Neutral Citation: 2003 ONFSCDRS 24

FSCO A01-001518

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

RANDAL KANE

Applicant

and

LOMBARD GENERAL INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before:

Susan Sapin

Heard:

October 15 and 16, 2002, at the offices of the Financial Services Commission of Ontario in Toronto.

Written submissions were received on December 10, 2002.

Appearances:

G. Joseph Falconeri for Mr. Kane

Harry P. Brown for Lombard General Insurance Company of Canada

Issues:

The Applicant, Randal Kane, was injured in a motor vehicle accident on February 16, 1996. He received statutory income replacement benefits (IRBs), and then loss of earning capacity benefits (LECBs) from Lombard General Insurance Company of Canada ("Lombard"), payable under the Schedule,¹ until June 5, 2001, when, as a result of an assessment of his residual earning capacity (REC) by a Designated Assessment Centre (REC DAC), Lombard reduced its income payments to him by $114.60 per week, the amount it says he should be able to earn as a part-time telemarketer. Mr. Kane disputes that he can work as a telemarketer, and submits that his REC is zero. The parties were unable to resolve their dispute through mediation, and Mr. Kane 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:

1. What is Mr. Kane's residual earning capacity?

2. Is Mr. Kane entitled to a special award because Lombard unreasonably delayed or withheld benefits?

3. Is either party entitled to its expenses of the arbitration?

4. Is Mr. Kane entitled to interest on all overdue amounts in accordance with section 68 of the Schedule?

Result:

1. Mr. Kane's residual earning capacity is zero. Therefore, Lombard shall repay to Mr. Kane the $114.60 per week it deducted as of June 5, 2001, and ongoing.

2. Mr. Kane is entitled to a special award of $6,000, inclusive of interest.

3. Mr. Kane is entitled to his reasonable arbitration expenses.

4. Mr. Kane is entitled to interest on all overdue amounts in accordance with section 68 of the Schedule.

Legislative criteria

Under section 30 of the Schedule, an insured person's REC is defined as the amount the person could earn from the type of employment that best satisfies the criteria set out in subsection 30(2)1.:

(i) The person is able and qualified to perform the essential tasks of the employment, or would be . . . if the person had not refused to obtain treatment or participate in rehabilitation that was reasonable, available and necessary to permit the person to engage in the employment.

(ii) The employment exists in the area in which the person lives and is accessible to the person.

(iii) It would be reasonable to expect the person to engage in the employment having regard to the possibility of deterioration in the person's impairment and to the person's personal and vocational characteristics.

A person is able to perform the essential tasks of the employment if the person does not have any impairment that permanently prevents the person from performing those tasks; a person is qualified if he or she has the job skills and any license or other credentials required, or could obtain them without significant effort.²

Subsection 2(1) of the Schedule specifies that "personal and vocational characteristics" include:

a) employment history

b) education and training

c) vocational interests and aptitudes

d) vocational skills

e) physical abilities

f) cognitive abilities

g) language abilities

The task of identifying a suitable employment and the potential income that could be earned from it, or REC, is carried out by a Designated Assessment Centre mandated to conduct multidisciplinary assessments under section 27 of Schedule. The insured person is required to submit to reasonable physical, psychological, and mental examinations, after which the DAC must designate the type of employment that best satisfies the criteria above.

Section 27 of the Schedule further requires the DAC to provide the insured person and the insurer with a report that explains the reasons for the specific employment and income identified. These reasons must include a description of any possible deterioration in the person's condition, and must identify the personal and vocational characteristics that the DAC took into account at the time it made its assessment.

In this instance, I find the June 2001 REC DAC conducted by WorkAble Centres Inc. was seriously flawed because the assessors did not properly apply the statutory criteria and reached a conclusion inconsistent with their own findings. As this was plain to see from the REC DAC reports themselves, I find it was unreasonable for Lombard to rely on the report to reduce Mr. Kane's weekly income benefits. Consequently, I find that Mr. Kane's REC is zero, and he is entitled to a special award.

EVIDENCE AND ANALYSIS

I will deal with the criteria in order.

Criterion #1

(a) The person is able and qualified to perform the essential tasks of the employment

Mr. Kane, 48, has a Grade 10 education and has been a licensed automobile mechanic since 1986. Except for six months in 1979, when he unsuccessfully tried his hand at real estate, he worked as a mechanic for Canadian Tire from 1972 until his motor vehicle accident. There is no dispute that he was seriously injured in the accident, and that his resulting physical limitations prevent him from ever returning to this job.

Mr. Kane disputes the conclusion of the June 5, 2001 REC DAC report that he is able and qualified to perform the essential tasks of a telemarketing position 4 hours per day, 5 days per week, despite his physical limitations. This nine-day assessment was conducted by a general medical practitioner, an occupational therapist, a physiotherapist, a psychologist, and a psychometrist, and included a labour market survey.

Given the minimal formal qualifications identified for telemarketers, and the fact that on-the-job training is provided, Mr. Kane would be qualified for this type of position from that point of view. However, I find the report does not support the conclusion that Mr. Kane is physically or mentally able to do this job. Furthermore, Mr. Kane testified that when the psychometrist asked him how he felt about telemarketing, he told her emphatically that he held such people in contempt, that he did not like being contacted by them at home, and that he routinely insisted on being removed from their contact lists. Mr. Kane's strong feelings about the job selected for him by the DAC are factors no one seems to have taken into account.

Mr. Kane testified that, from the date of the accident, he has had constant daily pain varying from moderate to intense in his neck, left shoulder, back and legs. The pain is exacerbated by activity, and requires that he rest after exerting himself. He suffers from headaches, dizziness, nausea, memory loss, poor sleep, an inability to concentrate, blurry vision and depression. This is not disputed.

Dr. Daniel Ozimok, the general medical practitioner who conducted the medical examination portion of the REC DAC assessment, confirmed these symptoms and reported that Mr. Kane had been diagnosed with "aggravation of pre-existing degenerative changes in the cervical spine, thoracic outlet syndrome, and thoracolumbar strain." He concluded that these placed significant physical restrictions on what Mr. Kane could do. He noted that Mr. Kane took up to five tablets daily of Oxycontin, a narcotic drug, for his back pain, as well as Elavil, an antidepressant used in the treatment of chronic pain, and Diclofenac, a drug that relieves pain due to arthritis.³ Dr. Ozimok opined that Mr. Kane was fit only for light sedentary work that did not require prolonged sitting, standing or walking, and where he could pace himself in these activities.

Dr. Ozimok is a general practitioner with little expertise in chronic pain. Although aware of Mr. Kane's medications, he did not consider either their effect or the effect of chronic pain itself on whether Mr. Kane would be competitively employable as a telemarketer on a permanent daily basis. In fact, the effect of chronic pain and medication on Mr. Kane's employability was not considered by any of the assessors. Dr. Ozimok's opinion is confined to medical/physical restrictions only and I find it of little value in determining whether Mr. Kane is physically able to consistently perform the essential tasks of a permanent part-time telemarketing position. Dr. Ozimok conceded at the hearing that he would defer to the opinion of an orthopaedic specialist with respect to Mr. Kane's diagnosis. Dr. D.J. Ogilvie-Harris, an orthopaedic surgeon who first examined Mr. Kane in December 1997 and has seen him several times since, testified persuasively at the hearing that Mr. Kane was not competitively employable. His evidence will be discussed in more detail below.

The REC DAC physiotherapy assessment, conducted by a physiotherapist and an occupational therapist, noted that Mr. Kane completed three hours of assessment activities on the day of the physiotherapy assessment with breaks totalling 20 minutes, and that he demonstrated poor positional tolerance, requiring the ability to change position as needed. His driving tolerance was not measured.

Dr. Deborah Cowan, the REC DAC psychologist, concluded that Mr. Kane meets the DSM-IV diagnostic criteria for pain disorder and adjustment disorder with moderately severe anxiety and depression. I find it significant that she based her findings on clinician-rated measures, and not solely on self-rated measures. Although Dr. Cowan concluded in her report that Mr. Kane was not disabled from work from a psychological perspective, I find that she failed to take into account his psychological suitability for the actual telemarketing jobs identified. She completely ignored the effect that Mr. Kane's medications and a one-hour commute each way might have on his already anxious and depressed condition. In fact, I find that Dr. Cowan's report indicates she likely was not even aware of the full extent of his medication, as she records only that he took "Amitriptyline for sleep."

More importantly, Dr. Cowan ignored the fact that a telemarketing position was entirely contrary to Mr. Kane's vocational preferences and actual work experience, factors she herself had identified in her report. It defies common sense that a psychologist would recommend a depressed person for a job for which he was clearly not suited. I will have more to say about Dr. Cowan's conclusions under the heading "Criterion #3 - personal and vocational characteristics," below, but for the purpose of determining Mr. Kane's psychological ability to perform the essential tasks of a telemarketing position, I was not persuaded by her report that a person who suffers chronic pain requiring fairly heavy-duty daily medication and who is moderately severely depressed and anxious would be psychologically able to handle a job in which he has expressed not only little interest, but an active dislike.

I note the assessors found that Mr. Kane put forth full and honest effort in both the physical and psychological components of the testing, and did not exaggerate his symptoms or his abilities.

I, too, found Mr. Kane to be an honest, straightforward and down-to-earth witness. His testimony was consistent with the medical evidence presented and he made no attempt to exaggerate his circumstances. He candidly admitted that he was thoroughly fed up, frustrated and discouraged with his condition and with his seven-year relationship with Lombard, and that he was disappointed with Lombard's apparent change of heart about offering him a lump-sum settlement. Cross-examination of Mr. Kane did not change my opinion. Where Lombard's evidence is inaccurate, contains gaps, or conflicts with Mr. Kane's, I prefer Mr. Kane's evidence.

Criterion #1

(b) the person would be able and qualified if the person had not refused to obtain treatment or participate in rehabilitation that was reasonable, available and necessary to permit the person to engage in the employment.

Lombard submits that Mr. Kane has failed to comply with the responsibility to make reasonable efforts to seek employment required of an insured person under section 13 of the Schedule, because he wants to receive a lump sum settlement of his claim, which is an inappropriate reason. Lombard argues that I should draw an adverse inference from this as a result.

I reject this submission for several reasons. Firstly, it is not clear to me that section 13, which is found in Part II of the Schedule, applies where an insured person is entitled to receive LECBs. The comprehensive, and complicated, rules pertaining to LECBs are contained in Part VI of the Schedule, which makes no reference to section 13. Part VI contains its own rules for compliance, in the form of the criteria set out in section 30; in this case, article 30(2) 1.(ii), referred to as Criterion #1(b) in this decision: participation in rehabilitation that is reasonable, available and necessary to permit the person to engage in the particular employment identified. I am not aware of any other requirements that would apply in this case.

Secondly, I find that neither the particular employment identified nor the proposed rehabilitation was reasonable or necessary. What Lombard proposed was a work-hardening program that included setting up a telemarketing work station in Mr. Kane's home. This, according to the October 19, 2001 report of the occupational therapy consultant assigned the task, would assist Mr. Kane to build tolerance to the required skills,

including gaining comfort on basic computer skills, and overall driving tolerances, so that he is able to perform at the minimum 4 hours/day, 5 days per week level. The most suitable location to build conditioning is the client's home, as this will fulfill this therapist's initial goals of assisting the client to establish a structured and consistent routine, expose the client to daily driving demands, and build tolerances to computer-based telemarketing skills.⁴

Mr. Kane's goals are not mentioned. It was not explained how working at home would expose Mr. Kane to daily driving demands.

As noted previously and as discussed in greater detail below, I find that it should have been obvious to any reasonable person on the face of the REC DAC report, that telemarketer was not a suitable or reasonable occupation for Mr. Kane. Mr. Kane testified that he loathes telemarketers; that he prefers to work with things, not people, (a factor reflected in Dr. Cowan's vocational testing and in his own vocational history); that his chronic pain makes him impatient, irritable and short-tempered; that he has been unsuccessful in sales in the past; and that he and his wife did not want strangers in their home. I find these to be valid reasons not to participate in the rehabilitation proposed by Lombard.

Furthermore, as the report acknowledges that there are no home-based opportunities in telemarketing in any case, I fail to see how this proposed rehabilitation was reasonable, and I find Mr. Kane cannot be faulted for being unwilling to participate. Whether he may have had other reasons for refusing is irrelevant under the circumstances, as the proposal was unreasonable and unrealistic in the first place.

Finally, there is evidence that rehabilitation more appropriate to Mr. Kane's circumstances was available. I accept Dr. Ogilvie-Harris' testimony that published research over the years has proven that massage and supervised exercise programmes are two of the very few methods that are effective in managing chronic pain, maintaining function and preventing deterioration in patients suffering from this condition. Lombard discontinued paying for such treatment for Mr. Kane on the basis of a medical rehabilitation assessment (Med Rehab DAC) conducted in May 2002.⁵ Dr. Ogilvie-Harris was critical of the DAC assessor's failure to consider pain relief as a viable goal of treatment and felt that the report revealed that the assessor had no understanding of the management of chronic pain patients. I find these criticisms to be valid. Lombard may wish to reconsider its position on rehabilitation options in light of Dr. Ogilvie-Harris' evidence.

Criterion #2

The employment exists in the area in which the person lives and is accessible to the person.

Mr. Kane disputes Lombard's position that part-time telemarketer positions in Richmond Hill and Maple, identified by Ms. Carolyn Brezina, the REC DAC's psychometrist/vocational evaluator, are accessible to him. Ms. Brezina's report indicates that these positions are not in Mr. Kane's "primary local job search area" and that, in fact, the job search area had to be extended in order to find part-time positions within his physical restrictions. These jobs require Mr. Kane to drive south to Richmond Hill or Maple from his home in Udora, a tiny community on the shore of Lake Simcoe.

The parties submitted maps downloaded from the Internet which provide directions and driving times from Udora. The maps give slightly different figures. As Mr. Kane's map actually specifies Udora as the starting point, I accept his as the more accurate.⁶ It shows the distance between Udora and Maple as 69.7 kilometres and estimates a driving time of about 50 minutes one way, on secondary and regional roads. The drive to Richmond Hill appears to be comparable. The maps do not indicate what the driving time would be in inclement weather, but common sense dictates it could be quite a bit longer.

None of the REC DAC assessors considered the effect of adding almost two hours of driving to Mr. Kane's four-hour work day, the maximum they had determined he could tolerate. I find the combined commute and sedentary work exceeds the restrictions identified by the DAC, and the telemarketing jobs cannot be considered to be "accessible" to him as a result. I note that when contacted by Ms. Brezina, both employers stated that the jobs involved sitting at a computer, with minimal official breaks, and that employees could only stand "on occasion." Mr. Kane testified that prolonged sitting causes him to stiffen up. The ability to stand only on occasion does not seem to me to be consistent with Mr. Kane's need to move about within his own comfort level to prevent pain and stiffness.

A final point: the occupational therapy consultant assigned to set up Mr. Kane's at-home rehabilitation, discussed above, stated in her report that Mr. Kane required an ergonomic workstation, including desk and chair. She proposed that Mr. Kane could take this ergonomic workstation with him to his prospective employers. As this proposal was not canvassed with the employers identified, we cannot know if it would be acceptable to them. This further mitigates against Lombard's submission that these jobs are "accessible" to Mr. Kane.

Lombard further submitted that the jobs are accessible because Mr. Kane has shown "a consistent ability to drive significant distances on a regular basis," because he drives his wife 28 kilometres to Coppin's Corners every morning so she can get a ride with a co-worker to her job in Scarborough. He picks her up again in the evening, and once a week drives her all the way to work. Mrs. Kane does not drive. Mr. Kane also drives to doctors' and lawyers' appointments and occasional concerts in Toronto. He used to drive to his chiropractor once every 3-4 weeks, a round trip of 42 kilometres. I do not find this to be the equivalent of a one-hour drive at each end of a four-hour sedentary shift. Furthermore, Mr. Kane testified that after driving to Coppin's Corners, he needs to rest at a coffee shop before driving home again. I do not find that these examples demonstrate that Mr. Kane has the driving tolerance required to consistently be able to drive to and from the telemarketer's job on a daily basis, and do the job four hours a day as well.

Criterion #3:

It would be reasonable to expect the person to engage in the employment having regard to the possibility of deterioration in the person's impairment and to the person's personal and vocational characteristics.

(a) Deterioration

Mr. Kane testified that he felt his condition had deteriorated over the last couple of years. Dr. Ogilvie-Harris opined that Mr. Kane is worse off now than when he first saw him, that he suffered impairment of whole body functioning secondary to his chronic pain syndrome, and that it is because of chronic pain that he is tending to show increased signs of stiffness and deconditioning.⁷ This further exacerbates his pain symptoms, and a vicious cycle typical of the chronic pain sufferer is set in motion. Dr. Ogilvie-Harris testified that it is characteristic of Mr. Kane's injuries that he will get worse over time. Statistical evidence indicates that persons such as Mr. Kane, who suffer pre-existing degenerative disc disease that is rendered significantly symptomatic by a motor vehicle accident, are unlikely to fully recover. After six-years off work, they have less than a 2 per cent chance of returning to competitive gainful employment.

Lombard concedes that Dr. Ogilvie-Harris is an impressive witness. His opinion of Mr. Kane's condition and prospects is based on a wealth of skill and relevant experience with injured persons in all walks of life. Dr. Ogilvie-Harris keeps abreast of the latest research. His opinion that Mr. Kane is not competitively employable, that absenteeism is a significant problem for chronic pain sufferers, and that these factors were not considered by the DAC, carries a great deal of weight, and his criticisms of the DAC, that none of the assessors had any experience in managing chronic pain, are valid ones.

b) the person's personal and vocational characteristics

It is with respect to these criteria that I find the lack of relationship between the DAC's conclusions and its own findings to be the most perplexing and inexplicable.

Mr. Kane's testimony about his education and work history is absolutely consistent with the summary contained in the individual psychological and vocational report prepared by Dr. Deborah Cowman, the psychologist member of the multidisciplinary REC DAC team.

The report relates that Mr. Kane lost interest in high school in Grade 9, until he transferred to a more technical programme that included auto mechanics, electrical, small engine and body shop work. He graduated from the programme two and a half years later at the age of 18 with the equivalent of a Grade 10 education. As noted above, except for a brief six-month stint as a real estate agent in 1979, Mr. Kane worked full time as a mechanic at Canadian Tire from 1972 until his accident in 1996.

Mr. Kane testified that he was not very good at selling real estate ("sales does not seem to suit me") and returned to Canadian Tire after selling only two homes in six months.

During his school years, Mr. Kane worked at various jobs such as stocking shelves and bagging groceries at a local grocery store, delivering barrels of gas to gas stations in a 10-tonne truck, and pumping gas. He also did renovations part time for friends and others, and built his own home, undertaking specialised work such as wiring, plumbing, framing, installing wood siding, drywall, windows, doors and cabinetry, and laying carpets, tiles and hardwood floors. He indicated that prior to the accident, he had hoped to pursue this type of work full time.

Mr. Kane testified that he likes to work with his hands, building and repairing things. Dr. Cowan's report states:

The Canadian Work Preference Inventory (CWPI) was administered to address vocational interests. Consistent with his reported work history, Mr. Kane's pattern of responding on the CWPI indicates that he prefers occupations which are objective in nature. People who respond similarly tend to be oriented towards working with objects, materials and machinery, and performing activities such as repairing or constructing.⁸

It is common knowledge that telemarketing involves contacting strangers over the telephone and attempting to sell them products or services. It is without question a "people-oriented" job. In addition, Ms. Brezina's report states that the telemarketing jobs identified are sales jobs that require minimum sales quotas to be met in order to maintain employment. Sales bonuses and commissions are paid on top of the $8 or $10 hourly wage.

I am hard pressed to think of a job more incompatible with Mr. Kane's personal and vocational characteristics than telemarketer. It underscores the inadequacy of the entire "cookie-cutter" assessment process undertaken by this particular DAC.

SPECIAL AWARD

Mr. Kane seeks a special award under section 282(10) of the Insurance Act, which authorises me to award an insured person up to 50 per cent of the monetary value of a benefit found to be payable to him or her, if I find that an insurer has unreasonably withheld or delayed payments to an insured person. The maximum award is reserved for cases where bad faith or egregious conduct on the part of an insurer was responsible for the withholding or delay.

The recent appeal decision in Persofsky and Liberty Mutual Insurance Company (FSCO P00-00041, January 31, 2003) contains an exhaustive discussion of the principles governing special awards, which I adopt.

For all the reasons stated above, I find that the REC DAC assessment on which Lombard relied to reduce Mr. Kane's LECB benefits by $114.60 per week was so seriously and obviously flawed on the face of it that it was unreasonable for Lombard to rely on it to reduce the payments. I further find on the evidence presented at the hearing, that Lombard's attempts to rehabilitate Mr. Kane were similarly unreasonable in the circumstances. I find that Mr. Kane's mental and physical condition has deteriorated in part due to Lombard's unreasonable actions. Also, I find that Mr. Kane has suffered financial hardship due to Lombard's conduct. Under the circumstances, I find a moderately severe special award to be appropriate.

From June 5, 2001, when benefits were first reduced, to the date of this decision, February 26, 2003, Mr. Kane is owed 91 weeks of benefits @ $114.60, or $10,428.60. The special award is calculated on the principal amount plus interest, to which Mr. Kane is entitled in accordance with section 282(10) of the Insurance Act. I consider a lump sum special award of $6,000 inclusive of interest to be an appropriately severe penalty. I refer the parties to the Persofsky decision in the event there is any disagreement about the calculation of the special award.

Two other factors were of concern to Mr. Kane. Firstly, that Lombard first agreed to discuss a lump sum settlement with him, which he would prefer over a long-term relationship with his insurance company, which he perceives as adversarial and as not having his best interests at heart, and then changed its mind; and, secondly, that his file has been handled by no less than 12 separate adjusters, who appear to have approached claims handling from different perspectives.

As there is no requirement under the Schedule that insurers "settle out" claims, failure to do so of itself cannot be the subject of a special award. If an insurer's vacillation resulted in benefits delayed or withheld, however, a special award could be payable. In this particular case, I am not persuaded on the evidence that a commitment to settle made and withdrawn, or the excessive turnover in adjusters, although unprofessional and unacceptable, resulted in a delay or withholding of benefits.

EXPENSES:

The parties did not advise me at the close of the hearing of any offer or counteroffer under Rule 77.2 of the Dispute Resolution Practice Code (Fourth Edition May 31, 2001) that I should consider in making an award of expenses. As Mr. Kane has been entirely successful in this arbitration proceeding, I would exercise my discretion under section 282(11) of the Insurance Act to award him his expenses of the arbitration in accordance with the criteria set out in Rule 75.2. If the parties are unable to agree on entitlement to or the amount of expenses, either party may request an appointment before me to determine the matter.

February 26, 2003

Susan Sapin Arbitrator

Date

Neutral Citation: 2003 ONFSCDRS 24

FSCO A01-001518

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

RANDAL KANE

Applicant

and

LOMBARD GENERAL INSURANCE COMPANY OF CANADA

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. Kane's residual earning capacity is zero. Lombard shall repay to Mr. Kane $114.60 per week from June 5, 2001 and ongoing, subject to indexation.

2. Lombard shall pay to Mr. Kane a special award of $6,000, inclusive of interest.

3. Mr. Kane is entitled to his reasonable expenses of the arbitration.

4. Lombard shall pay interest on benefits owing in accordance with section 68 of the Schedule.

February 26, 2003

Susan Sapin Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98.
2. 2Subsection 30(3).
3. 3At the hearing, Mr. Kane testified that he now also takes 150mg daily of Wellbutrin, an antidepressant, and anti-inflammatories twice a day.
4. 4Exhibit 8.
5. 5Exhibit 23
6. 6Exhibit 2
7. 7Exhibit 20, report dated October 1, 2001.
8. 8Insurer's Arbitration Brief, tab B4