Neutral Citation: 2002 ONFSCDRS 101

FSCO A00-000163

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ROBERT LACROIX

Applicant

and

JEVCO INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before: Eban Bayefsky

Heard: June 11, 12, 13 and 14, 2001 in Oshawa, Ontario. Written submissions were received by July 30, 2001. December 20, 2001 by telephone conference.

Appearances: David J. Gillespie for Mr. Lacroix Jamie Pollack for Jevco Insurance Company

Issues:

The Applicant, Robert Lacroix, was injured in a motorcycle accident on June 10, 1994. He applied for and received statutory accident benefits from Jevco Insurance Company ("Jevco"), payable under the Schedule.¹ The parties disagreed as to the quantum of Mr. Lacroix's income replacement benefits ("IRBs") and loss of earning capacity benefits ("LECBs"). The parties were unable to resolve their disputes through mediation, and Mr. Lacroix applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Which of the following amounts are to be used in the calculation of Mr. Lacroix's IRBs and LECBs, pursuant to sections 10 and 29 of the Schedule?

i) Is Mr. Lacroix's base pay for the 4 weeks preceding the accident $4,459.68?

ii) Is the value of Mr. Lacroix's 4.5 weeks of annual vacation to be included in the calculation of his gross annual income ("GAI"), pursuant to sections 9 and 81 of the Schedule?

iii) Are Mr. Lacroix's employee benefits (Canada Pension Plan premiums, Employment Insurance premiums, employer health tax and workers' compensation premiums) to be included in the calculation of his GAI, pursuant to section 81 of the Schedule?

iv) Regarding the employer's pension contribution, is the "normal employer cost" of 2.97% (of an employee's annual wage) or the "required funding contribution" of 11.4% (of the annual wage) to be included in the calculation of Mr. Lacroix's GAI, pursuant to section 81 of the Schedule?

v) Is Jevco entitled to use the income tables under section 82 of the Schedule to calculate Mr. Lacroix's net weekly income from employment?

vi) Is Jevco required to index Mr. Lacroix's IRBs as of January 1, 1996, pursuant to section 79 of the Schedule?

vii) Are Mr. Lacroix's disability pension benefits (from his employer, General Motors) a deductible collateral benefit, pursuant to section 75 of the Schedule?

2. What is Mr. Lacroix's residual earning capacity for the purpose of calculating his LECBs, pursuant to section 30 of the Schedule?

3. Is Jevco liable to pay Mr. Lacroix a special award, pursuant to section 282(10) of the Insurance Act?

4. Is Mr. Lacroix entitled to interest on any amounts found to be owing, pursuant to section 68 of the Schedule?

5. Is either party liable to pay the other its expenses of the arbitration, pursuant to section 282(11) of the Insurance Act?

Result:

1. The following amounts are to be used in the calculation of Mr. Lacroix's IRBs and LECBs:

i) Mr. Lacroix's base pay for the 4 weeks preceding the accident is $4,459,68.

ii) The value of Mr. Lacroix's 4.5 weeks of annual vacation is not to be included in the calculation of his gross annual income.

iii) Mr. Lacroix's employee benefits (CPP, EI, EHT and WSIB) are not to be included in the calculation of his GAI.

iv) The "normal employer cost" of 2.97% for the employer's pension contribution is to be included in the calculation of Mr. Lacroix's GAI.

v) Jevco is not entitled to use the income tables under section 82 of the Schedule to calculate Mr. Lacroix's net weekly income from employment.

vi) Jevco is required to index Mr. Lacroix's IRBs as of January 1, 1996.

vii) Mr. Lacroix's disability pension benefits are not a deductible collateral benefit.

2. Mr. Lacroix's LECBs shall be calculated on the basis that his residual earning capacity is zero.

3. Jevco is not liable to pay Mr. Lacroix a special award.

4. Mr. Lacroix is entitled to interest on the amounts now owing.

5. If required, the parties may now make submissions on the issue of expenses.

EVIDENCE AND ANALYSIS:

Background

Mr. Lacroix was injured in a motorcycle accident on June 10, 1994. As a result, he was unable to return to his job at General Motors as a utility welder. Jevco accepted his claim and paid him income replacement benefits until the parties agreed to commute his IRBs to LECBs, pursuant to section 24 of the Schedule. Jevco calculated Mr. Lacroix's pre-accident earning capacity ("PEC") based on the net weekly income used to calculate his IRBs, pursuant to section 29(1) of the Schedule. Jevco set Mr. Lacroix's residual earning capacity ("REC") at a gross annual income ("GAI") of $37,918.40, based on his alleged ability to perform a job as a pressure sealer-tester (aircraft manufacturer) with an hourly rate of $18.23. Jevco made an LECB offer of $296.62 per week, less deductions under section 75 of the Schedule. A Residual Earning Capacity Designated Assessment Centre ("REC DAC") was arranged given that Mr. Lacroix was deemed to have rejected both the PEC and REC offers. The REC DAC determined that Mr. Lacroix's REC was $24,534 based on his ability to work full-time as a Service Advisor with experience of less than 36 months. Jevco accepted this and has been paying Mr. Lacroix LECBs since February 17, 1998.

Base Pay

Pursuant to sections 10 and 29 of the Schedule, the parties calculated Mr. Lacroix's IRBs and LECBs based, in part, on his gross annual income at the time of the accident. The parties disagreed as to the value of Mr. Lacroix's base pay for the 4 weeks preceding the accident. Based on the Employer's Confirmation of Income, Mr. Lacroix's accountant, Mr. I. Wollach, initially calculated Mr. Lacroix's base pay in the 4 weeks preceding the accident to be $4,633. However, in his written submissions, Mr. Lacroix stated that Mr. Wollach had "done a reconciliation of the payroll records wherein he concluded that in the 4 weeks before the accident Mr. Lacroix earned a gross income of $4459.68, excluding employee benefits and vacation pay." Mr. Lacroix submitted that Mr. Wollach had properly calculated his gross income for this period as $4,459.68, despite the fact that this was lower than the calculations of both Jevco and its accountant, Mr. D.M. Edwards. However, Mr. Lacroix subsequently submitted that he had no objection to using Mr. Edwards' higher calculation of $4,574.80, given that the Insurer wished to rely on the general accuracy of Mr. Edwards' calculations. Despite the Insurer's general position, I accept Mr. Lacroix's initial submission that Mr. Wollach had properly calculated Mr. Lacroix's gross income for the relevant 4-week period, particularly in light of Mr. Edwards' observation that Mr. Wollach's initial figures included the value of 2 holiday days Mr. Lacroix had taken before the accident (for which Mr. Lacroix had already been paid). I, therefore, find that, for the purposes of calculating Mr. Lacroix's IRBs and LECBs, his base pay should be $4,459.68.

Vacation Pay

The parties disagreed as to whether the value of Mr. Lacroix's 4.5 weeks of annual vacation ought to be included in the calculation of his gross annual income. In the appeal case of Pafco Insurance Company and Howden (Appeal P00-00028, June 22, 2001), Director's Delegate Naylor found that, while vacation pay is to be considered income from employment, the issue is the period to which it should be allocated, and that this requires a flexible approach tailored to the particular facts of the case. Delegate Naylor found that Ms. Howden was "well on her way to having taken the vacation time to which she was entitled in the year before the accident" and, therefore, that "paid vacation was included in her annual income, not on top of it." Delegate Naylor agreed with the Arbitrator's framing of the issue, namely, "whether application of the accrual method over the four weeks reasonably reflected Ms. Howden's earnings picture" and found that accrued vacation pay paid out after the accident was not income from employment for the four weeks before the accident."

In this case, Mr. Lacroix was entitled to 4.5 weeks of vacation per year. I heard no evidence as to whether or how this accrued over the course of the year. While Mr. Edwards testified that, as a general matter, Mr. Lacroix likely accrued vacation pay as he worked, he also said that there was no evidence of this here. The only direct evidence was that the worker had taken two paid holiday days in the 4 weeks preceding the accident (the Friday before Victoria Day and Victoria Day). As pointed out by Mr. Gillespie, unlike the situation in Howden, there was no evidence that Mr. Lacroix had, at the time of the accident, taken the annual vacation to which he was entitled. However, in the absence of evidence of the accrual of vacation pay, the extent to which Mr. Lacroix had used his vacation time prior to the accident or the manner in which employees at Mr. Lacroix's workplace were compensated for unused vacation time, I am not prepared to find that 4.5 weeks of vacation pay should be included in the calculation of Mr. Lacroix's pre-accident earnings.

Employee Benefits - CPP, EI, EHT, WSIB

Mr. Lacroix submitted that all of his employee benefits (both statutory and non-statutory) should be included in his gross income for the purpose of calculating his pre-accident income. Mr. Edwards testified that, in his view, the following statutory benefits should not be included in gross income: Canada Pension Plan premiums ("CPP"), employment insurance premiums ("EI"), employer health tax ("EHT") and workers' compensation premiums ("WSIB"). The appeal case in Pafco and Howden directly addresses the issue of including CPP and EI premiums in gross income. In both cases, Delegate Naylor found that the amounts should be excluded from gross income.

Mr. Lacroix submitted that, in light of the fact that the right to claim economic losses was deleted in Bill 59, the Howden appeal decision should not be applied to Bill 164 cases. I reject this. I see nothing in Delegate Naylor's analysis to suggest that her conclusions on the calculation of gross income are to be confined to Bill 59 cases. If anything, Delegate Naylor emphasizes the similarities between Bill 59 and its predecessors, stating, for example, that, under Bill 164 and Bill 59, "the formula for calculating net weekly income remains the same." I, therefore, find the Delegate's decision on CPP and EI contributions is directly applicable to the case at hand. Regarding CPP contributions, Delegate Naylor's only specific statutory references were to provisions that are identical in Bill 59 and Bill 164. Section 61(1) of Bill 59 is identical to section 81(1) of Bill 164 and is cited by Delegate Naylor for the proposition that "CPP contributions are not viewed as income." Delegate Naylor noted that section 61(1) "speaks of the 'contribution payable on the gross annual income.'" I am bound by (and, in any event, agree with) the Delegate's conclusion that an employer's CPP contributions are not the same as, and should not be included in, an insured's income for the purpose of calculating income replacement benefits.

Delegate Naylor found that similar reasoning applied in relation to an employer's EI premiums. She again cited section 61(1), as well as section 8(6), both of which restate the language of Bill 164 on EI premiums, and concluded that such amounts are not to be included in an insured's gross income. I accept this conclusion.

Howden did not address whether the employer's health tax or WSIB premiums should be included in an insured's gross income. Mr. Edwards testified that, in his view, the employer's health tax and WSIB premiums should be treated consistently with CPP and EI contributions. He stated that they are "either all in or all out." Specifically, he stated that the employer's health tax is a cost to the employer, with no entitlement bestowed on the employee, and that it could not be viewed as a benefit to the employee. Mr. Edwards stated that WSIB contributions are like employers' EI payments and that if the latter is excluded from an insured's gross income, then the former should be excluded. I agree with Mr. Edwards' analysis, particularly his view that payments that are similar in nature should be treated consistently. I find that the employer's health tax is not sufficiently connected to an employee's remuneration to be included in the calculation of income replacement benefits. While an employer's WSIB premiums are perhaps of more direct benefit to an employee, they are very similar in nature to EI premiums and should, therefore, be excluded from gross income.

Employee benefits - Employer's pension contribution

The parties disagreed as to the amount of the employer's pension contribution on behalf of Mr. Lacroix which should be included in the calculation of Mr. Lacroix's gross annual income. By letter dated June 8, 2001, General Motors set out the costs to it of the various benefits provided to Mr. Lacroix. The value of each benefit was stated as a percentage of annual wages. General Motors indicated a value for employer pension contributions in 1994 of 2.97%. In a second letter on June 8, 2001, they stated that 2.97% represented the "normal employer cost" to General Motors, that is, the "pension cost incurred for the employee's current year of service." However, they indicated that General Motors' "required funding contribution" for 1994 (an amount which included both the normal employer cost and "any special payments for unfunded actuarial liabilities related to past events") would bring the percentage of annual wages up to 11.4%.

Mr. Lacroix cited the Mercer Handbook of Canadian Pension and Benefit Plans (1991) to the effect that an employer's payments to a fund will usually be expressed as the sum of two items: (1) a percentage of the payroll of participating employees, to cover current service costs, and (2) dollar amounts paid annually for a term of years, to pay off past service costs or actuarial losses. This principle would appear to be consistent with General Motors' statement regarding its "required funding contribution."

Mr. Lacroix submitted that the higher figure of 11.4% should be used in calculating his gross income since his employer's pension contribution is better reflected in the average, as opposed to the current, cost per employee. Jevco submitted that the 2.97% figure should be used since there was no evidence to suggest that it would be more appropriate to use the 11.4% figure and because General Motors stated that "since normal cost is the pension cost incurred for the employee's current year of service, 2.9% [sic] is more representative of the true 1994 cost to General Motors."

I find that the appropriate figure for the employer's pension contribution is 2.97%. I agree with General Motors' statement that the 2.97% figure more accurately reflects the true cost of Mr. Lacroix's pension since it was the pension cost incurred in 1994. While General Motors' 1994 required funding contribution" properly included payments for unfunded liabilities, there is no evidence of what the past events in question were, whether they involved Mr. Lacroix or whether Mr. Lacroix would benefit from the higher contributions General Motors made to cover those liabilities. In the absence of further evidence as to the relationship between General Motors' payments for the unfunded liabilities and its payments to cover Mr. Lacroix's pension, I am not prepared to find that the "required funding contribution" figure of 11.4% should be used in the calculation of Mr. Lacroix's income replacement benefits.

Calculation of IRBs pursuant to section 82 of Bill 164

Jevco maintained that it both used, and was entitled to use, section 82 of the Schedule (and the net weekly income tables thereunder) to calculate Mr. Lacroix's income replacement benefits. Section 82 states, in part, that "despite...section 81, an insurer may elect that..." determinations of a non-self-employed person's net weekly income will be made in accordance with the net weekly income tables and that such "an election...may be revoked." Mr. Lacroix appeared not to dispute that Jevco had used the relevant income tables to calculate his IRBs. However, he submitted that Jevco had not properly elected to use section 82 and, therefore, that its use of the income tables to calculate his IRBs was a nullity. Mr. Lacroix cited the appeal decision of Stone and Zurich Insurance Company (OIC Appeal P97-00014, January 12, 1998) to the effect that an insurer's election under section 82 to use the income tables should be information available to its policy holders" and that the corporate decision" to use the tables must be an election that applies to all persons unless and until the election is revoked." The decision also stated that an insurer "should be able to provide evidence of its election...."

Mr. P. Tucker of Jevco testified that, based on an October 1994 letter from Jevco to Mr. Lacroix and a related Jevco form entitled "Calculation of Accident Benefits (Bill 164)," Jevco had used the statutory income tables to calculate Mr. Lacroix's income replacement benefits. The letter notes that "as per the taxation table," Mr. Lacroix's net pre-accident weekly income was $758 per week. The form notes that "taxation code 1" was used in determining Mr. Lacroix's net weekly earnings. Mr. Tucker testified that there was no other evidence in the file that any other method of calculation was used, but also stated that he did not know if there was any other evidence in the file of an election under section 82. Mr. Tucker stated that he had pulled eight cases randomly that morning and that, in all eight cases, the tax tables were used. He said that he believed, but could not say for sure, that Jevco had used the tax tables for employed persons in each and every case. He also said that Jevco's policy was to apply the tax tables, but he could not say whether there was a written policy to that effect.

Mr. Wollach testified that, based on Jevco's correspondence and the particular calculations used, Jevco clearly used section 81 to calculate Mr. Lacroix's IRBs. However, Mr. Wollach stated that he had not asked Jevco whether they had used section 81 or section 82 of the Schedule and that he did not know that Jevco had elected to use section 82.

Assuming that Jevco used the income tables under section 82, I find that they had not properly elected to do so. As set out in Stone, an election under section 82 is a significant corporate decision which must be transparent to an insurer's policy holders. While it is not clear precisely what evidence an insurer must proffer to establish that it has engaged in such a process, I find that, at a minimum, an insurer must demonstrate that an election was, in fact, made. I do not find it sufficient for an insurer to simply show that it has used the section 82 income tables in various cases (including the one under consideration). I find that an insurer must demonstrate that it has addressed its mind to the choice between section 81 and 82 and that it has decided to invoke the tables under section 82. I find that an insurer's option under section 82(4) to revoke a section 82(1) election only has meaning if the insurer has first clearly chosen to use the tables under section 82.

I see no evidence of Jevco actually choosing to use the section 82 tables. Mr. Tucker could simply point to brief documentary references that Jevco had used the tables in calculating Mr. Lacroix's IRBs and to the likelihood that the tables were used for Jevco's other employed insureds. He could point to no other evidence that Jevco had made an election under section 82. Jevco provided no evidence that a formal election had, in fact, been made. I do not find that Jevco can, by default, establish that it made an election; that is, by indicating that there was no evidence that any other method of calculation was used. Certainly, Jevco provided no evidence that it communicated such an election to its policy holders. It simply made a terse reference in its correspondence to Mr. Lacroix that, according to the taxation table, his net pre-accident weekly income was a certain amount. Jevco's corresponding IRB calculation form adds nothing since it was not communicated to Mr. Lacroix. I find that, at the very least, Jevco ought to have made a clear election to invoke section 82 for its employed insureds and to have communicated to Mr. Lacroix that such an election had been made. I do not find it necessary to decide whether, pursuant to the appeal decision in Stone, Jevco was required to do more at the corporate and/or policy holder level. I agree with Mr. Gillespie that Jevco bears the onus of establishing compliance with section 82, and I find that they have not discharged that onus. I, therefore, find that they were not entitled to use the section 82 income tables to calculate Mr. Lacroix's IRBs.

The parties made submissions on the treatment of non-taxable employee benefits, specifically, whether gross annual income is to be adjusted based on the non-taxable employee benefits prior to applying the section 82 income tables. The parties' submissions appeared to be predicated on whether Jevco was entitled to invoke section 82 in the first instance. Given my finding that Jevco was not so entitled, I find it unnecessary to consider this issue.

Indexation of Benefits

Mr. Lacroix submitted that, pursuant to section 79(1)1 of the Schedule, Jevco ought to have indexed his IRBs as of January 1, 1996. Mr. Lacroix stated that Jevco only indexed his LECBs. By letter dated January 11, 2001, Jevco notified Mr. Lacroix that, pursuant to section 80(1) of the Schedule, it was indexing his LECBs as of January 1, 2001. Jevco called no evidence on this point and made no submissions. Section 79(1)1 states, in part, that, effective the 1^st day of January in every year after 1994, the net weekly income from employment used to determine the amount of a person's weekly IRBs shall be revised by adjusting the amount in accordance with the indexation percentages published under section 268.1 of the Insurance Act. Jevco complied with a similar provision regarding Mr. Lacroix's LECBs. I see no reason to exempt Jevco from doing the same in respect of the indexation of Mr. Lacroix's IRBs commencing on January 1, 1996.

Deductibility of Disability Pension Benefits

Mr. Lacroix was laid off by General Motors on November 17, 1995, because his accident-related limitations could not be accommodated. Mr. Lacroix received extended disability benefit ("EDB") payments from Clarica Life Insurance Company commencing on November 18, 1995. Mr. Lacroix then elected early retirement in order to access his pension. Mr. Lacroix accepts that, pursuant to section 75 of the Schedule, the long-term disability ("LTD") benefits paid by Clarica under the extended disability plan are a deductible collateral benefit. However, he submits that the disability benefits he receives under his pension plan are not deductible. He argues that these latter benefits are analogous to Canada Pension Plan ("CPP") benefits, which are pension payments, not income continuation payments, and which are not deductible because they are not payments for loss of income.²

Jevco maintains that Mr. Lacroix's disability pension benefits are deductible under section 75 of the Schedule as they were paid under an income continuation plan and were for the loss of income. Jevco cited the case of Striker v. Economic Mutual Insurance Company, [2001] O.J. No. 1139 (Ont. S.C.J.) where Morin, J. stated that, pursuant to the decision of Chrappa v. Ohm (1996), 1996 CanLII 8002 (ON CTGD), 29 O.R. (3d) 222 (Ont. Ct. Gen. Div.), affirmed by the Court of Appeal at (1998), 1998 CanLII 893 (ON CA), 38 O.R. (3d) 651, "the basic question to be answered is, what are the payments for?" In finding that the insurer was entitled to deduct the net payments the insured received under his long-term disability policy from the insured's loss of earning capacity benefits, Morin, J. found that the benefits paid under the policy were not fixed at the outset of the policy, the insured person had to be employed at the time the disability commenced in order to qualify for benefits, and the quantum did not reflect what the insured person wished to purchase and was reflective of employment income being earned either at the time the policy was issued or at the time the disability commenced.

While there is some overlap between the present situation and that described in Striker, I find that the disability pension benefits Mr. Lacroix receives are more in the nature of typical pension benefits than payments for the loss of income under an income continuation plan.

Pursuant to Article I, section 3(a) of the General Motors Supplemental Agreement (on its Pension Plan), an employee becomes eligible for a disability pension if he or she is totally and permanently disabled "prior to attaining age 65 and has at least 10 years of credited service." Under section 4(a), the monthly pension payable is a "basic benefit for each year of credited service that the employee had at the date of retirement...." Under section 4(3), annual lifetime pensions are determined in accordance with the employee's age and years of credited service. Section 12 states that an employee's absence from work at the time he or she would be eligible to retire under the Pension Plan does not preclude the employee from retiring.

Pursuant to an explanatory volume published by General Motors, entitled "Your Benefits in Retirement," an employee is advised that his or her "monthly basic benefit is the same as if you had retired at age 65," the payments being "based on your credited service, at the time of your disability retirement." The document indicates that an employee who takes disability retirement will be eligible for a monthly supplementary pension if he or she meets certain criteria related to age and years of credited service. The document adds that "should you be approved for CPP/QPP disability benefits prior to age 65, your supplementary benefit would be reduced by your CPP/QPP disability benefit." The document states that if an employee is under age 65, his or her disability pension benefit will cease if he or she is no longer totally and permanently disabled or becomes gainfully employed for purposes other than rehabilitation. Finally, the document notes that an employee who elects a particular type of retirement cannot change the election: "the type of retirement under which you retired will be retained throughout your retirement years."

Mr. Wollach testified that, in his view, the pension Mr. Lacroix receives mirrors the situation under the Canada Pension Plan in that it is a retirement amount and not for the loss of income under an income continuation plan. Mr. Wollach testified that Mr. Lacroix's long-term disability payments and disability pension benefits are integrated in that the former provides for the deduction of the latter, so as to avoid double recovery. Mr. Edwards testified that, in his opinion, Mr. Lacroix's pension disability benefits should probably be treated the same as his extended disability benefits (but he also stated that Jevco had advised him to treat the pension benefits as deductible).

I find that, unlike the situation in Striker, Mr. Lacroix's pension payments were fixed at the outset of the policy (since they were basic amounts pre-determined in accordance with an employee's age and years of service) and were not reflective of employment income earned at the commencement of either the policy or the disability. Disability pension payments are the same as regular retirement benefits, the only difference being that they are determined in accordance with an employee's years of service at the time of his or her disability retirement. While employment at General Motors was a pre-condition to receiving benefits under the plan, an employee did not have to be actively employed in order to retire early and to receive benefits under the plan. The condition that an employee is only entitled to disability pension benefits if he or she continues to be disabled and unemployed only applies to the age of 65. And as long as a person continues to meet the eligibility criteria, his or her decision to take early disability retirement applies throughout his or her retirement. The disability pension is integrated with both EDP benefits and CPP benefits, thereby avoiding double recovery and rationalizing the receipt of benefits once an employee has opted for early retirement based on total and permanent disability. I find that these factors distinguish this case from that of Striker, and establish that Mr. Lacroix's disability pension benefits are not payments for the loss of income under an income continuation plan.

I find this case more like that of Cugliari, in which the Court held that in order to receive a CPP disability pension, a person need not demonstrate pecuniary loss, and that the purpose of the legislation to preclude certain instances of double recovery would not be advanced by deducting CPP disability benefits when the conditions of eligibility did not require a person to be employed at the time of the disability or to demonstrate pecuniary loss. In order to qualify for a disability retirement pension, Mr. Lacroix did not have to demonstrate pecuniary loss and did not have to be actively employed. Just as Mr. Lacroix's pension plan sought to avoid double recovery by integrating pension payments with EDB and CPP benefits, the intent of section 75 to avoid double recovery would not be furthered if these were conditions of entitlement to a disability retirement pension.

Therefore, in answering the question set out by Morin, J. in Striker (namely, "what are the payments for?"), I conclude that Mr. Lacroix's disability pension benefits are more in the nature of typical pension payments than payments for the loss of income under an income continuation plan.

Mr. Lacroix's Residual Earning Capacity

Mr. Lacroix underwent a REC DAC assessment in September and October 1997. The assessment team concluded that "the employment type which best represents Mr. Lacroix's present earning capacity and which exists in an area accessible to the client is Service Advisor National Occupational Classification ["NOC"] Code #1453, with an annual gross income of $24,534 for experience of less than 36 months." The DAC noted the tasks of a Service Advisor at an auto repair shop as: greeting and providing information to clients at a reception desk, telephone communication, simple keyboarding and computer tasks, filing and writing tasks, and simple accounting tasks. Mr. Lacroix disputed the DAC's conclusion that he was capable of doing the Service Advisor job and submitted that his residual earning capacity is zero. Jevco supported the DAC's conclusion, in part, on the basis that no other medical evidence existed to suggest that Mr. Lacroix was incapable of performing the recommended job of Service Advisor. The issue is, therefore, whether the REC DAC correctly assessed Mr. Lacroix's residual earning capacity and, if not, whether Mr. Lacroix's REC should be something other than zero.

Mr. Lacroix suffered serious and permanent injuries in the 1994 motorcycle accident. Mr. Lacroix's initial injuries included a fractured humerus, fractured ulnar, radial fractures, mandible fracture, fractured thumb and finger dislocation. Mr. Lacroix continues to suffer constant pain in his right elbow, which radiates up to his shoulder and down to his hand, numbness in his two last right fingers, intermittent burning pain in his left wrist and a sharp pain in his left forearm. Mr. Lacroix's symptoms are aggravated by cold weather and overexertion. Mr. Lacroix testified that, after awhile, medication does not work to reduce his pain. On August 28, 1995, after various surgical procedures and physiotherapy, Mr. Lacroix recovered to the point that he could attempt a return to his pre-accident job at General Motors. He had a junior employee to assist him with the heavier aspects of his job. His position was eventually eliminated and he was transferred to a new job, but he was advised that he could not be accommodated and he was laid off in November 1995. As explained above, he ultimately took early retirement.

In February 1996, Dr. E.J. White, an orthopaedic surgeon, conducted an insurer medical examination of Mr. Lacroix and reported that "there is no question...that he will have permanent disability from [his] injuries with some limitation of extremes of movement at the right elbow and both wrists." Dr. White stated that Mr. Lacroix "will require permanent restriction of certain types of work and physical activities that would require heavy lifting or repetitive pronation-supination movements of the forearms and wrists." Dr. White felt there were "many types of light to moderate jobs that [Mr. Lacroix] would be capable of performing now and in the future, provided he can be properly accommodated."

In April 1996, Mr. Lacroix underwent a functional abilities evaluation and it was determined that he met the "demands of LIGHT LEVEL work."

In June 1996, Dr. M.C. Mason, a physical medicine and rehabilitation specialist, examined Mr. Lacroix and reported that he "should be capable of more sedentary forms of work, although he will even be limited to some extent in that regard because of his difficulty positioning his right upper extremity for tasks such as writing and keyboarding." In July 1996, Dr. Mason re-assessed Mr. Lacroix and stated that "it would be hard for him to be competitive in any form of manual tasks involving the upper extremities, including writing, and keyboarding."

The September and October 1997 REC DAC reported that Mr. Lacroix had "difficulty positioning his right hand on the keyboard for computer tasks" and that he was "unable to sustain this position for long periods as he experienced fatigue after a short period of computer task." Mr. Lacroix's "keyboarding speed was slow but he managed to pick up his speed as the week progressed." The assessors felt that while Mr. Lacroix's "endurance for computer keyboarding" was limited, it was "sufficient to meet the [full-time] demands of a service advisor." The assessors also concluded that "although he lacks clerical experience, he showed the ability and motivation to pick up an office routine from on-the-job training."

Later in October 1997, Dr. Mason examined Mr. Lacroix and reviewed the medical materials (including the REC DAC assessment). Dr. Mason summarized Mr. Lacroix's medical impairments and reported that he was "capable of more sedentary forms of work, although he still has some limitations in that regard - the decrease in range of motion of the right upper extremity may limit his speed and tolerance for even some desk-type activities, because of the difficulty he has placing his hand in good position for keyboarding, and other tasks." Dr. Mason concluded that "Mr. Lacroix may be capable of returning to the work force with appropriate up-grading and education, at jobs that don't require repetitive or strenuous use of the upper extremities, particularly the dominant right upper extremity...[although] he does have significant, permanent, residual vocational limitations as a result of his injuries."

Mr. Lacroix testified that, when the DAC assessed him for the position of Service Advisor, he had great difficulty in conducting the typing test, where he was asked to type a letter on a computer. He stated that he had to stop every so often because of the pain in his wrist and shoulder, and that it took him pretty much the whole day to type just one letter.

Mr. Lacroix testified that, when the DAC concluded he could do the job of Service Advisor, he pointed out that he did not have the requisite training. He said that Jevco ultimately agreed to provide this training. In 1999, he began a 2-year course at Durham College for this position. The programme involved 24 courses over 2 years, 5 days a week. Mr. Lacroix testified that he excelled in all of the courses, that he only missed two days of school during the whole programme and that the course simulated some of the work of a Service Advisor. However, Mr. Lacroix stated that, whereas all of the other students could complete their assignments in one day, he had to take the assignments home and complete them on his computer at night. He also said that, while he did well in the academic aspects of the course, when the more manual work began (in the second part of the course), and things got a lot more physical, he needed his co-students' help. Mr. Lacroix stated that once this happened, he developed the view that he was not physically capable of doing everything required of a Service Advisor. He nevertheless continued with the course because it had already been paid for, although he did state that he could have stopped the course and paid Jevco back.

Mr. Lacroix acknowledged that, despite the injuries he suffered in the accident, he recovered to the point that he could resume his pre-accident activities of skiing, motorcycle riding, bowling and golf. He could no longer play hockey. He has resumed most of his pre-accident household tasks, although he cannot clean his bathtub or shovel his driveway. He testified that skiing was one of his hobbies and that he became a ski-instructor in 1997. However, he stated that certain allowances were made during the training course so that he would not have to perform certain arm movements. He also said that he only became a Level 1 instructor, which allows him to teach children who are learning to ski for the first time. He said that he became an instructor on the suggestion of a friend and that, due to the expenses, low-pay, travel and brief periods of employment involved in actually working as an instructor, he has not applied for a job as one. He testified that he became an instructor simply for personal satisfaction.

In May 2001, Mr. J. Kumove, a vocational rehabilitation specialist who interviewed Mr. Lacroix and reviewed the DAC's recommendations, reported that the position of Service Advisor involved searching on a computer for technical information, parts specifications, repair instructions and warranty data for the mechanics. Mr. Kumove also stated that a Service Advisor must input customer information into a database. Mr. Kumove stated that these functions would involve prolonged and frequent use of a computer terminal.

Mr. Kumove concluded that Mr. Lacroix was not capable of performing the job of Service Advisor. He noted Mr. Lacroix's medical impairments and, in particular, the DAC's report that Mr. Lacroix was limited in various ways in performing the keyboarding element of the Service Advisor position. He noted that the DAC had concluded that Mr. Lacroix "lacked clerical skills and worked at a slow pace in his computer keyboarding tasks." He also noted Mr. Lacroix's reports that his school instructors gave him extra time to complete assignments, and that he completed them by taking his work home at night and by taking frequent rest breaks. Despite this approach, Mr. Lacroix apparently still suffered "debilitating right shoulder pain after completing major assignments" and was "unable to complete full days of school activity for two days afterwards." Mr. Kumove concluded that Mr. Lacroix would "experience great difficulty with the keyboarding element of the job" and that "from an employer's point of view, he would be a poor candidate for hiring, as his multiple upper extremity injuries predispose him to repetitive strain injuries (RSI)."

Mr. Kumove stated that he was very familiar with the position of Service Advisor (having assisted several other clients to prepare for the position) and that, while Mr. Lacroix was a well-motivated individual, he would, at most, be able to do the job on a part-time basis and at significantly reduced earnings, and would likely not be able to continue on a long-term basis due to the "obvious strain on his upper extremities."

Mr. Kumove testified that the position of Service Advisor is highly dependant on the use of a keyboard and that Mr. Lacroix could, therefore, not perform the essential tasks of the position. Mr. Kumove concluded that, in light of the general prejudice in the workforce against applicants of Mr. Lacroix's physical status and age, and given that he is not physically suited to light or sedentary jobs which require repetitive hand and arm movements and/or keyboarding, Mr. Lacroix might very well be totally and permanently disabled from returning to the workforce. In support of this conclusion, Mr. Kumove pointed, in part, to the fact that, despite his high grades in the Durham College programme, various employment recruiters had passed Mr. Lacroix over for job opportunities.

Mr. Kumove testified that there was only an outside possibility that a benevolent employer would offer Mr. Lacroix a job as a part-time Service Advisor. Even if this occurred, Mr. Kumove stated that Mr. Lacroix would not be able to maintain this position. He said that, given that Mr. Lacroix cannot perform physical or clerical jobs, and given that the few light occupations that he might do, either do not match his vocational characteristics or are not available in his geographic area (such as movie theatre usher or parking lot attendant), it was quite speculative as to what Mr. Lacroix could do and he would likely not find gainful employment. Mr. Kumove dismissed as irrelevant two 1996 reports prepared by Associative Rehabilitation Inc. regarding jobs potentially suited to Mr. Lacroix on the grounds that they simply contained a list of computer-generated positions based on Mr. Lacroix's previous employment experiences and involving various physically demanding tasks.

Mr. Kumove stated that, based on Mr. Lacroix's current situation, his residual earning capacity should be considered to be zero. Mr. Kumove said that, at the time of the DAC assessment, Mr. Lacroix was neither qualified nor able to do the job of a Service Advisor. He said that, now, Mr. Lacroix might have the training, but he is still not capable of doing the job.

On May 10, 2001, Mr. G. Pett, a vocational rehabilitation specialist, conducted a review of the medical and rehabilitation materials in the file to determine the appropriateness of the DAC's recommendation of Service Advisor and whether any other positions would be more suitable for Mr. Lacroix. Mr. Pett indicated that, given the various assessments that had already been conducted, as well as the fact that Mr. Lacroix had been performing well in his re-training programme at Durham College, he did not feel it necessary to either interview Mr. Lacroix or conduct further testing. He testified that, while it would have been preferable to have interviewed Mr. Lacroix, it would likely not have changed his views of this case. Mr. Pett reported that Mr. Lacroix was vocationally and academically capable of performing the job of Service Advisor in late 1997 and that his participation in the Durham College programme "delay[ed] his re-entry into the work-force by approximately four years." However, Mr. Pett testified that taking the course might have been of some benefit to Mr. Lacroix obtaining a Service Advisor position.

Mr. Pett stated that Mr. Lacroix could perform light level physical activity, provided there was no repetitive or prolonged use of hand or power tools and no "strenuous upper extremity based activity." Mr. Pett noted the DAC's observation that Mr. Lacroix was able to use a computer "for up to one hour at a time with some brief intermittent breaks to rest both hands." Mr. Pett stated that Mr. Lacroix was "not totally constrained in the use of his upper extremities, but as noted in the REC DAC and Dr. Mason's reporting he possesses definitive limitations in this regard. "Mr. Pett, therefore, stated that "to err on the side of caution and in consideration of possible medical deterioration factors as provided by Dr. Mason, the NOC rating of Not Relevant concerning limb coordination would be advised."

Regarding the appropriateness of the DAC's recommendation of Service Advisor, Mr. Pett concluded as follows:

In my opinion based on the transferability of Mr. Lacroix's vocational skills/knowledge base while taking into account his assessed personal/vocational characteristics and level of impairment, I would consider that the REC-DAC advisement of Service Advisor employment (NOC #1453) does not represent the most reasonable employment for Mr. Lacroix on a post-accident basis. Although there may be some minor justification for having considered such work (i.e. such as involving Mr. Lacroix's knowledge of automotive parts and operations), by and large I would not have advised this work in the presence of many other positive contributors to developing an alternative employability profile.

Mr. Pett stated that, by taking a job as a Service Advisor, Mr. Lacroix would be leaving behind his approximately 20 years of experience in the industrial/manufacturing sector and entering the retail services sector, a field in which he had had no prior experience. Mr. Pett stated that this would significantly constrain Mr. Lacroix's residual earning capacity in both the short and long term.

Mr. Pett concluded that, based on Mr. Lacroix's personal and vocational characteristics, he would be most suited to the position of Production Clerk (a position which, as pointed out by Mr. Kumove, the DAC did not consider). Despite his reservations about the position of Service Advisor, Mr. Pett testified that it would be a "strong second" choice to the position of Production Clerk. Mr. Pett noted that, based on the NOC's description of the position of Production Clerk, limb co-ordination was not "deemed as...relevant to this occupation" and that the job did not require fine finger dexterity, manual dexterity aptitudes or significant or dextrous use of the worker's motor co-ordination. However, Mr. Pett testified that the job of Production Clerk might have involved the use of a computer, pen and paper. Mr. Pett stated that, given Mr. Lacroix's impairment, this job would be safe for him to perform from a functional perspective" and that he could perform the job "with regard to the possibility of deterioration of his impairment...."

On June 7, 2001, Mr. Kumove reviewed Mr. Pett's report and criticized his failure to conduct a vocational rehabilitation interview of Mr. Lacroix, particularly in light of Mr. Pett's view that the DAC's analysis was seriously deficient. Mr. Kumove stated that, based on his knowledge and experience of community college programmes, and given Mr. Lacroix's limited range of skills and experience, Mr. Pett incorrectly concluded that Mr. Lacroix did not need specific vocational preparation to compete in the labour market for the position of Service Advisor. Finally, in light of Mr. Pett's acknowledgement of Mr. Lacroix's medical impairments, Mr. Kumove strongly disputed Mr. Pett's conclusion that Mr. Lacroix was well-suited to the position of Production Clerk. Mr. Kumove stated that this position "involves extensive operation of a computer keyboard, a pen and paper." Regarding the issue of limb and motor co-ordination, and manual and fine-finger skills, Mr. Kumove asked how a worker could do the required tasks of compiling detailed worksheets and customer order specifications (as set out in the Production Clerk NOC description) "without typing, and/or using a pen and paper, both of which involve fine finger dexterity?" and stated that "a person without quick and accurate keyboarding abilities would not be considered for a production clerk position." For similar reasons, Mr. Kumove stated that Mr. Lacroix would not be a "competitive candidate for clerical occupations."

Mr. Pett testified that he disagreed that a person who could not work quickly on a computer would not be considered for a Production Clerk job. He stated that, while the position of Service Advisor was not vocationally suited to Mr. Lacroix, it was still physically suitable for him. Mr. Pett stated that, in any event, there were keyboard modifications available to reduce the amount of keyboarding required of Mr. Lacroix (such as mouse-driven and voice activation programmes). Mr. Pett felt that Mr. Kumove incorrectly viewed Mr. Lacroix as highly disabled, and that Mr. Lacroix's efforts to return to the workforce belied this. However, Mr. Pett acknowledged that Mr. Lacroix clearly had a functional impairment, that there were definite barriers to disabled workers returning to the workforce and that Mr. Lacroix needed a job-search training programme since he had been out of the labour force for so long.

I find that the REC DAC incorrectly concluded that Mr. Lacroix was well-suited to the position of Service Advisor and that it, therefore, properly reflected his residual earning capacity. I do not accept Mr. Pett's opinion that Mr. Lacroix's REC should be determined on the basis of the position of Production Clerk. Pursuant to section 30 of the Schedule, residual earning capacity is determined on the basis of a position which best satisfies certain criteria, the relevant ones being that the insured is able and qualified to do the job and the job is medically, personally and vocationally suitable for the worker (having regard, in part, to the possibility of medical deterioration and the need for significant re-training). I find that neither the position of Service Advisor nor that of Production Clerk complies with the requirements of section 30. I find that the focus of the analysis under section 30 should be the DAC's determination concerning the appropriate position, particularly in light of the fact that, pursuant to the DAC's recommendation, Mr. Lacroix pursued, and Jevco funded, a vocational re-training course to become a Service Advisor. Jevco, in fact, submitted that the DAC conducted the most thorough assessment of Mr. Lacroix's employability and that its conclusions should be given the most weight. However, in the event that Jevco is entitled to rely on Mr. Pett's more recent evidence concerning the appropriateness of the position of Production Clerk, I will address this option as well. I place no weight on the job-list prepared by Associative Rehabilitation Inc. given that it consisted of very general and physically unsuitable suggestions based on Mr. Lacroix's previous employment experience.

I find that both positions of Service Advisor and Production Clerk required considerable use of the hands and arms. The DAC stated that a Service Advisor would do simple keyboarding, computer and writing tasks. I accept Mr. Kumove's more direct evidence that this position would involve prolonged and frequent use of a computer terminal. I find that Mr. Pett's emphasis of the NOC's rating of Not Relevant for limb co-ordination for the position of Production Clerk (to the effect that it would not require fine finger dexterity, manual dexterity aptitudes or significant or dextrous use of motor co-ordination), suggests that the position of Service Advisor would require abilities in these areas. In any event, Mr. Pett surveyed three employers regarding the position of Service Advisor and all three indicated that the employee would need to use a computer.

I accept Mr. Kumove's analysis that the position of Production Clerk would require extensive operation of a computer keyboard, pen and paper (particularly in light of his observation that the required tasks of compiling detailed worksheets and customer order specifications would likely require typing and/or the use of a pen and paper). Mr. Pett agreed that the position of Production Clerk is essentially a clerical, administrative job. I accept Mr. Kumove's comments to the effect that, more and more, clerical occupations require the proficient use of computers, particularly jobs like Production Clerk which involve work-flow co-ordination, custom order and other worksheets. Mr. Pett qualified the general NOC description regarding limb co-ordination by acknowledging that the position of Production Clerk required paperwork and, possibly, the use of a computer and pen and paper. The NOC description, in fact, states that a Production Clerk must use manual or computerized systems to prepare and maintain various reports on the progress of work, materials used, rates of production and other production information. Mr. Pett also simply disagreed with whether prospective employers would pass over a person who could not work quickly on a computer. I, therefore, find that both of the noted positions would require considerable use of the hands and arms.

I find that Mr. Lacroix is not medically suited to either of these positions. Dr. White found that Mr. Lacroix suffered permanent limitations in his right elbow and both his wrists, and that he could only do light to moderate jobs if he were properly accommodated. Dr. Mason more specifically addressed Mr. Lacroix's manual abilities, stating that he would likely be limited and non-competitive in writing and keyboarding. The DAC clearly documented Mr. Lacroix's difficulties in using the computer. Mr. Lacroix was recognized throughout as a credible and motivated individual, and I accept his evidence that he typed very slowly during both the DAC assessment and his re-training programme, and that he suffered greatly after having worked at night to complete his assignments. Mr. Lacroix also stated that he realized that he was not physically suited to the position of Service Advisor when the more manual work began in his re-training programme (requiring him to seek the assistance of his co-students). I accept that he genuinely and legitimately experienced this difficulty.

Given Mr. Lacroix's significant physical limitations and the considerable hand and arm movements required in the jobs of Service Advisor and Production Clerk, I do not accept Mr. Pett's evidence that Mr. Lacroix would be capable of performing these occupations. While Mr. Kumove may have overstated the extent of Mr. Lacroix's disability, based on the medical and functional evidence in this case, I accept his view that Mr. Lacroix would not be competitively employable in either position. Mr. Pett testified that computer modifications were available, but also that disabled workers faced distinct barriers in returning to the workforce. In the absence of evidence of specific accommodations available to him, I am not satisfied that Mr. Lacroix could effectively reintegrate into the workplace as a full-time Service Advisor or Production Clerk.

The DAC assessed Mr. Lacroix for the position of Service Advisor, not for the position of Production Clerk. The DAC, in fact, noted the position of Production Clerk as an "additional viable occupation," but did not pursue it further, stating that based on Mr. Lacroix's past educational and work experience as well as his present physical abilities and vocational aptitudes, the team agreed that the...employment options [of Motor Vehicle Assembler, Inspector and Tester, and Service Advisor] were suitable for testing his present residual earning capacity...." (The DAC found that Mr. Lacroix was not physically suited to the position of Motor Vehicle Assembler, Inspector and Tester.) The job of Production Clerk was raised very late in the day by Mr. Pett. While Mr. Lacroix did not maintain that Jevco was precluded from relying on Mr. Pett's opinion, I find that it would be unfair to Mr. Lacroix to require him to disprove his ability to do this job, simply on the basis of Mr. Pett's recent recommendation and very general analysis of the suitability of such a position, and in the absence of specific physical testing for the job. This is particularly the case given that the DAC considered but rejected the position of Production Clerk as a viable option for Mr. Lacroix. In any event, I find that Mr. Lacroix would not be physically capable of obtaining and physically performing the tasks of a Service Advisor or a Production Clerk on a full-time basis.

Jevco suggested that Mr. Lacroix's physical abilities were greater than those reported by the DAC, given that he resumed motorcycle riding and obtained his licence as a ski instructor. I do not find that this alters the assessment of Mr. Lacroix's impairments. Mr. Lacroix's restrictions pertained to fine finger dexterity, manual dexterity and motor co-ordination. Mr. Lacroix had significant difficulty in using a computer because he could not properly position his hands and arms on the keyboard. I do not find that skiing or riding a motorcycle reflects an ability to perform these very specific functions. In any event, Mr. Lacroix even required accommodations in his ski instructors' training programme and only trained for very simple ski instruction.

Mr. Lacroix is also medically unsuited to the positions of Service Advisor and Production Clerk due to the possibility that his medical condition will deteriorate. As Dr. Mason reported, Mr. Lacroix "may be prone to exacerbations of musculoskeletal pain in his upper extremities that may require treatment from time to time to settle." Dr. Mason stated that "the decreased range of motion in the distal right upper extremity may make [Mr. Lacroix] more prone to injuries in the more proximal upper extremity because of the increased need for compensatory movements." Dr. Mason also raised the possibility of long-term degenerative changes due to the fractures in the "joint services of the right elbow and right wrist/hand, and left wrist." Neither the DAC nor Mr. Pett properly addressed the issue of how the recommended jobs might affect Mr. Lacroix's ongoing medical condition. I find that, given the arm and hand motion required in the recommended jobs, and the likelihood that Mr. Lacroix would have to use "compensatory movements" in his attempt to do them efficiently, he could very well suffer further injuries and exacerbations to his medical condition.

The two recommended jobs were not personally and vocationally suited to Mr. Lacroix. While Mr. Pett suggested that Mr. Lacroix was vocationally and academically capable of being a Service Advisor in 1997, he also suggested that it would be unreasonable for Mr. Lacroix to move from the industrial/manufacturing field (in which he had 20 years of experience) to the retail services field (in which he had no experience). Mr. Pett further testified that Mr. Lacroix was physically, but not vocationally, suited to the position of Service Advisor. Mr. Pett also stated that Mr. Lacroix would suffer distinct economic losses as a result of such a move. Given Mr. Pett's view of the significant shift involved in moving from Mr. Lacroix's current field to the position of Service Advisor, I do not accept Mr. Pett's opinion that the Durham College programme was unnecessary and, in fact, counterproductive. I agree with Mr. Kumove that Mr. Lacroix required specific vocational preparation to compete for a job as a Service Advisor.

The DAC noted that Mr. Lacroix lacked clerical experience. The NOC descriptions of both Service Advisor and Production Clerk indicate that clerical experience may be required. Mr. Pett suggested that moving to the retail services sector would be a significant change for Mr. Lacroix. The DAC rejected the position of Production Clerk as a viable employment option for Mr. Lacroix. Mr. Pett testified that Mr. Lacroix would require a job-search training programme in order to attempt to return to the workforce. I find that neither of the recommended positions would be personally or vocationally suited to Mr. Lacroix.

The issue at this point is whether Mr. Lacroix's REC is necessarily zero. Mr. Lacroix submitted that he was not capable of performing either of the recommended jobs. He submitted that, although he may have some earning capacity, given the absence of evidence of a viable alternative, his REC should not be "approximated." Mr. Lacroix did not offer any alternative positions. He maintained that part-time work was not reasonable and that I should not speculate as to what his residual earning capacity might be.

The recent appeal decision of Desroches and Economical Mutual Insurance Company (FSCO P99-00062, June 7, 2002) addressed this problem. Appeals Delegate McMahon held that the insured bore the onus of establishing his entitlement to loss of earning capacity benefits, which included the onus of establishing a particular residual earning capacity. Delegate McMahon found that, given that the insured had been found not to be totally disabled, that he had not suggested an alternative to the position recommended by the DAC and that the insurer had attempted to rehabilitate him, the Arbitrator ought to have used "his best judgement, relying on the criteria set out in s. 30."

As previously suggested, I find that Mr. Kumove overstated the extent of Mr. Lacroix's disability. Given the relatively specific nature of his disability, his high degree of motivation and the possibility that he could be accommodated in the workplace, I am not prepared to find that Mr. Lacroix is totally disabled from employment. However, even assuming that the positions of Service Advisor and Production Clerk are personally and vocationally suitable for Mr. Lacroix, I am not satisfied that he could obtain and maintain full-time employment in either of these jobs. While I accept the general principle laid down in Desroches that I am to use my "best judgement" in determining Mr. Lacroix's residual earning capacity, I find that, in the circumstances of the present case, this would be a highly speculative enterprise.

Delegate McMahon stated that an "arbitrator will often be faced with less than complete evidence, particularly where the insured person does not offer any alternative but a zero REC" and that, in these circumstances, an arbitrator will have "little alternative but to use his best judgement, relying on the criteria set out in s.30." However, in the present case, there is significantly less than complete evidence. Delegate McMahon stated that in assessing the merits of the parties' respective REC positions, "the arbitrator is called on to choose one position or the other, or to try and craft some alternative, that will almost invariably fall between the opposing positions" (emphasis added). Delegate McMahon also suggested that the "end result might [be] very different" where, as here, the insured "actively participated in a rehabilitation programme designed to return him to a vocation of his choice." In fact, Mr. Lacroix went further by completing the Service Advisor programme despite the fact that he legitimately developed the view that he was not physically suited to that position. His participation in the rehabilitation programme, in fact, confirmed his physical limitations. In my view, therefore, it is still open to an arbitrator to assess the parties' respective positions and to choose one over the other, particularly where the insured has been fully co-operative in rehabilitation efforts. I do not find that an arbitrator is required to "craft some alternative," particularly where the insured, the insurer and the DAC have all proceeded on the basis that the worker is limited to only a few occupations. I find that I should not attempt to identify an appropriate job in a vacuum, particularly where the DAC only tested Mr. Lacroix for two jobs, and chose not to pursue the only alternative position recommended by the Insurer's vocational rehabilitation consultant.

As held by Delegate McMahon, Mr. Lacroix may bear the onus of establishing his entitlement to benefits, but this could simply mean that he must substantiate his position that his REC is zero. In my view, Mr. Lacroix can still have a zero REC even though he is not totally disabled from working. As noted above, section 30 involves a variety of questions about an insured's employability. Even though a person may have some ability to work, the employment options open to them may not be suitable for various medical, personal, economic and vocational reasons. Where, as here, the entire focus has been on a small selection of jobs, where there is a dearth of medical, personal and vocational evidence of the suitability of other jobs, and where the insured has legitimately taken the position that he is not suited to even part-time employment, I find that an insured is not required to prove anything but his entitlement to a zero REC. I further find that I am not required to speculate, on the basis of significantly deficient evidence, as to what job Mr. Lacroix might be able to perform, and, therefore, as to what his residual earning capacity might be. While Mr. Lacroix may not be totally disabled from a medical perspective, I find that he can be totally incapable of employment based on the criteria set out in section 30.

Therefore, based on the available evidence, I find that the recommended positions are not medically, personally or vocationally suitable for Mr. Lacroix. I am unable to conclude that Mr. Lacroix's REC should be something higher than zero. While he may not be totally disabled, based on the evidence before me, I find that Mr. Lacroix's REC is zero.

Assuming, however, that, despite the noted evidentiary problems, I am required to infer what job Mr. Lacroix might be able to perform, I find that he could potentially do the job of Production Clerk on a part-time basis. This position might require more limited use of computers and might be somewhat closer to Mr. Lacroix's personal and vocational characteristics. This latter comment is tempered by the fact that Mr. Lacroix has now completed his Durham College programme, as well as the fact that the DAC did not test Mr. Lacroix for the position of Production Clerk. Whether there are employers willing to accommodate Mr. Lacroix's specific medical restrictions, and whether he would be able to maintain such employment, is entirely unknown at this point.

Therefore, in a manner similar to the Arbitrator in Desroches (and approved of by Delegate McMahon), assuming that the position of Production Clerk were suitable for Mr. Lacroix, I find that he might be able to perform such a position on a part-time basis, resulting in his potential earnings from the position being reduced by 50%. Given that he would likely face significant barriers in obtaining such employment (based on Mr. Kumove's and Mr. Pett's general evidence of the difficulties disabled individuals face in re-integrating into the workforce and given, for example, Mr. Pett's evidence that Mr. Lacroix now requires a job-search training programme), I find that any potential earnings he could make should be reduced by a further 25%. Assuming this to be the required approach, I find that Mr. Lacroix's REC should be determined on the basis of 25% of the full-time wage of a Production Clerk (with Mr. Lacroix's experience and in Mr. Lacroix's geographical labour market).

Special Award

Mr. Lacroix submitted that Jevco improperly delayed or withheld his weekly benefits by not including the appropriate employment benefits in the calculation of his IRBs and LECBs. Based on Mr. Tucker's evidence, Mr. Lacroix maintained that he had given Jevco an authorization in 1994 to seek information as to the value of his employment benefits (and relevant to the calculation of his weekly benefits), but that Jevco neither pursued the information nor used the services of an accountant to estimate these amounts. Mr. Lacroix maintained that he has been prejudiced by the passage of time and that Jevco should be ordered to pay a special award of 25%.

Jevco submitted that Mr. Lacroix bears the onus of establishing his entitlement to benefits and the quantum of those benefits, and that since Mr. Lacroix only recently provided Jevco with the relevant employment information from General Motors, Jevco could not have calculated Mr. Lacroix's weekly benefits earlier. Jevco also submitted that Mr. Lacroix's first authorization expired long before the issue of the value of benefits arose and that Mr. Lacroix refused to provide another authorization permitting Jevco to obtain information directly from General Motors. Jevco stated that once it received the information, it did not refuse to include the value of the benefits. Jevco, therefore, submitted that it has not unreasonably withheld or delayed benefits.

Mr. Lacroix replied that Jevco failed to take advantage of its early opportunity to obtain relevant financial information from General Motors, that Jevco refused to submit to his representative a list of questions for General Motors, that Jevco improperly calculated benefits on the basis of minimal information (contrary to a principle set out in the Howden appeal) and that, contrary to its suggestion, Jevco has not adjusted his benefits on the basis of the new information on the value of his employment benefits.

I do not find that Jevco should pay a special award in this case. While the parties disagreed about whether to include certain employment benefits in the calculation of Mr. Lacroix's weekly benefits, I see no evidence that Jevco improperly delayed payments to Mr. Lacroix. I am not prepared to speculate as to the propriety of Jevco's conduct on the basis of the limited correspondence in the file and the parties' general submissions about their dealings with each other. The passage in Howden referred to by Mr. Lacroix, to the effect that an insurer must "go beyond the employee's pay stub and last tax return to calculate the IRB" was made in the context of Pafco's concern that including employment benefits in the calculation of IRBs would compromise the timely and effective delivery of benefits. The issue was not whether Pafco had failed to make appropriate inquiries and, thereby, whether it had unreasonably delayed or withheld payments. In any event, while in this case, Jevco could, theoretically, have sought the relevant employment information from General Motors at the outset of the claim, I see no evidence that Mr. Lacroix disputed the issue of the inclusion of his employment benefits during the period in which the first authorization was in effect. Mr. Lacroix did not elaborate as to how he has been prejudiced by Jevco's alleged improper conduct.

Jevco appears to have calculated Mr. Lacroix's benefits on the information provided by General Motors (beginning with the Employer's Confirmation of Income). While I did not accept Jevco's position on the inclusion of Mr. Lacroix's disability pension benefits, I find that Jevco legitimately disputed its obligation to do so. Jevco was also successful on its interpretation of the inclusion of the other employment benefits. In these circumstances, I am not prepared to find that Jevco unreasonably delayed or withheld the payment of benefits.

EXPENSES:

If required, the parties may now make submissions on the issue of expenses.

June 27, 2002

Eban Bayefsky Arbitrator

Date

Neutral Citation: 2002 ONFSCDRS 101

FSCO A00-000163

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ROBERT LACROIX

Applicant

and

JEVCO 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. The following amounts shall be used in the calculation of Mr. Lacroix's IRBs and LECBs:

i) Mr. Lacroix's base pay for the 4 weeks preceding the accident is $4,459,68.

ii) The value of Mr. Lacroix's 4.5 weeks of annual vacation shall not be included in the calculation of his gross annual income.

iii) Mr. Lacroix's employee benefits (CPP, EI, EHT and WSIB) shall not be included in the calculation of his GAI.

iv) The "normal employer cost" of 2.97% for the employer's pension contribution shall be included in the calculation of Mr. Lacroix's GAI.

v) Jevco shall not use the income tables under section 82 of the Schedule to calculate Mr. Lacroix's net weekly income from employment.

vi) Jevco shall index Mr. Lacroix's IRBs as of January 1, 1996.

vii) Mr. Lacroix's disability pension benefits shall not be deducted from his IRBs or LECBs.

2. Mr. Lacroix's LECBs shall be calculated on the basis that his residual earning capacity is zero.

3. Jevco is not liable to pay Mr. Lacroix a special award.

4. Jevco shall pay Mr. Lacroix interest on the amounts now owing.

June 27, 2002

Eban Bayefsky Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98. O.R. 776/93 was extensively modified by O.R. 781/94; accordingly, where necessary, "1994 Schedule "refers to the original O.R. 776/93, and "1995 Schedule "refers to O.R. 776/93 as amended.
2. 2Cugliari v. White et al. (1998), 1998 CanLII 5505 (ON CA), 38 O.R. (3d) 641 (Ont. C.A.)