Neutral Citation: 2003 ONFSCDRS 10

FSCO A02-001029

BETWEEN:

LASZLO MOLNAR

Applicant

and

COACHMAN INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Susan Sapin

Heard:

December 17 and 18, 2002, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Mr. Molnar represented himself

Harry P. Brown for Coachman Insurance Company

Mr. Molnar, a self-employed carpenter, was injured in a motor vehicle accident on April 7, 2001. On April 12, 2001 he applied to Coachman Insurance Company ("Coachman") for statutory benefits payable under the Schedule.¹ Coachman denied certain benefits. The parties were unable to resolve their disputes through mediation, and Mr. Molnar 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. Molnar entitled to a different rate of income replacement benefits (IRBs) than the weekly rate of $166.30 already paid to him by Coachman for the periods April 14 to April 21 and July 30 to November 30, 2001?
Is Coachman entitled to a repayment of IRBs under section 47 of the Schedule because Mr. Molnar failed to inform Coachman that he worked and earned income during the period for which it paid IRBs?
Is Mr. Molnar entitled to a special award under subsection 282(10) of the Insurance Act because Coachman unreasonably delayed payments to him for IRBs and medical and rehabilitation treatment?
Is either party liable to pay the arbitration expenses of the other?

At the hearing, Mr. Molnar also presented a claim for transportation expenses of $320, but withdrew this claim as it was not payable under the Transportation Expense Guideline.

Mr. Molnar presented insufficient evidence to establish that he is entitled to anything more than the weekly rate of $166.84 already paid to him.
Mr. Molnar must repay Coachman IRBs in the amount of $692.39.
Mr. Molnar is not entitled to a special award.
The issue of expenses may now be dealt with.

Preliminary matters:

This was a difficult hearing for all concerned from a procedural and evidentiary point of view.

Coachman paid IRBs for the period claimed in this arbitration. However, Mr. Molnar disputes the weekly rate of $166.84 calculated by Coachman's accountant. Despite the fact that Mr. Molnar has been represented by no less than four consecutive legal representatives beginning shortly after the accident, it was evident at the hearing that he did not understand how self-employment income is calculated under the Schedule, and that he has never provided Coachman with the source documents it repeatedly requested in order to determine a weekly IRB rate. Mr. Molnar maintained that he was unaware of the many requests made by Coachman to his legal representatives, and stated that in any event he had misplaced the documents requested.

Mr. Molnar stated that his main reason for proceeding to arbitration was not his IRB claim, but to air his complaints against Coachman in the form of a claim for a special award, an issue he raised for the first time the Friday before the start of the hearing. He refused to provide particulars to Coachman at that time.²

Section 282(10) of the Insurance Act authorises me to impose a special award based on evidence presented at a hearing, whether or not notice was given at the pre-hearing. However, the principles of natural justice and fairness require the insurer to be given notice that it is facing a special award and a reasonable opportunity to respond.³ Coachman argued that had it been aware of the particulars of the special award claim, it might have presented different evidence. Rather than reopening the hearing at a later date to hear new evidence, and given that Coachman had arranged for four witnesses to attend the hearing to explain how Mr. Molnar's claim was handled, I decided to allow Mr. Molnar to present his evidence in order to determine if it was sufficient to make out a claim for a special award.⁴ As it turned out, I found no grounds for such an award on the evidence provided.

Although there had been considerable prior documentary exchange, neither party managed to produce all of the documents on which they intended to rely at the hearing in accordance with the time frames set out in the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001).

On the consent of the parties, I admitted as evidence at the hearing documents presented by either party, provided they were relevant to the issues in dispute, probative, and not prejudicial to either party, regardless of whether or not these documents were previously produced.

BACKGROUND:

Mr. Molnar was born in Hungary in 1963. He attended elementary school until age 14, then spent three years learning to be a carpenter. He completed five years of engineering studies at the equivalent of a technical college before emigrating to Canada in 1985. He is married with one child and has been a self-employed carpenter since 1998. He speaks English very well and did not require an interpreter at the hearing.

Despite this, however, Mr. Molnar appeared to have difficulty understanding the import of the evidence presented at the hearing. As there was no evidence of psychological or psychiatric difficulties,⁵ I can only conclude that Mr. Molnar's inability to accept Coachman's explanations about his entitlement to benefits or to appreciate the meaning of evidence presented at the hearing were due not to language abilities or psychological difficulties, but to either a genuine inability to assimilate, or an unwillingness to accept, information that did not accord with his fixed belief that he has been seriously wronged by his Insurer.

Many of the facts in this case are disputed. However, as I understand Coachman did not dispute Mr. Molnar's eligibility for IRBs on the grounds of disability, I make no finding about whether he was substantially unable to complete the essential tasks of his employment for the period during which IRBs were paid. I understood Coachman's position to be that Mr. Molnar is not entitled to a greater weekly rate than was paid, and that he should repay IRBs paid for the periods November 21 to 24 and 28 to 30, 2001, because he did not disclose to Coachman that he worked and earned income on those days.

Coachman further argued that Mr. Molnar should repay all of the IRBs he was paid, on the grounds that he was disentitled to any IRBs in the first place under section 33 of the Schedule, because he failed to provide information reasonably required to determine his entitlement to these benefits. However, I find that Coachman voluntarily chose to pay IRBs at a particular weekly rate on the basis of information available at that time. As such, I find Coachman should not now be entitled to rely on Mr. Molnar's non-compliance with section 33 of the Schedule to claim repayment of the entire amount paid.

Facts:

The details of the accident are not in dispute.

Mr. Molnar was returning to Toronto from work in Kitchener when he swerved to avoid a car that cut in front of him on Highway 401. His van hit the guardrail twice. The police investigated, and his van was towed to a body shop and eventually written off. As it was a Saturday, Mr. Molnar did not see a doctor until Monday. His own family doctor was on vacation, so he saw Dr. Armando Gonzales, who ordered x-rays, diagnosed a strained back muscle and bruising from the seatbelt. Dr. Gonzales prescribed Tylenol 2 for pain, and sent Mr. Molnar for chiropractic treatment and physiotherapy, which he began immediately and attended three times a week, changing facilities twice.

Dr. Gonzalez filled out a Disability Certificate dated May 2, 2001 stating that Mr. Molnar sustained a low lumbar strain and could return to his pre-accident employment. Mr. Molnar testified that he returned to work on April 21, and continued to work until July 30, although it took him 50 to 75 per cent longer to complete his work, and he had to hire helpers to do the heavy lifting because he was unable to do it himself. He stated that before the accident, although he worked with a partner, he lifted and carried such items as 4 x 8 foot sheets of 3/4 inch thick medium-density fibreboard weighing 48 kg, or 105.6 lbs by himself. He stated he could not do this after his accident, and his work amounted, in effect, to a light-duty part-time job. A second disability certificate dated October 3, 2001 provided by Dr. Gonzalez stated Mr. Molnar was unable to work.

Quantum of RBs

At the pre-hearing on October 21, 2002, Mr. Molnar claimed IRBs for the periods April 14 to 21 and July 30 to November 30, 2001, a period of 132 days, or 18.85 weeks, at the rate of $242 per week. This differed from his claim at mediation, which was for $400 a week to November 22, 2001. At the hearing, Mr. Molnar presented Coachman with yet another rate of $299 per week.⁶

On November 11, 2002, shortly after the pre-hearing, counsel for Coachman sent Mr. Molnar a cheque for $3,670.48 "for 22 weeks of income replacement benefits from April 14 to April 21 and July 30, 2001 to November 30, 2001," calculated on the basis of a weekly IRB of $166.84.⁷ Mr. Molnar disputes this rate.

Coachman based this rate on a preliminary calculation prepared by its accountant, Jennifer Anderson. Ms. Anderson testified at the hearing that she based her calculation on handwritten lists of revenues and expenses provided by Mr. Molnar, unsupported by original documents. Ms. Anderson was required to make a number of assumptions from this information, all of which are outlined in her December 7, 2001 interim report.

I find Ms. Anderson made repeated requests to Mr. Molnar's legal representatives for the precise documents necessary to calculate an IRB, such as source documents (original invoices, bills, receipts, etc.) and Revenue Canada tax returns for 2000 and 2001.⁸ I find this information was necessary to ascertain Mr. Molnar's pre-accident self-employment income and to properly calculate an IRB, and that Ms. Anderson's requests for this information were reasonable under section 33 of the Schedule, which requires insured persons to provide insurers with "any information reasonably required to assist in determining the person's entitlement to a benefit." Section 33 further provides that no benefit is payable during the period the information is not provided.

Mr. Molnar testified that he was unaware of Ms. Anderson's requests to his legal representatives. He further stated that he had misplaced his business records, despite the fact that, at the pre-hearing on October 21, 2002, he agreed to provide Coachman with complete records of his employment and earnings for the periods claimed.⁹ The records have never been provided.

Mr. Molnar's communication difficulties with his legal representatives are not Coachman's responsibility, and they do not excuse his failure to supply the necessary information. Despite the fact that it was not required to pay benefits under section 33, however, Coachman nevertheless voluntarily paid IRBs on the strength of the limited and unverified information provided. I find that it did so in order to dispose of Mr. Molnar's claim at a weekly rate favourable to itself and to secure a tactical advantage in the event Mr. Molnar chose to proceed to arbitration. I find this to have been a sensible course of action in the circumstances. However, I find that Coachman cannot now argue that Mr. Molnar's non-compliance with section 33 disentitles him to IRBs and entitles it to repayment of the entire amount paid, and I dismiss that part of Coachman's claim.

As I received no other evidence that would support a different weekly rate, I accept Ms. Anderson's assumptions, and her calculation of a weekly IRB of $166.84.¹⁰

Misrepresentation and repayment

Coachman submits that Mr. Molnar must repay his IRBs under section 47 of the Schedule on the grounds of wilful misrepresentation because he failed to disclose that he worked and earned income after the accident, on November 21, 22, 23, 24, 28, 29 and 30, 2001. By letter dated November 20, 2002, Coachman advised Mr. Molnar that it was seeking repayment of the entire $3,670.48 in IRBs paid up to November 30, 2001. Counsel for Coachman advised that Coachman applied for mediation of the repayment issue at FSCO on December 11, 2002, less than a week before this hearing. Mr. Molnar objected to this issue being included in this arbitration.

I adopt previous FSCO jurisprudence stating that the issue of repayment reasonably and consequentially flows from the issue of entitlement to and amount of IRBs. Mr. Molnar has put this in issue by proceeding with this arbitration.¹¹ Mr. Molnar has also raised the issue of a special award, which requires me to examine the Insurer's conduct. This cannot be done in a vacuum. Scrutiny of the Insurer's conduct also requires that I take into account the conduct of the Applicant, which in this case includes whether or not he misrepresented himself to his Insurer. I conclude therefore that I have jurisdiction to determine the issue of repayment.

I find that Mr. Molnar must repay the IRBs he received from Coachman for the seven days he worked between November 21 to 24 and November 28 to 30, 2001, for the following reasons. Shortly after its November 11, 2002 IRB payment to Mr. Molnar, Coachman discovered that Mr. Molnar was paid $2,450 for work performed at the Best Western Inn in London during the period he claimed to be off work.¹² Mr. Molnar did not dispute this at the hearing and did not explain why he never disclosed these facts directly to Coachman at any time, particularly at the pre-hearing. This is somewhat puzzling, as he did tell Dr. Kilian Walsh, a psychiatrist, and Dr. Stanley Sober, an orthopaedic surgeon, in the course of Insurer's Examinations (IEs) on December 13 and 18, 2001, that he had returned to light work with hired help "a couple of weeks ago" so as not to lose his clients.¹³ Absent an explanation, however, and given the significant income earned and not disclosed, I find that Mr. Molnar wilfully misrepresented his employment situation at the pre-hearing with respect to work performed and income earned at the Best Western Inn, and that he must repay the IRBs paid for those seven days as required by section 47.

Coachman attempted to further establish, through the evidence of Ms. Ana Paula De Brito, a certified kinesiologist who conducted periodic functional capacity assessments (FCAs) of Mr. Molnar, that Mr. Molnar misrepresented the amount of time he worked during the entire period for which IRBs were paid. However, Ms. De Brito testified that the notation of full-time work on the computerised FCA summary forms she completed was a misprint, and that she recalled that Mr. Molnar had told her he was in pain and that he worked about an hour a day or even an hour every second day. I do not find this evidence sufficient for me to reliably conclude that Mr. Molnar earned any income or wilfully misrepresented his employment other than on the days I find he worked at the Best Western Inn.

Section 47 also states that an insured person must repay amounts paid to it in error, regardless of the source of the error. I find that Coachman overpaid IRBs due to an apparent miscalculation of the number of weeks in the period claimed. According to my calculations, the periods April 14 to 21 and July 30 to November 30 add up to 18.85 weeks, and not 22 as Coachman stated in its November 11, 2002 letter. (See footnote 7). Mr. Molnar is required to repay $166.84 for the seven days worked, plus $525.55 for the 3.15 weeks overpaid in error, for a total of $692.39.

Special Award:

Subsection 282(10) of the Insurance Act provides that an arbitrator may order a special award against an insurer where he or she finds that the insurer unreasonably withheld or delayed payment of statutory accident benefits to an insured person.

Mr. Molnar claimed that he was entitled to a special award because Coachman delayed payment of IRBs and medical treatment. He further alleged that Coachman purposely ignored a change of address and mishandled documents in his file, in order to avoid paying benefits. These allegations are completely without merit, are unreasonable and have no basis in fact. I have dealt with them at some length in this decision so that my reasons for dismissing Mr. Molnar's claim for a special award are clear.

I find no evidence to support Mr. Molnar's claim that Coachman unreasonably withheld or delayed payment of IRBs. They were paid for the periods claimed, even though Coachman was under no obligation to pay benefits in the absence of information it reasonably required to determine entitlement to, and a correct weekly rate for an IRB. In failing to provide this information, Mr. Molnar, and not Coachman, is responsible for any delay.

I find no evidence that Coachman withheld or delayed payment for medical treatment.

At the pre-hearing, Mr. Molnar claimed expenses of $8,090.61 for physiotherapy and chiropractic treatment up until early 2002. Coachman eventually paid the total outstanding amount in the course of the dispute resolution process, some time after the October 21, 2002 pre-hearing. The FSCO jurisprudence is clear on three things: a party is not free unilaterally to end a proceeding, an insurer's unilateral action in agreeing to pay benefits at issue does not necessarily dispose of the question of a special award, and late payment by the insurer does not strip an arbitrator of jurisdiction to determine the issue of a special award.¹⁴ These principles do not apply in this case, however, because medical benefits were neither unreasonably delayed nor withheld. Consequently, there are no grounds for a special award.

I find that Coachman paid for initial physiotherapy and chiropractic services outlined in Treatment Plans dated April 9 and 17, 2001, but rejected further Treatment Plans dated June 18, August 4 and September 17, 2001, on the basis that it was "not in agreement" with the medical expenses claimed.¹⁵ Coachman also rejected a June 27, 2001 psychological Treatment Plan.

I find that Coachman complied with subsection 38(12) of the Schedule, which obliges insurers who refuse to pay for treatment to notify the insured person that they require him to undergo a medical and rehabilitation assessment at a Designated Assessment Centre (Med rehab DAC). In a report dated November 7, 2001,¹⁶ the assessors at the West Park DAC, a physiatrist, a chiropractor and a physiotherapist, found the first two Treatment Plans to be reasonable and necessary, and the third partially so. The Treatment Plans dated August 4 and September 17 were not found to be reasonable on the basis that Mr. Molnar had achieved maximum benefit. On December 2, 2001, Coachman paid for treatment the DAC considered reasonable and necessary.

I find it was reasonable for Coachman to accept the findings of the DAC report and to pay for treatment in accordance with its recommendations. I find Coachman did so without unreasonable delay.

The only aspect of Coachman's conduct that could be considered unreasonable was its failure to provide adequate reasons for refusing to pay for treatment. Subparagraph 38(12)(b)(i) of the Schedule requires that notice to the insured person of a DAC assessment under section 38(8) must include the insurer's reasons for not agreeing to pay for all goods and services contemplated by the treatment plan. That an insurer is "not in agreement" with the medical expenses claimed is not a reason for refusing treatment, and is unacceptable.¹⁷ However, I find no evidence that this "non-reason" resulted in a withholding or delay of benefits. Consequently, no special award is payable on that ground.

There is absolutely no evidence to support Mr. Molnar's allegation that Coachman purposely sent correspondence, particularly notices of impending IEs under section 42 of the Schedule, to the wrong address so that he would miss the appointments, and Coachman could then terminate his benefits. It is true that Mr. Molnar did in fact miss an FCE scheduled to take place in his home on December 7, 2001, and that Coachman identified non-compliance with section 42 as one reason he was not entitled to an IRB as a result (non-compliance with section 33 being the other reason.)¹⁸ However, as Coachman rescheduled the FCE to December 31, 2001, and Mr. Molnar received notice and attended, denial of benefits for non-attendance quickly became a non-issue.

As benefits were neither delayed nor withheld as a result of non-attendance and nothing turned on the fact that Coachman may have used an outdated address, no special award is payable.

In any event, I find that any confusion about Mr. Molnar's address was his own doing. I find that evidence presented at the hearing contradicted his testimony and indicated he was not truthful or forthright with Coachman about where he was living. I find that Mr. Molnar did not inform Coachman when he sold his house at 55 Leigh Avenue, where he lived with his wife and daughter, in Toronto on July 30, 2001. I find the Molnars were under court order to live separately¹⁹ but chose not do so and for that reason Mr. Molnar did not disclose he had moved into an apartment with his wife and daughter at 55 Rankin Crescent, also in Toronto.

I find that Mr. Molnar did not leave a forwarding address with the post office when he left Leigh Street, but simply notified selected parties that they could reach him through his cell phone. I find that Coachman was not advised of a change of address until September 26, 2001, when Mr. Molnar's legal representative, Ms. Denny Hutner-Pollock, e-mailed Ms. Jennifer Lloyd, Coachman's independent adjuster, to advise that she no longer represented Mr. Molnar and that his new address was 55 Rankin Crescent.²⁰

I find that the Treatment Plans sent to Ms. Lloyd continued to bear the Leigh St. address. I accept Ms. Lloyd's testimony that she did not always review mail as soon as it arrived at her office and that she may not have been aware of Mr. Molnar's new address by the end of September 2001.

I accept Ms. Lloyd's testimony that Dr. Joel Nathanson, chiropractor, advised her that when he went to 55 Rankin to conduct the FAE on December 7, 2001, he was told that Mr. Molnar did not live there. She testified that Dr. Nathanson also attended at 55 Leigh Street, with the same result.

I find that on December 31, 2001, in the course of the rescheduled FCE, Mr. Molnar told Dr. Nathanson that he lived two days a week with a "girlfriend" at the Rankin Crescent apartment and that he had no fixed address the rest of the time.²¹

I find that in a telephone conversation on January 14, 2002, Ms. Lloyd asked Mr. Molnar directly if he lived at 55 Rankin, and he stated that he did not.²²

I accept the testimony of Ms. Lloyd and Mr. Thomas Jakob, Coachman's adjuster, supported by the documentary evidence, that as of December 7, 2001, documents to Mr. Molnar were sent to both addresses.

I find Mr. Molnar's allegations that Coachman's handling of documents in his file was somehow improper, ("hanky-panky with the documents," to use his term for lack of a better one), to be completely unfounded. He cited as an example a medical report pertaining to someone else that was included in a list of documents sent to the West Park DAC for review as part of his DAC assessment. The document was not referred to in any of the DAC reports. I find that when Mr. Molnar made his concerns known to them, both West Park and Coachman responded with perfectly reasonable letters of explanation for what was obviously a mere clerical error.

Mr. Molnar, however, was not satisfied. He went to the extent of attending at the facility that authored the document to get a copy. As it turned out, the document could not be found, further adding to Mr. Molnar's suspicions. Although the clerical error had no possible significance to his case, Mr. Molnar remained convinced that this was yet another example of Coachman's duplicity.

Mr. Molnar cited as a further example of "cover-up" the fact that the files he requested and received from the West Park DAC and Coachman in the course of the arbitration proceeding did not contain exactly the same documents. Both Ms. Lloyd and Mr. Jakob, the Insurer's adjusters on this case, testified and explained their file and document-handling practices. I find that apart from a certain inevitable bureaucratic inefficiency that is the bane of large organisations that deal in large quantities of paperwork, there is absolutely no evidence of any unreasonable or improper conduct on the part of West Park or Coachman. Again, as there is no evidence that Coachman's handling of Mr. Molnar's documents resulted in delay or withholding of benefits, there are no grounds for a special award.

EXPENSES:

Both parties claim their expenses of the arbitration. In accordance with Rule 79 of the Dispute Resolution Practice Code, the parties may request a hearing to determine the matter if they are unable to agree on the entitlement to or the amount of expenses. Pursuant to Rule 77.5, if either party wishes me to consider any relevant Offer to Settle or Response to an Offer to Settle made under Rule 76, the party must file such document with the Commission within 10 days from the date of this decision.

January 31, 2003

Susan Sapin Arbitrator

Date