Neutral Citation: 2002 ONFSCDRS 207

FSCO A01-000981

BETWEEN:

DAVID J. PATRICK

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Fred Sampliner

Heard:

September 9, 10 and 11, 2002, in Windsor, Ontario.

Appearances:

Larry Belowus for Mr. Patrick

Karol F. Dycha for State Farm Mutual Automobile Insurance Company

The Applicant, David J. Patrick, sustained a permanent knee injury in a June 26, 1998 motor vehicle accident. Mr. Patrick disputes State Farm Mutual Automobile Insurance Company's ("State Farm") July 11, 2000 termination of his income replacement benefits and claimed retraining, under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Patrick 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. Patrick entitled to ongoing income replacement benefits after July 11, 2000 under Part II of the Schedule?
Is Mr. Patrick entitled to reimbursement of his claimed university expenses or future funding for his retraining as an engineer under Part V of the Schedule?

Mr. Patrick is entitled to ongoing income replacement benefits after June 27, 2000 under Part II of the Schedule.
Mr. Patrick is not entitled to reimbursement of his claimed university expenses or future funding for his retraining as an engineer under Part V of the Schedule.

Disability Issue:

Mr. David Patrick was a 22 year old labourer and crew supervisor employed by Paramount Roofing and Restorations Ltd. ("Paramount") at the time he spilled a dirt bike on June 26, 1998, permanently damaging his left knee. He has undergone three surgeries on his left knee, and it is not disputed that as a result of the accident he is unable to kneel, squat, climb, bend, run, or walk and stand for extended periods.

Mr. Patrick may have knee replacement surgery in the future. However, the parties agree he is unlikely to resume roofing work or any other intensive physical labour as a result of his injury.

Mr. Patrick has tried to work at two jobs since the accident. The evidence is that he failed at roofing for Paramount, and that he also was unable to tolerate working on oil rigs for two weeks in Western Canada.

In order for Mr. Patrick to succeed in his claim for ongoing income replacement benefits under Part II of the Schedule, he must establish on a balance of probabilities that he suffers a complete inability to engage in any employment for which he is reasonably suited by education, training or experience.² Thus, Mr. Patrick must look for another job that is suitable to his physical disability, training, experience and education.

In 1999, State Farm assigned a case manager and vocational rehabilitation specialist to assist Mr. Patrick's reintegration into the workforce. At State Farm's recommendation, Mr. Patrick completed his high school education that year in order to expand his job prospects.

Mr. Werner Reiser, State Farm's case manager, testified that he hired a rehabilitation expert to assist Mr. Patrick in reviewing employment alternatives or retraining. The rehabilitation expert, Mr. George Boghean, testified that he interviewed Mr. Patrick and conducted vocational tests.

Mr. Boghean's February 1999 and June 2000 reports recommend that Mr. Patrick pursue two retraining options, and conclude the following nine jobs are suitable without further training or education: material handler (coordinator), auto rental/leasing clerk, component insert machine operator, postal wicket clerk, customer service clerk for building supplies, security desk clerk, wave soldering machine operator, carburetor/alternator inspector/repairer, and photo/film printing machine operator.

Mr. Patrick argues that jobs identified by Mr. Boghean do not offer him future advancement, i.e they are dead-end positions. According to the National Occupational Classification ("NOC")³career handbook used by Mr. Boghean, supervisory jobs require previous experience in a work area. Thus, an insured re-entering the workforce from a completely different job would not be qualified to assume a supervisory role in most circumstances.

In my view, it would place an extraordinary burden on insurers to compel them to provide jobs that return an insured to the same supervisory level in a completely different line of work than held at the time of the accident where he or she has little or no transferable skill, training, experience or education in that area. However, the jobs should provide the insured with a reasonable opportunity to advance to a similar position.

The NOC job descriptions for some of State Farm's job proposals accommodate his skills by allowing him to advance to a supervisory position. This is not the primary reason for my finding that Mr. Boghean's recommendations are not suitable.

Mr. Boghean testified that he verified the pay rates and availability of the recommended jobs by checking local advertisements in Windsor newspapers. His evidence that the positions Mr. Patrick is suited to are primarily sedentary jobs is consistent with the opinion of Mr. Patrick's orthopaedic surgeon, Dr. Garth Annisette.

Dr. Annisette initially reported that Mr. Patrick met the eligibility test for income replacement benefits in this case. He clarified his opinion in an August 8, 2002 report, agreeing with Mr. Boghean that Mr. Patrick could work as a material handler (coordinator), auto rental/leasing clerk, and component insert machine operator because these jobs did not require him to kneel, bend, squat, pivot on his left knee, walk or run for extended periods.

There is no expert evidence to contradict Dr. Annisette's opinion. I find that Mr. Patrick is physically capable of performing the duties of a material handler (coordinator), auto rental leasing clerk and component insert machine operator.

Mr. Patrick's hourly wage at the time of the accident is established through the testimony, his employer and his income tax returns. This evidence indicates he was earning approximately $27,000 per annum at the time of the accident, with an hourly wage of $18.⁴

Mr. Boghean conceded that since Mr. Patrick has no skill or experience in any of the listed jobs, he would likely commence work at the bottom of the wage scale. The jobs of postal clerk, security desk clerk, customer service clerk, auto rental/leasing clerk, material handler (coordinator) and carburetor/alternator inspector/repairer range between $6.85 per hour and $13.47 per hour, substantially less than Mr. Patrick earned at the time of the accident. On that evidence, I find that these six jobs are not reasonably suitable employment alternatives for Mr. Patrick.⁵

Mr. Boghean also concluded that Mr. Patrick could work as a photo printing machine operator. The NOC handbook states that the machine operator is required to stand and walk, and it is not disputed that Mr. Patrick is unable to stand and walk for lengthy periods.

Mr. Boghean admitted that he did not understand the full extent of Mr. Patrick's disability when he prepared his recommendations. Since the medical evidence is that Mr. Patrick cannot stand and walk for lengthy periods, I find that he is not physically capable of working as a photo printing machine operator.

The NOC job specifications for the wave soldering machine operator and component insert machine operator jobs show the work is sedentary, requires only upper limb coordination/ dexterity, and is consistent with Mr. Patrick's spatial perception, mechanical interest and high school education. However, there is an important conflict in Mr. Boghean's evidence which causes me to reject these two positions.

Mr. Boghean reports that the starting wage is $17.73 per hour pay for a soldering machine operator and $24.67 for the component insert machine operator. Those quoted hourly rates respectively equate to annual earnings of approximately $35,000 and $50,000 for a 40-hour week with two weeks unpaid vacation, not the $23,740 and $21,424 a year he reports.

Mr. Boghean did not explain this contradiction in his evidence, and I am not prepared to accept that these two jobs pay the quoted hourly rate because these rates are inconsistent with all of the other starting annual salaries he reports.⁶ Since Mr. Patrick's earnings during the year before the accident are substantially greater than the annual salaries reported for either of these jobs, I find they are not suitable employment alternatives.

State Farm advances two retraining recommendations. The first suggests that Mr. Patrick might retrain as a veterinary assistant because he had experience working at an animal clinic for approximately two years during and shortly after high school. Mr. Patrick also had short-term experience bussing tables at a restaurant, performing menial factory jobs and cleaning.

The temporary, part-time jobs that Mr. Patrick held prior to working at Paramount involved walking or standing, the type of physical work that he is now unable to do. They required very little skill, no prior experience and paid poorly.⁷ I agree with Mr. Patrick that his pre-accident part-time or temporary positions are not suitable to his post-accident career,⁸ and I find that the recommendation of veterinary assistant is not reasonably suited for him.

Mr. Boghean reports that Mr. Patrick's interests lay in retail management, public relations, mechanical drafting, scuba diving, clerical work, computers, veterinary assistant, roofing, car racing and other self-employment possibilities. Mr. Boghean matched these job areas with Mr. Patrick's test scores showing an average or high average basic academic skills, cognitive, perceptual and psychomotor abilities.

Based on Mr. Patrick's interest and the tests, Mr. Boghean recommended he might alternatively retrain for computer work. Mr. Patrick's math skill is supported by his achievement of a B - in university level intermediate algebra/geometry during the spring semester 1999/2000 and Mr. Boghean's test results, indicating his higher than average perceptual and psychomotor abilities.

This evidence supports Mr. Boghean's recommendation that it is suitable for Mr. Patrick to receive basic computer training. However, Mr. Boghean did not provide Mr. Patrick with career recommendations in computer technology supported by the appropriate advice on further courses or retraining programs that would lead him into work that is consistent with furthering his academic training in this area.

In my opinion, an insured who suffers a significant disability and abruptly loses his or her pre-accident job or career is vulnerable because he or she is cut-off from familiar employment possibilities. The insured relies in many cases on professional guidance. An insurer that undertakes vocational or rehabilitation counselling has a positive obligation to provide realistic recommendations that demonstrably lead to specific jobs meeting the insured person's particular personal characteristics.⁹

There is no evidence from Mr. Boghean to support his recommendation that taking a course in short-term computer basics would be useful in any of the jobs he recommended or that the course would advance Mr. Patrick's marketplace skills by otherwise broadening the range of employment possibilities. I find that a course in computer basics is not a reasonable educational opportunity to advance Mr. Patrick's career.

All of the positions and retraining that State Farm submitted for Mr. Patrick's consideration are inconsistent with either his physical disability, his pre-accident earnings or did not lead to realistic career alternatives. In the Spicer¹⁰ case, Arbitrator Draper stated:

The range of alternative employment that may be considered depends on the applicant's background. It may include jobs that are different from the work that he or she was doing at the time of the accident, but only if they are reasonably suitable or appropriate for the applicant. If the job is substantially different in nature, status, or remuneration it may not be an appropriate alternative.

I find that all of State Farm's recommendations are not suitable to Mr. Patrick's experience, training or disability.

State Farm argues that even if there are problems with its recommendations, Mr. Patrick has failed to meet his burden to establish a prima facie case that he cannot do any suitable employment,¹¹ and that he has not sought alternative employment in accordance with his obligation under Part XII of the Schedule.

State Farm's arguments are not supported by the evidence. There is the testimony of Mr. Patrick that he has delivered resumes to machine shops, auto parts manufacturers and automobile assembly plants. No one wants to hire him because of his physical disability. His testimony that he looked for alternative employment on his own is supported by the uncontradicted evidence that he tried to resume work after the accident (roofing, oil rigs), and his employer's testimony that he is hardworking, honest and reliable.

Mr. Patrick's evidence was very straightforward and contained no significant contradictions about his injury or disability. I am satisfied that Mr. Patrick is motivated to work and that he sought alternative employment. I find Mr. Patrick's evidence credible, and I further find that he has met his responsibility to seek alternative employment under Part XII of the Schedule.

I reject State Farm's submission that Mr. Patrick intentionally worked at jobs where he would fail and likewise applied for positions for which he was unfit. On the contrary, I find that State Farm's failure to meet its responsibility to provide Mr. Patrick with jobs that were consistent with his personal characteristics mislead him to pursue inappropriate employment paths.

On January 24, 2000, State Farm rejected Mr. Patrick's request to fund his retraining as a professional engineer at Lawrence Technical University, a four-year Bachelor of Science program, and stated, "It has not been clearly established that your client cannot consider alternative employment based on his education training and experience." The letter instructed Mr. Patrick to sign authorization for a disability assessment at a Designated Assessment Centre ("DAC")¹² if he disagreed with the decision.

On March 24, 2000, Mr. Patrick signed back the authorization and requested a disability assessment. State Farm replied on May 25, 2000 that the Windsor facility could not conduct this type of assessment.

On June 22, 2000, Mr. Patrick asked State Farm to find the next closest DAC to assess his disability claim, and the same day State Farm sent him a formal termination notice for his income replacement benefits, effective June 27, 2000. State Farm did not respond to Mr. Patrick's second request for a DAC.

The Schedule requires that the insurer provide at least 14 days advance notice before stopping income replacement benefits.¹³ I find that State Farm's June 22, 2000 notice of stoppage does not comply with the Schedule, and is consequently ineffective. I further find that State Farm's January 24, 2000 letter constitutes notice to Mr. Patrick that his income replacement benefits were going to be terminated in June 2000, and that he was entitled to the opportunity to obtain a disability DAC assessment at that time.

I find that State Farm's reply to Mr. Patrick that the Windsor DAC could not conduct the assessment was incorrect. State Farm produced no evidence from the DAC to support its assertion that the Windsor facility was unable to perform the disability assessment, and I take notice that the Financial Services Commission website lists this facility as capable of both disability and medical/rehabilitation DAC assessments.

The Schedule uses the mandatory language "shall" to oblige insurers to arrange DAC assessments. I reject State Farm's submission that it somehow became Mr. Patrick's obligation to further the DAC process by applying for mediation to obtain what is his right.

The explicit legislative directive imposed on insurance companies recognizes the pivotal role the DAC plays in the legislative scheme. "Their function is to take the dispute out of the back-and-forth of competing partisan reports by providing an impartial assessment".¹⁴

In my view, State Farm committed a significant breach of its obligations by ignoring Mr. Patrick's requests for an independent evaluation of his claim for ongoing income replacement benefits. There is no evidence that State Farm has attempted to remedy this situation by arranging a disability DAC.

The present Bill 59 Schedule does not explicitly impose any penalty when an insurance company breaches its duty to arrange a DAC.¹⁵ However, there is a parallel between the present situation and arbitration decisions fashioning remedies when applicants failed to cooperate with insurer examinations and DAC assessments under previous versions of the Schedule.

In my view, when an insurer fails to meet this important statutory obligation to refer disputes to a DAC, the arbitrator may fairly exercise discretion to impose the same penalty¹⁶ as used on insured persons who fail to comply with insurer examinations. As a result, I draw an adverse inference against State Farm that Mr. Patrick is entitled to benefits until there is compliance with this statutory obligation.¹⁷

The inference is not rebutted by any other evidence. Mr. Boghean's recommendations are not appropriate to either Mr. Patrick's pre-accident pay and/or his physical disability. Dr. Annisette reviewed the job titles that Mr. Boghean sent him, not the full NOC descriptions. His general opinion that he thought Mr. Patrick was able to work at something does not address the specific jobs recommendations or undermine the adverse inference.

Mr. Patrick need not show that he is unable to do every aspect of each job that is suited to his education, training and experience.¹⁸ While I agree that his claim lacks any supporting expert evidence, his testimony is credible that he tried and sought work at comparable industrial jobs unsuccessfully.

Based on Mr. Patrick's evidence that he has sought alternative employment, the adverse inference to which he is entitled, together with State Farm's failure to produce evidence of suitable alternative employment, I find that he has established on a balance of probabilities that he continues to suffer a complete inability to engage in any employment for which he is reasonably suited by education training or experience. I find Mr. Patrick is entitled to ongoing income replacement benefits under Part II of the Schedule after June 27, 2000.

State Farm should immediately arrange a disability DAC assessment. I remain seized of this matter.

Retraining:

Mr. Patrick enrolled for the first semester of a four-year Bachelor of Science engineering program at Lawrence Technical University in Michigan, and successfully completed the spring 1999 courses. He claims reimbursement for the tuition ($4,060 US), books he purchased ($195.09 US), and requests an order that State Farm fund the remainder of this academic program (approximately $35,000 US).

Section 15 of the Schedule is a general guideline on retraining:

(2) The rehabilitation benefit shall pay for reasonable and necessary measures undertaken by an insured person to reduce or eliminate the effects of any disability resulting from the impairment or to facilitate the insured person's reintegration into his or her family, the rest of society and the labour market.

(3) Measures to reintegrate an insured person into the labour market include measures that are reasonable and necessary to enable the person to,

(a) engage in employment that is as similar as possible to employment in which he or she engaged before the accident; or

(b) lead as normal a work life as possible.

(4) In determining whether a measure is reasonable and necessary for the purpose of subsection 3, the insurer shall consider the insured person's personal and vocational characteristics. ...

[my emphasis added]

The definition of "similar"¹⁹ surrounded by the modifiers indicates to me that the drafters intended the insured person to look for retraining that builds on his or her previous career(s).

Mr. Patrick presented no evidence from a rehabilitation or vocational expert to support his testimony that his retraining as a professional engineer is "as similar as possible" to his pre-accident job as a roofing crew supervisor. Accepting his submission that it would take him the same time to complete university training for engineering as to retrain for other suitable jobs would lead to a significant unauthorized change to the eligibility test from one of a similar job to a quite different comparison between retraining times.

I take notice that a qualified professional engineer is far better educated, trained, earns more and has higher status than a roofing crew supervisor. Mr. Patrick has failed to establish that his claim for retraining as a professional engineer is "as similar as possible" to his pre-accident job as a roofing crew supervisor. Accordingly, I find that his claim for retraining is not a reasonable or necessary rehabilitation expense under section 15 of the Schedule.

My decision does not affect Mr. Patrick's future claims for retraining or vocational expenses. He should consider consulting his own expert and perhaps submitting the matter to a DAC facility.

EXPENSES:

The parties may apply for an assessment of expenses if they cannot agree on entitlement or amount, but they must first follow the rules in the Dispute Resolution Practice Code (4th edition, May 31, 2001) before asking the caseworker to set a date.

December 31, 2002

Fred Sampliner Arbitrator

Date