Financial Services Commission
Commission des services financiers de l’Ontario
Neutral Citation: 2002 ONFSCDRS 92
Appeal P00-00021
OFFICE OF THE DIRECTOR OF ARBITRATIONS
SHARON RILEY
Appellant
and
PILOT INSURANCE COMPANY
Respondent
Before:
Stewart M. McMahon, Director’s Delegate
Counsel:
Rebecca Nelson (for Sharon Riley)
Rudolph Lobl, Q.C. (for Pilot Insurance)
APPEAL ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
The appeal is dismissed and the order dated February 26, 2000, is confirmed.
Ms. Riley is entitled to one-half of her expenses of the appeal.
June 12, 2002
Stewart M. McMahon Director’s Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
The Appellant, Ms. Sharon Riley, was badly injured in a motor vehicle accident on October 13, 1990. The Respondent, Pilot Insurance Company (“Pilot”), paid her income replacement benefits (“IRBs”) pursuant to s.12(1) of the SABS1 on the basis that she suffered a substantial inability to perform the essential tasks of her employment. Pilot terminated benefits at the 156-week mark pursuant to s.12(5)(b), on the basis that she was not continuously prevented from engaging in any occupation or employment for which she was reasonably suited by education, training or experience.
Ms. Riley was awarded ongoing IRBs by way of an arbitration decision dated April 15, 1996. In February 1999, Pilot applied to the Director of Arbitrations for a variation/revocation order, permitting it to stop paying IRBs, on the basis that there had been a material change in Ms. Riley’s circumstances, and she was no longer entitled to ongoing benefits. The Director exercised her discretion to delegate the matter back to the arbitrator who had conducted the original arbitration hearing. By way of an order dated February 29, 2000, the arbitrator ruled that effective December 1999 Pilot was no longer required to pay IRBs.
Ms. Riley appeals the order, seeking a reinstatement of her IRBs.
II. RIGHT OF APPEAL
Pilot argues that this appeal is restricted to questions of law only. I agree.
III. BACKGROUND FACTS
Ms. Riley was 26 at the time of the accident. She was employed by a temporary agency and was working full-time as a clerk with the Federal Government. She is a practising Seventh Day Adventist and had been studying off and on at a Bible College in Alabama for about six years before the accident.
Ms. Riley suffered multiple injuries in the accident. The most debilitating was a fracture of the left hip. Her surgeons initially treated the fracture with screws, a plate and a bone graft. However, the surgery was unsuccessful, and the surgeons attempted a hip fusion approximately two and a half years later. This effort also failed, and Ms. Riley underwent a third surgical procedure in February 1994. As a result of this last procedure, Ms. Riley has been left without a conventional hip. In what is known as a girdlestone procedure, the head of the femur is embedded in musculature around the hip. Typically, this is a short-term solution, and most patients are ultimately given a hip replacement. In younger patients, there is a tendency for the surgeons to put off the hip replacement as long as possible, thereby lessening the chances of the need for a further hip replacement in the long term. As of the revocation hearing, Ms. Riley had not yet been given a hip replacement, nor were there any immediate plans to perform the surgery.
Music has been an important part of Ms. Riley’s life for many years. She was taking a “minor” in music at college. Ms. Riley formed a gospel choir about a year and a half after the accident. The choir was associated with Ms. Riley’s church and performed during Saturday services. The choir became quite successful and prior to the arbitration hearing, had been invited to participate in the Montreal and Toronto jazz festivals. In the years following the arbitration hearing, the choir became even more successful. By the time of the variation hearing, it had recorded an independent C.D. and was then signed to a recoding contract. The choir received a Juno award for their second C.D. The choir has also appeared on a number of television specials and movies, and has collaborated with internationally recognized musicians, resulting in a grammy award. In addition, the choir incorporated and is no longer strictly associated with Ms. Riley’s church. It now rents rehearsal space and pays its musicians and business manger. Ms. Riley has received some remuneration, but essentially has continued to provide her services without pay. As of the revocation hearing Ms. Riley had not returned to any form of gainful employment.
IV. THE ARBITRATION DECISION
As noted earlier, Pilot terminated benefits at the 156 week mark. Shortly after the termination, Pilot received a report from an orthopaedic surgeon who had conducted an insurer’s medical examination (“IME”) on its behalf. The surgeon reported that the hip fusion appeared to be failing. He also reported that Ms. Riley was in significant pain, and that at best she could work in a sedentary position on a part-time basis. Ms. Riley’s own doctors’ subsequently confirmed that the fusion had failed and that further surgery would be necessary.
The arbitrator stated that she had “no hesitation in concluding that Ms. Riley continued to be eligible to receive benefits at the time they were terminated in October 1993.” She went further, and awarded Ms. Riley a special award of $2,000, on the basis that Pilot had acted “precipitously and unreasonably.” The arbitrator also indicated that there was no doubt that Ms. Riley remained disabled during the period leading up to the girdlestone operation and in the immediate post-surgery period. However, she stated that entitlement to ongoing benefits after this time was more “problematic.”
The arbitrator made reference to Ms. Riley’s involvement in the choir. She recounted Ms. Riley’s evidence that she spent approximately 15 hours per week; selecting, arranging and teaching the music to the choir members, leading Friday night practises, performing during weekly church services, participating in outside performances, and otherwise directing the choir. The arbitrator found that these activities established that Ms. Riley is;
obviously a talented, able and energetic individual, who has remained reasonably active despite her debilitating injuries. Her success with the choir indicated that she is capable of significant exertion, and has the motivation and perseverance required to achieve her important goals.
However, the arbitrator also recounted Ms. Riley’s evidence that she remained in constant pain, and that she did little other than participate in the choir. The arbitrator also made note of medical evidence which supported Ms. Riley’s evidence that her condition was painful. This medical evidence also confirmed that the girdlestone procedure was temporary and that Ms. Riley’s condition would continue to deteriorate and that she would require hip replacement surgery. At best, this medical evidence supported a finding that Ms. Riley was capable of part-time sedentary work. The arbitrator found that this limited functional capacity did not permit Ms. Riley to return to employment that was commensurate with her pre-accident work history, and that accordingly she was not entitled to ongoing IRBs.
The arbitrator concluded by observing that Ms. Riley is a talented, energetic and capable individual and that she fully expected that with appropriate rehabilitation and vocational assistance, she would be capable of returning to suitable employment.
V. THE REVOCATION DECISION
The arbitrator started her analysis by posing the issue in the following terms; has there had been a material change in Ms. Riley’s circumstances, sufficient to satisfy her that Ms. Riley was no longer eligible for weekly benefits. Given the structure of the decision, it would appear that the arbitrator approached the matter as a two part test. One, had there been a material change in Ms. Riley’s medical condition. Two, what effect if any did that change have on her function, and more particularly, on her ability to engage in suitable employment.
The arbitrator reviewed Ms. Riley’s evidence concerning her medical condition. In short, Ms. Riley maintained that there had been no material change. She testified that she still suffered from pain, spasm and weakness, and that she fatigued easily. Ms. Riley took the position that she would remain continuously disabled until she had a hip replacement, but that she had no immediate plans to undertake the operation.
Ms. Riley filed a brief letter from her family doctor, stating that she had been totally disabled since the accident. The arbitrator noted that the letter offered little basis or explanation for this opinion, and that consequently she gave it “little weight.”
Pilot relied on the written opinion and testimony of Dr. Amies, a physiatrist, who examined Ms. Riley shortly before the revocation hearing. He testified that on examination he found the hip to be stable. Based on his examination, and review of a videotaped performance of the choir, he put Ms. Riley into the 40% of girdlestone patients who experience the least pain and discomfort. The arbitrator explicitly accepted this opinion.
The arbitrator also made note of the fact that in the years between the original arbitration and the revocation hearing, Ms. Riley had not returned to see her orthopaedic surgeon about a hip replacement, nor had she sought out other forms of therapy, and that she needed only relatively mild forms of analgesics.
The arbitrator concluded on the basis of this evidence that Ms. Riley’s medical condition had improved and that this represented a material change. In the subsequent portion of the decision the arbitrator focussed on evidence concerning Ms. Riley’s function. She also focussed on the changes in the structure of the choir, noting its evolution from a “loose volunteer church group” to a “carefully structured organization that has incurred serious professional and corporate responsibilities.” In addition she noted that this structural change was accompanied by significant artistic recognition and achievement.
In light of these changes, the arbitrator rejected Ms. Riley’s contention that she continued to devote 15 hours per week to the choir. She also dismissed Ms. Riley’s contention that her activities should be characterized as an amateur pastime of no vocational significance. She accepted that this characterization was true in the past, but found that as of the revocation hearing, Ms. Riley’s “activities with the choir are typical of the occupational activities of professional performing and recording artists,” and that “she has demonstrated through her activities over the last few years that she is fully capable of and not continuously prevented or disabled by her injuries from engaging in the occupation of or in employment as a professional musician.”
The arbitrator accepted Ms. Riley’s evidence that despite critical success, she was not earning a living as a musician. However, the arbitrator found that this was a matter of choice, and that nothing prevented her from pursuing her singing as employment rather than as a form of unpaid “ministry.” In this regard, the arbitrator equated Ms. Riley’s situation with the choices made by the insured person in Wison and Jevco Insurance Company (OIC A-008409, January 13, 1995). In that case, the arbitrator denied Mr. Wilson’s claim for ongoing benefits on the basis that he had elected to forego vocational retraining in favour of a volunteer position at a animal refuge. The arbitrator stated that Mr. Wilson was not to be criticized for this choice, but that it could not be ignored in relation to his claim for ongoing benefits. Likewise, the arbitrator found that Ms. Riley had declined Pilot’s offer of vocational assistance, and had decided not to return to school, in favour of pursuing her musical ministry, and that she could not ignore this in assessing whether or not Ms. Riley was entitled to ongoing benefits.
In addition to finding that Ms. Riley was capable of working as a professional artist, she also found that Ms. Riley was suited for and had the credentials to work as a choir-master, at a salary commensurate with her pre-accident work as a clerk. Finally, she also found that Ms. Riley could have returned to clerical work.
The arbitrator found that Ms. Riley’s condition had improved gradually in the period following the initial arbitration hearing, and concluded that the most appropriate date for the termination of benefits coincided with the end of the revocation hearing.
VI. THE ARGUMENTS ON APPEAL
Ms. Riley acknowledged that the arbitrator formulated the test correctly. As noted above, the arbitrator enunciated a two part test. One; had there been a material change in Ms. Riley’s condition. Two, did that change affect her functional ability to the extent that she was no longer prevented from engaging in suitable employment. However, Ms. Riley submitted that the arbitrator erred in the application of this test to the facts of the case.
Ms. Riley argued that the arbitrator inappropriately reversed the onus, making it her responsibility to prove that there had not been a change in her circumstances, instead of imposing on Pilot the obligation to prove that her condition had changed. In the alternative, Ms. Riley argued that the evidence supported a finding that there had been little if any change in her condition, and that the arbitrator erred in finding to the contrary.
Ms. Riley also argued that the arbitrator erred in focussing on changes to the choir’s structure and its emerging success, instead of on her personal circumstances.
Finally, Ms. Riley argued that the arbitrator erred in the way she approached the question of whether or not a career as a performing artist or choir-master was a suitable alternative, and whether there was sufficient evidence to support a finding that she could return to full-time clerical work.
Before I turn to a closer examination of each of these grounds, two general comments are called for.
One, appeals are restricted to questions of law. For the most part, Ms. Riley’s complaints are with the arbitrator’s assessment of the evidence. In many instances, Ms. Riley is in effect asking me to reassess the evidence and to make my own findings. However, given the restriction to appeals based on a question of law, I have very little room for interfering with findings of fact.
Two, while there is merit to some of the individual arguments advanced by Ms. Riley, if one steps back and looks at the matter as a whole, there was more than sufficient evidence to support the arbitrator’s findings that Ms. Riley’s condition had improved and stabilized in the period between the two hearings. Likewise there was sufficient evidence to support a finding that in light of these material changes, Ms. Riley was no longer prevented from returning to suitable employment, and accordingly was no longer entitled to benefits.
I will turn now to a more detailed examination of the arguments advanced on appeal.
- The arbitrator erred in finding that there had been a material change in her medical condition.
Ms. Riley advances two sub-arguments in this regard. First, she argues that a variation or revocation hearing is not an opportunity for an insurer to fill “gaps” in the evidentiary record from the first hearing. Second, she argues that even if Pilot can overcome this hurdle, the evidence cannot support a finding that there had been a material change in her condition.
I agree with the notion that a variation or revocation proceeding is not designed to afford the insurer an opportunity to pull together a better case, but there is no avoiding some level of reconsideration of the original evidence.
S. 284 of the Insurance Act reads as follows.
(1) Either the insured person or the insurer may apply to the Director to vary or revoke an order made by an arbitrator or the Director.
(2) If an application is made to vary or revoke an arbitrator’s order, the Director may decide the matter or he or she may appoint the same arbitrator or some other arbitrator to determine it.
(3) If the arbitrator or Director is satisfied that there has been a material change in the circumstances of the insured or that evidence not available on the arbitration or appeal has become available or that there is an error in the order, the arbitrator or Director may vary or revoke the order and may make a new order if he or she considers it advisable to do so.
(4) An order made, varied or revoked under subsection (3) may be prospective or retroactive. R.S.O. 1990, c. I.8, s. 284.
(5) Subsections 282 (5) to (9) and (11) to (11.2) apply with necessary modifications to an application under this section. 1993, c. 10, s. 35.
For our purposes, the key sub-section is 284(3) which authorizes the Director or his delegate to vary or revoke the original order in three distinct situations: if there had been a material change in the insured persons circumstances, on the basis of evidence that was not available at the time of the original order, or if there is an “error” in the order.
The second and third grounds are retrospective. They represent a challenge to the correctness of the original order. In contrast, the “material change in circumstances” ground is prospective. It does not challenge the correctness of the original order. It is designed to afford the insurer relief in circumstances where the insured’s circumstances have evolved to the point where payment of ongoing benefits can no longer be justified.
By its very nature, a change in circumstances can only be proven by the presentation of fresh evidence that speaks to the evolution in the person’s condition or other change in circumstances. However, to my mind that does not mean the individual presiding over the variation or revocation hearing is restricted to a consideration of the new evidence. The Divorce Act, R.S.C. 1985, c.3 (2nd Supp) contains a similar variation power in s. 17. There is authority considering that provision, for the suggestion that once the moving party establishes a material change in circumstances, every aspect of the initial award is open to review. See Willick v. Willick, 1994 CanLII 28 (SCC), [1994] 3 S.C.R. 670. I am not convinced that it is necessary to go that far in the context of a review of the insured person’s statutory accident benefits. However, particularly in respect of the second half of the test -- is the change sufficient to justify a finding that the person is no longer disabled-- it is both inevitable and entirely appropriate that the person conducting the variation or revocation will view the evidence tendered at the original hearing, and consider it in the light of the new evidence. Improper attempts to use the revocation and variation power to simply bolster a weak evidentiary record, can easily be controlled by the obligation to present evidence of a material change.
The second prong of Ms. Riley’s argument is essentially an attack on the arbitrator’s findings of fact, rather than a dispute over a question of law. However, Ms. Riley does allege that the arbitrator ignored important evidence and thereby erred in law. I am not convinced by this argument, but I will review it briefly.
Dr. Amies testified that he found Ms. Riley’s hip to be stable, and that there was no reason to believe she would need a hip replacement in the near future. He also testified that he could move the hip through a normal range of motion without evidence of pain, and that she could walk, albeit with the assistance of a cane, without apparent difficulty. However, Ms. Riley argued that this did not represent a material change from her condition at the time of the arbitration hearing. She argued that the arbitrator ignored the post-operative reports of her surgeons, Drs. Powell and Casses and the report of Dr. Langer who conducted an IME shortly before the arbitration hearing. She suggested that these reports indicate that her condition had improved significantly and that her pain level was fairly good. She argues these findings are largely consistent with the findings of Dr. Amies, and consequently undermine the arbitrator’s finding of a material change.
I have three principle difficulties with this argument. First, the present submission that Ms. Riley’s hip was giving her little trouble as of the time of the arbitration hearing, is entirely inconsistent with the position she advanced at that time. During the course of the arbitration hearing she maintained that she was in constant and debilitating pain, and had very little endurance or stamina. This is at complete odds with the report and testimony of Dr. Amies.
Second, I am not satisfied that the arbitrator ignored the evidence of Drs. Powell, Casses, and Langer. To the contrary, she referred to the findings of these doctors in her original decision, and there is no reasons to believe that she ignored their evidence in the course of her deliberations on the revocation request.
In addition, I think that Ms. Riley is distorting the impressions of Drs. Powell and Casses. Dr. Powell was very pessimistic at the time he performed the girdlestone procedure, and thought that Ms. Riley would need hip replacement surgery within a couple of months. His subsequent clinical notes reflect pleasant surprise that his patient was fairing much better than he had anticipated, and consequently that the surgery could be put off until she began to deteriorate. These comments were made shortly after the girdlestone operation, while Ms. Riley was still in a post-op recovery phase. They are in no way comparable to the comments of Dr. Amies who examined Ms. Riley approximately five years after her surgery and commented on how well she had adapted to her condition over the ensuing years.
Likewise, I believe that Ms. Riley is distorting the findings of Dr. Langer, when she suggests that they are not much different than the findings of Dr. Amies. At the arbitration hearing, Ms. Riley relied on the report of Dr. Langer to support her contention that she suffered from a significant amount of pain, and was capable of working part-time at most. This is quite contrary to the opinion of Dr. Amies, who testified that he thought Ms. Riley was capable of full-time work.
In conclusion, I am not convinced that the arbitrator ignored relevant evidence. Nor am I satisfied that the arbitrator made a finding of a material change that could not be supported by the evidence.
- The arbitrator erred by focussing on changes in the choir’s circumstances rather than on changes in her personal circumstances.
Ms. Riley argued that a change in the choir’s structure and success is not synonymous with a change in her circumstances. She acknowledged that such changes could be a reflection of increased capacity, but that the evidence for such a finding was lacking. Ms. Riley argued that if the arbitrator wanted to draw an inferences between a change in the choir and a change in her personal circumstances, she should have made an explicit finding concerning how many additional hours Ms. Riley was devoting to the choir. Ms Riley submitted that it was not sufficient for the arbitrator to merely state that she no longer accepted Ms. Riley’s estimate of 15 hours per week. In addition, Ms. Riley argued that the arbitrator improperly reversed the onus and required her, rather than Pilot, to establish how many hours she was devoting to the choir. In this regard, Ms. Riley pointed to the arbitrator’s comment that she had not tendered any documentation concerning her hours. With respect to the onus issue, there is a distinction between a reversal in the ultimate onus, and a shifting evidentiary onus. The arbitrator’s comments about the lack of any documentation reflect the latter. In the face of the evidence of a dramatic shift in the choir’s nature, there was a shift in the evidentiary onus that called for some evidence on Ms. Riley’s part to establish that there had not been a corresponding shift in her own commitments.
In addition, Ms. Riley’s arguments concerning the focus on the choir, treat this part of the arbitrator’s reasons as though it stands apart from the rest of the decision. It does not. The changes in the choir’s circumstances were considered by the arbitrator as part of a larger evidentiary record, which when considered in its entirety, satisfied the arbitrator that there had been a material change in Ms. Riley’s personal circumstances.
- The arbitrator erred in concluding that a career as a performing artist was suitable in the absence of evidence that she could have earned an income comparable to her pre-accident earnings.
This is Ms. Riley’s strongest argument. The Commission’s decisions have routinely held that a occupation will not be considered suitable if it does not produced an income similar to the insured’s pre-accident income. While there may be the odd exception to this rule, I am satisfied that the arbitrator erred by finding this to be a suitable occupation, without at least exploring the income issue. However, the arbitrator did not restrict herself to a finding that Ms. Riley was capable of working as a performing artist. She also found that she was capable of working as a choir-master, or returning to clerical work. For the reasons set out below, I can see no basis for interfering with these findings, and consequently any error with respect to the suitability of working as a performing artist, is insufficient to overturn the decision.
- The arbitrator erred in finding that she was capable of working as a choir-master.
Ms. Riley argued that there was insufficient evidence to support a finding that she had the credentials or experience to lead a church choir. In particular, she argued that the arbitrator erred when she relied on the evidence of Mr. Katz and his use of a bulletin produced by the Royal Canadian Council of Organists, which amongst other things set out recommended pay scales.
Ms. Riley did not object at the hearing to Mr. Katz’s evidence on this point, and she did not deal within the issue on cross-examination other than to confirm that the bulletin existed as of the first hearing. Nor did Ms. Riley present any competing expert evidence, and she did not state that she could not work as a choir-master during her evidence in chief. Her evidence on the issue during cross-examination was equivocal at worst. In the circumstances, I can see no basis for concluding that the arbitrator exceeded her jurisdiction or otherwise erred in law, when she found that Ms. Riley was suited for and qualified to work as a choir-master. Ms. Riley’s complaint is with the weighing of the evidence, and does not raise a reviewable error.
Ms. Riley also argued that the arbitrator erred by relying on Mr. Katz’s evidence, because the bulletin existed as of the first hearing.
In my view, the obligation to establish a change in circumstances on the basis of fresh evidence, does not mean that the insurer cannot rely on evidence that pre-dates the first hearing. The bulletin from the Council of Organists is a perfect example. It’s existence pre-dates the first hearing, but it only became relevant subsequently and in light of the significant improvements in Ms. Riley’s medical condition. This last point also demonstrates how the changes in the choir’s circumstances are relevant to Ms. Riley’s personal circumstances. Ms. Riley’s status as the leader of a choir that has been signed to a recording contract and that has gained a remarkable amount of critical success, is far different for the status she would have been afforded as the leader of a small church choir. The arbitrator did not err when she inferred that this change in status was relevant to the issue of Ms. Riley’s employability as a choir-master.
- The arbitrator erred in finding that she was capable of returning to full-time work as a clerk.
This argument is similar to the argument concerning employment as a performing artist. Ms. Riley argued that because the arbitrator did not make a positive finding that she was working full-time with the choir, the arbitrator was not in a position to make a finding that she was capable of working full-time as a clerk. I do not accept this proposition. One, it presupposes that Ms. Riley was not capable of spending more time on choir activities. Two, it presupposes that the physical demands of Ms. Riley’s commitments to the choir are equivalent to the demands of working as a clerk. Neither of these presumptions is self-evident. More importantly, Ms. Riley’s argument presupposes that the arbitrator had no other evidence on which to base her finding that Ms. Riley was capable of working full-time as a clerk. In this case, amongst other things, the arbitrator had the evidence of Dr. Amies who testified that in his opinion Ms. Riley’s was capable of returning to full-time clerical work.
Ms. Riley argues that Dr. Amies went too far and that the arbitrator ought not to have relied on his opinion. However, like a number of the other arguments, this is a challenge to the arbitrator’s weighing of the evidence, rather than a challenge that goes to jurisdiction, or otherwise suggests an error of law.
In conclusion, I see no basis for interfering with the arbitrator’s determination that there had been a material change in Ms. Riley’s circumstances, such that she was no longer entitled to ongoing benefits.
VII. EXPENSES
This is the first appeal from a variation hearing, and Ms. Riley argued some novel points concerning the nature of a variation hearing. However, in large measure, the appeal was an attack on the arbitrator’s findings of fact. In the circumstances, Ms. Riley is entitled to one-half of her expenses associated with the appeal.
June 12, 2002
Stewart M. McMahon Director’s Delegate
Date