Neutral Citation: 2000 ONFSCDRS 77 FSCO A99-000515

Between: Patricia Balinas, Applicant and State Farm Mutual Automobile Insurance Company, Insurer

Reasons for Decision

Before: Deena Baltman Heard: April 11, 12 & 13, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances: L. Brent Vickar for Mrs. Balinas W. Casey Van Moorlehem for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Patricia Balinas, was injured in a car accident on August 14, 1998. After the accident, she did not return to her pre-accident employment as a cleaner. State Farm Mutual Automobile Insurance Company (State Farm), paid her income replacement benefits (IRBs) of $316.90 under the Schedule¹ until December 3, 1998. The parties disagree about whether Ms. Balinas was paid at the correct rate and whether she is entitled to IRBs for any period beyond December 3, 1998. They also dispute whether or not Ms. Balinas is entitled to recover the cost of rehabilitation services.

The issues in this hearing are:

What is the amount of IRBs to which Ms. Balinas is entitled? In order to decide this issue, I must decide: (a) Was Ms. Balinas employed or self-employed? (b) What was her income from employment or self-employment before the accident?
Is Ms. Balinas entitled to IRBs beyond December 3, 1998, on the basis that she suffered a substantial disability to perform the essential tasks of her employment under section 4 of the Schedule?
Is State Farm entitled to a repayment² under section 47 of the Schedule?
Is Ms. Balinas entitled to recover the cost of treatment from Universal Rehabilitation Inc., in the sum of $1,320.53?

Ms. Balinas also claims interest on any amounts owing and her expenses of the proceeding.

Result:

Ms. Balinas is entitled to an IRB in the amount of $132.79. In reaching this conclusion, I make the following findings: (a) Ms. Balinas is self-employed. (b) In the 52 weeks preceding the accident, Ms. Balinas' income from self-employment, net of expenses, was $10,526, entitling her to an IRB of $132.79. (c) Ms. Balinas is not entitled to IRBs beyond December 3, 1998. (d) State Farm is entitled to a repayment in the sum of $2,761.65. (e) Ms. Balinas is entitled to recover the cost of treatment from Universal Rehabilitation Inc. in the sum of $1,320.53.

EVIDENCE AND ANALYSIS:

Introduction:

Ms. Balinas is 30 years old and has been living in Canada since 1995. She and her husband, Diego Balinas, have two children and are expecting a third. Ms. Balinas' native language is Spanish and she testified with the aid of an interpreter.

Since coming to Canada, Ms. Balinas has worked primarily as a commercial cleaner. Although she was occasionally troubled by migraines, she was largely in good health before this accident.

In the year preceding the accident, Ms. Balinas worked as a cleaner at the Royal York Hotel and the Eaton Centre. Her duties in the two jobs were similar. They included vacuuming, dusting, and cleaning kitchen areas, hallways, lobbies and bathrooms, including sinks and toilets. She also disposed of garbage and wiped doors clean. She often worked on more than one floor in the facility and would use the elevator to move about. Her supplies were on a cleaning cart which she rolled with her. She was not required to wash floors or use any machinery other than a vacuum cleaner.

I find the job to be physically demanding, with repetitive bending, reaching, pushing, and some lifting.

The accident occurred late at night on August 14, 1998, when Ms. Balinas was a front seat passenger in a van being driven by her husband on the 401 near Leslie St., in Toronto. There were two impacts. The first occurred when their van hit the rear of another vehicle that was stopped ahead of them. Mr. Balinas then moved the van over to the side of the road, whereupon they were hit by a car coming from behind. In the first impact, Ms. Balinas did not strike anything inside the van, but on the second her forehead and right knee hit the dashboard area. Although she was wearing her seatbelt at the first impact, it was not clear from her testimony whether it was still in place by the time of the second impact. Their van sustained approximately $4,300 in damages.

Ms. Balinas testified that she needed help from the paramedics to get out of the van because she was frightened and dizzy. She was taken to Scarborough Grace Hospital, but received no treatment "because [I] wanted them to take care of [my] husband," who was injured in the accident. Although Ms. Balinas knew that she was recently pregnant (with her second child), she did not advise anyone at the hospital of this.

By the next morning Ms. Balinas felt pain all over, particularly in her neck, back, head, arms, right leg and feet. A few days later, on August 17, 1998, she visited Dr. H. Mendez, her family doctor, who recommended physiotherapy.

Ms. Balinas saw Dr. Mendez on a few occasions and also took physiotherapy, which helped her a little. She experienced ongoing pain in her neck, back and right knee, and did not return to work before the birth of her second child in March 1999.

In September of 1999, Ms. Balinas resumed work as a cleaner at Rusica Building Maintenance. She claims that it was lighter work than her pre-accident employment, and that she was able to manage it despite ongoing symptoms. Ms. Balinas was laid off from Rusica in December 1999 and has not worked since. She is expecting her third child in December 2000.

Issue # 1: What is the Amount of IRBs to Which Ms. Balinas is Entitled?

Background:

In the 52 weeks preceding the accident Ms. Balinas worked as a cleaner at the Royal York Hotel and at the Eaton Centre. She claims that she was an employee in both jobs, whereas State Farm argues that she was self-employed in both, or at least one. This becomes important because Ms. Balinas did not begin her work at the Eaton Centre until three weeks pre-accident. Because a self-employed person is obliged to designate the 52 week period (rather than the four week period) prior to the accident as the relevant period for calculating income, Ms. Balinas would be entitled to a lower level of benefit if I find her to be self-employed. The relevant provision is section 8(2) of the Schedule:

An insured person who is eligible for an income replacement benefit under paragraph 1 of section 4 and who was self-employed at any time during the four weeks before the accident shall designate one of the following time periods:

The 52 weeks before the accident
The last fiscal year completed before the accident for the business in which the person was self-employed, if the business completed a fiscal year before the accident.

[emphasis added]

The parties agree that if I find that Ms. Balinas was self-employed at either of her pre-accident positions, she is obliged to designate either the 52-week period or the last fiscal year of her business, and that she cannot base the calculation on her four weeks of pre-accident earnings. This is consistent with the recent decision of Arbitrator Bayefsky in Deschenes and Guarantee Co. of North America.³

(A) Was Ms. Balinas employed or self-employed?

As mentioned above, Ms. Balinas held two jobs before the accident. Her primary job was at the Royal York Hotel (Royal York). Ms. Balinas began working there at some point in 1996. She stopped working in approximately February 1997, a few months before the birth of her first child. She resumed work in October 1997 and continued until a few weeks before this accident.

The Royal York did not hire Ms. Balinas directly. It retained Andora Inc. (Andora), a commercial cleaning company. Andora, in turn, retained various sub-contractors to supply individual cleaners. One of them was a company called Araya Janitorial Services (Araya), which was operated by Joaquim Araya, Ms. Balinas' brother. Araya then hired various individuals, including Ms. Balinas, to perform the actual cleaning.

Payment flowed to Ms. Balinas through a series of entities. The Royal York paid Andora a set fee. Andora kept a supervisor on site who maintained time sheets for each sub-contractor, showing the total number of hours worked by various cleaners. Andora then paid its sub-contractors, including Araya, according to the number of worker hours supplied. Araya, in turn, after taking a commission, paid the individual cleaners, usually by cheque. However, in Ms. Balinas' case, the cheque was made out to Magic Cleaning, a sole proprietorship operated by her husband, Diego Balinas. Magic Cleaning had a separate bank account, on which only Diego had signing authority. All the funds from this account went into the Balinas household.

Ms. Balinas claims that she is an employee of Araya. However, Mr. Araya testified that he considered Ms. Balinas a sub-contractor, whom he was paying under her company name. The evidence⁴ establishes that none of the Royal York, Andora, Araya, or Magic Cleaning considered Ms. Balinas to be an "employee" of anyone. Araya, although it retained her, did not make any tax deductions at source. No T4 slip was provided and Ms. Balinas did not declare her earnings from the Royal York employment on her income tax return. Although she generally worked similar hours each week, she had no formal rights or obligations vis a vis Araya.

I find that Ms. Balinas' relationship with Araya was a contract for service, and as such falls into the category of self-employment. This is consistent with the Commissioner's Guideline for Identifying Self-Employed Individuals.⁵

Ms. Balinas' second job was at the Eaton Centre, where she began working approximately three weeks before the accident. The Eaton Centre contracted with Quinterra Property Maintenance Inc. for the supply of cleaners. Quinterra, in turn, hired several cleaners, including Ms. Balinas, to clean the property. She received payment by cheque, in her name. No deductions were made. State Farm asserts that this job was also self-employment. Although I am inclined to agree, in view of my finding that she was self-employed at the Royal York, and therefore precluded from relying on the 4-week period pre-accident, it is not necessary for me to determine whether she was an employee of Quinterra or self-employed.

(B) What was Ms. Balinas'income in the 52 weeks before the accident?

The parties dispute Ms. Balinas' income from both jobs. I will deal with each in turn.

With respect to the Royal York job, Ms. Balinas relies on the time sheets and the cheques from Araya to Magic Cleaning. These indicate total earnings of $9,824.40. The dispute is over what, if any, expenses should be deducted. In his 1998 income tax return, Diego Balinas claimed $9,000 in sub-contracting fees and $5,805 in other expenses, to be set off against $22,890 earned by Magic Cleaning. State Farm argues that these expenses must be apportioned between Diego and the Applicant.

I disagree. Diego Balinas testified that the expenses had no foundation. Whatever implications that might have with Revenue Canada, I accept his evidence that there were few expenses of any significance. Magic Cleaning consists merely of Diego and the Applicant, who, when contacted by Mr. Araya by telephone, show up the job site and perform cleaning services. There are few obvious expenses, other than a telephone and bus fare. Uniforms and cleaning supplies are provided on site. Whatever legitimate expenses exist are mostly, if not entirely, attributable to Diego, who performed any administrative work required.

I conclude, therefore, that Ms. Balinas earned $9,824.40 from her job at the Royal York in the 52 weeks preceding the accident.

As for the job at the Eaton Centre, the difficulty is that there is a discrepancy among various documents. The T4 and Record of Employment issued by Quinterra state that Ms. Balinas earned $702 in the 3 weeks preceding the accident. However, the Employer's Confirmation of Income states that she worked for only two weeks and earned $337.50. Oddly, the Record of Employment and the Employer's Confirmation were filled out by the same individual, Ms. Nalini Mistry. Unfortunately, she is no longer working with Quinterra and did not testify.

To further confuse matters, the Application for Accident Benefits also states earnings of $337.50. Ms. Balinas testified that although she signed the Application for Accident Benefits, it had been filled out by her former representative, and she was not clear on how he had arrived at the figure of $337.50, rather than $702. She stated that although neither figure struck her as entirely correct, $702 was a much better reflection of the actual hours she recalled working.

I accept Ms. Balinas' position on this matter. Douglas Derby, the payroll administrator with Quinterra, testified that the payroll records recorded Ms. Balinas working three weeks rather than two. He suggested that because the Record of Employment was prepared by the same company that did Quinterra's payroll, and it also matched the T4, it was more likely to be correct than the Employer's Confirmation. He suggested that Ms. Mistry may have simply have not recorded all the relevant weeks from the payroll records. I accept this as the most likely explanation for the discrepancies.

I conclude, then, that Ms. Balinas earned $702 from her job at the Eaton Centre. This, when added to her earnings from the Royal York ($9,824) produces a total income of $10,526 in the 52 weeks preceding the accident. The parties agree that this figure translates into an IRB of $132.79.

Issue # 2: Is Ms. Balinas Entitled to IRBs Beyond December 3, 1998?

Ms. Balinas argues that she remains disabled from her pre-accident employment, and is therefore entitled to ongoing IRBs. In order to recover IRBs beyond the termination date of December 3, 1998, Ms. Balinas must demonstrate that she suffered "a substantial inability to perform the essential tasks of that employment," in accordance with section 4 of the Schedule.

State Farm terminated Ms. Balinas' IRBs on the basis of a report from Dr. V. B. Sennik, dated October 19, 1998. Dr. Sennik found that Ms. Balinas suffered a moderate whiplash injury and a mild lumbosacral sprain. He noted signs of symptom magnification. Dr. Sennik concluded that Ms. Balinas had been disabled from her cleaning duties but that she should be able to resume them within two weeks of his report. On that basis State Farm extended her IRBs as far as December 3, 1998.

There is little evidence to support any disability beyond that date. In his report of February 6, 1999, Dr. Mendez notes that he last saw Ms. Balinas on December 3, 1998 (coincidentally the date of termination) and that she was then "unable to perform the essential tasks of her employment." However, Dr. Mendez provides little support for this conclusion. After her first visit to him following the accident (on August 17, 1998), Ms. Balinas rarely mentioned the accident. Her next two visits (on September 9, 1998 and September 21, 1998) related to her pregnancy.

Because of her ongoing symptoms, Dr. Mendez referred Ms. Balinas to Dr. L. Chizen, a physiatrist, who saw her on December 14, 1998. Although he noted residual ligamentous discomfort from the accident, Dr. Chizen did not suggest that Ms. Balinas was disabled from working. He observed that Ms. Balinas was a "healthy appearing individual in no acute physical distress" and found no significant restrictions in her range of motion. I agree with State Farm that some weight should be given to Dr. Chizen's report, as he was independent of both parties and was not involved from a medical-legal perspective.

Ms. Balinas also referred me to the report of Dr. V. Hajek, a physiatrist, who assessed her on March 20, 2000. Dr. Hajek stated that she "certainly has not reached her pre-injury comfort nor functional level." But this does not address the specific test under the Schedule, namely whether she is disabled from the essential tasks of her pre-accident employment. Moreover, it is inconsistent with Dr. Mendez's report of January 24, 2000, where he found that Ms. Balinas was "much improved...no obvious disabilities were found."

I also received little evidence about whether the addition of two children to the family since this accident has had any effect on Ms. Balinas' motivation to return to work. At the very least, it is a question that needed to be explored in more detail.

For all these reasons, I am not persuaded that Ms. Balinas was disabled from the essential tasks of her pre-accident employment for any period beyond December 3, 1998.

Issue #3: Is State Farm Entitled to a Repayment?

The parties agreed that if I find Ms. Balinas was not disabled beyond December 3, 1998, based on an IRB of $132.79 (as I have found) Ms. Balinas was overpaid $2,761.65, and must repay that amount to State Farm.

Issue #4: Is Ms. Balinas Entitled to Recover The Cost Of Treatment From Universal Rehabilitation Inc.?

Under the Schedule, Ms. Balinas is entitled to recover the cost of physiotherapy treatment provided she can demonstrate that it was reasonable and necessary. Ms. Balinas received physiotherapy treatment at Universal Rehabilitation Inc. (Universal) from August 25, 1998 to October 29, 1998. Although this is not the same facility to which she had been referred by Dr. Mendez, Ms. Balinas reported the treatment to be somewhat helpful. I also note Dr. Sennik's comment in his report of October 19, 1998, that her rehabilitation program was "excellent and necessary" and should not be altered, except to include more home exercises. I am satisfied that the treatments received at Universal were reasonable and necessary.

State Farm paid for some of the early treatments by Universal, but then declined to pay for subsequent treatments unless it was provided with a more detailed treatment plan. In his letter of September 23, 1998, Mr. Mark Moore, who was handling the claim for State Farm, advised Ms. Toth, the physiotherapist, that he required "for each modality you plan to provide to Mrs. Balinas the frequency, duration and cost of same."

I see no basis for this demand. In her treatment plan, Ms. Toth had advised that she intended to provide physical therapy, 3-4 times per week, for 8-10 weeks. Moreover, in her earlier report of September 3, 1998, Ms. Toth set out in detail each modality that she recommended and how much time, respectively, they comprised within a physiotherapy session. I find it troubling⁶ that after receiving both those documents State Farm denied the claim for allegedly lacking in detail. It shall now pay the outstanding amount, including any interest charged by Universal, for a total of $1,320.53.

EXPENSES:

I urge the parties to resolve this issue on their own. I should be consulted only if necessary.

April 26, 2000

Deena Baltman Arbitrator

Arbitration Order