Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2003 ONFSCDRS 153 Variation/Revocation P02-00033

OFFICE OF THE DIRECTOR OF ARBITRATIONS

LORRAINE LANCTOT Appellant

and

ZURICH INSURANCE COMPANY Respondent

Before: David R. Draper

Representatives: Michael J. Gillen for Ms. Lanctot Donna M. Crabtree for Zurich

Hearing Date: July 7, 2003

VARIATION/REVOCATION ORDER

Under section 284 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The application for variation/revocation of the arbitration order, dated January 18, 1999, as upheld on appeal, is dismissed.
If the parties cannot agree on appeal expenses, they may request a determination by writing to the Commission within 30 days of this order, as set out in Rule 79.1 of the Dispute Resolution Practice Code.

October 30, 2003

David R. Draper Director of Arbitrations

Date

REASONS FOR DECISION

I. NATURE OF THE APPLICATION

This is an application by Lorraine Lanctot to vary or revoke the arbitration order, dated January 18, 1999, as upheld on appeal. She claims there is new evidence that likely would have affected the outcome. In the alternative, she submits that there has been a material change in her circumstances.

For reasons that follow, the application is dismissed.

II. BACKGROUND

The history of this matter is set out in my motion decision, dated June 26, 2003. In summary, Ms. Lanctot was injured in an automobile accident on February 25, 1993. She applied to Zurich Insurance Company ("Zurich") for accident benefits. Zurich paid benefits, including weekly income benefits under s. 12(1) of the SABS-1990¹ for 156 weeks. However, it did not accept Ms. Lanctot's claim for weekly income benefits after February 25, 1996, under the stricter, post-156 week test in s. 12(5)(b). The relevant parts of that clause state as follows:

(5) The insurer is not required to pay a weekly benefit under subsection (1),

(b) for any period in excess of 156 weeks unless it has been established that the injury continuously prevents the insured from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience.

This issue went to arbitration in June 1998. Both parties were represented by counsel. They filed exhibits, including joint medical briefs. Ms. Lanctot testified and called three other witnesses: David Lanctot (her husband), Dr. O.G. Marengere (her family doctor), and Dr. U. Buenger (a specialist in physical medicine and rehabilitation). Zurich did not call any witnesses.

The Arbitrator released her decision on January 18, 1999. She found that although Ms. Lanctot suffered serious physical injuries in the accident, they had resolved over time and by February 1996, "no physical or psychological problems were impeding her return to work." The issue, therefore, was Ms. Lanctot's assertion that she could not work on a regular basis due to constant chronic pain and a limited range of motion in her neck. Given the subjective nature of the complaints, the Arbitrator focused on credibility. She found that Ms. Lanctot was not a credible witness. This not only affected the weight given to her testimony, but also the opinions of the health-care providers who relied on her subjective complaints.

As a result, the Arbitrator concluded that Ms. Lanctot did not meet the post-156 week test, except for a six-week period starting March 21, 1996 (approximately one month after the 156-week mark), when she had ear surgery. The Arbitrator's reasons are summarized on page 21 of the decision, as follows:

I find that Ms. Lanctot was capable of a gradual return to sedentary work by December 1995. I find that work as a sales clerk, secretary, receptionist (with a telephone assistance device), or bank teller (with a stool) is suitable, having regard to Ms. Lanctot's past work experience. Had Ms. Lanctot begun a gradual return to work trial in December 1995, as recommended by Dr. Morrison and Dr. MacGregor, I find that she would likely have been capable of returning to full time employment by February 25, 1996, the third year anniversary of the accident. Ms. Lanctot unreasonably refused to participate in a pain management clinic in late 1994/early 1995. She did not attempt any return to work after 1994. I find her failure to return to work after February 1996 is more likely related to her own lack of efforts in rehabilitating herself rather than due to her injuries from the accident. Thus, the Applicant has failed to establish on a balance of probabilities that her injuries from the accident continuously prevented her from engaging in any occupation or employment for which she is reasonably suited by education, training or experience, after February 26, 1996.

However, on March 21, 1996 the Applicant underwent further ear surgery to repair the damage caused by the motor vehicle accident. Assuming a normal recovery from surgery of six weeks, I find that Ms. Lanctot would have been unable to engage in any employment for six weeks after the surgery of March 21, 1996, and is therefore entitled to weekly income benefits for those six weeks.

Both parties appealed. Ms. Lanctot was represented by new counsel — Garay and Associates. Ms. Lanctot challenged the Arbitrator's conclusion that she did not meet the post-156 week test. Zurich objected to the Arbitrator's order that it pay benefits for the six-week period following the surgery.

On June 28, 1999, Mr. Garay withdrew Ms. Lanctot's appeal. A few days later, Zurich indicated that it was still pursuing its appeal. Ms. Lanctot did not respond to Zurich's appeal. Consequently, the hearing took place on October 18, 1999, without her participation. Zurich claimed that:

the evidence did not support the Arbitrator's finding that Ms. Lanctot's ear surgery was to repair damage caused by the accident; and
the order was inconsistent with the Arbitrator's conclusion that Ms. Lanctot failed to establish that, after February 26, 1996, her accident-related injuries continuously prevented her from engaging in any suitable occupation or employment.

On November 9, 1999, I allowed Zurich's appeal. While I found no error in the Arbitrator's conclusion that Ms. Lanctot's ear injury resulted from the accident, I concluded that she erred in ordering post-156 week benefits in the face of her conclusion that Ms. Lanctot was not continuously prevented from engaging in any suitable employment or occupation. As a result, I reversed the Arbitrator's order on this issue and ordered that if any weekly income benefits had already been paid pursuant to the order, Ms. Lanctot was obliged to repay them.

Three years later, in December 2002, Ms. Lanctot filed an application for variation/revocation. She claimed that after the arbitration hearing, she continued to be assessed, often at Zurich's initiative, and that this new evidence cast doubt on the Arbitrator's factual findings, as upheld on appeal, as well as showing a material change in her circumstances. Ms. Lanctot also claimed that she never authorized Mr. Garay to withdraw her appeal and, therefore, asked that it be put back on the list of appeals to be heard.

Before the hearing on her application for variation/revocation, Ms. Lanctot brought forward some of her issues by way of motion. She asked for an order reinstating her appeal and for interim expenses to obtain a transcript of the arbitration hearing for purposes of both the appeal and the application for variation/revocation. In a decision dated June 26, 2003, I denied both aspects of the motion.

III. ANALYSIS

This application for variation/revocation is brought under s. 284 of the Insurance Act. As set out in Rule 61 of the Dispute Resolution Practice Code (Fourth Edition), relief is available under this section in three situations:

(a) there has been a material change in the circumstances of the insured;

(b) evidence not available on the arbitration or appeal has become available; or

Ms. Lanctot relies most heavily on (b), the "new evidence" argument. However, she also claims there has been a material change in her circumstances. I find it convenient to deal with these issues in reverse order.

A. Material Change in Circumstances

Ms. Lanctot's argument is that even if the Arbitrator's decision stands, her condition has deteriorated to the extent that she met the post-156 week test at some point after the arbitration hearing. The problem is that at the 156-week mark, she had to prove that her injuries continuously prevented her from engaging in any occupation or employment for which she was reasonably suited by education, training or experience. The Arbitrator found that she did not meet this test. The question is whether someone who is not continuously disabled at the 156-week mark and for some period thereafter can qualify for weekly income benefits at a later date.

I dealt with this issue at some length in my earlier appeal decision in this matter. The primary test of entitlement to weekly income benefits is found in s. 12(1). The insurer is required to pay benefits during the period that the insured person is substantially unable to perform the essential tasks of his or her occupation or employment, provided he or she meets the initial conditions set out in s. 12(2) or (3). This obligation to pay benefits is ongoing, with no time limit. The insurer must make payments every second week while it remains liable to the insured person.² However, at the 156-week mark, the insurer's liability to pay weekly income benefits is limited; it "is not required to pay a weekly benefit . . . unless it has been established that the insured person is continuously prevented from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience" (s. 12(5)(b), emphasis added).

In this case, Zurich notified Ms. Lanctot that it was terminating her weekly income benefits on the basis that she did not meet the post-156 week test. She challenged this decision by applying for mediation and then arbitration. The Arbitrator found that at the 156-week mark, Ms. Lanctot was not "continuously prevented from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience." It follows, in my view, that Zurich's obligation to pay weekly income benefits ended at that point.

I note that this conclusion is consistent with the analysis in Haldenby and Dominion of Canada General Insurance Company (2001), 2001 CanLII 16603 (ON CA), 55 O.R. (3d) 470 (C.A.), a case involving the return-to-work provisions in s. 16 of the SABS-1990. The insured person argued that the two-year time limit for commencing a court action did not run from the 156-week mark, when the insurer refused to pay further weekly income benefits, but from the point at which he claimed he could no longer work and the insurer refused his reapplication for further benefits. The Court rejected this argument, as follows:

In any event, the appellant's interpretation is contrary to the scheme of the SABS. Section 12(5)(b) provides that the insurer is not required to pay a weekly benefit under subsection (1) for any period in excess of 156 weeks, unless it has been established that "the injury continuously prevents the insured person from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience." The appellant's argument is that an insured person can receive benefits for 156 weeks, continue to work at a job after the 156 weeks, and then apply for further benefits. That would contradict the scheme of the Act which only allows payments in excess of 156 weeks if the person is continuously prevented from engaging in his or her employment as a result of the injury. Clearly, if a person was working after the 156 weeks, that person was not continuously prevented beyond that period from working. As a result, it would be inconsistent with s. 12(5)(b) to allow a person to reapply for benefits after that time. The person would never be entitled to such benefits. There can therefore be no extended limitation period based on such a reapplication.

For these reasons, I reject Ms. Lanctot's application for variation/revocation based on a material change in her circumstances. In any event, her main contention is that she has been unable to work in any capacity since the accident.

B. New Evidence

The scope of the "new evidence" ground in s. 284 of the Insurance Act has been considered in previous decisions. In Ready and Progressive Casualty Insurance Company and Zurich Insurance Company, (OIC P-004768/P-005403 and V-004768/V-005403, June 25, 1997), Director's Delegate Naylor held that although the approach may be somewhat different from the test for accepting new evidence on appeal, the party seeking variation still has to show that the evidence could not have been obtained for the original hearing by due diligence and that, if it had been available, likely would have had an important influence on the outcome. She referenced the need for finality, stating that "[t]he legislation places limits on when an order may be reviewed in the interests of ensuring that, in an adversarial process, the parties prepare adequately for the hearing and to secure a finite end to the adjudication process."

I took a similar approach in Osbourne and Allstate Insurance Company of Canada and York Fire & Casualty Insurance Company, (FSCO A97-00067, June 23, 1998), adding the following comments:

Parties are expected to present their evidence at the arbitration hearing and, generally, will bear the consequences of any failure to do so. The variation/revocation process is not meant to remedy sloppy preparation. It is intended to deal with situations where information becomes available that casts significant doubt on the result. . . .

I do not accept that a variation/revocation hearing is available only if the information being brought forward was not in existence at the time of the hearing. While finality is important, so is reaching the right result. . . . (pp. 7-8)

More recently, Director's Delegate McMahon followed the analysis in Ready, "subject to the caveat that all the applicable factors must be weighed together." He also held that variation/revocation should not be used as an appeal in disguise, either to avoid the 30-day appeal period or to reargue an unsuccessful appeal.³

In this case, Ms. Lanctot walks a fine line between appeal and variation/revocation. She challenges various aspects of the Arbitrator's decision, making arguments that could have been pursued in her original appeal, and then points to new evidence that she claims supports her position. Despite the detailed submissions made on her behalf, I am not persuaded there is any basis for reopening the matter.

One problem is the long delay. Ms. Lanctot is asking for a reconsideration of her condition going back to February 1996 — the 156-week mark. Even the Arbitrator had to look back approximately 16 months, but then nearly four more years passed between the release of her decision and Ms. Lanctot's application for variation/revocation. The first piece of new evidence is dated June 6, 2000, 18 months after the arbitration decision and more than four years after the 156-week mark. This passage of time makes it extremely difficult for any of the assessors to comment authoritatively on Ms. Lanctot's condition at the critical time.

In such circumstances, an application for variation/revocation is unlikely to succeed unless the new evidence is so strong that it undermines the arbitrator's factual findings in some fundamental manner. That is not the case here. At its highest, the new evidence provides a possible explanation for some of Ms. Lanctot's maladaptive behaviour. It does little to undermine the Arbitrator's conclusion that by December 1995, Ms. Lanctot was capable of returning to work, and that her failure to do so after that had more to do with her lack of rehabilitation efforts than her accident-related injuries.

For example, in June 2000, Dr. George F. O'Connor, a psychologist who had been providing psychological counselling for about a year, reviewed the various reports, administered some psychological tests and prepared a report on Ms. Lanctot's status. He noted her inconsistent behaviour in respect of her ability to sit, and the likely invalidity of her testing profile due to considerable symptom exaggeration. His conclusions are far from definitive:

There is some evidence of a personality change and a possible personality disorder. There is some indication that the client's premorbid personality tended to be passive, inhibited and introverted and has become more demanding, displays inappropriate assertiveness, more ebullient affect, along with considerable anxiety and cognitive difficulties. Subtle maladaptive, personality traits can become exaggerated by a head injury. Personality change can also be the result of psychotherapy (individual and group). Ms. Lanctot-Bruyere appears to be reacting to a long history of passive, dependent, unassertive behaviour which frequently led to abuse in various forms, and may now be attempting to make up for past transgressions. (p. 8)

Ms. Lanctot undoubtedly presents a difficult medical problem. She has fared poorly since the accident. However, Dr. O'Connor's report provides limited assistance on the legal question of Ms. Lanctot's entitlement to accident benefits at the 156-week mark. For one thing, he reports on her condition in June 2000, more than four years after the fact. This is particularly important because he finds that Ms. Lanctot's experiences since the accident may have contributed to her maladaptive behaviour, including the psychotherapy she received and her ongoing disputes with Zurich. Also, Dr. O'Connor focuses on explaining Ms. Lanctot's problems, not on her functional abilities. When he does comment on her capabilities, he states that, from a psychological perspective, she is not prevented from doing her housekeeping and self-grooming.

Similar comments can be made about the report of Dr. T. Mendes, a neurologist who conducted an examination in August 2000. Dr. Mendes found sufficient evidence to conclude that Ms. Lanctot suffered a "mild head injury," but also noted that there is a "significant functional overlay" that made it difficult for him to assess her level of disability. Also, as Zurich points out, Ms. Lanctot continued to provide incomplete or inaccurate information about her situation. For example, she told Dr. Mendes that 25 years before, she had part of her stomach removed and was told that it appeared cancerous, a claim that is not supported by any other evidence. More significantly, Ms. Lanctot apparently failed to tell Dr. Mendes that she had been in a second accident five weeks earlier, on July 4, 2000.

In summary, all of the issues were before the Arbitrator. She received evidence on Ms. Lanctot's physical and psychological condition, including conflicting medical opinions about the existence of a head injury or post-traumatic stress disorder. She made findings supported by this evidence, and reached conclusions by applying the law to the facts as she found them. This is not an appeal. The question is whether the new evidence would have affected the outcome. In my view, it does not meet this test. The evidence filed by Ms. Lanctot post-dates the critical period by more than four years and raises many of the same questions faced by the Arbitrator. I am not persuaded it is sufficiently strong to reopen the Arbitrator's assessment of Ms. Lanctot's capabilities in February 1996.

Let me now deal with three other issues that fall into somewhat different categories.

1. The Labour Market Survey

At page 21 of her decision, the Arbitrator sets out her conclusion that Ms. Lanctot was capable of a gradual return to sedentary work by December 1995, and identifies suitable options: "I find that work as a sales clerk, secretary, receptionist (with a telephone assistance device), or bank teller (with a stool) is suitable, having regard to Ms. Lanctot's past work experience." Ms. Lanctot claims that Zurich commissioned a "Labour Market Survey," prepared by Genex in October 1995, well before the hearing, showing that jobs in her area were extremely limited. In her submission, if the Arbitrator had been given this information, her conclusion might well have been different.

Zurich has provided evidence that on October 6, 1997, eight months before the arbitration hearing, its lawyer wrote to Ms. Lanctot's lawyer, providing a list of medical documents in its possession and stating: "If there are documents listed in the index that you do not have please let me know and I will provide you with copies." This list included the Labour Market Survey, as well as an update in December 1995. Ms. Lanctot's lawyer asked for 38 of the 133 documents, but not the Labour Market Survey or the update. For the hearing, the two lawyers prepared joint document briefs, containing 72 different medical records and reports. The briefs included a report from Dr. MacGregor which referred to labour market surveys, but the actual surveys were not included.

Based on this evidence, I conclude that the Labour Market Survey and the addendum cannot be considered "evidence not available on the arbitration," within the meaning of s. 284(3) of the Insurance Act. Ms. Lanctot and her lawyer were aware, or should have been aware, of the labour market surveys. Consequently, these documents fall squarely within the doubtful area of bolstering a poorly prepared case. Nor am I persuaded that this evidence is so strong that refusing to reopen involves "shutting . . . [my] eyes to a fact which falsifies the assessment."⁴

2. Dr. MacGregor's report

The Arbitrator relied on Dr. MacGregor's evidence, stating as follows:

I give Dr. MacGregor's opinion considerable weight. It is the only medical opinion which relies primarily on the relatively objective findings of the functional capacity evaluation, rather than on the entirely subjective limitations suggested by Ms. Lanctot. (p. 18)

Ms. Lanctot challenges the strength of Dr. MacGregor's report, arguing that it was based on an assumption that she completed grade 12. However, as the Arbitrator found, that is not the case. Ms. Lanctot completed grade 8, but failed to finish grade 9 after two attempts.

In my view, this argument would have been more appropriately advanced in Ms. Lanctot's original appeal. In any event, it is clear from the Arbitrator's decision that she was aware of Ms. Lanctot's educational level, and there is no reason to assume she did not take this into account in evaluating the evidence, including Dr. MacGregor's report.

3. Surgery

The Arbitrator discounted Ms. Lanctot's complaints about her coccyx, stating that her decision to delay surgery suggested that the pain was not as severe as she claimed. Ms. Lanctot states that she went ahead with the surgery in December 1998, when it would have no obvious effect on the Arbitrator's decision. In her submission, this demonstrates that her complaints were legitimate and she was not avoiding treatment.

It is clear from her decision that the Arbitrator knew that Ms. Lanctot had rescheduled the surgery for late 1998. Her comment related to the delay up to that point. In my view, the new evidence does not undermine the Arbitrator's finding, let alone the decision as a whole.

For these reasons, Ms. Lanctot's application for variation/revocation, based on new evidence, is dismissed.

IV. EXPENSES

The parties did not address the question of appeal expenses. If they are unable to reach an agreement, they may request a determination by writing to the Commission within 30 days of this order, as set out in Rule 79.1 of the Dispute Resolution Practice Code.