Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2002 ONFSCDRS 64

Appeal P01-00035

OFFICE OF THE DIRECTOR OF ARBITRATIONS

SANDRA ALVAREZ

Appellant

and

LIBERTY MUTUAL INSURANCE COMPANY

Respondent

Before:

Nancy Makepeace, Director's Delegate

Counsel:

Reno M. Berlingieri (for Ms. Alvarez)

George Gage (for Liberty Mutual)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal and cross-appeal are dismissed, and the arbitration decision, dated July 20, 2001, is confirmed.
Liberty Mutual shall pay Ms. Alvarez' appeal expenses. An assessment may be arranged, in accordance with Rule 79 of the Dispute Resolution Practice Code – Fourth Edition (May 31, 2001), if the parties are unable to agree on the amount owed.
The arbitration hearing on Ms. Alvarez' entitlement to education disability benefits and attendant care benefits may now proceed.

May 13, 2002

Nancy Makepeace Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Ms. Alvarez appeals from the arbitrator's ruling that her attendant care benefit rate is limited to the minimum hourly wage, pursuant to ss.47(9) and 50(10) of the SABS-1994. Liberty Mutual Insurance Company (Liberty Mutual) cross-appeals from the arbitrator's ruling that Ms. Alvarez qualifies for a weekly education disability benefit, under s.15(1)1.iii of the SABS-1994, and that her pre-accident earning capacity should be calculated on that basis under s.29(5). Although both appellants raised legitimate issues, I am not persuaded the arbitrator erred in law.

II. BACKGROUND

On June 27, 1995, Ms. Alvarez was struck by an automobile while a pedestrian. Neither party disagrees with the arbitrator's description of her injuries – multiple fractures, a severe brain injury and significant psychological impairment. The matter came before the arbitrator on the preliminary issues that are the subject of the appeal. The parties agree that the appeal and cross-appeal of the preliminary issue decision should be disposed of before the arbitration hearing on the main issues.

III. ATTENDANT CARE BENEFITS

There is no dispute that Ms. Alvarez is entitled to attendant care benefits under s.47(1) of the SABS-1994:

47(1) If an insured person sustains an impairment as a result of an accident, the insurer shall pay for all reasonable expenses incurred by or on behalf of the insured person as a result of the accident for,

(a) services provided by an aide or attendant; or

(b) services provided by a long-term care facility, including a nursing home, home for the aged or chronic care hospital.

The amount of attendant care benefits to which an insured person is entitled depends on the severity of her injury. Unless a higher maximum applies, an insured is entitled to a maximum attendant care benefit of $3,000 per month.¹ Under s.47(5), a person who suffers "severe brain injuries" or certain other serious injuries is entitled to a maximum of $6,000 per month.² The highest monthly maximum ($10,000) applies to two groups of insured persons – persons who suffer certain combined injuries, and persons who suffer "severe brain injuries that cause violent behaviour that may result in physical harm to the insured person or other persons."³ The parties agree that the latter applies to Ms. Alvarez, qualifying her for the highest maximum level of benefits under s.47(7).

Ms. Alvarez claims the maximum. At the time of the arbitration hearing, she was a residential patient in a rehabilitation facility. She subsequently left that program to live with her mother, but had returned to the facility by the time of the appeal hearing. Her treating psychologist, Dr. M. Cheryl A. Alyman, concluded that she needs 24-hour supervisory attendant care by professionals with training in acquired brain injury and the management of aggressive behaviours.

However, the arbitrator accepted Liberty Mutual's argument that Ms. Alvarez' benefits are limited under s.47(9) of the SABS-1994, which says,

The benefits payable to an insured person under this section shall be determined in accordance with Form 1 and subsection 50(10).

Section 50 describes the process for determining an insured person's entitlement to attendant care benefits. At the request of the insured person or the insurer, the insured person is assessed by a Designated Assessment Centre ("DAC"). The DAC prepares a report in Form 1, a prescribed form. The contents of the report are mandated by ss.50(9) and (10), which are as follows:

50(9) The report shall include,

(a) recommendations relating to the future provision of services referred to in section 47 to the insured person; and

(b) a determination of the amount to be paid by the insurer for the future provision of services referred to in section 47 to the insured person.

(10) The determination under clause (9)(b) shall be made in accordance with Form 1 and shall be based on the following hourly rates for services:

For care described in Part I of Form 1, $8.97 per hour.
For care described in Part II of Form 1, the minimum hourly wage established by paragraph 4 of subsection 10(1) of Regulation 325 of the Revised Regulations of Ontario, 1990.
For care described in Part III of Form 1, $14.35 per hour.

It is the disparity between these rates that gives rise to this proceeding. The three hourly rates correspond to the three levels of attendant care defined by Form 1. Level I care is for routine personal care relating to dressing, undressing, prosthetics, orthotics, grooming, feeding, mobility and extra laundering. Level II care is for basic supervisory functions relating to hygiene, ventilators, spinal cord injuries, severe brain injuries, attendant care on an intermittent basis, multiple amputations, and financial affairs. Level III care is for complex health/care and hygiene functions including genitourinary tracts, bowel, tracheotomy, ventilator and skin care, exercise, medication, bathing, other therapy and maintenance of supplies and equipment. There is no provision for "miscellaneous" or "other" types of care in Form 1.

Ms. Alvarez' attendant care needs were assessed by the Hamilton Hospital Designated Assessment Centre in January 1999.⁴ The DAC assessors concluded that while future improvements were possible, Ms. Alvarez "continues to require nearly full-time attendant care services." Its completed Form 1 broke down her need for attendant care as follows:

Level I care (59.86 hours per month)

~~$536.94~~

Level II care (586.95 hours per month)

4,020.61

Level III care (67.64 hours per month)

970.63

TOTAL

$5,528.18

The legislature's decision that Level II care is insured only at minimum wage, the lowest hourly wage of all three levels, suggests that it was expected to require the lowest skill level of the three levels of care. But Level II also includes the care requirements for severe brain injuries, defined as "client lacks ability to respond to an emergency or needs custodial care due to changes in behaviour." It may be that the legislature contemplated a requirement for simple custodial care. However, management of persons with behavioural problems, especially aggression caused by severe brain injury, can require considerable skill.

Ms. Alvarez says she is unable to obtain the care she needs at minimum wage. The arbitrator accepted her submission that "there is a gap in the legislation and it appears to be a serious oversight that Level III care in Form 1 includes only complex physical/health care needs with no category for psychological needs."⁵ However, the arbitrator found that Form 1 allows for no flexibility on the point, and that skilled supervisory care could not be provided under Level I or Level III. She also found that s.50(10)2 fixed the Level II rate at minimum wage, with no room for variation.

I am in the same position as the arbitrator: I find that the regulation leaves me no discretion in the matter. My detailed reasons follow.

Ms. Alvarez submits that the disputed provisions – sections 47(9) and 50(10) – must be given a meaning that is consistent with s.47(1), which says that an insured person is entitled to "all reasonable expenses incurred . . . as a result of the accident" for attendant care. I accept that the SABS-1994 is remedial regulation, and that the attendant care provisions are intended to ensure that injured persons are able to obtain the attendant care they need as a result of an accident. However, the substantive and procedural rules in Part X also reflect the legislature's intent to regulate the amount of attendant care benefits insurers must provide. I find no error in the arbitrator's finding that the specific restrictions in sections 47(9) and 50(10) override the general entitlement to all reasonable attendant care expenses.⁶

Ms. Alvarez submits that sections 47(9) and 50(10) allow an arbitrator some discretion in assessing the amount of attendant care benefit awarded. She submits that the requirements that benefits shall be determined "in accordance with" Form 1 and "based on" the prescribed hourly rates are non-binding guidelines. She notes that the drafters could have said the benefits "shall be limited to" or "are restricted to" the prescribed benefits. She relies on Tzatzkin and Liberty Mutual Insurance Company, in which the insured person was awarded attendant care benefits of $10 per hour, for four hours per day, five days a week, under s.47(2).⁷ However, like the arbitrator, I find that decision of little assistance because it appears the parties made no reference to s.50(10), and argued the case based on reasonableness.⁸ More helpful is Faerber-Macmillan and Allstate Insurance Company of Canada, in which the arbitrator assumed he was bound by the hourly rates set out for the three levels of attendant care.⁹

I accept that the phrase "in accordance with," considered in isolation, can be read as leaving some adjudicative discretion. However, its context clarifies the legislative intent.¹⁰ It appears in s.47(9), which, for convenience, says, "[t]he benefits payable to an insured person under this section shall be determined in accordance with Form 1 and subsection 50(10)." In my view, the italicized words indicate that this is not merely a rule to be followed by the DAC – those rules are set out in s.50 – but a rule that limits the benefits payable, and by inference, precludes an arbitrator from awarding benefits on a different basis. This interpretation finds further support in s.50(10), which has a precision that is inconsistent with its being a mere "starting point." Form 1 is equally precise in describing the three categories of care. I find no error in the arbitrator's conclusion that the phrase "based on" indicates only that the prescribed hourly rates are a fixed element in the calculation of the amount payable.¹¹

Ms. Alvarez submits that the arbitrator's interpretation leads to an absurd result, that the most seriously injured persons cannot receive the authorized $10,000 maximum on the basis of round the clock Level I or Level II care, but only if they need round the clock Level III care, or some combination of care. However, the $10,000 figure is a maximum, and there is no guarantee that every insured person who falls within s.47(6) or (7) is entitled to the maximum level of care. Moreover, both parties agree with the arbitrator's finding that s.47 allows for "stacking" of benefits. I agree that s.47 does not concern itself with how many attendants are involved, and does not appear to limit the number of hours claimed. It will be for Ms. Alvarez to establish what attendant care benefits she is entitled to when the arbitration hearing resumes. Any remaining issues about her entitlement should be brought before the arbitrator at that time.

Liberty Mutual submits that the harshness of the restrictions on attendant care benefits is offset by the fact that there is no lifetime maximum. Nevertheless, it is difficult to imagine that the legislature contemplated the result in this case, especially considering that insured persons cannot sue for pecuniary damages under the Bill 164 scheme.¹² I agree with the arbitrator that there is a gap in the attendant care rules that appears to result from an oversight in omitting psychological and behavioural problems related to acquired brain injury from Level III care. However, I am not satisfied I have authority to provide a remedy.

IV. EDUCATION DISABILITY BENEFITS

The parties agree on the following facts for the purpose of the preliminary issue hearing. At the time of the accident, Ms. Alvarez was 19 years old. She started secondary school in September 1989, at the age of 13. Between September 1989 and June 1993, she completed 20 of the 30 credits required to obtain an Ontario secondary school diploma. In September 1993, she enrolled full-time at Bishop Ryan High School for one month, and returned to that school between February and April of 1994. The following year, she was enrolled as a full-time student at Saltfleet High School between February 2 and March 6, 1995.

Three months later, on June 1, 1995, Ms. Alvarez started working as a full-time salesperson at Sam and Son International Cheese. The Employer's Confirmation of Income form confirms that she continued to work at that job at the time of the accident on June 27, 1995, and earned $1,048.60 over that period.

If an insured person is entitled to more than one kind of weekly benefit, s.61(2) of the SABS-1994 requires the insurer to offer the person the choice between them. Liberty Mutual did not offer Ms. Alvarez an election because it takes the position she does not qualify for education disability benefits ("EDBs"). They paid income replacement benefits of $193.12 per week under Part II of the SABS-1994. Ms. Alvarez' loss of earning capacity benefits were also calculated on the basis of her earnings from the cheese store, pursuant to s.29(1) of the SABS-1994. She was found to have a zero residual earning capacity. Ms. Alvarez submits that her pre-accident earning capacity should be assessed under s.29(5), which applies to persons who continue to qualify for EDBs 104 weeks after the accident.

The qualifying criteria for EDBs are described in s.15(1) of the SABS-1994:

15.(1) An insured person who sustains an impairment as a result of an accident is entitled to a weekly education disability benefit if the insured person meets the following qualifications:

The insured person,

i. was less than sixteen years of age at the time of the accident,

ii. was enrolled on a full-time basis in elementary, secondary or post-secondary education at time of the accident, or

iii. completed his or her education less than one year before the accident and was not employed, after completing his or her education and before the accident, in an employment that reflected his or her education and training.

The insured person, as a result of and within two years of the accident,

i. suffers a substantial inability to continue his or her education, in the case of an insured person who qualifies under subparagraph i or ii of paragraph 1,

ii. suffers a substantial inability to engage in employment that reflects his or her education and training, in the case of an insured person who qualifies under subparagraph iii of paragraph 1, or

iii. suffers a partial or complete inability to carry on a normal life, in the case of an insured person who qualifies under subparagraph i, ii or iii of paragraph 1.

Ms. Alvarez submits that she qualifies under s.15(1)1.ii or s.15(1)1.iii. The arbitrator found the second argument more persuasive, "depending on the evidence which she can present about not being employed or in an employment reflecting her education and training, . . ." The parties focussed their appeal submissions on the arbitrator's finding that s.5(1)1.iii applies.

Ms. Alvarez withdrew from school in the spring of 1995. She relies on the Commissioner's Guideline No. 4/95 (November 1, 1995), the Guideline for Identifying Individuals Who Qualify for Education Disability Benefits, which says,

An individual who withdraws from school also qualifies for the weekly education benefit if the automobile accident occurred within one year of withdrawing from school.

Liberty Mutual does not take the position that the word "completed" in s.15(1)1.iii requires graduation, but submits that its ordinary meaning requires the claimant to have fulfilled or finished some element of a program – a credit, a course or a term. The Insurer submits that Ms. Alvarez completed her education in June 1993 because she did not finish any more terms or credits after that date. The Insurer submits that the arbitrator erred in finding that

the word "completed" can be interpreted by relying on both a subjective and an objective standard; that is, someone's education is completed when they withdraw from secondary school.¹³

In Liberty Mutual's view, the arbitrator's interpretation effectively makes "last attendance" or "last enrollment" the qualifying criterion for EDBs, an easier qualifying test than the one mandated by the regulation.

I accept Liberty Mutual's submission that I am not bound to follow the Guideline. Commissioner's Guidelines are authorized by s.268.3 of the Insurance Act, which states that "a guideline shall be considered in any determination involving the interpretation of the Statutory Accident Benefits Schedule." However, I find that the Guideline takes a pragmatic and fair approach to s.15(1)1 that is more consistent with the language and purpose of that section than the interpretation favoured by Liberty Mutual.

The three subparagraphs of s.15(1)1 describe three ways a person can qualify for EDBs, but satisfying one of these criteria is just the first step in proving EDB entitlement. The second step is described in s.15(1)2. The two sections must be read together to understand the legislative scheme.

To receive EDBs, the insured person must show that she suffered a partial or complete inability to carry on a normal life, or a substantial inability to continue her education, as a result of and within two years of the accident, if she qualifies under the "less than 16 years old" or the "full-time enrollment" criterion. The clearest case of s.15(1)1.i and ii entitlement would be a 14-year old Grade 9 student who is unable to finish his year or to continue onto Grade 10 because of an accident in March.

If the insured person qualifies under the "completed education" criterion, she must prove that she suffered a partial or complete inability to carry on a normal life, or "a substantial inability to engage in employment that reflects . . . her education and training," as a result of and within two years of the accident. A clear case under this provision would be the student who completes a university degree, accepts a low-paying "stop-gap" job while looking for a job more suited to her qualifications, and is forced to remain underemployed because of an accident.

The obvious purpose of the EDB election is to ensure fair compensation for insured persons who are injured at an important transitional point in their economic lives. The SABS-1994 recognizes that the consequences of such an injury may be life-long. It provides a lump sum benefit for each year the insured person cannot "attend or successfully complete" school as a result of the accident, in addition to the weekly benefits provided under s.15. Under s.29(5), the insured person's EDBs also provide the basis for the loss of earning capacity benefit, which is a lifetime benefit, if she continues to qualify for benefits 104 weeks after the accident. Considering this context, I find that s.15(1)1.iii recognizes that people may be unemployed or underemployed for a period of time after completing school, and that an income replacement benefit and loss of earning capacity benefit based on a short or marginal employment history may not provide fair compensation for the economic loss that results from abbreviated or interrupted education.

It is easy to imagine fact situations that are clearly consistent with the legislative objective underlying education benefits, but that do not fit within s.15(1)1, on the narrowest interpretation of the section. The most obvious is the accident over the summer vacation. The Guideline states,

An individual is also eligible for education disability benefits if the automobile accident occurred at the time a school providing the education does not normally operate.

Counsel for Liberty Mutual argues that even without the help of the Guideline, this situation would fall within subparagraph ii – the insured person "was enrolled on a full-time basis." This assumes that enrollment status bridges the summer break, which is a fair assumption where the student planned to go back to the same school in September. But a student may change schools over the summer, decide not to continue her education, or graduate from one school to another. The word "enrolled" is not defined in the SABS. I find it suggests a forward-looking registration status, and in practice, students are normally registered for the coming year at the start of the term. I find that the Guideline sets out a sensible rule for applying an otherwise ambiguous reference to enrollment.

The Guideline also states that a student in the work term of a post-secondary co-operative program is eligible for EDBs. Again, without the Guideline's explication, it is not clear that this would qualify as being "enrolled on a full-time basis." In Stracuzza and Allstate Insurance Company of Canada, the issue was whether the insured person "was enrolled on a full-time basis" while working on the practical portion of her hairstyling apprenticeship, having finished the in-class portion. After finding that the program qualified as a post-secondary program because it was approved by the Minister of Education and Training, the arbitrator reasoned,

Rather than viewing the in-class and practical portions of the training separately as Ms. Stracuzza did, I find that a more reasonable approach is to regard the practical portion of her apprenticeship at Suki, together with the preceding in-class, diploma portion of the program, as the complete post-secondary educational program.¹⁴

In my view, this is a fair and sensible result consistent with the legislative purpose underlying s.15.

Liberty Mutual challenges the arbitrator's conclusion that the "completed his or her education" qualifying test has a subjective or individualized element, as well as an objective one. I am aware of no other decisions on the meaning of this phrase, but several FSCO decisions have considered the special difficulty of assessing disability in education disability benefits cases. The leading case is Zehr and Canadian General Insurance Group, in which Director's Delegate Draper confirmed the arbitrator's finding that the insured person was substantially unable to continue his education as a result of the accident, under s.15(1)1.ii and 15(1)2.i of the SABS-1994.¹⁵ At the time of the accident in July 1994, the insured person was 17 years old. He had just completed Grade 12 and started a summer job, and planned to complete his OAC when school resumed in September.¹⁶ As a result of the accident, he was not able to return to school until January 1995, on a part-time basis, and did not complete his OAC until June 1996. He enrolled in university that September, but had limited success, partly because the program he selected was "reasonably consistent with his pre-accident expectations" but not appropriate considering his accident-related limitations. The insurer submitted this was not a substantial inability to continue his education.

I adopt Delegate Draper's analysis:

On appeal, Canadian General accepts that the question is not whether Mr. Zehr can pursue "any education." The program must be reasonably comparable to his pre-accident situation. In my opinion, however, the arbitrator correctly held that the test involves an individualized inquiry based on the insured person's situation at the time of the accident. As the arbitrator states, the use of the words, "his or her education," reflects an intention that the inquiry is particular to the insured person.

The appropriate question is, what was Mr. Zehr's educational program at the time of the accident? This is a factual question to be answered without undue speculation. However, the inquiry is not static, looking only at what he was doing at the time of the accident. I agree with Mr. Zehr that the legislation recognizes the evolving, progressive nature of education. This interpretation is supported by the phrase, "continue his or her education," in s.15(1)2i and also by s.16(5), dealing with lump sum education benefits. I note that in Rich and Jevco Insurance Company, (FSCO A97-000896, December 30, 1998), an arbitration decision released shortly after the arbitration hearing in this case, another arbitrator reached the same conclusion.

Looking at the record, I find ample evidence that Mr. Zehr's educational program involved completing his OAC credits and attending university in a professionally-based program such as business or finance. The issue, as the arbitrator correctly identified, was whether he was substantially unable to continue this kind of education. It was not, as the Designated Assessment Centre ("DAC") approached the issue, whether or not he could attend school at all.

Relying on the following analysis from the Director's decision in Levenson and General Accident Assurance Company of Canada, (OIC A-000260, September 29, 1992), the arbitrator held that there is a qualitative aspect to the substantial-inability test:

Attendance at school is not just the physical act of occupying space in a classroom or lecture hall. Attendance at school encompasses many other activities, including the ability to comprehend and absorb classroom and laboratory instruction, complete assigned work, participate in discussions and projects, study, write or take examinations, meet any physical requirements of the course work, and generally function as a part of the student body with provision for some reasonable extra-curricular activity. This does not mean a person must excel in any of these tasks or be able to function in them as if the accident had not occurred, but be substantially able to perform them.

Although Levenson was decided under an earlier version of the accident benefits regulation, I agree with the analysis and find it applicable to the SABS-1994. It sets two parameters that, in my view, are appropriate. First, mere attendance is not enough to establish that the insured person is capable of pursuing his or her education. Second, some reduction in the insured person's achievement is not sufficient to establish entitlement.¹⁷

Applying the same approach to the qualifying test under s.15(1)1.iii, I find that "completed his or her education" is a relative term that relates to the student's plans and aspirations, as well as her achievements. This interpretation finds additional support in s.17, which does not preclude a "completed education" claimant from continuing to receive EDBs despite a temporary return to school after the accident, and in s.16, which awards a lump sum for every year or semester the insured person "is unable to attend or successfully complete" as a result of the accident. In contrast, s.15 uses the unqualified word, "completed," and does not refer to any objective units of education (semesters, years). I find that the phrase, "completed his or her education" includes an insured person who withdrew from education less than one year before the accident.

In the alternative, Liberty Mutual relies on Ms. Alvarez' application for accident benefits, completed by her mother, which states, "Sandra intended to go back to high school in September '95." Ms. Alvarez confirmed this in subsequent interviews with Liberty Mutual's adjusters. Liberty Mutual submits that this evidence shows that subjectively, Ms. Alvarez did not consider her education completed at the time of the accident.

It is arguable that since both the application and the statements were made after the accident, the best evidence of whether Ms. Alvarez' had completed her education at the time of the accident is her withdrawal from school several months earlier. However, the determinative factor in my analysis is that Ms. Alvarez' interpretation of "completed his or her education" is more consistent with the remedial purpose of EDBs, which is to provide for insured persons whose economic loss is not fairly reflected in their loss of income because they are new entrants to the workforce. Whatever her future plans were at the time of the accident, Ms. Alvarez falls squarely within this category, and I cannot imagine any reason why the legislature would have wanted her excluded from the protection of Part III of the SABS-1994.

For these reasons, I find no error in the arbitrator's finding that Ms. Alvarez is entitled to an election under s.61 of the SABS-1994. When the arbitration hearing resumes, the issue will be whether Ms. Alvarez suffers a substantial inability to engage in employment that reflects her education and training, under s.15(1)2.ii.

V. EXPENSES

The appeal and cross-appeal were unsuccessful, but both raised serious, novel questions of law. Liberty Mutual does not seek its expenses of Ms. Alvarez' appeal. I find it appropriate for Liberty Mutual to pay Ms. Alvarez' appeal expenses because her argument, while ultimately unsuccessful, had considerable merit and deserved appellate consideration.