potentially-suitable jobs. They simply sat back and waited for Mrs. K. to come up with the evidence.

Mrs. K. was 38 years old at the time of the accident. She had limited facility in English. The only job she had ever done since coming to Canada was working at the poultry plant. Canadian Surety argues there was no evidence to support the arbitrator’s findings that the only employment for which Mrs. K. was fitted was the type of physical work she did before. However, it was an eminently reasonable assumption, absent contrary evidence, that her options were limited. Given the strength of the overall evidence in support of Mrs. K.’s case, it was up to Canadian Surety to show suitable alternative employment was available.

The issue before the arbitrator was not to define precisely what constituted suitable employment in Mrs. K.’s case but to determine, on a balance of probabilities, whether she was continuously prevented from engaging in any employment or self employment for which she was reasonably suited. There was ample evidence to support his conclusion that she was so disabled. The evidence clearly favoured Mrs. K. lndeed, to accept Canadian Surety’s position on these facts would come close to requiring of insureds a near-impossible standard of proof. Therefore this aspect of the appeal is dismissed.

III. SPECIAL AWARD

The arbitrator also ordered Canadian Surety to pay a special award of $20,000, inclusive of interest, under s. 282 (10) of the Insurance Act, R.S.O 1990, c. I-8, as amended. That provision allows for the payment of a lump sum, up to the amount specified, if the insurer is found to have unreasonably withheld or delayed benefits.

The arbitrator sets out detailed reasons for concluding that Canadian Surety’s actions were unreasonable and deserving of a substantial special award. Canadian Surety argues there was a legitimate difference of opinion among the doctors involved and that it should not be penalised for accepting one viewpoint over another. As the arbitrator found, however, Canadian Surety disregarded even its own experts views.

Canadian Surety sent Mrs. K. to Dr. Iezzi for a psychological assessment. It then ignored his opinion that she was disabled on psychological grounds and needed additional treatment and vocational services even to allow her to do part-time work.

Instead, Canadian Surety continued to rely on an earlier report of Dr. Clifford, who acknowledged that his expertise lay elsewhere, and it maintained this position even as evidence of the severity of Mrs. K.’s psychological distress mounted. Moreover, as the arbitrator found, Dr. Clifford’s recommendation was that Mrs. K. commence a return to work through a reconditioning program and with adequate rehabilitative and psychological support. Canadian Surety took the step of cutting off Mrs. K.’s weekly income benefits, as well as ending the services of her rehabilitation caseworker, without implementing Dr. Clifford’s recommendations and without consulting him further. In his testimony, Dr. Clifford was critical of the insurer’s actions, describing its failure to follow through on his suggestions as "bizarre."

lnsurers that withhold benefits, while disregarding the recommendations of their own medical experts, leave themselves open to a special award.

There is no basis to interfere with the finding that Canadian Surety acted unreasonably in terminating Mrs. K’s weekly income benefits or to find that the amount of the special award was excessive, out of line with other awards or disproportionate in view of the conduct involved.

The appeal therefore is dismissed. Ms. K. is entitled to her appeal expenses.