Neutral Citation: 2001 ONFSCDRS 110

FSCO A00-000133

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

TED GRAPER

Applicant

and

LIBERTY MUTUAL FIRE INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Nancy Makepeace

Heard:

March 19 and 20, 2001, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Barry A. Percival for Mr. Graper

Dwain C. Burns for Liberty Mutual Fire Insurance Company

Issues:

The Applicant, Ted Graper, was injured in a motor vehicle accident on March 20, 1993. He applied for and received statutory accident benefits from Liberty Mutual Fire Insurance Company ("Liberty Mutual"), payable under the Schedule.¹ Liberty Mutual terminated weekly income benefits on June 22, 1999. The parties were unable to resolve their disputes through mediation, and Mr. Graper applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. Shortly before the hearing, Liberty Mutual paid Mr. Graper the outstanding income replacement benefits ("IRBs"), plus interest, and reinstated ongoing IRBs. However, the parties were unable to settle Mr. Graper's claim for a special award and arbitration expenses.

The issues in this hearing are:

1. Is Mr. Graper entitled to a special award pursuant to subsection 282(10) of the Act? If so, in what amount?

2. Is Mr. Graper entitled to his arbitration expenses pursuant to subsection 282(11) of the Act and Ontario Regulation 664, as amended by Ontario Regulation 464/96 made under the Act?

Result:

1. Mr. Graper is entitled to a special award in the amount of $25,000, inclusive of compound interest under subsection 282(10) of the Act.

2. I may be contacted if the parties are unable to agree on expenses.

EVIDENCE AND ANALYSIS:

Background:

Mr. Graper was injured in a serious head-on collision, on Highway 401 near Windsor, on March 20, 1993. He was 46 years old, and had worked as a music teacher for more than 20 years, most recently in a senior public school. He also taught some math classes. He returned to work after the accident, on a half-time basis, for the four school years between September 1994 and May 1998. At that time, he concluded he could not continue because of ongoing headaches, nausea, vomiting and fatigue. He has not worked since then, and claims he is unable to work in any suitable occupation. Mr. Graper's wife, Maureen Bird-Graper, was employed as a school principal. Her injuries included rib and spinal fractures. She returned to work in September 1993, although she continues to suffer back pain and fatigue. Their children, Aaron, then 11 years of age, and Cory, 13, were also injured in the accident. Aaron suffered a head injury and continues to face serious accident-related emotional challenges.

There is no dispute that Mr. Graper suffered serious injuries: a compound depressed skull fracture; frontal lobe contusion with dural laceration and loss of brain tissue; a blow-out fracture of the right eye socket and cheekbone, causing damage to the V1 and V2 facial nerves; multiple fractures of the left hand; multiple fractures of the left femur; and multiple fractures of the jaw. He was taken to Hotel-Dieu Hospital in Windsor, where Dr. Anita North, a neurosurgeon, operated on his skull and facial injuries. An orthopaedic surgeon performed an open reduction of his left femur and a closed reduction of his left hand fractures. Mr. Graper suffered pre-traumatic amnesia of about an hour and post-traumatic amnesia of several days.

On March 25, 1993, Mr. Graper was airlifted to St. Michael's Hospital in Toronto. Dr. Peter McDougall, a plastic surgeon, fashioned a tracheostomy to secure his airway, and performed facial surgery. Mr. Graper was also followed up for his head injury and his orthopaedic injuries. On April 27, 1993, he was discharged to Hillcrest Hospital. There he was treated with physiotherapy until his discharge on May 20, 1993. Since then, he has received physiotherapy at a community clinic, as well as engaging in an exercise maintenance program. His hand and leg fractures have healed satisfactorily, but he continues to experience severe recurrent headaches, nausea, vomiting and fatigue. He does not appear to have suffered any permanent cognitive deficits, but he has been treated for accident-related emotional problems. He has been seen by a number of specialists in connection with his head injuries, including neurologists, a neuropsychologist, an otolaryngologist, speech-language pathologists, a family therapist, a psychologist and a psychiatrist.

Immediately following the accident, Mr. Graper began using up his banked sick leave credits. When those expired in February 1994, he began receiving IRBs of $600 per week from Prudential of America General Insurance Company (Canada), which insured his car.² Prudential reduced his benefits to $300 per week on account of the post-accident income he earned after September 1994. This was in accordance with subsection 15 of the Schedule, and was not in issue at the hearing.

Mr. Graper stopped working on May 1, 1998. He claims that he was not able to continue teaching, even on a part-time basis, because of residual injuries resulting from the accident, especially headaches, nausea, vomiting and fatigue. Benefits of $600 per week were reinstated. and continued until June 22, 1999, when they were terminated.

On March 16, 2001 (the Friday before the Monday hearing start), Liberty Mutual sent Mr. Graper a cheque for $64,080, covering his outstanding IRBs of $600 per week from June 22, 1999 to March 9, 2001, plus interest calculated under subsection 24(2) of the Schedule. Liberty Mutual also reinstated Mr. Graper's ongoing IRBs at that time. On the morning of the hearing start, Liberty Mutual agreed that the correct amount payable to March 16, 2001 was $64,967.54, and undertook to pay the outstanding amount. The parties were not able to agree on Mr. Graper's claim for a special award.

Subsection 282(10) of the Act states that an arbitrator shall order a special award if she finds that the insurer "has unreasonably withheld or delayed payments." Mr. Graper submits that Liberty Mutual's conduct falls within the purview of this section in the following ways:

(a) Liberty Mutual terminated benefits in June 1999 in the face of medical reports saying he continues to suffer accident-related injuries that prevent him from working in any suitable occupation;

(b) having terminated benefits, Liberty did not reinstate them until the eve of the hearing, some 21 months later, although Mr. Graper provided additional medical reports supporting his claim after his benefits were terminated;

(c) in settlement discussions prior to the hearing, Liberty Mutual insisted on a full and final settlement of the claim, and only paid outstanding benefits and reinstated benefits on the eve of the hearing after that offer was rejected;

(d) Liberty Mutual continues to take an unreasonable position with respect to Mr. Graper's ongoing claim in failing to accept his entitlement to benefits; and

(e) during the hearing, Liberty Mutual took an unreasonable position in claiming solicitor-client privilege for an entry in its adjusters' files that Arbitrator Blackman ultimately ordered produced.

Liberty Mutual submits that I have no jurisdiction to consider a special award now that benefits have been reinstated and the outstanding amount paid. Alternatively, Liberty Mutual submits that its adjusters considered all the evidence in the file. It says that there is conflicting medical evidence in this matter, and that in terminating benefits, it relied on a series of medical and vocational assessments conducted at its request in November 1998. Liberty Mutual submits that the medical reports submitted after benefits were terminated were inconclusive. It also relies on Mr. Graper's demonstrated ability to return to his pre-accident job on a half-time basis for four school years before deciding to stop working and his failure to participate in a job-readiness program offered by the Insurer.

Preliminary Issues:

Jurisdiction

In his closing statement, Mr. Burns submitted that I have no jurisdiction to consider a special award in this matter now that Liberty Mutual has paid outstanding benefits and reinstated ongoing benefits. The time to raise jurisdictional objections is at the outset of the hearing. In any event, I do not accept the submission.

Liberty Mutual submits that an arbitrator has no authority to make a special award unless he or she has awarded disputed benefits. Several early arbitration decisions took this view. The argument is that the wording of subsection 282(10) only allows a special award "in addition to" an award of benefits and interest, and bases the amount of the award on the amount to which the insured person "was entitled at the time of the award" plus interest on "all amounts then owing."³

It is now established that an arbitrator retains jurisdiction to consider a special award despite an insurer's unilateral payment of outstanding benefits claimed on the eve of the hearing. The leading case is the appeal decision in Jensen and GAN Canada, in which Director's Delegate Naylor reasoned as follows:

The meaning of s. 282(10) is not straightforward. It is capable of being read a number of ways. The threshold inquiry is whether payments have been unreasonably withheld or delayed. In ordinary parlance, payments "withheld" means payments not granted, payments "delayed" means payments paid late. It is difficult to see how the addition of "delayed payments" can be given any content if late payment strips the arbitrator of jurisdiction to make an award.

A special award under s. 282(10) is not part of the schedule of benefits.⁴ It is an aspect of an arbitrator's authority in relation to adjudication of a person's right to benefits or the amount of benefits. However, cases dealing with a party's right to withdraw an application or appeal have held that a party is not free unilaterally to end a proceeding.⁵ It would seem to follow that the unilateral action of GAN Canada in agreeing to pay the benefits at issue does not necessarily dispose of the question of a special award. It is, of course, different if the parties mutually enter into a legitimate settlement which terminates all or part of the proceeding.⁶

In this case, Liberty Mutual reinstated benefits and paid outstanding benefits after its settlement offer was rejected, and Mr. Graper did not waive his right to seek a special award for delayed payment of benefits. I find that I have jurisdiction to decide the special award claim.

Production of Adjusters' Notes

On the first day of the hearing, Mr. Graper's counsel moved for an order that Liberty Mutual produce its adjusters' notes from January 1, 1999 and ongoing, its policy manual(s) pertaining to the claim, and any correspondence between Head Office and the Toronto Office pertaining to the claim. Mr. Burns stated, on behalf of Liberty Mutual, that there is no correspondence with Head Office. In response to the other two requests, he submitted that the proper time for production requests was at the pre-hearing in September 2000. In any event, Liberty Mutual claimed solicitor-client or litigation privilege for the claims file.

The parties in arbitration proceedings are expected to begin discussing production issues before the pre-hearing,⁷ and to bring any production disputes to the pre-hearing for resolution.⁸ However, document production is an ongoing process at the Commission,⁹ and Rule 32.4 of the Dispute Resolution Practice Code - 33rd Edition (April 15, 1997) confirms that an arbitrator "may at any time order the production of any document . . . she considers relevant" on appropriate terms. This is consistent with section 5.4 of the Statutory Powers Procedure Act (SPPA), which states that a tribunal may make orders for, inter alia, the exchange of documents, "at any stage of the proceeding before all hearings are complete" if the tribunal's rules made under section 25.1 deal with disclosure.¹⁰ In considering a party's production order, an arbitrator must consider the timing of the request, as well as issues of relevance and privilege.

In this case, there seems little reason Mr. Graper's production request could not have been raised well before the first day of the hearing. However, as the motion could be dealt with relatively quickly, without requiring an adjournment, I ruled that I would consider the request.

I declined to order production of the policy manuals, as I was not satisfied they were likely to be probative. I ordered Liberty Mutual to produce its adjusters' notes from January 1, 1999 to the date of the application for mediation (apparently September 1999, based on the Report of Mediator). Although a document-by-document approach may sometimes be appropriate, in this case I was satisfied that the parties were on an adversarial footing by the time Mr. Graper applied for mediation, and that documents prepared after that date were probably prepared for the dominant purpose of anticipated litigation. I ordered Liberty Mutual to make the documents available for examination by Mr. Graper on the morning of the second day of the hearing.

At that time, Liberty Mutual produced a set of adjusters' notes with several passages blacked out. Mr. Burns submitted that these entries were protected by solicitor-client privilege because they contained notes by Liberty Mutual's former counsel in the case. Mr. Graper disputed the privilege claim, submitting that an insurer cannot rely on solicitor-client privilege in response to a bad faith claim. I recessed the hearing to allow the parties to argue the issue before another arbitrator. That motion was conducted by Arbitrator Blackman on March 20, 2001.

In a separately issued decision, delivered orally on March 21st and confirmed in a written decision dated March 21, 2001, he ordered Liberty Mutual to disclose one of the entries for which privilege had been claimed (entry #89) and a portion of another (entry #87) with the privileged portion blacked out. The hearing before me resumed after a short break to allow for the exchange of the documents ordered. The two entries ordered disclosed were admitted into evidence, along with the adjusters' notes that were produced further to my order.

Witnesses

Grant Seppanen and Clive Townsend testified about Liberty Mutual's adjustment of Mr. Graper's claim. Mr. Seppanen has been employed by Liberty Mutual since November 1998. He handled Mr. Graper's file between January and June 1999, when his position was Senior Accident Benefits Specialist. Mr. Townsend has been a Liberty Mutual employee since May 1987, and became a Senior Claims Specialist in early 2000. He became involved in Mr. Graper's file in August or September 1999, and attended both mediations (November 1999 and January 2000). He assumed day-to-day handling of the file after the second mediation failed.

Mr. Seppanen named three other adjusters who handled the file before he became involved. I would like to have heard from the adjuster(s) who were involved in the fall and winter of 1998, when Liberty Mutual appears to have made important decisions about future handling of the claim. Linda Watson's testimony would have been especially helpful. Mr. Seppanen testified that she was involved in the file at an earlier stage, and that he reported to her as Team Director at the time. Ms. Watson was the author of memo #89, a critical memo as to Liberty Mutual's reasons for terminating benefits. Mr. Graper's counsel submitted I should draw an adverse inference against Liberty Mutual because of its failure to make the responsible officers available for cross-examination.

The pre-hearing discovery process at FSCO is abbreviated in keeping with the Commission's mandate to provide a quicker, less formal and less expensive alternative to the courts.¹¹ Because there is no oral examination for discovery, the system depends on the parties to exchange relevant producible documents and identify witnesses at an early stage.¹² To prove entitlement to a special award, an insured person must show that benefits were unreasonably withheld or delayed. Although the focus of a special award claim is the arbitrator's assessment of the evidence that was available to the insurer, the enquiry may also have a subjective component.¹³ In recognition of this, insurers often call the responsible adjuster to testify about the reasons for terminating benefits, as Liberty Mutual did in this case. This evidence should come from the responsible persons who have knowledge of the issues in dispute, and they should be identified at the pre-hearing. As the IME reports prepared in November 1998 were addressed to Kelly Jones, the adjuster who had carriage of the file at that time, her name would have been known to Mr. Graper well in advance of the hearing. However, it appears that Mr. Graper did not learn of Ms. Watson's involvement until the first day of the hearing, when Liberty Mutual produced its edited adjusters' notes.

In any event, Mr. Graper did not seek an adjournment of the hearing in order to ensure Ms. Jones' or Ms. Watson's attendance, and did not rely on any pre-hearing correspondence in which he raised this issue with Liberty Mutual. Considering the evidence available to me, including the testimony of Mr. Seppanen and Mr. Townsend and the adjusters' notes, I did not find it necessary to hear from Ms. Jones or Ms. Watson, and I draw no adverse inference from Liberty Mutual's failure to call them.

Special Awards

FSCO adjudicators have power to order a special award pursuant to subsection 282(10) of the Act:

If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the statutory accident benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.

This provision was added to the Act as part of the package of amendments that created the "no-fault" (or "statutory accident") benefit scheme in 1990. Early FSCO cases established that a special award is not analogous to an award of punitive damages at common law. The Ontario Court of Appeal recently reviewed the criteria for punitive damages in Whiten v. Pilot Insurance Company:¹⁴

For an award of punitive damages to be made, two requirements must be met: first, the defendant must have committed an independent or separate actionable wrong causing damage to the plaintiff; and second, the defendant's conduct must be sufficiently "harsh, vindictive, reprehensible and malicious"¹⁵ or "so malicious, oppressive and high-handed that it offends the court's sense of decency."¹⁶

In Erickson and Guarantee, Senior Arbitrator Rotter held that the criteria for punitive damages, that is wilful and deliberate misconduct or bad faith, goes considerably beyond the Insurance Act standard of simple unreasonableness. It is clear that conduct may be unreasonable, but still not deliberately or wilfully injurious, or motivated by bad faith. I find that wilful or deliberate misconduct or bad faith are additional factors in the conduct of the Insurer, beyond unreasonableness, which should be taken into consideration when assessing the quantum of a special award.¹⁷

In that case, the arbitrator found that the insurer had acted unreasonably, but not deliberately or with bad faith. She held that "unreasonable" means "1. Going beyond the limits of what is reasonable or equitable; 2. not guided by or listening to reason." She also held that it was not enough that the insurer's decision is found by the arbitrator to have been wrong.

Arbitrator Palmer discussed the reasonableness standard in the Commission's next special award case, Plowright and Wellington:¹⁸

"Unreasonable" behaviour by an Insurer in withholding or delaying payments can be seen as behaviour which was excessive, imprudent, stubborn, inflexible, unyielding or immoderate.

She described the standard expected of an insurer as "one of sound and moderate judgment." Commission adjudicators have consistently held that the special award enquiry "involves looking at the total context in which the [insurer's] decisions relating to the insured's benefits were made."¹⁹ The standard "is not perfection" and the insurer's decisions will not be judged with the advantage of hindsight.²⁰

The Decision to Terminate Benefits on June 22, 1999

Although Mr. Graper clearly sustained serious injuries in the accident, he had returned to teaching on a half-time basis between September 1994 and May 1998 before deciding he could not continue. His decision to stop working was based on the advice of Dr. James S. Brooks, his family doctor, reflected in a short letter dated May 4, 1998. Apart from a reference to "medical reasons," that letter did not say specifically why Dr. Brooks felt Mr. Graper could not continue working. In my view, Liberty Mutual was entitled to enquire further into the reasons for Mr. Graper's decision to stop working. However, there is no evidence they contacted Dr. Brooks or Mr. Graper to discuss the matter.

Mr. Graper testified that Dr. Brooks had been advising him to stop working for some time, but he resisted this advice because he loved teaching. He worked five mornings a week, between 8:00 a.m. and 1:30 p.m., teaching music and math. While working, he had persistent problems with headaches and vomiting. He testified that he would have to leave class to vomit at least twice each morning he taught. He had also lost 50-60 pounds. Mr. Graper rushed out of the hearing room several times throughout the hearing, appearing distressed.

Mrs. Bird-Graper also testified about her husband's attempt to work. She described him crawling to the washroom because of nausea. She also described emotional outbursts, which she said almost ended their marriage. In response to the Insurer's suggestion that Mr. Graper's hobbies (woodworking and playing the saxophone) indicate he could work, she testified that he can only spend about 3/4 of an hour in his avocational activities, which help him relax and give him some occupation. She felt this was not comparable to working with classes of up to 30 students for 4-5 hours a day. While the testimony of Mr. and Mrs. Graper was coloured by their anger with Liberty Mutual and their pursuit of this claim, I found them reliable and trustworthy witnesses. Their detailed accounts of Mr. Graper's symptoms are corroborated by all the experts who have treated Mr. Graper, apart from the experts who assessed him for Liberty Mutual in November 1998. I accept their evidence.

Dr. Brooks was more specific about the basis for his opinion in a subsequent letter dated September 29, 1998. He reported that Mr. Graper continued to suffer "severe head pain, dizziness, nausea and severe episodes of vomiting," all of which were a "direct result" of the accident. He suggested that Mr. Graper's fatigue may be the result of the medications he was taking for these symptoms. Dr. Brooks concluded:

After many years of valiant efforts to continue in his job after his serious M.V.A. in March of 1993, I advised Mr. Graper that it was no longer medically wise to continue teaching. I need to add that Mr. Graper was advised by me to stop working because of his poor health 30 months before he actually resigned.

If there are any questions regarding this gentleman's health, or the nature and severity of his disability, please contact me at the above number.

Mr. Seppanen and Mr. Townsend admitted that they did not contact Dr. Brooks in response to this invitation either before or after benefits were terminated.

In any event, Mr. Graper's difficulties should have been evident to Liberty Mutual from earlier medical reports the Insurer provided to the IME assessors in the fall of 1998. On Dr. Brooks' referral, Mr. Graper began psychotherapy treatment with Cecil Fennell, a social worker, in January 1997. Liberty Mutual paid for the treatment. In a report dated June 1, 1998, Ms. Fennell summarized Mr. Graper's psychological problems resulting from the accident. Presenting problems included difficulties with anxiety and impulse control, especially with respect to anger. Diagnoses were post-traumatic stress disorder, re-traumatization of childhood problems as a result of the accident, and anxiety disorder. Although Ms. Fennell discussed Mr. Graper's pre-accident emotional problems, she clearly attributed Mr. Graper's ongoing difficulties after the accident to the trauma of the accident itself. Liberty Mutual has not suggested it has evidence that Mr. Graper had any prior functional difficulties in the workplace or at home. Ms. Fenell's report also discussed Mr. Graper's decision to stop working:

In his daily life, the headaches remain a constant, although they are somewhat reduced by various medications. However, I gather that the medications themselves are a concern medically, as they produce dangerous secondary physical problems and symptoms. The nausea and vomiting increased in recent months to the point that he became no longer able to tolerate the frequency or severity of these symptoms. This, plus warnings from his doctor of the resultant physical damage to his system from repeated vomiting, led to his very reluctant decision to retire from teaching a few weeks ago, a decision that causes immense feelings of loss. [emphasis added]

Mr. Graper was also seen by Dr. Jacqueline Gardner-Nix, a pain specialist, starting in November 1997. Mr. Seppanen acknowledged that the source of that referral was Ms. Sue Wilkinson, of Rehabilitation Management Inc., a case manager appointed by Prudential and retained by Liberty Mutual. Liberty Mutual also approved and paid for this treatment. Dr. Gardner-Nix's reports of April 16, May 19, June 19, and September 11, 1998 described her attempts to find effective medication to treat Mr. Graper's recurrent severe migraine headaches. They also dealt with Mr. Graper's worsening stomach problems. In May, Dr. Gardner-Nix provided the following history, after describing Mr. Graper's headaches:

However a most prominent problem recently has been his vomiting secondary to gastritis, and some abnormalities were noted on his Upper GI Series. Recently he had an Endoscopy done at the Wellesley Hospital by Dr. Macon, and was told that he had a hiatus hernia and extreme inflammation at the base of his oesophagus. He was placed on two Losec (40 mg) daily, and this has somewhat helped up to now. Biopsies were taken, and he does not know the results yet.

He mentioned that he had presented to his family doctor with an exacerbation of his gastro intestinal episodes when he was quite unsteady on his feet after vomiting episodes, and his wife had called the doctor in concern. He himself associates his vomiting episodes with exacerbations of his migraines, but he had not really shared with us the full extent of his gastro intestinal symptoms up until the last visit here. He is not on any anti-inflammatories, and he stopped drinking alcohol a year and a half ago, so the etiology of the inflammation is probably the current vomiting, [emphasis added]

Dr. Gardner-Nix explained the causal relationship between Mr. Graper's headaches, vomiting and stomach problems even clearer in her next report in June 1998:

Ted Graper was seen for follow-up today for progress with his post traumatic headaches. In the last few months he has had major problems with his stomach, and this turned out to be secondary to recurrent vomiting which was induced by his severe headaches. Because of his stoical nature he had underplayed the frequency of the vomiting, but apparently it had been up to three times daily, and had caused intense inflammation in his lower oesophagus, stomach and duodenum. [emphasis added]

The doctor went on to say that Losec had resolved the inflammation, though the recurrent vomiting had continued.

In September, Dr. Gardner-Nix seems to have found Mr. Graper somewhat improved with respect to his headaches, although this followed a summer at the cottage, and the significant amount of medication required to manage the headaches was causing problems. She concluded:

He finds himself much more functional on this [drug] regimen, and he can manage his daily life routine far better. However he is still not contemplating going back to his teaching as the loud cacophony of noise that he has to be exposed to in his job as a music teacher would take the headaches out of control. I am hoping that the Epival will reduce the incidence of migraine exacerbations for him, but we will need a gradual taper of his analgesic medications to cope with rebound which he is obviously experiencing from the years of taking too much analgesia.

Dr. Gardner-Nix's final report prior to the termination of benefits stated that Mr. Graper, "is trying to maintain an active lifestyle, playing music some evenings, doing some wood working which apparently does not exacerbate his headaches, and generally being as active as possible now that he is not teaching." The report also indicated that Mr. Graper had not vomited for two weeks under a new medication regime. In my view, this report suggested some improvement in the management of Mr. Graper's condition, at least in the short-term, but it fell far short of recommending a return to work.

In November 1998, Liberty Mutual had Mr. Graper assessed by Dr. Robert S. Yufe, a neurologist, and Dr. Paul H. Grant, an orthopaedic surgeon, both at AssessMed, and by Dr. Denton Buchanan, a clinical psychologist at Herrold & Vernon Disability Management Inc. A comprehensive career evaluation was performed by Ms. Kirsten Cherian, a Certified Vocational Kinesiologist, and Mr. Denys Remedios, a Senior Vocational Consultant at Herrold & Vernon.

Dr. Grant concluded that Mr. Graper was not disabled from an orthopaedic point of view. Mr. Graper reportedly told him he still had aching pain in the left knee that was aggravated by prolonged standing and relieved by hot baths. Mr. Graper felt the knee had improved and did not affect his daily function. Dr. Grant observed patellofemoral crepitus in the left knee, as well as insignificant instability and 15 percent loss of flexion. He recommended that Mr. Graper avoid prolonged standing or walking, or repetitive climbing, kneeling, squatting or crawling. He felt these problems could be avoided by pacing.

Neurologist Dr. Yufe recorded Mr. Graper's complaints of constant headaches, resulting in vomiting, and stuttering brought on by fatigue and headaches. Mr. Graper's occasional stuttering was evident to Dr. Yufe. It was a recurrent problem during his testimony at the hearing. Mr. Graper reportedly told Dr. Yufe that he would vomit at work "3-4 times per day. He would have to excuse himself from the classroom and leave because of the vomiting. He would then return to class shortly after." In response to Liberty Mutual's request for a diagnosis, Dr. Yufe reported that Mr. Graper sustained a "moderately severe head injury" in the accident. He noted that Mr. Graper "has sensory loss in the face in the distribution of the right V1 and V2 dermatomes" as a result of the facial fractures. He did not find evidence of significant cognitive impairment.

Dr. Yufe believed the headaches and vomiting were "most likely due to analgesic rebound or medication induced headaches, although I have no way of proving this. One does not normally see persistent vomiting following an isolated right frontal lobe lesion. There was no history to indicate a concomitant brain stem or posterior fossa lesion that could cause persistent vomiting on a neurological basis." Nor did he think the vomiting was related to the hiatus hernia. He concluded,

From a neurological perspective, I did not think that there would be any reason at present why Mr. Graper is unable to return to his pre-injury occupation as a Grade 8 music and math teacher. His main problem, as he mentioned to me today, seemed to be vomiting. I do not believe that he has been evaluated by a gastroenterologist and I believe that this should be done.

Mr. Seppanen and Mr. Townsend admitted that Liberty Mutual did not arrange a gastroenterology referral. Liberty Mutual submitted that it was Mr. Graper's responsibility to do so. However, it was the doctors retained by the Insurer who suggested this line of enquiry. An insurer that fails to pursue the recommendations of its own expert should not expect to be able to rely on that expert's opinion in support of a decision to terminate benefits. In any event, Dr. Gardner-Nix's report of April 16, 1998, indicated that Mr. Graper was being investigated for gastroenterological problems. This report, like all her reports, was provided to Ms. Wilkinson, the Case Manager appointed by Liberty Mutual.

Dr. Buchanan, a psychologist, came to the following conclusions after interviewing Mr. Graper and administering neuropsychological tests at his home on November 16, 1998.

From a neuropsychological prospective [sic], Mr. Graper is capable of further vocational pursuits. . . .

He is showing normal or better intellectual ability. Memory function is well within the normal range. Reasoning, judgement, working memory and overall speed of information processing are normal. His emotional state is essentially within normal limits. He reports more symptoms of depression on a self report inventory than he describes either in his history presentation or he indicates in the more sensitive MMPI 2 data.

There is an indication of difficulty with anger and impulse control. This has been reported previously. His history of alcohol abuse suggests that this difficulty may have been present prior to the accident and, if so, undoubtedly aggravated by the accident itself.

Mr. Graper has some very legitimate anger issues related to the status of his son, Aaron. This emotional feature needs to be addressed in treatment.

In summary, there is no reason from these data to preclude Mr. Graper's vocational pursuit.

Herrold & Vernon's vocational assessors identified six occupational categories as suitable for someone with Mr. Graper's aptitudes: government managers in education policy development and program administration; library, archive, museum and art gallery managers; school and guidance counsellors; education policy researchers, consultants and program officers; musicians and singers; and retail salespersons and sales clerks. It was their opinion that Mr. Graper had immediately transferable skills for all these occupations, and that only on-the-job training would be required. They expected that Mr. Graper would likely secure employment at the post-36 month income level. I find that two of the identified categories - musicians and singers, and retail salespersons and sales clerks - would clearly not provide Mr. Graper with comparable income based on the income data provided by Herrold & Vernon. A third category - library, archive, museum and art gallery managers - is questionable.

The assessors noted Mr. Graper's desire to return to teaching. They did not believe he could return to full-time work:

It should be stressed that based on the observations made during testing and medical documentation on file, the claimant is not currently capable of full-time work. Any employment considerations are for part-time work in disability friendly work environments.

The assessors recommended a gradual return to work, and cautioned:

Whether or not Mr. Graper will ever be able to return to full time working status would depend on his success with a part time return to work. . . . It is more realistic to believe that this individual will secure part-time employment at best as this will allow for more flexibility pertaining to the working structure of the day.

Herrold & Vernon recommended that a labour market survey be conducted after specific vocational alternatives were selected. They also recommended a job readiness program to educate [Mr. Graper] with respect to career development strategy, contingency planning, goal setting, utilizing appropriate time frames, stress and coping skill management, education with respect to employment periodicals and services at the claimant's disposal, resume and cover letter preparation, cold-calling and telephone training, mock and informational interviews, and job shadowing techniques. The claimant will also benefit from further Vocational Psychological intervention allowing him to adequately absorb all information and techniques to be utilized in a return to work situation.

It was at this point when Mr. Seppanen took carriage of the file. He testified that he reviewed the entire file in January 1999, then spent the better part of the winter co-ordinating a job readiness program with Herrold & Vernon.

An important piece of evidence in this case is memo #87, an adjusters' note dated March 22, 1999. This is one of the entries Arbitrator Blackman ordered Liberty Mutual to produce. Part of the entry is blacked out, as permitted by his order. The remainder, with abbreviations explained by Mr. Seppanen, says,

Looks like we are considering reducing benefits and possible termination when [claimant] can return [full time] to work. Need [Team Manager] comment."

Mr. Seppanen explained that the author of this entry was John Franciosa, a Head Office Examiner in Boston. The Team Manager was a Mr. John McLean. The material produced does not include a comment from Mr. McLean, and Mr. Seppanen testified that he did not know that there was a response.

A decision appears to have been made soon thereafter, according to memo #89 by Linda Watson, Team Leader, on March 31, 1999. Mr. Seppanen reported to Ms. Watson, who reported to Mr. McLean. Again, Mr. Seppanen explained the abbreviations:

Futurity review - acknowledged note from John [Franciosa]. We need status of re-training & [return to work] program. Is it underway? Progress? - Printed note for Grant [Seppanen] to update file. Received LCE's [reserves] - suggest we leave as is for now - under [no-fault wage reserves] we still have high exposure that IRB's will be payable for life although perhaps on a reduced basis - (50%) - if we succeed with our position that [claimant] can at least [return to work] on part time basis. Agree that we should terminate IRB's once above program complete as this will push the case forward to arb/litigation & hopefully resolution but realistically we are looking at [part time] work (see [remark] 080)²¹ due to severity of head injury & length of time off work. We should also keep in mind that [claimant] would make a good witness (well educated, well spoken, hard working family man etc) at trial or arb. There remains the possibility of a S/S [settlement] at the end of the day. Under [no fault wage reserves] we still have exposure for med/rehab [expenses] until 3/20/2003 when the benefit period runs out under the SABS. We still have ongoing therapy [expenses] & re-training costs so [reserves] appear in line at this point in time. 63 note to John. [emphasis added]

Mr. Seppanen testified he had not seen the note referred to in the last line, but assumed this was a note to Mr. Franciosa.

An entry from Mr. Seppanen on April 1, 1998 stated that he had received Herrold & Vernon's proposal for the job readiness and vocational psychological program. This proposal, set out in a letter from Ms. Cherian and Mr. Remedios dated March 30, 1999, was to last from 9 to 13 weeks. After an initial assessment, there would be 8 to 12 weeks of psychological intervention, which would include "stress management, pain management, identifying roadblocks, identifying the claimant's concerns and implementing appropriate coping strategies." The job readiness part of the program would last a further week. The proposal was forwarded to Mr. Percival on April 14, 1999. Mr. Seppanen's letter asked Mr. Percival to contact Mr. Remedial to arrange for Mr. Graper's attendance.

Mr. Percival responded by letter of May 5, 1999 to Mr. Seppanen.²² Although Mr. Percival's letter requested that the program be deferred, the implication is that Liberty Mutual had no reasonable basis for requesting a further assessment, given the medical information already on file. Mr. Percival also stated:

Mr. Graper has continued to see his psychologist, Dr. Fennell, every Wednesday for the past two years. In addition, he continues to see Dr. Jackie Garner Nix, a neurologist, and pain management specialist on a monthly basis. He also continues to see Dr. Jim Brooks who is a general practitioner on a bi weekly basis.

Mr. Seppanen made a note to file:

I recommend we discontinue the IRB's, based upon the medical documentation we have on file which supports [claimant] can [return to work]. Our offer of the job readiness program would remain open.

An Assessment of Claim form was issued, dated June 1, 1999, stating IRBs would be discontinued on June 22, 1999 based on medical documentation supporting the Insurer's position that Mr. Graper's injuries did not continuously prevent him from engaging in any suitable occupation.

Liberty Mutual submitted that Mr. Graper's request to defer the program reflected his disinterest in returning to suitable work. Mr. Graper suggested that Liberty Mutual should have contacted him or his counsel about rescheduling the program. I find that Mr. Graper was unlikely ever to agree to participate in the program, but I do not find this significant. I am not persuaded there was any need for such a program or that there was any reasonable likelihood it would have helped Mr. Graper get back to work, if he had participated. He was already attending weekly therapy sessions with his psychologist, Ms. Fennell. There is nothing in her reports - or indeed in the reports of Herrold & Vernon or Assessmed - to suggest that "vocational psychological intervention" would help Mr. Graper overcome his severe headaches, unpredictable vomiting and fatigue. Nor did Liberty Mutual have any reason to believe that Mr. Graper needed help with resume preparation, job search techniques or interview preparation. I find that Liberty Mutual's proposal reflected a "one size fits all" approach to vocational reintegration which was unlikely to assist Mr. Graper.

Mr. Seppanen testified that in terminating benefits, he relied on the assessment reports prepared at Liberty Mutual's request in November 1998. The IME assessors - Dr. Grant, Dr. Yufe and Dr. Buchanan - could find no orthopaedic, neurological or neuropsychological barriers to Mr. Graper's returning to work. However, Mr. Graper did not claim his orthopaedic injuries were disabling. The neurologist, Dr. Yufe, rejected Liberty Mutual's suggestion that Mr. Graper's vomiting resulted from a hiatus hernia. He felt it was more likely related to his headaches or medication. On this point, he agreed with Dr. Gardner-Nix. Liberty Mutual did not follow up on his recommendation that gastroenterological problems be explored.

Dr. Yufe suggested that Mr. Graper's headaches were likely medication-induced. But Dr. Gardner-Nix had discussed this issue in her report of September 1998, when she said "we will need a gradual taper of [Mr. Graper's] analgesic medications to cope with rebound which he is obviously experiencing from the years of taking too much analgesia." Dr. Gardner-Nix is a pain specialist at Mount Sinai, a major teaching hospital. Her 11-page curriculum vitae reflects her expertise in malignant and non-malignant pain. If Liberty Mutual was concerned about Dr. Yufe's suggestion that Mr. Graper might be having medication- induced headaches, an appropriate course would have been to ask Dr. Gardner-Nix for her comments. Another option would have been to consult another pain specialist. The Insurer did neither. In any event, an insurer is responsible for iatrogenic problems resulting from medication prescribed to treat accident-related injuries.²³

The vocational assessment conducted by Herrold & Vernon is of little assistance to the Insurer. The vocational consultants did not accept that Mr. Graper could return to work full time. Although they recommended a job readiness program and labour market survey, they felt it was "more realistic" to expect that Mr. Graper could secure part time work, "at best." In summary, the Insurer's own assessors were, taken as a whole, equivocal as to Mr. Graper's ability to return to work even on a part-time basis. I find that Liberty Mutual failed to give a fair and balanced reading of its own experts' reports.

In any event, an insurer is not entitled to rely on a selective reading of the medical evidence that supports termination of benefits, but must assess all the medical reports available to it fairly and in their entirety. Considering the information available to Liberty Mutual at the time benefits were terminated, I find there were legitimate questions the Insurer was entitled to ask. But this does not itself warrant terminating benefits. The Insurer was obliged to consider whether its questions had been answered. It did not do so. Liberty Mutual's persistence with its decision to terminate benefits is particularly troubling in light of Dr. Gardner-Nix' reports of May and June 1998 and Dr. Brooks' letter of September 1998, which explained the worsening symptoms that prompted Mr. Graper's decision to finally take Dr. Brooks' longstanding advice to stop working.

After 156 weeks of disability, an insured person is entitled to ongoing weekly income benefits only if he satisfies the entitlement test under paragraph 12(5)(b) of the Schedule. As Director's Delegate Draper stated in Lanctot and Zurich Insurance Company, the test is stricter than the test that applies under for the first 156 weeks in two respects:

First, the scope of possible work is expanded from the insured person's own occupation or employment to any suitable occupation or employment. Second, the degree of disability is tightened from "substantially unable to perform the essential tasks" to "continuously prevented." ²⁴

The continuity requirement posed a challenge for Mr. Graper because he returned to work after the accident and continued to work after the 156 week mark, albeit on a half-time basis. Director's Delegate Draper discussed the meaning of "continuously prevented" in Lanctot and Zurich:

In my view, s.12(5)(b) relieves the insurer of its obligation to continue paying weekly income benefits under s.12(1) if at any point after 156 weeks, the insured person's injuries do not continuously prevent him or her from engaging in some type of suitable occupation or employment. If the insured person challenges the insurer's decision to terminate benefits, the arbitrator must determine whether the s.12(5)(b) test is met: do the insured person's injuries continuously prevent him or her from engaging in any suitable employment for the period claimed? This is a question of fact, the approach to which has been considered in a number of court and arbitration decisions.

I agree with earlier decisions holding that entitlement is not lost simply because the insured person is capable of working for a brief period. As Watts J. states in Roberts, the test should be informed by reason, common sense and a healthy regard for the realities of the situations within the reasonable contemplation of the legislation.²⁵ The standard should not be set so high that it precludes legitimate claims, or so low that it encourages specious ones.

Judges and arbitrators have also been understandably reluctant to penalize an insured person for attempting to return to work. . . . An insured person can return to work for up to 30 days without affecting his or her benefits, but a longer return to work does not result in automatic disentitlement.²⁶ This approach has been adopted by arbitrators in interpreting the return-to-work provisions in s.16 of the Schedule.²⁷

As a result, an insured person who returns to work more than two years after the accident and continues working for more than 90 days will not automatically be disentitled by s.16(2).²⁸ Moreover, it has been held, correctly in my view, that a return to work cannot be taken as proof that the insured person is no longer prevented from engaging in a suitable occupation or employment. First, the work might not be suitable within the meaning of the legislation.²⁹ Second, the person's performance may be so compromised that it cannot be said that he or she is capable of doing the work in any meaningful sense. In each successful claim, however, the insured person has been able to establish that, despite working, he or she continuously met the disability test.

An insured person is obliged to take reasonable steps to rehabilitate himself and return to work, but he is not required to be heroic. The question is whether it was realistic and reasonable, in all the circumstances, for the insured person to return to work. I find that the overwhelming preponderance of medical evidence available to Liberty Mutual when it terminated benefits was that Mr. Graper was unable to return to work at that time. Considered fairly, it suggested, at best, that he might be able to return to part-time work some time in the future. As Ms. Watson's memo shows, this was also Liberty Mutual's reading of the medical reports. I do not accept Mr. Burns' submission that "pushing the case forward to arb/litigation" was an innocuous reference to the Insurer's adopting a settlement or litigation "strategy." The meaning of this memo is clear. Ms. Watson understood that Liberty Mutual would probably be required to pay Mr. Graper's IRBs for life, "although perhaps on a reduced basis - (50%)." However, her view was that the Insurer should resist payment and force Mr. Graper to come after it for his benefits. The Insurer would then hope to settle but, again, "realistically we are looking at part time work."

Ultimately, Liberty Mutual paid full benefits of $600 per week retroactive to June 22, 1999. This was a wise decision. I find that the Insurer's reasonable concerns about Mr. Graper's ongoing entitlement should have been satisfied by the reports of his treatment providers, especially Dr. Gardner-Nix. Accordingly, I find that Liberty Mutual unreasonably withheld benefits of $600 per week after June 22, 1999.

Delay in Reinstating Benefits between June 22, 1999 and March 16, 2001

Given my finding that the Insurer unreasonably terminated benefits in June 1999, my finding that its refusal to reinstate benefits prior to March 16, 2001 was unreasonable goes to the amount of the award.

Dr. Brooks wrote directly to Mr. Seppanen on June 23, 1999, after Mr. Graper's benefits were terminated:

I do not agree that Mr. Graper can safely return to the work force or currently undergo a retraining program. The reports that I have in my possession state that the same symptoms that forced Mr. Graper into retirement continue to dominate his life today. Essentially Mr. Graper retired from teaching because of chronic severe head pain, persistent vomiting and excessive fatigue. These health problems have been modestly reduced since Mr. Graper retired but are still ongoing health concerns. Mr. Graper continues to attend a variety of health care professionals seeking relief from these symptoms and this week attended Dr. Gary Shapiro in Unionville to explore new treatment modalities for relief of his head pain.

I have reviewed the medical reports that you have provided. These reports do not deal wi th Ted Graper's continuing problem with vomiting, the cause of which has not been determined, and for which no curative treatment has been found.

I have had Mr. Graper as a patient for almost 30 years. I can state without reservation that Mr. Graper is thoroughly honest, and extremely hard working. He was a committed educator and tried for almost four years to remain active in teaching after his accident.

Mr. Graper resigned after a gallant effort to continue and I feel that he is being judged in an unjust, unfair and inhumane fashion. No person should be forced to return to work when they are in constant threat of severe head pain and intractable vomiting.

Dr. Brooks made a compelling point in this report: that the IME reports did not address Mr. Graper's main disabling problems - severe headaches and intractable vomiting. However, Dr. Brooks' advocacy on behalf of his patient is evident from the tone of this report and his comments about Mr. Graper's character and the Insurer's handling of the claim. Although I took this into account when assessing what weight to put on the report, I am not prepared to dismiss the report out of hand. A doctor who has treated a patient for 30 years may become the patient's advocate because he knows the effect the accident has had on the patient's long work history. In fact, Liberty Mutual, far from questioning Mr. Graper's commitment to teaching, submitted that he refused to look for alternative work because of that commitment. This was an odd approach to take, since there was no evidence that Mr. Graper's headaches and vomiting would be less problematic in the alternative occupations the Insurer identified than in teaching.

Mr. Graper applied for mediation of the dispute. The Report of Mediator, dated January 24, 2000, indicates that the parties attempted to settle the matter between September 1, 1999 and January 24, 2000. Mr. Graper's application for arbitration was received on February 4, 2000.

In February 2000, Dr. Brooks prepared a longer report for Mr. Percival. Dr. Brooks took an even stronger advocacy tone in this report, and I disregard his comments about Liberty Mutual's conduct. However, Dr. Brooks also summarized Mr. Graper's symptoms at that time, and Liberty Mutual did not dispute the accuracy of the description.

Mr. Graper takes drugs to abort the pain related to his compound skull fracture and severe facial fracture. The facial and cranial damage was treated via bone reconstruction, surgical removal of damaged frontal lobe tissue, and "plastic surgery" to minimize facial disfigurement.

The symptomology [sic] of the headaches, which are constantly present in various degrees of severity, consists of: blurred vision; nausea leading to regurgitation as a result of dizziness; severe pain, especialy behind the right eye (the right eye is 7-8 mm out of alignment as the eye socket could not be raised to its proper position during facial bone reconstruction); sensitivity to light; stammering; "shortness" of temper; irrational thoughts and behaviours; fatigue; loss of appetite; loss of sexual drive; low self esteem due to a feeling of inadequacy for not contributing to the household income and overall function of the home.

Dr. Brooks described the various drugs Dr. Gardner-Nix had prescribed for Mr. Graper's headaches and nausea. He reiterated his opinion that Mr. Graper cannot work because his symptoms are amplified by effort, and that it was on his insistence that Mr. Graper stopped. Dr. Brooks' understanding of Mr. Graper's day is consistent with what Mr. Graper has told all the experts who have assessed him, and with Mr. Graper's testimony at the hearing:

Mr. Graper also requires extra sleep to help deal with his chronic pain. After driving his son to school at 7:30 a.m., he goes back to bed on most days until approximately 9:30. He then performs household tasks or indulges in his hobbies of light woodworking or music. After lunch he requires two to three hours of sleep before he can make dinner. Should Mr. Graper try to undertake a more demanding schedule, he pays heavily with more intense headaches, nausea and/or vomiting.

Psychotherapist Fennell also prepared a report for Mr. Percival in March 2000. About Mr. Graper's return to half-time work, Ms. Fennell made the following comments:

He managed to sustain this activity [teaching] until May, 1998 out of his love of his profession, his determination to appear normal and his motivation to provide for his family. Work however greatly exacerbated his pain and symptoms, although he shared the extent of this with only his immediate family and latterly with myself, hiding his suffering in so far as possible from others. Thus, it has been Mr. Graper's immense motivation and loyalty to his profession and family that led him to utilize minimization, avoidance and denial as coping strategies to deal with the trauma and pain that he endures, and which permitted him to push aside for so long the physical price that he paid for working. However, it is precisely this motivation and determination that has led to his being perceived as being capable of normal functioning.

Hence, it has been erroneously assumed by some that because he worked part time for a period of time since the accident, that he could continue to do so if he really wanted to. The fact is, nothing could be further from the truth. In my clinical opinion this man cannot be competitively employed. To do so would cause further irreparable damage to his health and increase his already intense level of suffering and pain beyond the limits of all endurance. [emphasis added]

Ms. Fennell gave further details about how working affected Mr. Graper's symptoms:

Headaches

Mr. Graper has constantly had headaches to varying degrees since the accident in 1993. On a scale of one to ten, the patient's baseline scale of pain from headache is six. At this level of pain, while high, he is able to function, as long as he limits his level of activity, takes his medication as prescribed, has regular periods of sleep during the day and is not subject to undue stress.

If the above criteria are not met, the pain level quickly rises to seven, eight, nine or ten. At a level above six, nausea, vomiting, dizziness, and stammering, come into effect. At a pain level of ten, Mr. Graper has to resort to Demerol injections, the pain being described as "like a pick axe being driven into my skull."

Nausea and Vomiting

Even with anti-nausea medication, periods of nausea and violent episodes of vomiting still occur, even after having adopted a more sedentary lifestyle. When he was teaching however, these symptoms occurred far more frequently, and with much greater severity, to the point that episodes of nausea and vomiting occurred several times a day, as well as regularly at night. Because of his immense motivation to teach, Mr. Graper managed to continue in his work for many months despite the escalation of pain and symptoms. As their frequency and intensity increased, irreparable damage was being done to his esophagus, as well as affecting his overall ability to function even in a limited capacity. Finally, after months of duress on the part of his general practitioner, Dr. James Brooks, Mr. Graper capitulated to Dr. Brooks' insistence that he stop work, realizing he was not only devastating himself physically, was also robbing his family of a functioning mate and parent.

In the months before Mr. Graper stopped teaching, he would routinely have to excuse himself for 5 to 10 minutes from a class to deal with episodes of vomiting. He would then return and try to resume the lesson. This added to his stress level as the children were left unattended at these times. Should the vomiting not stop, Mr. Graper would have to call the principal to take over the clas, while he returned to the nurses room for rest, or left for home.

Once he stopped teaching in May, 1998, the episodes of nausea and vomiting decreased substantially. During a normal week, while there were still periods of nausea, and incidents of vomiting, these were reduced to once or twice a week at night and once or twice a week during the day - providing his stress and activity level remained low.

In recent months, however, since the removal of insurance benefits, there has again been an increase in all the symptoms mentioned above, and an overall decrease in his level of functioning, [emphasis added]

Ms. Fennell also described Mr. Graper's daily routine:

Since being unable to work, Mr. Graper has developed a lifestyle that permits him to function within narrow limits. This involves a daily schedule whereby he can perform light household duties, perform errands, and engage in his hobbies (light woodworking and music), as long as these activities are interspersed with regular period of sleep each day - approximately one hour in the morning, and two to three hours in the afternoon.

The first year without work was an incredibly difficult period for Mr. Graper, during which he felt totally lost, However, by the spring of 1999, he had begun to adjust to his new life, and to find some comfort in the diminution of his symptoms. In other words, he was well on his way to finding some peace of mind and enjoyment in life, in spite of his horrendous injuries. The curtailment of benefits in June, 1999 however brought these positive developments to a crashing halt, and in my clinical opinion have represented a re-traumatization of this man.

Dr. Gardner-Nix prepared a medical-legal report in April 2000. She reported that Mr. Graper's headaches resulted from the accident and, because of them, he remained "totally disabled from work." She described Mr. Graper's symptoms when she first started seeing him in November 1997:

continual daily headaches . . . a dull ache behind the tight eye which easily crescendos in intensity to a 10 out of 10 . . . several times per week, . . . associated with photophobia, phonophobia, and nausea to the point of vomiting. He would also experience dizziness and stammering as the pain increased. There were multiple episodes of vomiting, as the pain reached a high intensity more than once daily, and he had an increase in pain brought about by loud noise such as that he would experience when teaching music. In fact, by 10:30 every morning, he had usually vomited with the pain intensity. He was continually fatigued because of lack of restorative sleep due to pain, and would commonly wake and vomit because of the high pain intensity. He found it difficult to keep his temper, and since the accident had had behavioural outbursts which were difficult for his family to cope with. At the time I saw him, he was working part time, but found that a great challenge because of the pain and vomiting, and would usually go home in the afternoons to sleep. He was taking an average of 20 Tylenol #1 a day, and had tried various avenues for help including craniosacral therapy, behavioural techniques, and psychotherapy. He was a stoical man, and therefore tended to underplay the amount of medication he took, and the excessive degree of vomiting he was experiencing. His passion with [sic] teaching music to school children, and yet his job was making his headaches worse and his episodes of vomiting more frequent. He admitted to having been through a period of drinking to try to cope with the headaches, but at the time of my first interview with him he had been "dry" for 13 months.

Dr. Gardner-Nix then described the series of medications she had tried Mr. Graper on - amitriptyline, triptans (sumatriptan and noratriptan), anticonvulsants (Epival, Neurontin), Percocet (Endocet or Oxycocet) instead of Tylenol for pain, Demerol self-injected for the most serious pain, Losec for stomach upset, and Stemetil to reduce vomiting. She expressed concern that frequent use of the narcotics and triptans might lead to rebound headaches, but she reported that Mr. Graper was compliant with her instructions and was not over-using these drugs. She concluded that she was "still not happy with his pain management" and was planning to change his medications over the next year. She also discussed his gastrointestinal problems:

As I followed him over the last couple of years, I note that he had a severe episode of gastritis and an upper GI bleed, around May of 1998. This was due to the continued severe vomiting. I also note than in July 1998 he made the decision, encouraged by his family doctor, that he should not return to the school in the fall, as the morning of music activities was causing such severe crescendoes of headache, with vomiting episodes which had led to his severe inflammation of his gastric mucosa, and it was thought best that he should retire from teaching. This was a most difficult decision from [sic] him, as this was one of his greatest passions.

With the discontinuation of his work, he did find that headaches became slightly less frequent and intense, and vomiting episodes reduced in frequency. However, he is by no means able to live anywhere close to a normal life, being unable to plan outings because headaches might interfere, and being severely restricted in pursing his greatest love, his music, which involved playing in the band. [emphasis added]

Mr. Townsend testified that Liberty Mutual reviewed all three reports, but "had already formed an opinion."

An insurer has a continuing duty to consider all available information with respect to an insured person's benefit claim, and to reconsider a decision to terminate benefits based on new information. Insurer intransigence has resulted in a special award in a number of FSCO decisions.³⁰ In my view, the reports of Dr. Brooks, Ms. Fennell and Dr. Gardner-Nix in the spring of 2000 should have resolved any remaining doubts on the Insurer's part as to Mr. Graper's situation. These reports are persuasive because of their completeness, consistency and level of detail. The report of Dr. Gardner-Nix is particularly compelling because of her expertise and detailed description of Mr. Graper's symptoms and treatment. Her report also reflects her concern about rebound headaches. This was not a family doctor overprescribing narcotics for a patient with nonspecific pain complaints. Dr. Gardner-Nix had worked with Mr. Graper for more than two years to find the best regime for controlling his headaches. If any doubt remained following her earlier reports, I find that this report would have resolved it for an insurer considering the matter fairly.

Mr. Townsend testified that the reports of Mr. Graper's treating practitioners in the spring of 2000 did not cause Liberty Mutual to rethink its decision to terminate benefits "until we had him assessed." It may have been in response to these reports that in April 2000 Liberty Mutual arranged to have Mr. Graper assessed by a psychiatrist and gastroenterologist of its choosing. Liberty Mutual was entitled to request these assessments, but it was not entitled to dismiss the reports of treating practitioners while withholding benefits pending further IME reports.

Dr. Lawrie Reznek, a psychiatrist, assessed Mr. Graper for Liberty Mutual on June 26, 2000. He concluded that Mr. Graper had made a complete recovery from a moderate traumatic brain injury. He found no evidence of psychiatric pathology, including depression or post-traumatic stress disorder. He identified no deficits in cognition, concentration or memory. He concluded that Mr. Graper's principal barriers to recovery are pain and fatigue. He believed the fatigue resulted from his mild to moderate sleep apnea, which also causes headaches, and the pain from narcotics dependence, which results in rebound headaches. Dr. Reznek concluded that Mr. Graper did not suffer from any substantial inability to work as a music and math teacher or to engage in his activities of daily living.

Dr. Reznek's report was based on a one-hour interview with Mr. Graper. He did no testing, and his examination of Mr. Graper was superficial. Dr. Reznek reviewed certain documents, but it is not clear whether he was provided with the entire file. The most significant shortcoming of his report is his failure to respond to the reports of Dr. Brooks, Ms. Fennell and especially the thorough and detailed reports of pain specialist, Dr. Gardner-Nix. Dr. Reznek is not a neurologist, pain specialist, or headache specialist. He gave no reason for concluding that Mr. Graper's headaches were induced by sleep apnea or medication, rather than by his head injury. I place no weight on this report.

Dr. Gardner-Nix responded to Dr. Reznek's report on November 27, 2000:³¹

I have worked with many patients suffering daily headaches. It has been possible to withdraw short-acting analgesics from some of these patients, occasionally having to replace them with long-acting analgesics, and observe a reduction of headache frequency and sometimes intensity. However, headache specialists acknowledge that not all chronic headaches are due to analgesic rebound, and only some of these patients respond well to analgesic withdrawal. It has been my experience that it is most difficult in some patients to treat what may or may not be rebound headaches, and some have to be admitted to addiction facilities, not the most appropriate place for them, to support this course. They have to endure at least two or more weeks of excruciating pain during the withdrawal of their headache medications, and the resulting lowered frequency of severe headaches, may be sufficient to allow them to avoid analgesics in the future, and treat their remaining severe headaches with ice and bedrest. However, this depends on the frequency of the natural headaches being quite low, e.g., less than once every two weeks. For others, if the headaches remain frequent and severe (more than twice a week and pain intensities of 10/10) it is sometime better for their quality of life to maintain them on analgesics, providing their requirements are stable and not escalating, and their quality of life is improved. In general, if analgesic requirements are stable and the medication is doing more good than harm to the patient, we accept treating a degree of rebound along with the natural frequency of the headaches.

I believe that if Mr. Graper were tapered and denied his migraine medications, his exacerbations to severe pain and vomiting may become less frequent, but would still be severe and frequent enough to render his quality of life worse than at present. It would be extremely hard to tolerate putting him through such excruciating pain and vomiting for several weeks, when I suspect that his natural frequency and intensity of headaches will still be frequent enough to require medication intervention. I am also concerned, having seen other patients in this position, that he might have a stroke with the severity of the pain.

Recently, I have prescribed a sustained-release opioid for him, plus a long-acting triptan, and his severe migraine exacerbations have reduced in frequency. However, I cannot deny him occasional use of short-acting medication to treat severe exacerbations, because I consider it unethical. I have observed him during one of his severe episodes of migraine, and he is extremely impaired by his pain.

His medication requirements are stable and he is not escalating his doses. Unfortunately, music, his greatest passion, is also one of his strongest triggers for his migraines, which are often accompanied by violent vomiting. With his current regimen, he can usually participate in his music functions, which are crucial to his quality of life.

Therefore, much as I respect Dr. Reznek's opinion, I consider it impractical to apply it to this patient.

Dr. R.E. Warren, a gastroenterologist, assessed Mr. Graper on September 6, 2000. He concluded that "Mr. Graper's gastrointestinal symptoms are primarily cerebral in origin, i.e. he has no contributory gastrointestinal abnormalities involving his esophagus, stomach, or small bowel." He felt the finding of hiatus hernia was of no clinical significance.

The nausea-vomiting are a part of the symptom complex originating with headache, dizziness-vertigo, analogous to the nausea-vomiting that occur as part of the disorder called motion sickness ( "sea sickness").

In conclusion, Mr. Graper's gastrointestinal problems are secondary to central (cerebral) dysfunction and are incapacitating and insecurity-provoking to him, and not consistently aborted using medications, rendering him incapable of performing at his usual occupation as a classroom teacher. He demonstrates that he can go about his daily routine in independent fashion rather than requiring constant personal attention, [emphasis added]

Dr. Warren did speculate that Mr. Graper could possibly work as a math or music tutor, but felt "the insecurity and stress entailed as a classroom instructor are likely aggravating factors in his current incapacitation as a teacher. Other than this factor of insecurity, I detected no evidence of symptom magnification or functional overlay." Work as a tutor would not have provided Mr. Graper with remuneration comparable to that of his pre-accident salary.

Mr. Townsend testified that in response to Dr. Warren's report, Liberty Mutual decided "to reinstate benefits or try to resolve the file." Liberty Mutual blamed Mr. Graper for the delay in obtaining Dr. Warren's report because Mr. Graper failed to attend the first scheduled appointment with Dr. Warren in June 2000. Mr. Graper testified he was sick that day. The appointment was rescheduled for September. I place no significance in this because I find that Liberty Mutual acted unreasonably in failing to reinstate benefits while insisting on these further IME reports. It should not have taken Dr. Warren's report to convince the Insurer to reinstate benefits: Dr. Yufe had concluded that Mr. Graper's hiatus hernia was unlikely to be the cause of the vomiting when he conducted his IME two years earlier. And Dr. Gardner-Nix had consistently linked Mr. Graper's vomiting with his headaches, dizziness and nausea. The Insurer was not entitled to disregard her reports just because she is a treating physician.

In any event, despite Dr. Warren's report, no benefits were paid for another two months, until March 16, 2001.

Settlement Discussions:

The parties met to discuss settlement of the matter on February 27, 2001. As a result of their discussion, Liberty Mutual made an offer on the basis that if the offer were not accepted by 5:00 p.m. on Friday, March 9, 2001, the Insurer would bring benefits up to date, with interest, and reinstate ongoing benefits. Mr. Graper did not accept the offer. Mr. Townsend's letter accompanying the cheque, was dated March 15, 2001, and included the following:

Please note, the reinstatement of benefits is on a without prejudice basis and is not an admission of liability nor an acceptance that the injury continuously prevents Mr. Graper from engaging in any occupation or employment for which he is reasonably suited by education, training or experience.

Also, we maintain the position that it is our right, with respect to Part IV of the regulations, that the insurer may, on reasonable notice, require an examination of the insured person by a qualified medical practitioner as often as it is reasonably necessary.

Mr. Graper submitted that this letter amounts to a threat that he will face ongoing litigation with Liberty Mutual unless he agrees to a full and final settlement. I am not persuaded that seeking a full and final settlement is unreasonable conduct, per se. Nor is it unreasonable for an insured person to seek a larger settlement in return for waiving his right to litigate further. But if an insured person wants to keep the matter open, it remains open for the insurer, too. This is part of the give-and-take of bargaining: each side takes away something, each side gives up something, and both sides avoid litigation. An advantage for the insured person who decides not to give a full and final settlement is that he will be entitled to mediate and litigate future disputes, including disputes about Insurer Medical Examinations requested under subsection 23(2) of the Schedule.

However, an insurer should not expect to use the settlement process to shelter its conduct from arbitral review. That the matter was in arbitration by the time Dr. Warren made his report did not relieve Liberty Mutual of its obligation to consider all available information fairly and to pay its insured what it owed. It was not entitled to wait until the very eve of the hearing in the hopes of obtaining a better settlement.

Accordingly, I find that the further withholding of benefits between late December 2000 and mid-March 2001 was unreasonable and that a special award is warranted. That settlement discussions were ongoing at that time does not bear on my special award finding one way or the other. Any offers may, of course, be relevant if the parties are unable to agree on arbitration expenses.

Calculation of the Maximum Amount of the Award:

I find that Liberty Mutual unreasonably withheld benefits of $600 per week between June 22, 1999 and March 16, 2001, a period of about 90 weeks. The total principle amount owing for this period is approximately $54,000.

As Arbitrator Sampliner noted when he considered the calculation of interest under subsection 282(10), ". . . the section is one long run-on sentence." Parsing it to determine how the legislature intended special awards to be calculated has given much grief. The root of the problem is that special awards involve two kinds of interest calculation. Simple interest of 2 percent per month is payable on overdue benefits under subsection 24(4) of the Schedule. This provision is intended to compensate the insured person for not having use of his money for the period when benefits were overdue. Subsection 282(10) of the Act provides for a further payment of interest, at the rate of 2 percent per month, compounded monthly, from the time the benefits first became due. The simple interest payable under subsection 24(4) is included in the principal amount on which compound interest is paid. The compound interest requirement reflects the legislature's intention that benefits not be delayed unreasonably.

Subsection 282(10) involves a three-step calculus: the amount of the benefits owing + simple interest at 2 percent per month + compound interest at 2 percent compounded monthly. The question is when to apply the 50 percent maximum in this process. In Beiler and Alpina, Arbitrator Sampliner concluded that the maximum applies to the final result of the special award calculus.³² Acknowledging the ambiguity in the section, he relied on matters of policy and practicality. He reasoned that if the compound interest is payable on the special award, it could become "the most important factor" in the award, but the arbitrator would have limited ability to adjust the award to fit the insurer's conduct, a result that would be repugnant to the intent of the section.

Beiler has been followed in numerous subsequent arbitration decisions,³³ and I was given no reason to depart from that approach in this case. The parties agreed that the amount of benefits plus simple interest under subsection 24(4) of the Schedule owing on March 16, 2001 was $64,967.54. The addition of compound interest under subsection 282(1) of the Act adds roughly another $15,000 to this amount. Accordingly, I find that the maximum award I can make in this case is 50 percent of approximately $80,000, or $40,000.

Amount of the Award:

Liberty Mutual submits that the legislature intended special awards to be modest. The Insurer submitted that the traditional range of punitive damages awards against insurers has been in the range of $7,500 to $15,000.³⁴ Liberty Mutual argues that FSCO special awards

frequently approach and exceed the civil court range (and in a number of cases exceed this range by many multiples), without the necessity or protection to an insurer of: (a) the civil rules of evidence at trial, (b) full examinations for discovery, (c) the right to elect a judge or jury, and (d) a "bad faith test" that goes "considerably beyond the Insurance Act standard of simple unreasonableness.

I understand the last point to mean that special awards are different from awards of punitive damages and require only a finding of "simple unreasonableness."

As Liberty Mutual did not identify any particular defect in the hearing or pre-hearing process in this case, and did not argue that it was denied a fair hearing, I need not comment on points (a) through (c). That a special award is not an award for punitive damages is well established in FSCO jurisprudence, and I accept it.³⁵ I am not clear why it follows that a special award must not exceed the typical award of punitive damages. There is certainly no such indication in the Insurance Act.

What the Act and accident benefits schedules do indicate is the legislature's intent that first-party accident benefits be paid promptly through a non-adversarial process. I find that by setting the maximum of the special award to 50 percent of the amount of benefits and interest owing, subsection 282(10) clearly indicates the legislative intent that the award be proportional to the benefits unreasonably withheld and the length of the delay in paying benefits owed. That is the "cap," and the only cap, prescribed by the legislature. Equally clearly, the provision gives arbitrators discretion in setting the amount of the award. FSCO adjudicators have considered what percentage an award represents of the benefits and interest withheld in order to fix an amount that fits the seriousness of the insurer's misconduct. Director's Delegate Naylor approved this approach in A.B. and Royal Insurance Company of Canada, where the issue was whether the arbitrator erred in fixing a special award by reference to benefits other than the benefits unreasonably withheld:

The percentage cap on awards provides both a maximum and a reference point for determining where on the scale the insurer's actions should lie. Remove the basis of the calculation from the amount unreasonably withheld, and one is left with an amount that is, as here, essentially arbitrary. There is no valid basis by which to judge the reasonableness or proportionality of the amount levied.³⁶

In this case, Liberty Mutual's challenge to the percentage approach appears to be rooted in its view that special awards should be for nominal amounts. This leaves unanswered the question of how to fix the appropriate amount, if not by reference to the seriousness of the insurer's conduct and the amount of benefits and interest withheld.

Liberty Mutual also relied on a passage from in Monachino v. Liberty Mutual Fire Insurance Company for the proposition that a special award is comparable "to costs sanctions in the civil courts, which range from party and party costs to solicitor and client costs."³⁷ I read the decision differently. After reciting subsection 282(10), Keenan J. made the following coments:

This section applies to arbitration cases under the Insurance Act. It gives to the arbitrator statutory authority to punish an insurer for misconduct in relation to payments under the No-Fault Benefit Schedule [now "Statutory Accident Benefits Schedule"]. But for that subsection the arbitrator would have no power or authority to impose any sanction for misconduct. The guilty insurer would find the arbitration procedure to be a safe haven from any punishment for misconduct.

These proceedings are not an arbitation and a judge sitting in this Court is not an arbitrator. Section 282(10) does not apply to these proceedings. This Court has inherent jurisdiction and powers under the general law to deal with misconduct of a party by other means, such as an award or denial of costs, as was done by Osler J. in MacDonald v. Travelers Indemnity of Canada supra.

As I read this passage, Justice Keenan was commenting on his own powers to sanction insurer misconduct, and did not mean to suggest that an arbitrator's power to penalize insurer misconduct is limited to powers with respect to costs. The Act gives arbitrators power to order a special award, in subsection 282(10), and power to award arbitration expenses, in subsection 282(11) and 282(11.1); subsection 282(11.2) grants power to order the insured person to pay the insurer's arbitration assessment if an arbitrator finds the insured person commenced an arbitration that was frivolous, vexatious or an abuse of process. These are separate powers, governed by different criteria. In this case, for example, my ruling that Mr. Graper is entitled to a special award does not necessarily mean I will find him entitled to reimbursement for all his arbitration expenses. If the parties disagree about expenses, I will consider the criteria set out in section 12 of Ontario Regulation 664, R.R.O. 1990, as amended by Ontario Regulation 464/96, made under the Insurance Act.³⁸

Liberty Mutual also submits that the interest rates on overdue benefits are punitive, and therefore it cannot have been the legislative intent to punish insurers further in the absence of a finding of bad faith. The Insurer relies on Mendez and AXA Insurance Company, in which Arbitrator McMahon said,

Traditionally pre-judgment interest was loosely tied to prevailing interest rates and was designed only to compensate the plaintiff for the loss of use of the money awarded at trial. However at 2% per month the interest provided for under Bill 68 [the Schedule] goes well beyond compensating for loss of use. It is punitive in nature and must be seen as part of a scheme designed to produce prompt payment of benefits.³⁹

Although the simple interest rate of 2 percent per month set out in section 24(4) of the Schedule certainly offers a premium on market rates, undoubtedly to provide a strong incentive for prompt payment, I am not convinced it is intended to be punitive, as the interest is payable as soon as benefits are overdue, without any need for a finding that the insurer acted unreasonably. The compound interest element of a special award can be very significant, especially where benefits have been withheld for a long period of time. Since the reasonableness standard and the addition of compound interest are expressly mandated by subsection 282(10), I am not persuaded this provides an argument for reducing or denying a special award. To the extent Liberty Mutual's argument is an appeal to consider the actual dollar costs of a special award, rather than a percentage that does not take the addition of interest into account, I accept this submission.

Liberty Mutual further submits that the intent of the statutory accident benefit scheme is to "ensure affordable auto insurance rates and a comprehensive accident benefit plan to protect the more than six million drivers in Ontario."⁴⁰ According to Liberty Mutual, the legislative intent was that "serious cases would be conducted by the Civil Courts if bad faith were an issue." The problem with this submission is that the special award provision was introduced as part of the package of legislative amendments that created the statutory accident benefit scheme, and it has remained in place, despite three significant rounds of legislative change, including the Bill 59 amendments that substantially reduced certain benefits. Moreover, the power to grant special awards is given to arbitrators, but not to the courts. ⁴¹

Finally, Liberty Mutual submits that for "serious cases within the FSCO forum," a remedy is provided by section 288 of the Act, which gives the Director power to review arbitration orders and to recommend that the Superintendent investigate.

Again, I am not persuaded section 282 and section 288 provide mutually exclusive remedies, or that section 288 was intended to negate section 282. The legislature enacted both provisions as part of the same package of amendments in 1990. I must assume they intended both to be given meaning.

In Erickson, Senior Arbitrator Rotter held that the amount of a special award "must be substantial enough to have a deterrent effect. It should be more than a nominal amount, which could be viewed as a licence to act unreasonably." She also stated that a special award "should take into consideration the time and resources expended by the insured person in asserting and securing his or her rights." However, she cautioned that "a special award is not an award of damages or costs, and cannot be expected to fully reimburse or compensate an individual for his expenses or losses." These principles have been followed in subsequent FSCO special award decisions. Arbitrators have tended to consider the amount as a percentage of the benefits and interest award in order to ensure that the award is proportionate to the misconduct. I accept that "[t]he higher end of the percentage scale should be reserved for especially egregious conduct on an insurer's part, without mitigating factors. ⁴²

The amount of a special award should reflect the seriousness of the insurer's misconduct, considering aggravating and mitigating circumstances. I accept Liberty Mutual's argument that the insured person's conduct is also a factor to be considered because it affects the context of the insurer's conduct. However, I am not satisfied that Liberty Mutual's unreasonable conduct of this matter can be explained or mitigated by anything Mr. Graper did or failed to do.

I find that Liberty Mutual's decision to reinstate benefits and pay outstanding benefits on the eve of the hearing is a mitigating factor because it saved Mr. Graper the need to prove entitlement. However, there was very little risk for Mr. Graper in proceeding with the hearing, and the pre-hearing payment also benefited Liberty Mutual because an arbitrator's order for the payment of benefits is protected by section 287 of the Act. That this was significant for the Insurer is shown by Mr. Townsend's "without prejudice" covering letter. For these reasons, I find this of limited significance as a mitigating circumstance.

I find no evidence of malice in this case. However, there are two aggravating factors. The first is that Liberty Mutual withheld benefits despite knowing that its conduct was aggravating Mr. Graper's symptoms. The second, and more significant factor, arises from memo #89, which shows that Liberty Mutual terminated benefits although it knew that Mr. Graper was likely to succeed if he pressed his claim to arbitration. The Insurer's adversarial, tactical approach to Mr. Graper's claim has no place in an accident benefits scheme premised on early resolution of disputes between insured persons and first-party insurers.

Considering all the circumstances, including the strength of the medical evidence supporting Mr. Graper's claim, the length of time during which benefits were withheld, the effect this had on Mr. Graper's symptoms, the Insurer's selective reading of its own experts' reports and its intransigence in the face of reports supporting Mr. Graper's claim, the absence of malice, and Liberty Mutual's decision to reinstate benefits without forcing Mr. Graper to prove entitlement at a hearing, I award a special award of $25,000, including the compound interest under subsection 282(10).

EXPENSES:

If the parties are unable to agree about arbitration expenses, an expenses hearing may be arranged. Rule 77 of the Code sets out FSCO practice in case of dispute about the assessment of expenses payable.

July 20, 2001

Nancy Makepeace Arbitrator

Date

Neutral Citation: 2001 ONFSCDRS 110

FSCO A00-000133

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

TED GRAPER

Applicant

and

LIBERTY MUTUAL FIRE INSURANCE COMPANY

Insurer

ARBITRATION ORDER

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

1. Liberty Mutual shall pay Mr. Graper a special award in the amount of $25,000, inclusive of compound interest under subsection 282(10) of the Insurance Act, forthwith.

2. I may be contacted if the parties are unable to agree on arbitration expenses.

July 20, 2001

Nancy Makepeace Arbitrator

Date

A decision to pay or not to pay benefits involves an analysis by the Insurer of whether an applicant meets the statutory criteria for benefits. Necessarily such an evaluation will contain both objective and subjective elements. Usually, the objective elements of a claim can be ascertained from documents such as the reports of physicians, or the claims documents themselves. Evidence of the subjective aspects of the adjustment of a claim is, however, more elusive. When the internal decision-making of the Insurer is being impugned by an applicant, as in the case of a special award, it is next to impossible to present a case without access to the internal documents of the Insurer. [from Nigro and State Farm Mutual Automobile Insurance Company, (FSCO A99-000656, August 28, 2000)]

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents On or Between June 22, 1990 and December 31, 1993, Regulation 672 of R.R.O. 1990, as amended by Ontario Regulations 660/93 and 779/93.
2. 2Liberty Mutual's adjusters, Grant Seppanen and Clive Townsend, testified that Liberty Mutual took over Prudential's business in the winter of 1997.
3. 3Liberty Mutual relies on Jensen and GAN Canada Insurance Company, (OIC A95-00057, September 24, 1996). The other decisions Liberty Mutual relies on are distinguishable. In Prieto and TTC, (OIC A-002387, October 14, 1993), Bahita and GAN Canada Insurance Company, (OIC A-013688, April 23, 1996), and Stelzer and Zurich Insurance Company, (FSCO A99-000170, August 17, 2000) no special award was payable because the applicant was found not to be entitled to benefits. Entitlement was disputed, so there was no issue about the effect of payment prior to the hearing. In Bapoo and Co-operators General Insurance Company, (OIC A-006212, October 3, 1994), there was no issue as to benefit entitlement because the applicant had commenced court proceedings for accident benefits.
4. 4Leitgeb and Allstate Insurance Company of Canada, (OIC P-012407, November 16, 1995) [footnote in original]
5. 5Chapman and Allstate Insurance Company of Canada; Chapman and Wellington Insurance Company (OIC P-001897 & P-001989, June 10, 1994) [footnote in original]
6. 6'Jensen and GAN Canada Insurance Company, (FSCO P96-00079, March 31, 1999); Lopez and State Farm Mutual Automobile Insurance Company, (FSCO P98-00031, September 20, 1999). See also Chafe-Moote and Prudential of America General Insurance Company (Canada), (FSCO P99-00044, September 8, 2000).
7. 7Rule 32.1 and 32.2 of the Dispute Resolution Practice Code - 3rd ed.
8. 8Rule 33.1(c).
9. 9Rule 32.3.
10. 10As FSCO's Rules do. Rule 1.4 states that the Code is made under the authority of section 21 of the Insurance Act and section 25.1 of the SPPA.
11. 11See Rule 1.1 of the Code.
12. 12The minimum notice requirements are set out in Rules 32, 33, 36, 37 and 38, but these time frames are subject to arbitral discretion, and pre-hearing arbitrators normally order that disclosure be completed within a reasonable period of time following the pre-hearing.
13. 13Although I do not agree that evidence of the insurer's internal decision-making is necessary in every special award case, I find Arbitrator Wilson's comments helpful:
14. 14Whiten v. Pilot (1999), 1999 CanLII 3051 (ON CA), 42 O.R. (3d) 641 (Ont.C.A.), under appeal to Supreme Court of Canada.
15. 15Vorvis v. Insurance Corporation of British Columbia 1989 CanLII 93 (SCC), [1989] 1 S.C.R. 1085, 58D.L.R. (4th) 193 at p. 208. [footnote in original]
16. 16Hill v. Church of Scientology of Toronto, 1995 CanLII 59 (SCC), [1995] 2 S.C.R. 1130 at p. 1208, 126 D.L.R. (4th) 129. [footnote in original] See also Clarfield v. Crown Life Insurance Co. (2000), 2000 CanLII 29045 (ON SC), 50 O.R. (3d) 696 (Ont. Sup.Ct.of Justice).
17. 17(OIC A-000560, July 16, 1992). That a special award is not an award for punitive damages has subsequently been reaffirmed in a number of cases, including Halifax Insurance Company and Reith, (FSCO Appeal P98-00037, July 16, 1999).
18. 18(OIC A-003985, October 29, 1993).
19. 19Rocca and AXA Insurance Company, (FSCO P99-00020, August 1, 2000).
20. 20For example, see Cripps and AXA Insurance Company, (OIC A-013360, February 7, 1997); McConachie and GAN Canada Insurance Company, (FSCO P97-00069, October 28, 1998); and Ford and Wawanesa Mutual Insurance Company, (FSCO P00-00005, August 4, 2000).
21. 21As Arbitrator Blackman found memo #80 to be protected by solicitor-client privilege, it is not before me.
22. 22Mr. Seppanen enclosed the reports from the four insurer examinations in November 1998 with his April 14th letter. Mr. Percival responded, "these reports were in your hands for the past five months and it took your Company that long to forward same to this writer." Mr. Seppanen testified that there was no particular reason for the delay in sending Mr. Graper the November 1998 reports, except that he was pulling together the job readiness program. This ignores the important role of the insured person in working with the insurer to decide on an appropriate rehabilitation strategy. I am not satisfied the Insurer had reason to withhold the IME reports obtained for the purpose of adjusting the claim.
23. 23Correia and TTC Insurance Company Limited, (FSCO A00-000045, October 27, 2000), confirmed on appeal (P00-00061, July 16, 2001) and the decisions cited therein.
24. 24(FSCO P99-00012, November 9, 1999).
25. 25Roberts v. Safeco Insurance Company, [1988] O.J. No. 691 (H.C.J.). [footnote added]
26. 26See Roberts v. Safeco, supra; Howe v. Economical Mutual Insurance Co. (1989), 1989 CanLII 10424 (ON HCJ), 40 C.C.L.I 216) (Ont. Dist. Ct.); and Dowling v. Phoenix Continental Management Ltd. (1989), 1989 CanLII 4364 (ON HCJ), 70 O.R. (2d) 311 (H.C.J); Crooks v. Wawanesa Mutual Insurance Co. (1996), 1996 CanLII 8036 (ON CTGD), 30 O.R. (3d) 244 (Ont. Gen Div.). [footnote in original]
27. 27In two early decisions, including one of mine, the opposite interpretation was adopted. Work for more than 90 days after the 156-week mark was held to preclude entitlement. However, in later decisions, arbitrators have consistently held that an insured person who returns to work for more than 90 days is not automatically disentitled. Instead, the return to work creates a rebuttable presumption against entitlement. I accept this approach. See, Russell and Co-operators General Insurance Company, (OIC A-005417, December 20, 1993); Theuma and Halifax Insurance Company, (OIC A-006496, April 28, 1994); Lafleur and Zurich Insurance Company, (OIC A-004141, May 11, 1995); Whyte and Metropolitan Insurance, (OIC A-009277, April 30, 1996); and Chudy and West Wawanosh Mutual Insurance Company, (OIC A96-000924, January 23, 1997). [footnote in original]
28. 28Unlike the 156 weeks in s. 12(5)(b), the return to work provisions in s. 16 run from the date of the accident. [footnote in original]
29. 29For example, see Campanella v. The Great American Insurance Company, [1977] C.I.L.R. 1-876 (Ont. Co. Ct.). [footnote in original]
30. 30See, for example, Erickson and Guarantee Company of North America, (OIC A-000560, June 2, 1992); Maas and State Farm Mutual Automobile Insurance Co., (OIC A-015935, October 16, 1996), upheld on appeal (OIC P96-00080, December 8, 1997);Murray and Wawanesa Mutual Insurance Company, (OIC A-003224, August 23, 1996); and McConachie and GAN Canada, (FSCO P97-00069, October 28, 1998).
31. 31Liberty Mutual copied the report to Mr. Graper's counsel on November 3, 2000. Mr. Percival complained about late production of the report, but Mr. Burns advised that he received the report on October 26th and it was not received by Liberty Mutual until October 24, 2000.
32. 32(OIC A-003051, August 9, 1994).
33. 33For example, Murray and Wawanesa Mutual Insurance Company, supra
34. 34Whiten v. Pilot, supra, at 656 and 661.
35. 35I note, in passing, that in Whiten v. Pilot, the Court of Appeal reduced the award of $1 million made by the trial court to $100,000, and another recent decision of the Superior Court of Justice awarded punitive damages of $200,000: Clarfield v. Crown Life Insurance Company (2000), 2000 CanLII 29045 (ON SC), 50 O.R. (3d) 696.
36. 36(FSCO P99-00049, September 18, 2000).
37. 371987 CanLII 4062 (ON HCJ), [1987] I.L.R. 1-220, 60 O.R. (2d) 385, 42 D.L.R. (4th) 204 (Ont.H.C.).
38. 38Appended as Part F of the Code.
39. 39(FSCO A96-001355, January 25, 2000).
40. 40Statement of the Honourable Murray Elston, Minister of Finance, on introducing the Ontario Motorist Protection Plan on October 23, 1989 (Legislative Assembly of Ontario, 2nd session, 34th Parliament, Official Report of Debates (Hansard), at p. 3175-3176.
41. 41Monachino v. Liberty Mutual Fire Insurance Company, supra; Christakos v. Dominion of Canada General Insurance Co., [1997] O.J. No. 1279, March 27, 1997, Ont.Ct. (Gen.Div)
42. 42Rocca and AXA Insurance, supra, followed in Chafe-Moote, supra.