Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2000 ONFSCDRS 55

Appeal P99-00008

OFFICE OF THE DIRECTOR OF ARBITRATIONS

RAVEL SINGH

Appellant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Respondent

and

WELLINGTON INSURANCE COMPANY (Now Halifax Insurance Company)

Respondent

Before:

David R. Draper, Director’s Delegate

Counsel:

Kevin K. V. Doan (for Ravinder Singh)

Thomas H. Clemenhagen (for Allstate) Mark Wilson (for Wellington)

APPEAL ORDER

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

1. The appeal is dismissed and the arbitration order dated January 6, 1999 is confirmed.

2. Ravel Singh will pay the appeal expenses of Allstate Insurance Company of Canada and Wellington Insurance Company (now Halifax Insurance Company) fixed at $500, all inclusive, for each insurer.

March 17, 2000

David R. Draper Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This is an appeal by Ravinder Singh from an arbitration decision dated January 6, 1999. He claims the arbitrator erred in concluding that he is not entitled to any additional weekly benefits from either insurer. In addition, Mr. Singh challenges the arbitrator’s order that he must repay benefits to Allstate Insurance Company (“Allstate”) because he had collateral benefits available to him. Finally, he contends that the arbitrator erred in refusing to order special awards against both insurers.

II. BACKGROUND

Mr. Singh was involved in two automobile accidents C on June 21, 1993 and April 21, 1995. After the first accident, Allstate paid him weekly income benefits under the Schedule¹ on the basis that he could not return to his job as an aluminum-door assembler. Allstate continued to pay benefits until the 156-week mark, one year after the second accident, but then took the position that Mr. Singh did not meet the stricter, post-156 week test.

Because the second accident was after January 1, 1994, it is governed by different legislation C the SABS-1994.² Wellington Insurance Company (“Wellington”)³ refused to pay weekly income replacement benefits under the SABS-1994 because Mr. Singh was already receiving weekly income benefits from Allstate. Following a four-day arbitration hearing, the arbitrator reached the following conclusions that are challenged by Mr. Singh on appeal:

(1) Mr. Singh is not entitled to weekly income benefits from Allstate under s.12(5)(b) of the Schedule from June 21, 1996 and ongoing.

(2) Mr. Singh is not entitled to income replacement benefits under s.7 of the SABS-1994 from June 21, 1996 and ongoing.⁴

(3) Mr. Singh had collateral benefits available to him that are deductible from weekly income benefits and, as a result, he must repay $3,750 (gross) to Allstate.

(4) Nether insurer is required to pay a special award under s.282(10) of the Insurance Act.

III. ANALYSIS

I find little merit in this appeal. The arbitrator’s decision reflects a careful review of the evidence, setting out clear factual findings and detailed reasons for her conclusions. Unfortunately for Mr. Singh, she did not find his evidence credible. That is the main reason his claims were denied. On appeal, he makes some rather technical arguments which, in my view, do not establish any error.

A. The First Accident - Allstate

(1) Weekly income benefits

The issue Mr. Singh raises is quite narrow. He challenges the arbitrator’s conclusion that by June 21, 1996, he was capable of working as a “pin to pin” truck driver, and that this was suitable employment. The error, Mr. Singh claims, is that he did not obtain his Class A licence until the fall of 1996. He submits, therefore, that his entitlement to weekly income benefits should continue until he was legally qualified to do the job.

While Mr. Singh’s position seems reasonable, it does not hold up to closer scrutiny. Rehabilitation is a mutual obligation requiring the good faith efforts of both parties. In this case, Mr. Singh compromised any meaningful dialogue by exaggerating his limitations. He claimed that he was incapable of returning to any type of suitable employment due to the combined effects of the injuries suffered in the two accidents. With the exception of Dr. James E. Bateman, even his own experts did not go this far.⁵

Most strikingly, in May 1996, one month before Allstate stopped paying benefits, Dr. B.S. Sehmi, an orthopaedic surgeon, prepared a medical report for the Ministry of Transportation in support of Mr. Singh obtaining a Class A licence, allowing him to drive large trucks.⁶ As the arbitrator notes, Dr. Sehmi checked “no” with respect to musculoskeletal diseases, psychiatric disorders and neurological diseases, amongst others. He also reported that his examination was “negative” for locomotor problems of the upper extremity, lower extremity, neck and lumbar areas.

In cross-examination by Allstate’s counsel, Dr. Sehmi agreed that in the summer of 1996, there were “a number of occupations and jobs in light industrial work” that Mr. Singh could do.⁷ Dr. Suraj Sira, Mr. Singh’s primary treating physician, agreed with this opinion, as well as similar opinions expressed by his other doctors, Dr. Glen A. McDonald and Dr. D.J. Ogilvie-Harris.⁸ At the time Allstate terminated Mr. Singh’s weekly income benefits, it was unaware of Mr. Singh’s efforts to qualify as a truck driver. Its position, based on the report of Dr. Michael Ford and surveillance evidence, was that Mr. Singh was far less disabled than he claimed. In Allstate’s view, there was nothing to prevent him from returning to his pre-accident employment, which had become less physically demanding due to changes in the company’s production methods.

The possibility that Mr. Singh might be able to work as a truck driver did not become a focus until June 1997, when investigators found him at the offices of a trucking company helping another man prepare for a trip to Windsor and then leaving with him. At the arbitration hearing, Mr. Singh acknowledged that starting about August 1996, he took a one-and-a-half month driving course and obtained his Class A licence in November or December 1996. In response to questions from his counsel, he testified that he never tried to get work as a truck driver and only went to Windsor to visit his cousin. On cross-examination, he gave a different explanation, stating that he began looking for work as a truck driver in early 1997, but found it difficult due to his lack of experience.

For reasons set out in her decision and amply supported by the evidence, the arbitrator did not accept Mr. Singh’s testimony. Instead, she found that Dr. Sehmi filled out the Department of Transportation medical forms because he believed Mr. Singh was able to work as a truck driver. Further, she found that Mr. Singh’s concerted efforts to get his trucking licence, starting in early 1996, indicated that he believed he could drive a truck for a living. Finally, and perhaps most importantly, she found that his persistence in pursuing an occupation as a truck driver, while laudable, was in sharp contrast to his failed attempts to return to work in April 1995 and March 1997, when he reported being unable to continue for more than a few hours. In other words, he was not forthcoming about his true abilities.

The outcome in this case might have been different if Mr. Singh had discussed his plans with Allstate and claimed weekly income benefits while he completed his training and obtained his Class A licence. However, by exaggerating his limitations, he seriously undermined his claim. The reliable evidence before the arbitrator fell well short of explaining why Mr. Singh could not return to some type of alternative employment by June of 1996.

(2) Special award

Mr. Singh also challenges the arbitrator’s refusal to order Allstate to pay a special award. According to s.282(10) of the Insurance Act, a special award is warranted if the arbitrator finds that the insurer “has unreasonably withheld or delayed payments.” Given the decision on Mr. Singh’s entitlement, there is no basis for a special award. Further, there is no reason to second-guess the arbitrator’s finding that Allstate had “ample evidence” for its decision to terminate Mr. Singh’s weekly income benefits.

(3) Collateral benefits

Paragraph 12(4)(b) of the Schedule provides that weekly income benefits are calculated based on 80 per cent of the insured person’s gross weekly pre-accident income, less any payments for loss of income, except Unemployment Insurance benefits, received by or available to him or her, or received under any sick leave plan.

Mr. Singh had disability coverage through his employer, including short term disability (“STD”) benefits. It is not contested that he could have claimed 15 weeks of STD benefits by applying within 90 days of his accident, as long as he complied with the requirement in the policy that he also apply for Unemployment Insurance (“UI”) sickness benefits. According to the employer’s Human Resources Manager, Mr. Singh decided to pursue accident benefits and waived his right to claim STD benefits. There is no suggestion, however, that he could not have claimed both STD and accident benefits.

The arbitrator held that the STD benefits were “available” to Mr. Singh and, therefore, deductible. On appeal, Mr. Singh argues that the benefits were not available because he was under no obligation to apply for UI. In his submission, he should not have to use his UI sickness benefits in preference to collecting his full entitlement from Allstate.

The arbitrator applied the plain meaning of “available,” concluding that the STD benefits were available to Mr. Singh. I agree with her approach. Mr. Singh did not provide any support for his position that it would offend the legislation to make him apply for UI. If anything, the legislation suggests the opposite C that insured persons who qualify for UI benefits will receive them, but without any reduction in their accident benefits. Consequently, I find no error.

B. The Second Accident - Wellington

(1) Income replacement benefits

For Wellington, the test was whether, as a result of the second accident, Mr. Singh suffered a substantial inability to perform the essential tasks of his pre-accident employment as an aluminum-door installer. The arbitrator found that the injuries Mr. Singh suffered in the second accident C primarily neck pain and a worsening of his low back pain C were not disabling. As a result, she concluded that Wellington was not liable to pay any income replacement benefits.

Mr. Singh’s first argument is that the arbitrator erred in finding that the second accident did not cause the disc herniation found in his lower back. Her findings are set out on page 14:

The Applicant’s doctors disagreed about the role of the second accident in the Applicant’s low back problems. Dr. Sehmi felt that the Applicant had sustained a lumbosacral strain in the first accident, which was aggravated in the second, leading to the disc herniation evident in 1996. Dr. Sira testified that he believes the Applicant would have had significant ongoing low back problems even if he had not been involved in the second accident. I prefer Dr. Sira’s view. As I was presented with no lumbar x-rays predating the second accident, there is no objective evidence that it played a significant role in the Applicant’s symptoms. While the Applicant testified that the second accident made his back pain worse, he gave no specific evidence about a change in the frequency or severity of symptoms. The medical records suggest that the Applicant’s complaints of back pain were about the same before and after the second accident. I am not persuaded that the second accident resulted in a significant aggravation of the Applicant’s low back symptoms.

In Mr. Singh’s submission, Dr. Sira did not rule out a causal relationship between the second accident and the disc herniation, but simply stated that the first accident would have resulted in significant low back problems whether or not the second accident had occurred. He claims, therefore, that the arbitrator should have accepted Dr. Sehmi’s opinion, making the second accident a material cause of his limitations.

I am unable to accept this argument. Even if Mr. Singh’s interpretation of Dr. Sira’s evidence is correct, which I doubt, the lack of any x-rays prior to the second accident allowed the arbitrator to question Dr. Sehmi’s opinion. Also, the real issue was whether the second accident had any effect on Mr. Singh’s ability to work. Based on the medical records, the arbitrator was not persuaded there was any significant change in his symptoms. This finding was available to her and should not be disturbed on appeal.

Mr. Singh also claims that the arbitrator erred in her interpretation of the stoppage provisions in s.64 of the SABS-1994. In his submission, Wellington was obliged to follow these procedures and, having failed to do so, should be required to pay income replacement provisions pending a proper termination. He refers to the arbitration decision in Mike and State Farm Automobile Insurance Company, (FSCO A96-001468, November 12, 1998) in support of this proposition C a decision released after the arbitration hearing was completed. In Mike, the arbitrator stated in obiter that if she had concluded that the insured person was not entitled to ongoing IRBs, she would have dealt with the insurer’s failure to comply with s.64 by ordering benefits for the period it reasonably would have taken to obtain a DAC assessment if the insurer had followed the proper procedures.

The arbitrator rejected Mr. Singh’s position for reasons that can be summarized as follows:

• It is not clear that s.64 applies where the insurer never started paying benefits and, in any event, the evidence suggests that Mr. Singh decided to forego a DAC assessment and proceed directly to mediation, as allowed by s.64(13) of the SABS-1994.

• Wellington did not have specific notice of this argument and, if it had, it might have presented its case differently.

• Even if s.64 applies, it is not clear that the proper remedy for non-compliance would be to order Wellington to pay ongoing benefits where entitlement was not established at the arbitration hearing.

Despite counsel’s detailed arguments, I am not persuaded that the arbitrator erred. On the contrary, I agree with her analysis in the circumstances of this case.

The stoppage provisions are an important feature of the SABS-1994. Before an insurer can stop paying benefits, it must give the insured person notice of its intention to stop paying benefits and his or her right to request an assessment by a Designated Assessment Centre (“DAC”). If the insured person requests a DAC assessment, the legislation requires that benefits continue pending the results. As the arbitrator notes, however, it only comes into play when the insurer is stopping the payment of weekly benefits:

64.—(1) An insurer shall not stop payment of weekly benefits under . . . Part IV . . . on the ground that the insured person no longer suffers from a disability as a result of the accident in respect of which weekly benefits are paid, except in accordance with this section. [emphasis added]

It is clear that Wellington never started paying benefits. While it initially accepted that Mr. Singh was disabled, Wellington refused to pay IRBs on the basis that they were reduced to zero by the weekly income benefits he was already receiving from Allstate.⁹ Its initial Explanation of Assessment by Insurance Company states that Mr. Singh’s claim for IRBs was refused because “claimant is receiving disability benefits through Allstate Insurance.”

In November 1995, seven months before Allstate stopped paying weekly income benefits, Wellington wrote to Mr. Singh, enclosing a copy of Dr. Ford’s report. Relying on this report, Wellington advised Mr. Singh as follows:

This is the notice that is required by Section 66(7) and 64(8) of the Statutory Accident Benefits Schedule that will [sic] no longer cover you for physiotherapy.

We understand that you are still receiving disability benefits from Allstate Insurance. This is to notify you that we will not honor a disability claim if you plan to present one at a later date.

If you disagree with our position you are entitled to apply for mediation of this dispute, as set out in the Dispute Resolution sections of the Insurance Act of Ontario.

Wellington also provided a second Assessment of Claim by Insurer, stating that Mr. Singh was not entitled to IRBs because he was no longer disabled from injuries suffered in the April 1995 accident.

Mr. Singh did not challenge Wellington’s decision, either procedurally or substantively, although he was represented by counsel from early 1996 at the latest.¹⁰ However, when the dispute eventually went to arbitration, he argued during final submissions that Wellington failed to follow the correct procedure and should bear the consequences.

I agree with the arbitrator that the late clarification of Mr. Singh’s position on s.64, whether it is characterized as an issue or an argument, raises fairness concerns. In any event, I am not persuaded that s.64 applies. As held in previous decisions, including the arbitration decision in Mike, s.64 is designed to protect the flow of benefits.¹¹ It applies when the insurer is planning to interrupt the flow of the insured person’s weekly benefits. That is not the case here.

If Allstate had stopped paying benefits before Wellington made a decision on disability, Mr. Singh would have been entitled to expect a decision from Wellington on his entitlement to receive IRBs. If Wellington started making payments, it would then be obligated to follow the procedures in s.64 before stopping. Again, however, that is not the situation here.

(2) Special award

Mr. Singh’s argument for a special award is based on Wellington’s failure to comply with s.64. Given my conclusions above, it follows that there is no basis for a special award.

IV. APPEAL EXPENSES

Mr. Singh was awarded his arbitration expenses despite his lack of success. Allstate and Wellington submit that he should now bear the consequences of proceeding further, without success. I agree. Applying the criteria set out in Reg. 664 of R.R.O. 1990, as amended (the Expenses Regulation), I am not persuaded that the appeal had sufficient merit that the insurers should be expected to bear Mr. Singh’s expenses or their own. As a result, Mr. Singh will pay expenses fixed at $500, all inclusive, for each insurer, reflecting the relatively modest demands of responding to this appeal.

March 17, 2000

David R. Draper Director’s Delegate

Date

Footnotes

1. 1R.R.O. 1990, Reg. 672, as amended, the Statutory Accident Benefits Schedule—Accidents Before January 1, 1994.
2. 2Ontario Regulation 776/93, as amended, the Statutory Accident Benefits Schedule—Accidents after December 31, 1993 and before November 1, 1996.
3. 3Now Halifax Insurance Company.
4. 4At arbitration, the issue was Mr. Singh’s entitlement to income replacement benefits from April 21, 1995 and ongoing, but only the more limited time period was pursued on appeal.
5. 5For example, see: Dr. B.S. Sehmi - Exhibit 2, Tab D13; Exhibit 2, Tab D15; Dr. Glen A. McDonald - Exhibit 2, Tab D7; Exhibit 2, Tab D9; Dr. D.J. Ogilvie-Harris - Exhibit 2, Tab D12.
6. 6Exhibit 14.
7. 7Transcript, April 22, 1998, p. 404.
8. 8Transcript, April 22, 1998, pp. 459-461, 467-471, 475 and 512.
9. 9Exhibit 1, Tab A30, Transcript, April 22, 1998, pp. 523-525.
10. 10Arbitration decision, p. 27.
11. 11Marques and Commercial Union Insurance Company, (FSCO P97-00047, May 25, 1998); Henry and Allstate Insurance Company of Canada, (OIC P96-00064, July 23, 1997).