Neutral Citation: 2001 ONFSCDRS 101

FSCO A97-001789

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

BEJIA SMITH

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before:

Stewart McMahon

Heard:

February 22, 23, 24, 28 and 29 and June 5, 6, 7, and 8, 2000, in London, Ontario.

Written submissions were received on July 19, and August 9, and 17, 2000

Appearances:

Stephen R. Schenke for Ms. Smith

Ian D. Kirby for Allstate Insurance Company of Canada

Issues:

The Applicant, Bejia Smith, (who generally is known as Ms. Auger) was injured in a motor vehicle accident on February 28, 1994. At the time of the accident Ms. Auger was on an extended leave from her job as a letter carrier with Canada Post. She applied for and received statutory accident benefits from Allstate Insurance Company of Canada (Allstate), payable under the Schedule.¹

Allstate paid income replacement benefits (IRBs) for approximately two years, at which point it made a loss of earning capacity benefit (LECB) offer. The offer was rejected, triggering an assessment of her residual earning capacity at a designated assessment centre (REC DAC). The REC DAC concluded that Ms. Auger could work full-time as a security guard. Ms. Auger claims that the REC DAC overestimated her residual earning capacity, and that at most she was capable of working part-time. Allstate paid LECBs in accordance with the report for approximately three years, at which time it conducted a reassessment of Ms. Auger's residual earning capacity in accordance with section 33 of the Schedule. Allstate's subsequent offer of a reduced LECB was rejected by Ms. Auger, triggering a second REC DAC assessment, which concluded that Ms. Auger's condition had deteriorated and that she was now capable of working only part-time as a dispatcher. Both parties reject the second REC DAC's conclusion. Allstate maintains that Ms. Auger can work full-time, albeit at a less demanding job. Ms. Auger maintains that she is now incapable of any form of gainful employment. Following the release of the second REC DAC report, Allstate refused to increase Ms. Auger's LECB. Instead, it reduced the benefit in accordance with its own assessment of her earning capacity.

After the release of the second REC DAC report, Allstate advised for the first time that it intended to argue that Ms. Auger did not qualify for LECBs, because her disability was unrelated to the motor vehicle accident. For the reasons set out below, I conclude that it is too late for Allstate to rely upon such a defence. As a consequence, two issues remain. One; what is the amount of Ms. Auger's LECB from the inception of the LECB to the point of the mandatory three year re-assessment? Two; what is the amount of her LECB after the re-assessment?

Ms. Auger received various supplementary medical and rehabilitation benefits that were subsequently terminated. Ms. Auger continued to receive treatment and seeks to be reimbursed for these expenses.

Finally, Ms. Auger seeks a special award.

The parties were unable to resolve their disputes through mediation, and Ms. Auger 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:

1. On what date may Allstate substitute LECBs for IRBs?

2. What is the amount of the initial LECB?

3. Is Ms. Auger entitled to further LECBs beyond the three year review mandated by section 33 of the Schedule, and if so, in what amount?

4. Is Ms. Auger entitled to the following supplementary medical expenses?

• chiropractic adjustments

$1,716.40

• massage therapy

$2,850.00

• physiotherapy

$2,114.10

• psychotherapy

$5,250.00

5. Is Ms. Auger entitled to a special award, and if so in what amount?

6. Is either party entitled to their arbitration expenses?

Result:

1. Allstate may substitute LECBs in place of IRBs as of September 24, 1996. Allstate shall pay Ms. Auger the difference between the IRB rate of $431.78 and the LECB rate of $181.89 paid by Allstate from April 23, 1996 to September 24, 1996.

2. Allstate shall pay Ms. Auger LECBs based upon a residual earning capacity associated with working 30 hours per week as a security guard. This LECB is payable from September 25, 1996 to September 25, 1999. Allstate shall pay Ms. Auger the difference between this rate and the $181.89 paid by Allstate, together with interest in accordance with section 68 of the Schedule.

3. Ms. Auger is entitled to LECBs from September 25, 1999 onward, based upon a residual earning capacity associated with working as a dispatcher 20 hours per week. Allstate shall pay Ms. Auger the difference between this rate and the $24.96 paid by Allstate, together with interest in accordance with section 68 of the Schedule.

4. Allstate shall pay to Ms. Auger's supplementary medical expenses totalling $11,930.50 together with interest in accordance with section 68 of the Schedule.

5. Allstate shall pay Ms. Auger a special award of $3,000 inclusive of interest.

6. The parties may write to me regarding expenses.

EVIDENCE AND ANALYSIS:

(i) Pre-accident history

Ms. Auger was born in London, Ontario in 1954. In 1982 she joined Canada Post as a letter carrier in Edmonton. She returned to London in 1986, where she continued working as a letter carrier. Ms. Auger had difficulty maintaining her regular work schedule. In the six years between 1992 and 1988, Ms. Auger was absent due to illness or injury 26 per cent of the time. Once she returned to London, her absenteeism was even more pronounced, at 35 per cent of the time.

In 1988, Ms. Auger was involved in a motor vehicle accident. She was insured by Allstate at the time, and was paid benefits as a result of her injuries. Following the accident, Ms. Auger was on a mixture of sick leave and light duties until late 1990, when she went on extended sick leave. In the ensuing years, Ms. Auger was embroiled in a battle with Canada Post over the timing and conditions of her return to work. In late 1993, the parties agreed that Ms. Auger would return to work on a graduated basis starting in January 1994.

While negotiating with Canada Post over the terms of her return, Ms. Auger enrolled in three courses at the University of Western Ontario that started in the fall of 1993. She also enrolled in courses at two other institutions, and began to work from home as a manicurist. Ms. Auger did not advise Canada Post about her schooling until the eve of her return date, at which point she asked for, and was granted an extension of her leave until the end of the school term. She was due to return to work in April 1994.

In the months immediately preceding the 1994 accident, Ms. Auger was studying full-time and working part-time. However, she was also getting regular medical attention related to the injuries she sustained in the 1988 accident, and was attending counselling sessions which dealt with a number of issues, some of which were accident related and some of which were not.

(ii) The 1994 accident and its aftermath

The motor vehicle accident we are concerned with occurred on February 28, 1994, approximately a month before Ms. Auger was scheduled to return to Canada Post.

Ms. Auger's vehicle was struck on the passenger's side. She bruised her right elbow and left knee, but these complaints soon resolved. She also sustained soft tissue injuries to her neck, shoulders and back. These complaints became chronic and are associated with persistent headaches, fatigue and generalized pain. By the fall of 1994, Ms. Auger was receiving an average of two physiotherapy sessions a week, two massage treatments per week, and two or three chiropractic adjustments. Notwithstanding her impairments and treatment schedule, Ms. Auger managed to return to school almost immediately after the accident, and for the next two years, maintained roughly the same university course load as before the accident.

Approximately a year after the accident, Dr. Arciszowski undertook an assessment for Canada Post. He reported that there were no obvious physical abnormalities and no evidence of chronic pain. He recommended a short work-hardening program and a graduated return to work as a letter carrier. However, a few months later, Ms. Auger was referred by her family physician to Dr. Teasell, a London physiatrist, for treatment of chronic pain. Dr. Teasell reported that it would be good for Ms. Auger to return to some form of work, but in contrast to Dr. Arciszowski, he was not sure she would be able to return to Canada Post.

Dr. Teasell recommended that Ms. Auger be weaned from the temporary relief afforded by massage therapy and chiropractic manipulations, but that she continue with an exercise program. Ms. Auger's physiotherapist, Ms. Cecil James, testified that she thought Ms. Auger was capable of handling a more aggressive physiotherapy regime than Dr. Teasell approved of. She stated that with the cut-back in therapy, she noticed a deterioration in Ms. Auger's condition by the fall of 1995.

Notwithstanding that Ms. Auger was taking three university courses, Dr. Finestone, a physiatrist reported to a disability carrier in September 1995, that Ms. Auger was not capable of any remunerative work. Dr. Finestone's opinion is echoed in Dr. Teasell's report of November 23, 1995, in which he stated that she was not fit for any work at present, but that in approximately six months he would consider releasing her to part-time work, provided that the duties did not include repetitive overhead work, pushing, pulling or lifting more than 10 pounds and no prolonged standing or sitting. These restrictions related to concerns that they would cause excessive pain, rather than the possibility of physical harm.

(iii) The IRB claim, the transition to LECBs, and the "causation defence"

Ms. Auger made a claim for IRBs on the basis of her employment relationship with Canada Post, and on the basis of her self-employment as a manicurist. Allstate rejected the claim related to the self-employment because Ms. Auger was unable to produce any documentation to establish that she earned any income from this endeavour.² However, Allstate accepted the claim related to employment with Canada Post. It is unclear i f the adjuster considered Ms. Auger to be employed with Canada Post at the time of the accident, or, as suggested by counsel, treated her as a person who qualified for IRBs on the basis that she was entitled to start work pursuant to a contract of employment. In either event, the test for IRBs is the same; did the accident directly or indirectly cause an impairment that resulted in a substantial inability to perform the essential tasks of a full-time letter carrier?

Ms. Auger's longstanding difficulty maintaining her usual job duties, coupled with her ability to resume her studies shortly after the accident (which was her principle pre-accident activity), raises doubts about whether the motor vehicle accident made a significant or material contribution to her ongoing inability to return to work as a full-time letter carrier. However, Allstate did not challenge Ms. Auger's entitlement to receive IRBs. Instead it continued paying IRBs without protest until the spring of 1996, at which point it made Ms. Auger a very modest LECB offer, and after the release of a REC DAC report began to pay LECBs.

After paying LECBs for more than three years, Allstate advised for the first time that it was taking the position that it did not owe Ms. Auger LECBs because any ongoing disability was attributable to her pre-accident impairments, rather than to any impairments caused by the accident. Ms. Auger takes the position that having begun to pay LECBs, it is now too late for Allstate to rely upon a causation defence.

In light of these opposing positions, I must determine as a preliminary matter if Allstate can rely on a causation defence at this juncture. For the reasons that follow, I conclude that it is too late for Allstate to rely on this defence.

The transition from IRBs to LECBs starts with the delivery of an LECB offer by the insurer. The insurer is only obliged to make such an offer if the insured person continues to qualify for IRBs 104 weeks after the onset of disability. By virtue of this provision, the factor that determines whether a person is entitled to an LECB offer, is entitlement to IRBs.

As a general rule, the issue of whether the person qualified for IRBs at the 104-week-mark, and hence entitled to an LECB offer, should be dealt with as part of the IRB process, not after the insurer has already made an LECB offer or begun to pay LECBs. This case raises the question: can an insurer that pays IRBs to the 104 week mark without protest, later oppose its obligation to pay LECBs on the basis that notwithstanding that it paid IRBs to or beyond the 104 week mark, the insured did not in fact qualify for the benefit?

In Gauthier and Allstate Insurance Company of Canada (FSCO A98-000805, June 21, 2000), I held that in ordinary circumstances, if the insurer pays IRBs to the 104 week mark, without seeking to terminate the benefit on the basis that any disability is unrelated to the accident, it cannot later rely upon a causation defence to oppose its obligation to pay LECBs. To my mind, if the insurer not only pays IRBs to the 104 week mark without protest, but then begins to pay LECBs, the insured person's position is even stronger, and the insurer will only be able to rely upon a causation defence in very limited circumstances. I have set out below an abbreviated version of my reasoning in Gauthier.

The provisions regarding the payment of IRBs force insurers to make their initial assessment of the insured's entitlement to benefits very quickly. For example insurers must respond to an application within 14 days, overdue payment attracts onerous interest, and an unreasonable denial exposes the insurer to a special award. In this context, an insurer must have a relatively free hand to challenge the insured person's entitlement, notwithstanding that it has started to pay benefits. To this end, section 64 of the Schedule provides that the insurer may give the insured person notice at any point while it is paying IRBs, that it intends to terminate the benefit. Numerous decisions have held that in such circumstance, the onus is on the insured person to prove that they are entitled to further benefits. This onus includes an obligation to prove that the accident continues to make a material contribution to any ongoing disability. The legislation contains a comprehensive code for the resolution of such disputes that include provisions for medical examinations by experts of the parties' choosing, and DAC assessments.

In contrast, the insurer is not under the same time pressure when it assesses its initial obligation to pay LECBs. Because it is not required to make an offer until104 weeks after the onset of disability, it has at least two years to investigate the cause and extent of the person's disability before it begins to pay LECBs.

In addition, once the insurer makes the transition from IRBs to LECBs, the Schedule does not provide a mechanism for investigating or resolving causation disputes. The LECB scheme is premised on the fact that before the insurer makes an LECB offer, it has satisfied itself that the insured person is disabled by reason of the accident, or an arbitrator has made such a ruling. The DAC assessments that form part of the LECB provisions, are limited to assessing the insured person's residual earning capacity, rather than dealing with the wider questions of entitlement to benefits and causation. In keeping with this, the REC DAC assessments conducted in this case dealt only with an analysis of Ms. Auger's residual earning capacity, without concern for the cause of her condition.

However, in Gauthier, I noted that the rule prohibiting the insurer from attempting to raise a qualification defence after the fact was not absolute, and that there might be cases, for example where fraud was proven, that would justify an insurer demanding a post facto evaluation of causation.

The Gauthier decision was not released until after the conclusion of Ms. Auger's arbitration hearing. However, on the first day of the hearing, and again towards the end of the hearing, I gave the parties a general sense of the reasoning I later employed in Gauthier.

Counsel for Allstate advised at the time that he was not challenging the reasoning in Gauthier.

Instead, he argued that Ms. Auger had been asked repeatedly about her pre-accident condition, and that she misled the Insurer by hiding the true extent of her pre-accident difficulties. I indicated that it struck me in the context of Ms. Auger's case, that the Insurer's right to raise the issue now, would at a minimum, be contingent upon its ability to establish that it had attempted to explore Ms. Auger's pre-accident condition before it first made an LECB offer, and that these efforts had been thwarted by improper conduct attributable to Ms. Auger. Counsel advised that he intended to try and establish this fact.

The principle evidence concerning Allstate's attempts to explore the causation issue is found in the notes prepared by the initial adjuster, Ms. Bull, and the notes of Ms. Paulette Elie, who replaced her in late August 1995.

The adjuster's first log note, indicates that Ms. Auger told Allstate at the outset that she had been involved in an earlier accident, and that the present accident had aggravated an existing low back condition. This should have been sufficient to alert Allstate to the possibility of a causation issue that might need to be explored further. During submissions, Allstate correctly noted that the evidence established that Ms. Auger consistently told its adjusters and medical assessors that by the time of the 1994 accident, she was 75 % recovered from her previous injuries. Allstate argued that these statements were false and that once it obtained the pre-accident records it realized she was far from recovered by the time of the 1994 accident. It also submitted that because of these misrepresentations it did not seek to challenge the causal relationship between her disability and the accident, before making an LECB offer. The notion that Allstate was simply prepared to accept Ms. Auger's assertions at face value, or that it was lulled into some sort of belief that causation was not a live issue, is inconsistent with Ms. Bull's log dated August 16, 1995, in which she makes a note to herself to get a release to allow her to obtain Allstate's own file related to the 1988 accident, or copies of the medical records from the solicitor. The note goes on to record the adjuster's belief that she needed the prior medical history because "causation is key to DAC - pre-existing condition. I reject Allstate's assertion that it relied on any misrepresentation by Ms. Auger.

Despite the fact that Allstate was alive to the causation issue, a review of the adjusters' logs reveals that little was done to obtain pre-accident records before paying LECBs.

Ms. Bull's notes contain two references to the need to obtain pre-accident records. The first is dated May 29, 1995, following a meeting with Ms. Auger's counsel. The note indicates that she told the lawyer of her intention to prepare releases so she could obtain Ms. Auger's "prior files."³ The second note is the aforementioned log of August 16, 1995, which also referred to the need to obtain releases for pre-accident records. However, there is nothing in the adjuster's file to suggest that Ms. Bull ever prepared such releases or presented them to Ms. Auger.

Ms. Elie assumed carriage of the file in the fall of 1995. One of her first actions was to ask the caseworker to obtain clinical notes from four of Ms. Auger's treatment providers. However, none of them treated Ms. Auger before the accident.

On October 16, 1995, Ms. Elie made a note to herself to call Ms. Auger's lawyer to get the "prior mva file & all meds (who was prior)." However, there is no note confirming that such a call was made.

Ms. Elie, wrote to Dr. Winder, Ms. Auger's family doctor on October, 26, 1995. Amongst other things, Ms. Elie asked for the doctor's pre-accident records. This is the first time there is any explicit written request to anyone for pre-accident records. Dr. Winder answered belatedly on January 22, 1996, enclosing a copy of his notes. He indicates that he did not become Ms. Auger's doctor until after the accident, and accordingly did not have any pre-accident records. The copy of Dr. Winder's file tendered at the hearing does contain some pre-accident records, but he did not testify. I have no way of knowing when or how they came into his file. I am not prepared to presume that the records were in his file at the time of the Insurer's request, and that he was attempting to mislead Allstate.

Again, the more important point is that the Insurer did not follow up on Dr. Winder's letter by asking for copies of Ms. Auger's previous doctors' files. The adjuster's notes indicate that in the latter part of 1995, her efforts were primarily directed at trying to resolve a number of vexing supplementary expense claims. Her focus then shifted to preparing for the upcoming LECB offer. Nowhere in the notes is there any suggestion that the initial LECB offer was in any way qualified or made dependant upon the production of pre-accident records.

Ms. Elie testified that notwithstanding the absence of any corroborative notes, she made numerous demands for pre-accident notes before she made an LECB offer. I do not accept this evidence. Ms. Elie was a very partisan witness who went to considerable lengths to try to establish that she and her predecessor had vigorously demanded pre-accident records from the outset. On cross-examination she was reluctant to admit that the notes she relied upon, some of which were quite cryptic, were even capable of alternate interpretations. On one notable occasion she had to ultimately admit that a log note she had relied upon as irrefutable evidence of her demand for pre-accident records, was in fact a demand by Ms. Auger's counsel for Allstate's records. In addition, this was a very difficult file to adjust.

Adjusting a large file such as this is a fluid task. Priorities and strategies change over time. Her notes make it abundantly clear that she and her counsel pursued pre-accident records vigorously in 1997 and thereafter, but as reviewed above, her notes do not suggest that she or her predecessor made anything approaching a concerted effort to obtain the records before Allstate began paying LECBs. I suspect that when Ms. Elie testified that she had made repeated verbal demands for Ms. Auger's pre-accident medical records, she was recalling her later efforts in 1997, and was mistaken in her belief that these demands had been made before the Insurer began to pay LECBs. In the absence of supporting notes, I am not satisfied that Allstate pursued the pre-accident records issue in any concerted manner before the transition to the LECB scheme.

The first record of a written demand to counsel for pre-accident records did not occur until March 1997, a year after the Allstate first made an LECB offer. At the time Ms. Auger's counsel took the position that the pre-accident records were irrelevant. Ms. Elie's continued attempts to obtain the records were resisted until Ms. Auger changed solicitors. Although it is not crucial to my reasoning, I note that even after Allstate obtained records that suggested Ms. Auger might not have returned to full-time work as a letter carrier even if the accident had not occurred, it did not immediately raise the causation issue. In fact, Allstate did not raise the causation issue at the time of the three year review, notwithstanding that it had received most of the records by that time.

Even if there was some attempt to explore Ms. Auger's pre-accident history before the LECB offer, that would not be sufficient to allow Allstate to argue at this stage that as of the 104 week mark, Ms. Auger was not disabled by virtue of the second accident, and hence not entitled to LECBs. Allstate was alive to the causation issue and could have pursued it by seeking a medical opinion and invoking the stoppage provisions of section 64. Having failed to avail itself of the opportunity at the appropriate time, it is too late to do so now, when amongst other things, Ms. Auger has lost the protections offered by the termination provisions of the IRB process, including the right to have the question assessed by a disability DAC. This case does not approach the type of situation I envisaged when I stated in Gauthier there might be exceptions to the general rule that a post facto assessment of entitlement at the 104 week mark would not be permitted in support of a defence to the payment of further LECBs.

Allstate re-framed the issue at various points during the hearing, arguing that an examination of the pre-accident records and those generated at the time of the three year review, suggest there was little difference in Ms. Auger's condition at the two points in time. Allstate argued that it followed that at the time of the three year review, Ms. Auger's pre-accident earning capacity, and her residual earning capacity were the same. Based upon this proposition, it argued that as of the three year review her LECB should be nil.

Underlying this proposition is the notion that the claimant's pre-accident earning capacity is re-viewable at the three year mark. I disagree. The three year review is concerned only with the insured's residual earning capacity. The pre-accident earning capacity is fixed at the time LECBs are first paid. For an employed person, or one who is deemed to be employed, pre-accident earning capacity is fixed by reference to the amount of the IRB. In Ms. Auger's case, the IRB and hence the pre-accident earning capacity was based upon her salary as a full-time letter carrier. Allstate's attempt to argue that Ms. Auger never had the capacity to work full-time as a letter carrier and would never have returned to work even if the accident had not occurred, is in effect nothing more than an attempt to argue that she was not disabled by virtue of the accident. I have already determined that it is too late for Allstate to argue that issue now.

(iv) The transition date from IRBs to LECBs

One final question remains to be settled before considering the amount of the LECB.

The parties were unable to agree on the date Allstate was entitled to substitute LECBs for IRBs. Because the IRB is larger than the LECB, Allstate argues for an earlier transition date, and Ms. Auger argues for a later transition.

Section 21 of the Schedule stipulates that if the insured still qualifies for benefits at the 104 week mark, the insurer shall "promptly" make an LECB offer. In this case the 104 week mark occurred in the last week of February 1996. However, because of Dr. Teasell's refusal to release Ms.

Auger to any form of work until the spring of 1996, the parties agreed that Allstate could defer the offer until April. When Ms. Auger rejected the offer, triggering a REC DAC assessment, Allstate terminated IRBs. On May 2, Allstate made what it characterized as an advance of $1,000. Allstate made no further payments until November 5, at which point, it paid $4,338.13 representing payment of LECBs in accordance with the REC DAC report, retroactive to April 23 (after accounting for the $1,000 advance).

Ms. Auger claims she should have been paid IRBs from April 23 (the date IRBs were terminated) to November 5 (the date of Allstate's first LECB payment), and LECBs thereafter. Allstate contends that Ms. Auger is not entitled to any further IRBs, because once its LECB offer was rejected, it was entitled to suspend all payments and then make a retroactive LECB payment after the release of the REC DAC report. Allstate relied upon the agreement reached in January that extended the time for making an LECB offer until April. I fail to see how this agreement assists Allstate. The agreement allowed it to defer making an offer, it did not authorize the suspension of all forms of income benefits.

The appeal decision in Gan Canada and Rocca, (P99-00003, July 20, 1999), stands for the proposition that if the insurer's LECB offer is rejected, it must continue paying IRBs until 14 days after receipt of the REC DAC report, at which time it may substitute LECBs. The certificate from the REC DAC is dated August 6, but the adjuster's notes suggest it was not received until September 10, 1996. Allstate would have been authorized to switch to LECBs 14 days later. Accordingly, Ms. Auger should have been paid IRBs until September 24. She is entitled to the difference between the LECBs paid at $181.89 per week and the IRB rate of $431.78 per week, from April 23, 1996 to September 24, 1996.

In making this ruling, I take note of Allstate's argument that a demand for further IRBs had not been mediated. The main dispute between the parties is Ms. Auger's demand for further weekly benefits. In the absence of any prejudice, I think that it is overly technical to suggest that once Ms. Auger determined that the substitution of LECBs had taken place prematurely, she should have made an additional application for mediation. In fact, the mediation unit has a policy of not re-mediating issues, making it questionable if a further application would have been accepted. However, in light of the fact that there was no demand for further IRBs until the time of the hearing, no interest is payable on the shortfall.

(v) The initial residual earning capacity assessments and determination of the quantum of the LECB for the first three years

I turn now to the amount of Ms. Auger's LECB. This issue involves two distinct sub-issues. One; the amount of her benefit from the transition to LECBs to the mandatory three year review, and two; the amount of LECBs after the three year review. In this section I will deal with the amount up to the time of the three year review.

As the second anniversary of the accident approached, Allstate commissioned Associative Rehabilitation Inc. (ARI), which had been performing case management functions, to prepare a loss of earning capacity report. ARI produced a report and addendum that identified eight "suitable"sedentary jobs available in the London area. The authors of the report were not able to meet with Ms. Auger to review her work history in any depth, and no physical testing was done. The ARI report is essentially a catalogue of "suitable" jobs based on the author's impressions of Ms. Auger's transferable skills. I am not convinced that Ms. Auger would be qualified for most of these positions. For example, the job eventually chosen by Allstate as the most suitable was the manager of an optical retail store. Ms. Auger has very limited retail experience, almost no managerial experience, and no experience working in an optical outlet. I place very little weight on the opinions expressed in the ARI report.

Dr. Teasell met with a representative of ARI and Ms. Auger's lawyer in late March 1996, at which time he released Ms. Auger to work 20 hours per week, as of May 1, with an increase to 30 hours per week by July 1.

Ms. Auger became very upset upon learning of Dr. Teasell's opinion. She testified that because Dr. Teasell had not seen her since late January, he was unaware of the decline in her condition.

She met with Dr. Teasell in mid-April, at which time she told him she did not think she could work.

Dr. Teasell reported this conversation to the family doctor, and noted that a patient's view of their own limitations is frequently a predictor of how well they will do. However, Dr. Teasell did not retract his earlier impression that she was fit to return to part-time work.

The validity of Ms. Auger's assertion that she was incapable of returning to work must be assessed in light of the fact that she was taking three university level courses. She testified that she devoted approximately 13 hours per week to her studies. This is significant in two respects. One, the ability to attend school suggests that she was capable of at least part-time sedentary work. Two, even before the 1994 accident, Ms. Auger had expressed an interest in being retrained. After the accident, she reported that she was studying with a view to either going to law school or becoming a counsellor. Both occupations would have required years of additional study. I am satisfied that Ms. Auger had no interest in returning to work at this time. She did however, have reason to portray herself as incapable of returning to work, as this would allow her to continue her studies while supporting herself on disability payments. I reject Ms. Auger's assertion that she was incapable of working.

Ms. Auger first began to see Dr. Iezzi, a psychologist, after she learned that Dr. Teasell had released her to part-time work. Dr. Iezzi reported that there did not appear to be any psychological factors which would prevent her from pursuing full-time work, but he endorsed Dr. Teasell's view that her chronic pain and fatigue would limit her to part-time work. He did express some concern about Dr. Teasell's timetable. To enhance the chances of a successful return to the workforce, Dr. Iezzi recommended that a coordinated plan be developed involving all of Ms. Auger's treatment providers. No such plan was ever put in place. In fact, in the spring, Allstate advised ARI, the case manager, that its services were no longer required, and refused to pay for further physiotherapy or massage therapy. The REC DAC assessment was conducted over two weeks in July 1996. In accordance with REC DAC guidelines, an initial screening was done by a physiotherapist and physiatrist who concluded that it was safe for Ms. Auger to undertake the psychological and occupational assessments. The psychological assessment identified vocational interests and strengths used to select potential occupations, which were then subjected to a five-day occupational assessment. The three jobs selected for assessment were: car rental agent, image consultant, and security guard. The assessors reported that Ms. Auger attended on time for each of the sessions, and validity testing suggested she was consistently putting forth a genuine effort. Based upon the fact that Ms. Auger was able to perform the required tasks throughout the five day assessment, the authors concluded that she would be capable of working at the selected jobs full-time. The security guard job was identified as the most appropriate for the calculation of residual earning capacity. At the hearing, both parties agreed that work as a security guard was the appropriate reference. During submissions, Ms. Auger acknowledged that the totality of the evidence would not support a finding that she was incapable of working at that time. She submitted that the appropriate finding would be that she could work as a security guard for 20 hours per week.

The REC DAC is a comprehensive assessment conducted by neutral evaluators and must be given careful consideration. However, in this case, I find that the authors overestimated Ms. Auger's capacity. In particular, I do not believe the report gives sufficient consideration to her ability to maintain full-time work for an extended period. The job simulation portion of the REC DAC assessment stretched over five days to simulate a regular work week. However, the ability to maintain a schedule over a single week, is still only a predictor of the individual's ability to maintain that schedule week in and week out. In addition, in the body of the report, the assessors noted that Ms. Auger "appeared to be exhausted most of the time following performance of required tasks," and "there appears to be objective signs of generalized lethargy and [she] took intermittent breaks to pace her body either by taking short walks or stretching her upper limbs. She was tired/fatigued with increased pain symptoms at the end of each day." However, there is no discussion of these findings in the conclusion to the report, and there is no explicit consideration of how fatigue and pain would effect her ability to engage in full-time work on a sustained basis.

Ms. Auger relied upon a number of reports generated in the post-DAC period that record complaints to her doctors and therapists that she found the assessment process exhausting and painful. When these reports are combined with the REC DAC's own observation that she appeared fatigued and in pain, they support a finding that Ms. Auger would not have been capable of maintaining full-time work on a sustained basis.

Dr. Teasell consistently represents a conservative voice in debates over the management of persons with chronic pain. He has regularly opined that individuals with chronic pain must learn to live within their limitations and frequently will have to settle for less demanding jobs than they were previously capable of. In light of this, his view that Ms. Auger would have been fit to return to work 20 hours per week as of May 1, 1996, with an increase to 30 hours per week by July, must be given considerable weight when considering Ms. Auger's submission that she was incapable of working.

I find that as of the time of the REC DAC assessment in July 1996, Ms. Auger was capable of working as a security guard for 30 hours per week. The LECB based upon this residual earning capacity is payable until the conclusion of the mandatory three year review discussed in the following section.

In reaching this conclusion, I have taken account of Ms. Auger's evidence that Dr. Teasell was not aware of the decline in her condition in the spring of 1996. Ms. Auger was clearly upset when she heard that Dr. Teasell had released her to work, as is evidenced by the fact that she began to see Dr. Iezzi. However, I find Ms. Auger's evidence concerning her decline in the early part of 1996 exaggerated. Most the decline in her condition did not occur until after the REC DAC was completed. For example, Ms. Auger testified that because of a worsening of her condition in early 1996, she had to drop a university course. However, a review of her academic records reveals she completed all three of the courses she registered for.

Allstate paid LECBs at the rate of $181.89 per week based upon the REC DAC report. Ms. Auger is entitled to the difference between the LECBs paid by Allstate, and the amount owing as a result of my finding that she was capable of working only 30 hours per week, together with interest in accordance with section 68. If the parties cannot agree on the calculation or the amount owing, they may write to me within 30 days of the date of this decision.

(vi) Ms. Auger's condition after the initial REC DAC, and the mandatory three year review.

Once a determination is made concerning the amount of the insured person's LECB, the amount is locked in until the time of a mandatory review undertaken after three years.⁴ In this case the review was conducted in August of 1999. In brief, Ms. Auger submits that following the first REC DAC, her condition worsened to the point where by the time of the three year review she was incapable of any form of gainful work. In contrast, Allstate argued that by the time of the review she was capable of full-time work. In this section, I review the evidence concerning Ms. Auger's activities and medical assessments in the period following the first REC DAC, leading up to the mandatory review.

Shortly after the first REC DAC, Ms. Auger began to complain of pain in her right hip. She attributed this new complaint to having been pushed too hard during the work simulation. Ms. Auger's physiotherapist, Cecile James, endorsed this view. She labelled the pain as bursitis. Dean Dryburg, Ms. Auger's chiropractor, thought that the hip pain was more likely a side effect of her longstanding back pain. I suspect that the chiropractor's view is correct, but I need not decide this point. The relevant fact is that sometime in 1996, Ms. Auger developed this additional complaint.

Ms. Auger enrolled in a single university course (as was her routine) in the summer of 1996. She completed this course and enrolled in three courses in the fall.

Dr. Teasell reported in the latter part of 1996, that he was impressed with Ms. Auger's gains. In contrast, Dr. Iezzi reported that Ms. Auger was under increasing stress as a result of ongoing conflict with her landlord and Allstate. He indicated that the increased stress manifested itself in greater physical complaints. This theme of somatic complaints is found in many of the subsequent reports. It is particularly prominent in the reports of Dr. Mount, a psychiatrist and Drs. Partridge, Cowman, and Lawson, psychologists who conducted assessments at the behest of Allstate.

Dr. Iezzi suggested that Ms. Auger's school work was more than she could cope with, and he suggested she withdraw. Ms. Auger followed this advice and withdrew in early 1997. Pursuing a university degree was one of Ms. Auger's key goals. Her decision to withdraw from school is compelling evidence of a deterioration in her condition.

Ms. Auger moved to the small village of Port Stanley in March of 1997. Dr. Winder asked Ms. James to do an in-home assessment. She testified that the house was disorderly and that Ms Auger had been unable to properly unpack and set up the residence.

The principal members of Ms. Auger's treatment team met in August 1997. Dr. Iezzi, Cecile James and Dean Dryburg all testified that at the time, they thought they could retrain Ms. Auger for some form of sedentary work, but they needed a co-ordinated plan. At the time, each was dealing with crises on an ad hoc basis, rather than pursuing a comprehensive rehabilitation plan. The team members blamed this on Allstate's refusal to properly fund their efforts.

In the fall of 1997, AMI conducted a three-day vocational assessment at Allstate's request. Dr. Henderson, a consulting psychologist, reported to AMI that Ms. Auger needed further physical and psychological therapy as part of a return to work strategy. Despite this opinion, ARI's report stated that there was no medical evidence to suggest Ms. Auger was precluded from working full-time, and that there were many suitable jobs she was capable of pursuing. On cross-examination, Mr. Marc Menard, the vocational evaluator who prepared the AMI report, admitted that he did not mean to suggest that she was capable of returning to full-time work immediately, but that she was a candidate for a program that would return her to work. The most significant fact coming from this report was the offer by AMI staff to assist Ms. Auger with a job search, and Ms. Auger's rejection of this offer. Ms Auger indicated to the staff that it would be premature to start looking for work until she was symptom free.

Allstate also arranged for Ms. Auger to be seen by Dr. Mount, a psychiatrist, in the fall of 1997. Dr. Mount conducted a lengthy interview with Ms. Auger and completed a painstakingly thorough review of her medical file that included insightful commentary. Contrary to the opinion of Dr. Iezzi, he found little evidence of depression. However, he found that she was suffering from a chronic pain disorder, with associated psychological factors. Dr. Mount requested that Dr. Partridge, a psychologist, conduct psychometric testing.

Dr. Partridge reported in the spring of 1988, that Ms. Auger felt overwhelmed by stress and was in a "genuine state of psychological and emotional distress" that was sufficiently severe that it would impair her ability to function effectively in any kind of work. However, Dr. Partridge also noted that the test results suggested the possibility that Ms. Auger was deliberately simulating stress.

Dr. Mount endorsed Dr. Partridge's comments concerning Ms. Auger psychological and emotional distress, He too suggested that there "was a conscious and volitional misrepresentation of some parts of her clinical picture." In coming to this latter conclusion, he relied in part upon surveillance evidence that suggested Ms. Auger was capable of more than she admitted to Dr. Mount who noted that it was likely that Ms. Auger had a number of emotional stresses that she was not dealing with, and which manifested themselves in physical complaints. In light of this fact, he opined that traditional psychological counselling was of limited value. However, taking into account Ms. Auger's statement that she found the sessions with Dr. Iezzi helped her deal with stress, he suggested the counselling continue. However, he suggested that Dr. Iezzi should be cautioned about taking at face value Ms. Auger's suggestions that she was entirely innocent in all of the conflicts which gave rise to the various stresses affecting her life. Finally, Dr. Mount suggested that some form of work simulation and perhaps a sheltered type of environment might be useful in returning Ms. Auger to the work force.

I found Dr. Mount's report thorough, thoughtful and balanced. I give it considerable weight, including the comments concerning Dr. Iezzi's assumption that Ms. Auger was always an innocent victim of her circumstances, and his findings of depression.

In the spring of 1988, Allstate arranged for a multi-disciplinary assessment by Work Able. The physiatrist reported that there was no obvious "substantial physical impairment" and that Ms. Auger's principle impairments were due to pain and fatigue. Ms. Auger limited her efforts during the functional abilities evaluation due to pain and fatigue, but the authors noted that there were few signs of biomechanical stress. The authors concluded that from a physical point of view, she was capable of working full-time as either a security guard or a hospital admitting clerk. This portion of the report is one of the strongest pieces of evidence that Ms. Auger was intentionally exaggerating her physical limitations.

The psychological component of the Work Able report mirrors Dr. Mount's report. It too suggests that her condition is at least in part attributable to a genuine psychological disability. This comment is all the stronger in light of the fact that Allstate asked the psychological team to comment on its belief that Ms. Auger had "intentionally and consciously attempted to influence test results, and that there has been a conscious and volitional misrepresentation of some parts of her clinical picture." The authors adopted Dr. Mount's opinion that there was a "mixture of authentic emotionally based reasons for Ms. Auger's symptoms as well as a conscious and volitional misrepresentation of some parts of her clinical picture. The authors noted that Ms. Auger tended to reject emotional explanations for her ongoing difficulties in coping, in favour of physical explanations, and according was likely understating her emotional liabilities while exaggerating physical symptoms. The authors concluded that because of her emotional difficulties she would only be able to present herself in an appropriate fashion for 20 hours per week. However, they anticipated that in the future she would be able to work full-time.

There is some evidence that Ms. Auger's condition improved a little in the summer of 1998. She reported taking her dog on longer walks, including up a nearby hill. She also began to operate a Bar-B-Q stand in front of a local wine-bar. There was considerable evidence concerning the start and end date of this operation, and the number of hours she worked. I find that it was a rather haphazard affair in keeping with Ms. Auger's penchant for ignoring the advice of others, and trying to do things on her own terms. Contrary to Allstate's submissions, I find at most, it supports the contention that Ms. Auger was capable of part-time work.

Ms. Auger moved to a cottage in January 1999, after another dispute with her landlord. She took in a few paying guests in the summer of 1999. One of the guests was called to testify on behalf of Ms. Auger. She reported that the cottage was dishevelled and filthy. She stayed for a couple of days out of pity. She testified that she left when she concluded that either she or Ms. Auger must be going mad.

I do not see the fact that Ms. Auger took in a few paying guests over the summer as persuasive evidence that she was capable of working full-time. To the contrary, the evidence of the witness supports the contention that Ms. Auger would have difficulty presenting herself in a fashion that an employer would find acceptable.

The second REC DAC was conducted in August 1999. As before, a psycho-vocational assessment was done to identify potential occupations, which were then subjected to five days of testing. Interestingly, working as a security guard was not amongst the potential jobs. No explanation for this was provided.

The assessors reported that Ms. Auger was generally late in the morning and she usually appeared to be exhausted. They did not have the same degree of concern about whether she was putting forward an honest effort as might have been expected in light of the reports of Work Able, and Dr. Mount. In summary, they found Ms. Auger to be fit to perform jobs that required limited strength, and that allowed for a change of position, but concluded she was capable of working only 20 hours per week. The occupation deemed most appropriate was a dispatcher.

Ms. Auger's physiotherapist, Ms. James, sent a letter to the DAC in the midst of its testing. This was contrary to DAC guidelines, which provide that file materials are to be provided at the outset. Allstate suggested that the letter tainted the DAC, and that another DAC should be scheduled. Ms. Auger's counsel suggested that a joint letter be sent to the DAC asking who saw Ms. James' letter, and what role it played in their deliberations. When Allstate did not respond to this overture, he wrote to the DAC himself. The reply from the DAC advised that the letter did not affect the outcome. In addition, a review of the DAC report suggests that little use was made of any of the medical reports filed by the parties. I am not convinced that Ms. James' letter, although improper, materially affected the outcome of the assessment. I note parenthetically that the contents of the letter are more significant as evidence of Ms. James' lack of objectivity, which is a factor I considered when assessing the weight to be given to her opinions on the extent of Ms. Auger's disability.

In opposition to the opinion of the REC DAC, Ms. Auger continued to maintain at the hearing that she was incapable of any form of competitive employment. She relied heavily upon the opinion of Dr. Iezzi, who suggested that her psychological condition had deteriorated to the point where she could not work at all. Allstate maintained that Ms. Auger was capable of full-time work.

I reject Allstate's submission that as of the three year review, Ms. Auger was capable of working full-time. The overwhelming weight of the evidence, including the opinions of a number of experts retained by the Insurer, supports a finding that Ms. Auger deteriorated in the period between the two DACs. I have no hesitation in finding that as of the time of the second DAC, Ms. Auger was capable of working no more than 20 hours per week, as reported by the REC DAC. However, I also reject Ms. Auger's submission that she is incapable of work. As a treating psychologist, Dr. Iezzi had the opportunity to view Ms. Auger over a number of years, and his opinion must be carefully considered. However, in this case, it is not a matter of weighing the opinion of a single assessor who saw the claimant on one occasion, against the opinion of a long time treatment provider. There are a number of thorough and careful assessments that concluded that although Ms. Auger had deteriorated, she continued to have some residual earning capacity. I prefer this evidence, and find that Ms. Auger has the ability to work 20 hours per week as a dispatcher.

Shortly after the release of the REC DAC report, Allstate indicated that it disagreed with the conclusion. It reduced Ms. Auger's LECB to $24.96 per week on the basis of the AMI report suggesting she could work full-time as a hospital admitting clerk. I was not provided with the LECB that would be associated with the REC DAC's conclusion. Ms. Auger is entitled to the difference between the amount paid by Allstate, and the amount associated with the REC DAC report, together with interest in accordance with section 68. If the parties cannot agree on the calculation, they may contact me within 30 days of this decision.

A fair bit of time was spent by the parties pointing fingers" in an effort to portray the other as being responsible for Ms. Auger's decline, and her failure to be properly rehabilitated. To my mind, each of the parties must bear some responsibility, and there is little to be gained in trying to apportion blame.

Very briefly, Ms. Auger was very difficult to deal with. She was uncooperative and took steps that caused Allstate to suspect that she was trying to cheat the system. For example, she foolishly submitted altered claim forms for insignificant expenses, and made it difficult for Allstate to conduct legitimate investigations over matters such as occupational services. More importantly, she rebuffed Allstate's attempts to return her to the workforce, preferring to stay in school, and later maintaining that she did not have to return to any form of work until she was symptom free. At the end of the IRB stage, a residual income is attributed to her based upon her capacity, irrespective of whether or not she chose to return to work. At this stage it is in her best interests to get back to some form of work.

later maintaining that she did not have to return to any form of work until she was symptom free. At the end of the IRB state, a residual income is attributed to her based upon her capacity, irrespective of whether or not she chose to return to work. At this stage it is in her best interests to get back to some form of work.

For its part, Allstate rejected overtures from Ms. Auger's treatment team, and ignored the opinions of its own experts regarding Ms. Auger's limitations, and the need for psychological treatment. Allstate, which has been very suspicious of Ms. Auger's treatment team, is going to have to find a way to work with them.

(vii) Supplementary medical and rehabilitation expenses

Ms. Auger made claims for various supplementary medical and rehabilitation expenses that were denied. In this section I will deal with each of the disputed claims.

Moving expenses

As stated earlier, Ms. Auger's move from London to Port Stanley, and the subsequent move from the townhouse to the cottage were necessitated by disputes between Ms. Auger and her landlords, not by the accident. On this basis, the claims as stated are dismissed. However, it is clear that on each occasion, Ms. Auger had a great deal of difficulty unpacking and organizing her home. These tasks were made more difficult because of her chronic pain. Just as an insured person can qualify for housekeeping assistance pursuant to section 55 on the grounds that the housework unreasonably aggravates their condition, I find that Ms. Auger is entitled to assistance with the unpacking and organizing. Unfortunately, I received very little evidence on this issue. I am satisfied that Ms. Auger needed 8 hours per move, to assist her unpacking and organizing the house. This claim is to be paid on the same scale as the housekeeping services funded by Allstate: $16.80 per hour x 16 hours for a total of $268.80, together with interest in accordance with section 68.

Housekeeping expenses

Two invoices related to housekeeping services were submitted.

The first invoice is from Daytime Domestics. The outstanding balance is $159.13 representing mileage charges from London to Port Stanley. The rest of the account was honoured by Allstate. Ms. Auger's evidence on this point was limited to the bare statement that she had to employ a London service because she could not find a housekeeper in Port Stanley. Ms. Auger offered no evidence of what attempts she made to find a local housekeeper. In the circumstances, I am not satisfied with her evidence on this point and this portion of the claim is dismissed.

The second invoice is from OHHP which is also a London firm, but it does not appear there was any mileage component. The account is for $2,763.81, representing housekeeping services from December 23, 1997 to August 25, 1998. Looking at the invoice, it is apparent that the housekeeper came for a half day (four hours) once per week. In addition, on a number of occasions they billed for an extra 1.5 hours during which they assisted with laundry.

The evidence called on this point was very limited. It would appear that Allstate had been paying for housekeeping services at 4 hours per week from shortly after the accident until late 1997. Ms. Elie did not offer any reason why the benefit was terminated. A few of the medical reports suggest that housekeeping would be of assistance. In addition, as noted earlier, there was evidence from the physiotherapist, and the guest who stayed for a few days in the summer of 1998, that the house was unclean. I am satisfied that the four hours per week is justified. I heard no evidence that would justify the assistance with laundry, which could have been done in smaller loads. The invoice from OHHP is reduced by $247.80. The balance of $2,516.01 is payable by Allstate together with interest in accordance with section 68.

Chiropractic, massage and physiotherapy expenses.

Ms. Auger seeks payment of the following expenses:

• chiropractic adjustments

$1,716.40

• massage therapy

$2,850.00

• physiotherapy

$2,114.10

TOTAL

$6,680.50

In the spring of 1996 a MED REHAB DAC, reported that massage and physiotherapy were no longer necessary, and that only a few more chiropractic sessions were needed. Ms. Auger continued to receive massage and physiotherapy, and exceeded the quota of chiropractic treatments.

The chiropractic accounts start in the fall of 1996, at which time Ms. Auger was attending on a weekly basis. The accounts end in the summer of 1999, at which point she was attending an average of two treatments per month. The massage therapy accounts run from the spring of 1996 to the summer of 1997. Ms. Auger attended hour long weekly sessions throughout this period. The physiotherapy sessions were more sporadic, but included a couple of home visits.

Ms. Auger's treatment regime throughout this period was far from ideal. She must bear some of the responsibility for this. Allstate must also take some of the blame. By this stage, it had refused to deal further with Ms. Auger's treatment team. As a result of these factors, Ms. Auger's treatment tended to deal with crises, or at most was designed to help her deal with her condition, rather than being a co-ordinated effort to rehabilitate her. In the circumstances, these therapy sessions, though largely palliative, were reasonable attempts to deal with Ms. Auger's situation. I find that she is entitled to these expenses. In making this finding, I recognize that Allstate has expended large amounts on Ms. Auger's treatment. I also reiterate my earlier comments that the parties are going to have to find a way to co-operate. This will mean that Ms. Auger is going to have to be more open and prepared to follow the advice of others, and will have to recognize that she must commit to a program designed to increase her work capacity. For its part Allstate is going to have to develop a working relationship with Ms. Auger's treatment providers.

Ms. Auger is entitled to $6,680.50 on account of these therapies, plus interest in accordance with section 68.

Psychological therapy

Ms. Auger claims $5,250 on account of psychological counselling provided by Dr. Iezzi, a registered psychologist. As noted previously, all the medical evidence, including a MED REHAB DAC supports the need for this counselling. Allstate relies on two related defences.

During submissions, Allstate noted that prior to the accident, Ms. Auger had been receiving counselling (from a counsellor rather than a psychologist). Allstate wondered what opinion the assessors would have had about the causal relationship between the accident and Ms. Auger's current condition if they had known about the prior counselling. If Allstate had wanted to explore this issue, nothing prevented it from seeking an additional opinion after it obtained the prior medical history. It chose not to. In the absence of evidence, the Insurer's query is merely conjecture.

In addition, Allstate submitted there was evidence to suggest that much of Ms. Auger's psychological difficulties were related to the ongoing litigation. Counsel argued that as such, the impairment is not as a result of the accident. This in turn raises the question of whether or not the accident "directly or indirectly" caused the impairment. While it is certainly true that involvement in the litigation process has contributed to Ms. Auger's psychological problems, I am not satisfied that as bright a line can be drawn around Ms. Auger's psychological condition as Allstate argues. Ms. Auger is dealing with a host of emotional troubles, some of them totally unrelated to the accident, some of them related to coping with her chronic pain condition, and some related to her dealings with Allstate. It is impossible to disentangle these elements. Quite apart from the question of whether or not the litigation related issues can be said to have been caused by the accident, I am satisfied that the issues related to her chronic pain have made a significant contribution to the need for counselling, and as such Allstate is responsible for the cost of the counselling. I find that Ms. Auger is entitled to $5,250 representing the accounts of Dr. Iezzi, together with interest in accordance with section 68.

(viii) Special Award

Ms. Auger claims a special award on two bases. One, Allstate's refusal to fund Dr. Iezzi's counselling. Two, Allstate's refusal to pay LECBs in accordance with the second REC DAC report. I will deal with each in turn.

As noted above, Allstate had a number of psychiatrists and psychologists assess Ms. Auger and comment on the need for psychological counselling. All of them supported the need for some form of ongoing counselling. Allstate had doubts about the legitimacy of this claim, and highlighted them in at least one of the referral letters, asking the assessor to note its concern that Ms. Auger was fabricating her complaints (the Work Able letter). Notwithstanding the reply that there was evidence of legitimate psychological impairment, Allstate refused to fund Dr. Iezzi's sessions. Even more disturbing, the issue was referred to a MED REHAB DAC which reported that Ms. Auger should continue to see Dr. Iezzi. In the face of this report Allstate maintained its refusal, in clear contravention of the "pay pending" provisions of section 39(11). This is a very serious matter that deserves redress.

I reject Allstate's argument that the refusal was not unreasonable in the face of the argument that the treatment was necessitated by the litigation rather than the accident. This argument was not raised until the hearing. The principle focus of a special award claim must be on the reasonableness of the insurer's conduct at the time the benefits were refused. Hindsight should not be used to condemn or justify the insurer's conduct. The amount of the outstanding account before interest, is approximately $5,000. I award Ms. Auger a special award of $3,000 inclusive of interest.

The merits of a special award in relation to the LECB issue is not so clear. In essence, Ms. Auger argues that Allstate was obliged to increase the amount of the LECB after the release of the second REC DAC report. Allstate argues that it did not have to because it took the position that the REC DAC was tainted by Ms. James' letter. Ms. Auger responds to this argument by noting that this point was not raised in the Notice of Explanation forwarded by the adjuster. While this is true, at about the same time that the adjuster sent out the Notice of Explanation, Allstate's counsel wrote to advise that his client was taking the position that the DAC was tainted, and proposing that another DAC be conducted. I ultimately found that the DAC was not tainted by the letter, but I am satisfied that Allstate's position was arguable and that its refusal to pay in accordance with the REC DAC report was not unreasonable.

EXPENSES:

If the parties cannot agree on expenses they may write to me within 30 days of this decision.

July 4, 2001

Stewart McMahon

Arbitrator

Date

Neutral Citation: 2001 ONFSCDRS 101

FSCO A97-001789

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

BEJIA SMITH

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Allstate may substitute LECBs in place of IRBs as of September 24, 1996. Allstate shall pay Ms. Auger the difference between the IRB rate of $431.78 and the LECB rate of $181.89 paid by Allstate from April 23, 1996 to September 24, 1996.

2. Allstate shall pay Ms. Auger LECBs based upon a residual earning capacity associated with working 30 hours per week as a security guard. This LECB is payable from September 25, 1996 to September 25, 1999. Allstate shall pay Ms. Auger the difference between this rate and the $181.89 paid by Allstate, together with interest in accordance with section 68 of the Schedule.

3. Ms. Auger is entitled to LECBs from September 25, 1999 onward based upon a residual earning capacity associated with working as a dispatcher 20 hours per week. Allstate shall pay Ms. Auger the difference between this rate and the $24.96 paid by Allstate, together with interest in accordance with section 68 of the Schedule.

4. Allstate shall pay to Ms. Auger's supplementary medical expenses totalling $11,930.50 together with interest in accordance with section 68 of the Schedule.

5. Allstate shall pay Ms. Auger a special award of $3,000 inclusive of interest.

July 4, 2001

Stewart McMahon

Arbitrator

Date

Footnotes

1. 1The 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. O.R. 776/93 was extensively modified by O.R. 781/94; accordingly, where necessary, "1994 Schedule "refers to the original O.R. 776/93, and "1995 Schedule "refers to O.R. 776/93 as amended.
2. 2Ms. Auger filed a tax return prepared after the accident, that indicated she had earned some income. However, she did not file any of the supporting documentation. I am not satisfied with the sufficiency of this evidence and find that Allstate was correct in basing her claim on the income from Canada Post. The amount of the IRB is listed as an issue in the pre-hearing letter, this was related to a claim that the IRB should have been increased to reflect a pay raise that would have been paid had Ms. Auger returned to work. This claim was wisely abandoned during the hearing.
3. 3Ms. Elie testified that she thought the reference to "prior files" was a reference to Ms. Auger's doctor's pre-accident clinical notes and records. The structure of the entire note suggests to me that the reference is to Allstate's own file relating to the earlier accident. In any event, I do not see that anything turns on the distinction, as there is no evidence that Ms. Bull ever prepared the releases.
4. 4There is an exception to this general rule. Section 34 of the Schedule provides that if the insured person provides the insurer with a certificate evidencing a permanent deterioration, they may require the insurer to conduct an early review. Initially Ms. Auger argued for such a review, but during submissions acknowledged that none of the medical opinions suggested that the down-turn in her condition was permanent.