Neutral Citation: 2001 ONFSCDRS 45

FSCO A99-000366

BETWEEN:

DANIEL COLE

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before:

K. Julaine Palmer

Heard:

March 5, 6, and 7, 2001 in Toronto.

Appearances:

David Levy for Mr. Cole

Ian D. Kirby for Allstate Insurance Company of Canada

Mr. Cole was injured in a motor vehicle accident on June 17, 1995. He received weekly income replacement benefits from Allstate Insurance Company of Canada ("Allstate"), payable under the Schedule,¹ until February 3, 1996. Mr. Cole disputed the termination of his income replacement benefits. After the parties were unable to resolve their dispute through mediation, Mr. Cole applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

Is Mr. Cole entitled to income replacement benefits from February 4, 1996 and ongoing under section 8 of the Schedule?
Is Allstate liable to pay Mr. Cole's expenses of the arbitration under subsection 282(11) of the Insurance Act?

Yes, Mr. Cole is entitled to ongoing income replacement benefits, in an amount which remains undetermined for the present.
Yes, Allstate is liable for Mr. Cole's expenses of the arbitration.

Mr. Cole suffered multiple injuries in a motor vehicle accident on June 17, 1995. His injuries included facial lacerations, a broken jaw, a broken nose, broken teeth, and a broken left clavicle (collar bone). Mr. Cole was in hospital for 12 days after the accident. His left shoulder was immobilized in a figure eight sling for almost two months. After his injuries healed and he had received some physiotherapy treatment, Mr. Cole returned to work at Northern Telecom Limited (Nortel). However, he did not return to his previous job as a machine operator. Allstate terminated Mr. Cole's income replacement benefits (IRBs) effective February 3, 1996. Mr. Cole contends that Allstate did not terminate his IRBs properly and submits that he could not perform the essential tasks of his job as a machine operator then, nor since, as a result of the injuries he sustained in the 1995 motor vehicle accident. Accordingly, Mr. Cole claims ongoing entitlement to IRBs and an offer of a loss of earning capacity benefit (LECB), according to the provisions of section 20 of the Schedule.

Allstate submits that no medical evidence after January 22, 1996 suggests Mr. Cole could not have returned to his previous job at Nortel if it were available to him. Allstate submits that as of February 3, 1996 Mr. Cole was not substantially unable to perform the tasks of his pre-accident job. Allstate submits the only reason Mr. Cole did not work after January 27, 1996 was that he was laid off on that date as part of a massive downsizing by Nortel. Allstate submits that Mr. Cole has been able to do every job he has tried since the accident. If Mr. Cole has suffered any subtle cognitive deficits, Allstate submits those deficits may be compensable in tort, but they do not materially affect his ability to work.

The Legal Test:

Since Mr. Cole was employed at the time of the accident, the Schedule provides that he is entitled to IRBs, if he sustained an impairment in the accident and suffered a substantial inability to perform the essential tasks of his employment as a result. If Mr. Cole continued to qualify for IRBs 104 weeks after the onset of the disability, then the Insurer must make an offer of a loss of earning capacity benefit (LECB).

Essential tasks of a machine operator:

Mr. Cole described his work as a machine operator making telephone switch and voice data circuit boards. He testified that he believed he would have had significant problems with two aspects of his job, had he been able to return to it after the accident. Firstly, he would have been unable to perform the overhead reaching involved in the job. Overhead reaching was required to refill long plastic tubes with microchips, every two to three minutes. Secondly, Mr. Cole believed he would have had difficulty with the problem-solving requirements of the job. He described programming, mechanical and electrical issues that could stop production. Mr. Cole testified that he has concentration and memory problems since the accident and has significant difficulty absorbing meaning from material he is reading. Mr. Cole testified that there was a considerable amount of pressure in his job as a machine operator. Each circuit board had a quota or rate per day. He was required to meet 80% of that rate.

Mr. Cole filed a job site evaluation carried out by Annemarie McDonough, an occupational therapist, on September 1, 1995. Ms. McDonough visited the job site and observed an employee performing various aspects of the job. She also questioned Nortel's occupational health nurse, an occupational health and safety representative and Nortel's people development manager, Dominic Muro.

With respect to the physical demands of the machine operator job, I focus on the overhead reaching requirement, since this was the physical component of the job with which Mr. Cole testified he would have had the most difficulty, given the symptoms in his left arm and shoulder after the accident.

Ms. McDonough wrote about this aspect of the job:

Reaching overhead involves flexing the shoulders and extending the elbows and wrists in front of the body to complete a task at or above shoulder level. Reaching overhead is essential with this job. Job tasks such as programming the machine using the control board or reaching for panels of tubes mounted on the top of the machine require overhead reaching. According to Mr. Muro, reaching overhead for the panels is one of the most physically demanding tasks of this job even though the panels are very lightweight. This is especially true if accessing the panels above and to the back of the work table. To accurately remove a panel from or return it to the machine, the operator must lean forward outside of his base of support and balance on the balls of both feet while reaching overhead.

Ms. McDonough also reported on the cognitive and perceptual demands of this job in a task analysis dated October 1, 1995. She wrote as follows:

The cognitive demands identified during this analysis consisted of problem solving, sequencing, attention, concentration, insight and judgement. Various perceptual skills are also important with this job.

Ms. McDonough reported that the machine operator had to be able to quickly solve problems and address the issue so production might resume when the machine stops functioning. The worker had to be able to sequence the numerous repetitive steps involved in mass production. The worker required insight and judgement because he was operating large and expensive machinery. The worker was required to inspect each of the tiny pieces affixed to the circuitry board to identify any problems with the manufacturing.

Ability of Mr. Cole to perform his essential tasks:

Mr. Cole was examined by an orthopaedic specialist, Dr. G. D'Angelo on November 20, 1995 in an insurer's examination. His major complaint at that time was with his left shoulder. Mr. Cole described grinding in the left shoulder with abduction and increased pain with abduction or with extension. He also described pain when he rolled onto the left shoulder at night when trying to sleep and also had noted occasional spontaneous onset of pain.

On his physical examination of Mr. Cole's shoulder, Dr. D'Angelo noted that Mr. Cole had a palpable deformity at the site of his fractured clavicle on the left side. He described tenderness directly over the acromioclavicular joint and could detect mild crepitus with abduction of the left shoulder, which seemed to be originating from the region of the acromioclavicular joint. Dr. D'Angelo noted a negative impingement sign anteriorly and laterally, a positive shoulder adduction test, normal strength of external rotation, and only about 90 degrees of active abduction, but 90 degrees of internal rotation and 70 degrees of external rotation.

Dr. D'Angelo reviewed Mr. Cole's hospital records, including x-rays and took x-rays of his left clavicle and views of his acromioclavicular joints with and without weights. He noted no separation and no degenerative changes. He felt the glenohumeral joints were intact. Dr. D'Angelo described his impression of Mr. Cole's musculoskeletal problems as:

fracture of the left clavicle
strain of the left acromioclavicular joint, and
mild tendinitis of the left shoulder

Dr. D'Angelo also wrote as follows:

The impact to the left shoulder girdle is sufficient to strain the ligaments and joint capsule of the acromioclavicular joint. I believe he probably sustained a Grade One injury, meaning that the ligaments were stretched but not torn. This can also cause damage to some cartilage inside the joint, which is noted as a grinding or crepitant feeling at the left shoulder with range of motion. Abduction increases the pain from this joint because it jams the acromion and the clavicle together. There is no sign of significant impingement, but there is some sign of tenderness over the rotator cuff, which is an indication of mild tendinitis, which could be due to the acromioclavicular joint injury, which is adjacent, or due to a mild stretch at the time of the injury.

Dr. D'Angelo suggested that the proper treatment for the problem was physiotherapy, which Mr. Cole had already undergone. He suggested considering a differential block to the shoulder, that is injection of a steroid into the acromioclavicular joint and then into the subacromial space, to see which site was causing the greatest pain for Mr. Cole.

Dr. D'Angelo suggested that Mr. Cole should return to work lifting 10 to 15 pounds maximum and that he should "avoid any activity which requires lifting the elbows above shoulder height. Repetitive back-and-forth movement of the shoulder could aggravate the tendinitis."

Mr. Cole's family doctor, Dr. A. A. Kennedy, injected Mr. Cole's left shoulder with Kenolog, a cortisone product, on November 20, 1995 the same day he had seen Dr. D'Angelo. He was still receiving physiotherapy. Dr. Kennedy saw Mr. Cole again on December 18, 1995 and July 9, 1996 with complaints of left shoulder pain. At the last visit he ordered x-rays of his left shoulder, which showed no abnormalities. Dr. Kennedy also gave Mr. Cole a second shot of cortisone in the left shoulder. When he saw Mr. Cole again in March 1997, he was still complaining of pain in his left arm and shoulder, which was quite tender on pressure.

In a "sign back" letter to the case manager dated December 4, 1995, Dr. Kennedy indicated there were no contraindications to Mr. Cole returning to a work-conditioning program at Nortel, except

that his weight lifting should be restricted to 10 pounds. Dr. Kennedy also answered a question about whether Mr. Cole's left shoulder tendinitis was accident-related by saying it was not, but that it may have been a secondary development due to physiotherapy. From the material before me at the hearing, including Dr. Kennedy's clinical notes and records, it is apparent that Dr. D'Angelo's report was not made available to Dr. Kennedy.

Where Dr. Kennedy's opinion about the source of Mr. Cole's left shoulder tendinitis conflicts with Dr. D'Angelo's opinion, I prefer Dr. D'Angelo's opinion that the tendinitis was likely accident-related, because of Dr. D'Angelo's greater expertise in the fields of orthopaedics and sports medicine.

Mr. Cole participated in extensive neuropsychological testing, conducted over three days in July 1997 by Dr. Andy Cancelliere, a clinical psychologist. Dr. Cancelliere concluded that Mr. Cole had sustained a head injury in the accident of June 17, 1995. He found Mr. Cole demonstrated impairments with respect to attention and concentration of a highly demanding task. He found impairments in Mr. Cole's vocabulary, his memory for nonverbal information, his reading, his problem solving ability, his mental flexibility, and naming and verbal fluency. Dr. Cancelliere was of the opinion that Mr. Cole's difficulties with attention and concentration, problem solving, mental flexibility, and verbal fluency were compatible with frontal lobe dysfunction. His difficulties with vocabulary, memory and naming were consistent with temporal lobe involvement. Dr. Cancelliere felt Mr. Cole likely sustained a traumatic brain injury in the accident with "adverse consequences upon his intellectual and cognitive capacities." As the testing was undertaken about two years after the accident, Dr. Cancelliere felt little further spontaneous recovery would be likely to occur.

April Belbeck, an occupational therapist, and Vice-President of Clinical Services at Rehabilitation Management Inc., testified about Mr. Cole's functional abilities. Ms. Belbeck had also prepared a report dated November 17, 1999 based on an interview and functional analysis of Mr. Cole at his home. Ms. Belbeck related that, among other things, Mr. Cole complained of constant left shoulder pain, weakness in his left shoulder, and difficulty in reaching above his head. He also complained of constant pain and numbness in his fourth and fifth fingers, which affected his ability to grip and hold objects. Mr. Cole also complained of problems with his memory, decreased concentration and attention, and difficulties learning new material. Ms. Belbeck was of the view that Mr. Cole had a full active range of movement in both shoulders. However, she noted he reported pain when reaching into cupboards above shoulder level and when reaching into the back of cupboards or closets. However, he was able to perform the tasks.

Ms. Belbeck felt that the bi-manual overhead reaching would have been Mr. Cole's most significant difficulty in performing the essential tasks of his job as a machine operator at Nortel. She was of the view that this movement would aggravate his pain. In her view it was not the weight of what was being lifted that was important, it was the repetition of the movement every few minutes that caused the most strain on the joint.

Mr. Cole remains a generally optimistic person who works hard at his job and has maintained an excellent attendance record over his career. Dr. Cancelliere noted that his personality is such that he may tend to slightly underestimate problems which he is having. When he was asked on cross-examination if he felt he could have done the overhead reaching part of his machine operator job with the assistance of a step-stool, he replied that he might have been able to do it. Although I accept that Mr. Cole had a good grasp of the duties involved in his job as a machine operator, I prefer the evidence of Ms. Belbeck about the extensive modifications that would have to be made to allow the microchip refilling work to be carried out at below shoulder-level. She also had concerns about the amount of stair climbing that would be involved with such a modification and how the refilling could be accomplished in the short time frame required. In her years as an occupational therapist Ms. Belbeck testified that she had never seen an overhead and forward reaching requirement resolved in such a manner. I do not conclude that Mr. Cole's physical disability could have been accommodated by the provision of a step-stool such that he would have been able to carry out the essential physical tasks of his job as a machine operator.

On January 18, 1996 an ergonomist employed by Functional Rehabilitation, the company engaged by Allstate to assist with Mr. Cole's rehabilitation, visited Mr. Cole's workplace and observed his post-accident job. Barbara Weatherston, the ergonomist, felt that Mr. Cole was able to perform that job with no restrictions. This job was performed largely seated and did not require overhead lifting. Employees were free to get up, stretch and move around without restriction. There were no quotas and few pressures to the job. Ms. Weatherston described the job in a two-page report and attached a physical demands analysis of the job supplied by the company occupational nurse. Mr. Cole does not claim he was unable to perform the essential tasks of this post-accident job.

However, in the concluding paragraph of her report, Ms. Weatherston asserted that "comparing Mr. Cole's current functioning on the job to the physical demands of the job that he did at the time of the accident, I feel that Mr. Cole would be fully capable of performing the demands of the job he did at the time of the accident." On the basis of this opinion, Allstate terminated Mr. Cole's IRBs.

In my view, it is inconceivable that Ms. Weatherston could have made this assertion had she any reasonable understanding of Mr. Cole's ongoing symptoms arising from the accident, had she considered Dr. D'Angelo's opinion, had she spoken with Mr. Cole about his pre-accident job or had she read the job site evaluation dated September 1, 1995 prepared by Annemarie McDonough, an occupational therapist employed by the same company as Ms. Weatherston. Ms. Weatherston's assertion ignores all the major differences between Mr. Cole's pre- and post-accident jobs. I reject this conclusion of her report entirely.

According to the testimony of Wanda Rumsam, Allstate's rehabilitation service advisor, she terminated Mr. Cole's income replacement benefits based on Ms. Weatherston's report. She testified that the report indicated that Mr. Cole could resume his pre-accident duties and return to full-time hours and therefore he was not entitled to further IRBs.

Conclusion re: Ability to perform essential tasks:

Mr. Cole was successful in obtaining a new full-time job near the end of September 1996, after a period of about five months of performing intermittent temporary labouring jobs. The job of set-up operator he now holds at Meritor Suspension Systems Company requires very little or no overhead reaching and has fewer cognitive demands than his pre-accident job at Nortel, since any trouble-shooting of his machine is performed by another employee. Mr. Cole now earns close to $20 per hour, but that is less than what he was earning at Nortel in 1995.

Mr. Cole used to assist his widowed sister, Marion McLean, with her home maintenance and outdoor work, especially cutting her grass, prior to the accident. Mrs. McLean testified that her brother has not cut her grass since the accident and would not help her with a painting project at her home last year, because of his problems with his left arm.

I find bi-manual overhead reaching every few minutes was an integral, essential part of Mr. Cole's job as a machine operator with Nortel. In addition, the job required quick-thinking and problem-solving skills. In my view, Mr. Cole could not perform the essential tasks of his employment as a machine operator at Nortel in January 1996 both because of his left shoulder impairment and the effects of a brain injury incurred in the accident of June 1995. I accept the evidence of Dr. D'Angelo, Ms. Belbeck, and Dr. Cancelliere in this regard, as well as the evidence of Mr. Cole and his sister, Mrs. McLean. I find Mr. Cole continues to remain impaired from performing the essential tasks of this job to the present time and was so impaired at a point 104 weeks after the accident.

Accordingly, Mr. Cole is entitled to ongoing IRBs, less the proper credits for post-accident income, plus interest, as set out in section 68 of the Schedule. He is also entitled to an LECB offer.

75% — 90% issue re Post-accident income:

Severance Pay issue

Resuming work after an accident does not automatically disentitle an insured person from receiving IRBs. However, according to the provisions of subsection 10(4) of the Schedule, Allstate is entitled to credit for 75% of the net income Mr. Cole received from employment started more than 26 weeks after the accident (i.e. after December 16, 1995), until he has been engaged in the employment 26 weeks. Otherwise, Allstate is entitled to credit for 90% of Mr. Cole's net income from employment against the IRBs payable. Net income is defined in subsection 10(5) as being gross income from employment less employment insurance premiums, CPP contributions, and income tax payable.

The proper amount of Mr. Cole's IRBs is agreed by the parties to be $635.07 per week in 1995. Allstate is entitled to a credit of 90% of Mr. Cole's net income from employment at Nortel until January 27, 1996, because he started that employment within 26 weeks of the accident. Allstate is entitled to a credit of 75% of Mr. Cole's net income from employment from his temporary labouring jobs, because each job lasted less than 26 weeks, and for his employment at Meritor, until he had been in that employment for 26 weeks. Since he began working at Meritor September 30, 1996, that would be until March 31, 1997. Thereafter, Allstate is entitled to a credit of 90% of Mr. Cole's net income from employment at Meritor. I do not accept Allstate's interpretation of subsection 10(4) that would stop the 75% credit at some earlier date. In my view the repeated use of the words "the employment" as opposed to "any employment" in subsection 10(4)(a) precludes Allstate's interpretation.

Mr. Cole is entitled to the indexing of his weekly benefits as set out in section 79 of the Schedule, beginning January 1, 1997.

The parties both made submissions with respect to the amount of income replacement benefits Mr. Cole should be entitled to receive. Allstate submitted that by its calculations, Mr. Cole was not entitled to any IRBs. Mr. Cole's submissions were based on average weekly incomes deduced from his T4 reported income for various years, combined with other information about earnings from Nortel and Meritor. There was some confusion as to what the net income (as determined by the Schedule’s permitted deductions only) would be in various years. The parties should recalculate Mr. Cole's entitlement to IRBs based on my findings. If they cannot agree on the appropriate amount, then a party should apply to re-open the hearing for further written submissions with respect to this calculation.

Allstate submitted that Mr. Cole arranged his termination from Nortel in such a way that he stopped work 16 weeks earlier than he might have done. Allstate submitted that it should not have to compensate Mr. Cole with IRBs during this period. Section 87 of the Schedule states that for the purpose of the Schedule, severance pay is not included in a determination of an insured person's income. Mr. Cole did receive severance pay in 1996 on the termination of his employment with Nortel. In my view, because of this provision in the Schedule, it is irrelevant that Mr. Cole might have exercised other options such as working out a period of notice in winding up his employment with Nortel. In any event, I do not consider the letter of January 31, 1996 from Functional Rehabilitation to be sufficient evidence of any right Mr. Cole might have had to continue in employment with Nortel for longer than he did. Nothing in the Nortel file indicates he had such a right. Indeed, a letter dated January 22, 1996 from Patti Russell, a Nortel manager, indicated only that in lieu of notice, Mr. Cole would receive 80 days' pay. Mr. Cole also denied that he had any such right.

Special Award:

Mr. Cole claims entitlement to a special award under subsection 282(10) of the Insurance Act. According to that provision, an arbitrator must make a special award when he or she concludes that an insurer has unreasonably delayed or withheld a benefit from an insured person.

I have found that Mr. Cole could not substantially perform the essential tasks of his employment as a machine operator at Nortel. Mr. Cole's benefits were terminated effective February 3, 1996 in a manner not in compliance with the terms of the Schedule.²

The circumstances of Mr. Cole's return to work at Nortel, to a "made up job," as Mr. Cole characterized it, and his subsequent layoff once he was ready to work an eight-hour day were somewhat unusual. No one contends that Mr. Cole's layoff from Nortel was in any way related to the accident; it was related to a downsizing in Nortel's operations. However, in my view, given the evidence Allstate had in Dr. D'Angelo's report, which it had commissioned, it was unreasonable for Allstate to conclude that as of February 3, 1996 he could have returned to substantially performing the essential tasks of his pre-accident job as a machine operator. I come to this determination fully recognizing that Ms. Weatherston's report concluded otherwise. However, I do not believe that Allstate was reasonably entitled to rely on a report that is so obviously deficient in its consideration of the essential tasks of Mr. Cole's pre-accident job and his residual disabilities. Allstate should have questioned Ms. Weatherston's conclusion. In my view it is insufficient for Allstate to say it relied on Ms. Weatherston's report in the face of the other contradictory information known to it.

That being said, I do not consider Allstate's behaviour to be at the most unreasonable end of the scale of unreasonable withholding of benefits. Mr. Cole was apparently represented by counsel throughout his dealings with Allstate and yet the error in the notice of termination of benefits was not brought to Allstate's attention until years later. Yet, terminating income replacement benefits, especially where circumstances are somewhat out of the ordinary is a complicated procedure under this Schedule that has serious consequences for the insured person. An insurer should be extra vigilant to be sure it follows the prescribed procedure in complex or unusual cases. In the circumstances of this case I find that Allstate should pay a special award of 15 per cent of the amount to which Mr. Cole is entitled together with interest on all amounts owing to him (including unpaid interest) at the rate of two per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.

EXPENSES:

Both parties seek their expenses of this arbitration from the other. Allstate submitted that after deduction of the appropriate percentage of post-accident income, Mr. Cole is not entitled to any IRBs, so there was no reason to have a hearing lasting 2.5 days. Mr. Cole submitted that the only way he can force Allstate to provide an LEC offer is to prove entitlement to an IRB at the 104-week mark.

I agree with Mr. Cole's submission with respect to the necessity of this proceeding if he believed he was entitled to an LEC offer. Depending on the quantification of his pre-accident earning capacity (PEC) and residual earning capacity (REC), Mr. Cole could be entitled to significant amounts over time. I conclude, therefore, that this arbitration was necessary, even if he is not entitled to any IRBs at certain times since the accident, because of his post-accident earnings.

Considering the above, as well as the other criteria set out in subsection 12(2) of Ontario Regulation 664, R.R.O. 1990, as amended by Ontario Regulation 464/96, I award Mr. Cole his expenses of the arbitration.

March 28, 2001

K. Julaine Palmer Arbitrator

Date