Neutral Citation: 2003 ONFSCDRS 45

FSCO A02-000334

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

FRANCES AUSTIN-GALLAGHER

Applicant

and

LIBERTY MUTUAL INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

William J. Renahan

Heard:

February 24 and 25, 2003, at the offices of the Financial Services Commission of Ontario in Toronto.

Written submissions were received on March 6, 2003.

Appearances:

Robert Kostyniuk for Mrs. Austin-Gallagher

Dwaine Burns for Liberty Mutual Insurance Company

Issues:

The Applicant, Frances Austin-Gallagher, was injured when she was struck by a motor vehicle on August 24, 1997. She applied for and received statutory accident benefits from Liberty Mutual Insurance Company ("Liberty"), payable under the Schedule.¹ Liberty refused to pay weekly non-earner or income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mrs. Austin-Gallagher 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 were described in broad terms in the reporting letter of the arbitrator who conducted the pre-hearing on July 23, 2002. At the opening of the hearing I attempted to narrow the issues and made rulings where the parties could not agree. As well, after the conclusion of the hearing, I invited the parties to make further submissions on an issue which Mr. Burns had dealt with in his submissions, but which was not specifically defined as an issue at the outset.

The eligibility criteria for an income replacement benefit are set out in section 4 of the Schedule. Section 4.1 sets out the criteria for a person who is employed at the time of the accident. Section 4.2 sets out the criteria for a person who is unemployed at the time of the accident but was employed for at least 26 weeks during the 52 weeks before the accident. Section 4.3 sets out the criteria for a person entitled to start work under a contract of employment at the time of the accident.

The parties approached the case on the basis that Mrs. Austin-Gallagher was unemployed at the time of the accident and her eligibility was governed by section 4.2. They agreed that in the 52 weeks prior to the motor vehicle accident, Mrs. Austin-Gallagher had worked slightly more than 18 weeks at an IKEA Canada Limited ("IKEA") furniture store as a salesperson. In the 52 weeks before the accident she had also worked "casual part-time" as a bartender for the Westin Harbour Castle Hotel ("Westin"). Mrs. Austin-Gallagher presented her case on the basis that the work at the Westin in the year before the accident amounted to at least eight weeks of employment and that she qualified for an income replacement benefit under section 4.2. Liberty argued that Mrs. Austin-Gallagher's employment with Westin did not constitute eight weeks of employment. In the alternative, it argued that Mrs. Austin-Gallagher was employed part-time with Westin at the time of the accident.

I defined the issue as whether Mrs. Austin-Gallagher was employed at least 26 weeks in the year before the accident. However, after the conclusion of the hearing, it occurred to me that if Mrs. Austin-Gallagher was employed with Westin for the requisite amount of time, I might find that she was employed by Westin at the time of the accident and governed by the eligibility requirement in subsection 4.1. Although Mr. Burns had addressed this additional issue in the alternative in his submissions, I did not specifically define it as an issue I would consider.

I therefore invited the parties to make further written submissions on whether Mrs. Austin-Gallagher was employed with Westin at the time of the accident. In written submissions, Mrs. Austin-Gallagher argued that she was employed with Westin at the time of the accident and Liberty argued that she was unemployed.

At the opening, I also dealt with whether Liberty could raise a limitation defence at the hearing. When I asked Liberty for its view of the issues, it claimed that Mrs. Austin-Gallagher was barred from raising a claim for income replacement benefits because she did not commence the arbitration within two years from its refusal to pay the benefit. Mrs. Austin-Gallagher responded that this was the first time she had heard of the limitation defence. Liberty did not direct me to any correspondence which identified a limitation defence as an issue. Liberty did not advise Mrs. Austin-Gallagher until the hearing that it would rely on the written refusal to pay income replacement benefits. Instead, it introduced the written refusal to pay benefits at the hearing and directed me to evidence which showed that it had a limitation defence. I ruled that I would not consider the issue because Mrs. Austin-Gallagher had prepared to deal with substantive issues and it was unfair to ask her to deal with a preliminary issue which Liberty had not raised in a timely fashion. I refused Liberty's request for an adjournment because it provided no reason for raising the limitation defence for the first time at the opening of the hearing.

I identified Mrs. Austin-Gallagher's claim for a special award at the outset. In his opening statement, Mr. Kostyniuk gave three grounds for such an award. In his closing submissions, Mr. Burns argued that a special award was not in issue because Mrs. Austin-Gallagher had not given particulars prior to the hearing as required by the arbitrator in his pre-hearing letter. I ruled that a special award was an issue because it was identified at the opening of the hearing and Liberty did not object at that time.

The issues in this hearing are:

Is Mrs. Austin-Gallagher entitled to an income replacement benefit from August 31, 1997 and continuing for 104 weeks pursuant to section 4 of the Schedule?
What is the amount of any income replacement benefit?
Is Mrs. Austin-Gallagher entitled to housekeeping expenses from August 24, 1998 to August 24, 1999 pursuant to section 22 of the Schedule?
Is Mrs. Austin-Gallagher entitled to a special award pursuant to subsection 282(10) of the Insurance Act?
Is either party entitled to expenses pursuant to subsection 282(11) of the Insurance Act?

Result:

Mrs. Austin-Gallagher is entitled to income replacement benefits pursuant to section 4.1 of the Schedule from August 31, 1997 to November 3, 1997, on the basis that she was employed by Westin at the time of the accident.
The amount of income replacement benefit is $173.99 per week.
Mrs. Austin-Gallagher is entitled to interest on $1,739.90 from September 14, 2001 at the rate of 2 per cent per month compounded monthly.
Mrs. Austin-Gallagher is not entitled to further housekeeping expenses.
Mrs. Austin-Gallagher is not entitled to a special award.
The parties asked that I not deal with expenses of the arbitration proceeding at this time.

EVIDENCE AND ANALYSIS:

Mrs. Austin-Gallagher worked ten years for IKEA as a salesperson. IKEA terminated her full-time employment on December 30, 1996.

After the termination of her employment with IKEA, Mrs. Austin-Gallagher received (un)employment insurance benefits ("EI"). While receiving EI she did some work for Westin. Her EI benefits ended after 25 weeks on July 19, 1997. The accident occurred on August 24, 1997. Sometime in November 1997, Mrs. Austin-Gallagher returned to bartending work at the Westin.

Injury:

The accident occurred while Mrs. Austin-Gallagher was walking her dog. She stepped out onto the street and was struck on the side of the leg by what the emergency hospital records describe as a slow moving vehicle. Mrs. Austin-Gallagher's most significant injury was to the left knee.

Dr. Jeffrey Gollish is an orthopaedic surgeon. He performed an arthroscopic debridement (removal of damaged tissue) of the knee on June 4, 1998. He found chondromalacia (softness of the cartilage of the patella), an anterior cruciate ligament which was slightly thinned and a "large unstable central flap" on the patella which he excised. "The subchondral bone exposed was approximately 6 to 8 mm in diameter centrally. The margins of the lesion were bevelled using the shaver."

Dr. Gollish concluded that the contusion to the knee resulted in stretching and thinning of the anterior cruciate ligament as well as post-traumatic chondromalacia patellae.

Employed or unemployed at the time of the accident:

In her application to Liberty for accident benefits, Mrs. Austin-Gallagher ticked off a box which indicated that she was unemployed. She testified that she considered that she was unemployed from her full-time job at IKEA and that she did not think part-time work would qualify for income replacement benefits. Liberty argued that the first time it heard of a claim for income replacement benefits was in the application for mediation, when Mrs. Austin-Gallagher claimed that she was unemployed but had worked 26 weeks in the year before the accident.

The first eligibility requirement under section 4.1 of the Schedule is that "The insured person was employed at the time of the accident." Subsection 2(5) adds:

For the purpose of this Regulation, a person is employed if, for salary, wages, other remuneration or profit, the person is engaged in employment, including self-employment, or is the holder of an office, and "employment" has a corresponding meaning.

A similar requirement was considered in Joyce and Co-operators General Insurance Company.²

In that case, Director's Delegate Naylor considered whether a registered nurse was "employed" at the time of the accident under the 1990 Schedule. Ms. Joyce worked for two home-care companies on an "as-needed" basis. Neither agency had an obligation to supply her work, and Ms. Joyce did not have to accept any work offered. She did very little work in the two months before the accident and around the time of the accident, neither company had work to give her. The issue was whether Ms. Joyce was simply a casual employee, with periods of employment interspersed with periods of unemployment, as the arbitrator found, or whether she was operating under a contract of employment even during periods when she was not assigned work.

The Director's Delegate relied on a passage from Madore and Co-operators General Insurance Company³ where Arbitrator Mackintosh wrote:

. . . individuals may retain their status as employees during periods when they are neither performing work nor earning income due to such reasons as illness or an unpaid leave of absence. I consider that the status of being employed depends as much upon the intentions of the employer and the employee and the expectations between them, as upon the payment of salary in return for specified work.

The Director's Delegate concluded:

While "employed" should be given its ordinary meaning, the context and purpose of the statutory scheme must not be ignored. Section 12 benefits are broadly intended to provide compensation, within the parameters of the Schedule, for loss of employment earnings, or opportunity to earn, by reason of disability arising from automobile accidents.

The Director's Delegate considered the ongoing relationship between the parties, Ms. Joyce's line of work and her employment history, and concluded that Ms. Joyce was employed at the time of the accident.

I therefore examine the ongoing relationship between Mrs. Austin-Gallagher and Westin.

Christopher Gallagher, Mrs. Austin-Gallagher's husband, worked at Westin as a bartender for catered functions and he helped Mrs. Austin-Gallagher obtain casual part-time work at Westin as a bartender. Mrs. Austin-Gallagher first worked for Westin on October 8, 1994. She was on a roster of bartenders and Westin called the bartenders in order of seniority. Mrs. Austin-Gallagher was one of the last bartenders put on the list and was near the bottom. She could decline or accept the work, although she testified that she never declined work and she would trade her shift at IKEA if the Westin work conflicted with the IKEA work.

At work, Mrs. Austin-Gallagher pushed a rolling bar into the room where the function was held and set it up with liquor and glasses supplied by Westin. Westin paid her $14 per hour plus 15 per cent of the cost of every drink sold, which usually amounted to a total hourly rate of more than $28. Westin paid a minimum of one hour if the function was cancelled.

Westin issued a pay slip for every two-week pay period which showed deductions for Canada Pension Plan, Employment Insurance, taxes and union dues. At the end of the year Westin issued one T-4 slip for income tax deducted.

Westin paid Mrs. Austin-Gallagher for 26 hours between August 31, 1996 and December 7, 1996. It provided the following information for the pay periods from December 26, 1996 to August 24, 1997, the date of the accident:

Pay Period Ending

Gross

January 4, 1997

$219.47

January 18, 1997

nil

February 1, 1997

102.08

February 15, 1997

nil

March 1, 1997

186.48

March 15, 1997

nil

March 29, 1997

81.34

April 12, 1997

26.20

April 26, 1997

79.97

May 10, 1997

368.85

May 24, 1997

79.36

Grand Total

$1,143.75

Westin wrote a letter to Mrs. Austin-Gallagher's counsel as follows:

Mrs. Austin-Gallagher worked on a casual basis in our Banquets department and was not guaranteed any hours.

Banquet casuals are deemed hired for each function worked and terminated at the end thereof. As a result, Ms. Austin-Gallagher's employment record is limited to only payroll information, such as earnings and hours worked.

Mrs. Austin-Gallagher testified that no one told her that she was hired for each function and then terminated.

When Mrs. Austin-Gallagher applied for employment insurance benefits she submitted an Employment Questionnaire to Employment and Immigration Canada dated January 3, 1997. On that form she indicated that she was employed part time with Westin. Human Resources Development Canada ("HRDC") asked for Records of Employment from IKEA and Westin. As a result of Westin's response, HRDC asked for further information. Westin submitted a Record of Employment Correction form signed by the Westin payroll manager on February 7, 1997, in which he wrote "still working P/T on call basis."

Except for Westin's letter that Mrs. Austin-Gallagher's employment was terminated after every shift, all the evidence points to a continuing employment relationship between Westin and Mrs. Austin-Gallagher. The preponderance of the evidence was that the parties intended to create a relationship of employment with rights and obligations. Because Mrs. Austin-Gallagher was a member of a union and paying dues, I find it likely that Westin was obliged to offer Mrs. Austin-Gallagher work in accordance with seniority. I find this significant because it creates a stronger employment connection than was found on the facts of Joyce, where the employer was not obliged to offer Ms. Joyce work. Although the work was infrequent, I find that Mrs. Austin-Gallagher was employed by Westin on August 24, 1997, the time of the motor vehicle accident.

Disability:

The next question is whether Mrs. Austin-Gallagher suffered a substantial inability to perform the essential tasks of her employment with Westin, and if so, for how long?

Dr. Gollish reported that the anterior cruciate ligament injury was minor, caused some minor instability, but no long-term impairment or disability. He found that Mrs. Austin-Gallagher would continue to experience symptoms due to the chondromalacia patellae. He reported:

Specific activities which tend to cause increased patellofemoral pain include those activities which require active knee extension from a flexed position, such as stair climbing, arising from a chair or other sitting position, squatting or kneeling. People with this type of pathology in their knee also report anterior knee discomfort in association with prolonged standing or walking.

Dr. Gollish found a permanent impairment with respect to weight bearing activities and supported Mrs. Austin-Gallagher's claim that she experienced knee discomfort with prolonged standing or walking. However, the work at Westin was short hours and intermittent and did not require prolonged standing or walking. Mrs. Austin-Gallagher returned to Westin shortly after the accident. Although her husband helped her push the bar into the function room and set it up, Mrs. Austin-Gallagher admitted that her husband helped push the bar over the carpet before the accident. I heard no other evidence that Mrs. Austin-Gallagher was unable to perform the essential tasks of her employment as a bartender. After the accident, Mrs. Austin-Gallagher received the following payments from Westin:

Pay Period Ending

Gross

November 23, 1997

$364.42

December 6, 1997

$487.61

December 24, 1997

$579.90

Mrs. Austin-Gallagher earned $1,143 from Westin in the eight months before the accident and $1,801 in November and December 1997, after the accident.

Mrs. Austin-Gallagher testified that she never turned down any work offered by Westin and I heard no evidence that she was disabled from performing the essential tasks of bartending at any time, including any time she might have required to recover from the arthroscopic surgery in June 1998.

Considering the significance of her injury, her work history at Westin, her return to work at Westin and all the other evidence, I find it likely that Mrs. Austin-Gallagher was unable to perform the essential tasks of bartending until some time in November 1997, when she returned to that work, and that she is entitled to income replacement benefits from August 31, 1997 to November 3, 1997, a period of ten weeks.

Amount of income replacement benefit:

Liberty hired Mr. Daniel Edwards to calculate any potential income replacement benefit. Mrs. Austin-Gallagher hired Mr. Thomas Dyson to comment on Mr. Edwards' calculations. Mrs. Austin-Gallagher started a day care business after the accident and the main difference between the two accountants concerned how much in expenses Mrs. Austin-Gallagher could claim. Both had to make assumptions because they did not have source documentation or payroll information to show when specific amounts were earned. Most calculations were based on information in Mrs. Austin-Gallagher's income tax returns.

The formula for calculating an income replacement benefit is set out in section 6 of the Schedule and starts with the calculation of Mrs. Austin-Gallagher's gross income in the 52 weeks before the accident. The calculation of gross income is set out in section 8.

Mr. Edwards took Mrs. Austin-Gallagher's 1996 employment income and vacation pay from IKEA and pro rated it for what he calculated to be 128 days from August 24, 1996 to December 31, 1996, the date IKEA terminated Mrs. Austin-Gallagher's employment. He also took a proportionate share of the 1996 employment income from Westin. He also added the Westin income earned in 1997 up to the date of the accident and the employment insurance benefits⁴ Mrs. Austin-Gallagher received in 1997.

Mrs. Austin-Gallagher received long-term disability benefits from Great-West Life arising out of an accident at IKEA. She received these benefits from about August 24, 1996 to about October 29, 1996 while she was employed by IKEA. This period occurred within the 52 week period for determining gross income. Mr. Edwards thought he should deduct the long-term disability benefits from gross income. Mr. Dyson did not know if it should be deducted.

In York Fire & Casualty Insurance Company and Shearstone,⁵ Director's Delegate Makepeace dealt with whether workplace insurance benefits should be included in calculating gross income from employment under the 1996 Schedule. She ruled that they should not be included. Among other reasons, she cited that the benefits were outside of the employment relationship as they did not constitute the exchange of money for services and that the drafters of the legislation considered what payments for loss of income should be included in "gross income," when they decided unemployment insurance benefits should be included. Presumably, they intended to exclude other payments for loss of income. Lastly, under subsection 9(6) of the 1994 Schedule, temporary disability benefits were included in the calculation of gross income. She concluded that the deletion of temporary disability benefits from the calculation of gross income in the 1996 Schedule was evidence of a legislative intent to narrow the definition of gross income. For the same reasons, I agree that Great-West Life disability benefits should not be included in the calculation of Mrs. Austin-Gallagher's gross income.

Mr. Edwards did not have the specific amounts Mrs. Austin-Gallagher received in disability benefits. He assumed the benefits were the same as her salary and reduced her gross income from IKEA proportionately to reflect that four months of that income was disability benefits which are not included in the calculation of gross income.

Mr. Edwards arrived at a gross income in the 52 weeks before the accident of $13,672.92. I believe that he used correct principles and neither party questioned his arithmetic.

As well, I have no reason to question his deductions for income tax, Canada Pension Plan and Employment Insurance for a net weekly income of $217.49. The income replacement benefit is 80 per cent, or $173.99.

Under subsection 6(2) of the Schedule, the insurer may deduct from the income replacement benefit, 80 per cent of net income received by an insured after the accident. Mrs. Austin-Gallagher started a day care business after the accident and in her 1997 income tax return she reported gross income of $973 from September 19, 1997 to December 31, 1997. In the following years, Mrs. Austin-Gallagher offset her expenses incurred in earning income from the day care business so that she reported losses in 1998 and 1999.

In 1998 and 1999, Mrs. Austin-Gallagher deducted a number of expenses, including a portion of house expenses, to create a loss of income for income tax purposes. I expect that if Mrs. Austin-Gallagher had deducted a reasonable portion of her house expenses from her 1997 day care income, as she did in 1998 and 1999, she would have reduced her 1997 day care income to zero. I therefore make no deduction for post-accident income.

Housekeeping expenses:

Pursuant to section 22 of the Schedule, Liberty paid Mrs. Austin-Gallagher housekeeping expenses for about one year and terminated them on the basis of a form signed by Mrs. Austin-Gallagher's family doctor on July 29, 1998. Dr. S. Coish completed the form presented to her by an occupational therapist as follows: "Not able to return to jobs involved heavy lifting, bending and prolonged weight bearing for 3-4 months, then re-assess. Released to pre-accident home making duties."

Mrs. Austin-Gallagher submitted an invoice dated September 26, 2000 for 106 weeks of housekeeping services from August 14, 1998 to September 26, 2000 at $35 per week for a total of $3,710. Mrs. Austin-Gallagher did not reply when asked whether she advised Liberty that she required a housekeeper beyond August 14, 1998.

On January 5, 2001, Dr. Coish wrote a letter "To Whom It May Concern" in which she reported "Frances has also retained the services of a housekeeper because she has been unable to do heavy housekeeping. She should now be able to do all regular light housekeeping." Mrs. Austin-Gallagher testified that although she employed a housekeeper before the accident, she still requires a housekeeper to do heavier chores on account of her knee injury.

Mrs. Austin-Gallagher explained that Dr. Coish made her initial report in July 1998 that she could perform her pre-accident home making duties because of a flippant remark she made to Dr. Coish concerning her health.

Mrs. Austin-Gallagher made a number of flippant remarks in cross-examination. For example, she asked Mr. Burns where he got his medical degree from and she asked the other participants at the hearing whether they wished to volunteer whether they were undergoing psychological treatment. Mrs. Austin-Gallagher was not subtle and it was clear to me when she was not serious.

As well, Mrs. Austin-Gallagher was surprisingly unconcerned about misrepresentations she made to obtain EI benefits. When confronted with two failures to declare income on claim cards she submitted for EI benefits and which she signed and declared to be true she replied, "Oops, I obviously made a mistake" and "Oh my goodness, I didn't declare that, I must have made a mistake."

Lastly, Mrs. Austin-Gallagher answered many questions in cross-examination by telling Mr. Burns to ask her lawyer for the information or look in his own file for the answer. In some cases, the answer was fair, because I would not expect Mrs. Austin-Gallagher to remember the information Mr. Burns asked for. But in many cases, Mrs. Austin-Gallagher demonstrated disinterest in providing information.

I did not find Mrs. Austin-Gallagher a credible witness and did not accept her testimony, by itself, that she required housekeeping assistance after Liberty terminated housekeeping expenses.

I find it likely that Dr. Coish would recognize Mrs. Austin-Gallagher's flippancy and that a family doctor would not provide a written opinion that her patient could perform a function if she had any doubts. I accept Dr. Coish's statement in July 1998 that her patient could perform her pre-accident home making duties as reliable.

Accordingly, Mrs. Austin-Gallagher is not entitled to further housekeeping expenses.

Interest:

Section 46 is contained in Part X of the Schedule and provides:

(1) An amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under this Part.

(2) If payment of a benefit under this Regulation is overdue, the insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue at the rate of 2 per cent per month compounded monthly.

Section 35 is contained in Part X and provides in part as follows:

(1) On receiving an application for an income replacement, non-earner or caregiver benefit, an insurer shall promptly determine whether a benefit is payable.

(2) If the insurer determines that a benefit is payable, the insurer shall pay the benefit to the person within 14 days after receiving the application.

Section 33 is also contained in Part X and provides in part as follows:

(1) A person applying for a benefit under this Regulation shall, within 14 days after receiving a request from the insurer, provide the insurer with the following:
Any information reasonably required to assist the insurer in determining the person's entitlement to a benefit.

(2) The benefit is not payable for any period before the person complies with subsection (1).

Accordingly, Liberty should have paid the income replacement benefit 14 days after receiving the application for income replacement benefits. Liberty was not required to pay Mrs. Austin-Gallagher an income replacement benefit for any period Mrs. Austin-Gallagher failed to provide reasonably required information.

The first question is when Mrs. Austin-Gallagher applied for the income replacement benefit.

The application for accident benefits, Form OCF 1/59, is in a form approved by the Commissioner of Insurance. Part 5 asks the applicant "Which of the following best describes your employment situation at the time of the accident?" and is followed by boxes to check for "employed" or "not employed." If the applicant checks "employed," she is directed to answer questions concerning her employment, including the number of hours per week she works for each employer. Mrs. Austin-Gallagher thought that "unemployed" best described her employment situation at the time of the accident.

I did not hear or receive evidence on when Mrs. Austin-Gallagher first notified Liberty that she qualified for an income replacement benefit, however, the parties proceeded on the basis that the issue was first raised in the application for mediation in August 2001. Accordingly, unless Mrs. Austin-Gallagher failed to comply with her duty under section 33 of the Schedule to provide Liberty with reasonably required information, interest would run from two weeks after Mrs. Austin-Gallagher applied for mediation.

Although Liberty claimed that Mrs. Austin-Gallagher failed to provide it with reasonably required financial information and although Mr. Edwards recommended in his report of January 24, 2003 that Liberty obtain further financial information from Mrs. Austin-Gallagher, I did not receive any evidence on this issue. Accordingly, I am not satisfied that Mrs. Austin-Gallagher failed in her duty to provide Liberty with reasonably required information and I find that the income replacement benefit was overdue 14 days after Mrs. Austin-Gallagher sent her application for mediation to Liberty.

The onus is on Mrs. Austin-Gallagher to prove when interest should start to run. Since she did not file the application for mediation and since the parties proceeded on the basis that Mrs. Austin-Gallagher applied for mediation in August 2001, I find that Mrs. Austin-Gallagher applied for an income replacement benefit on the last day of August 2001. The benefit was overdue 14 days later and interest should run from September 14, 2001.

Accordingly, under section 46 of the Schedule, Mrs. Austin-Gallagher is entitled to interest on the overdue income replacement benefits from September 14, 2001 at the rate of 2 per cent per month compounded monthly.

Special award:

Under subsection 282(10) of the Insurance Act an arbitrator is required to make a special award if he finds that an insurer has unreasonably withheld or delayed payments. Mr. Kostyniuk advanced three grounds: that Liberty misled Mrs. Austin-Gallagher by telling her that she did not qualify for income replacement benefits; that it was unreasonable for Liberty to deny income replacement benefits in the face of medical evidence that Mrs. Austin-Gallagher clearly met the test for disability; and, that Liberty unreasonably took the position that Mrs. Austin-Gallagher was not employed for 26 weeks in the 52 weeks prior to the accident.

I heard no evidence that Liberty told Mrs. Austin-Gallagher that she did not qualify for income replacement benefits.

Liberty adjusted Mrs. Austin-Gallagher's claim on the basis she put forward in her application for benefits, that is, for a non-earner benefit. Mrs. Austin-Gallagher first raised the issue of her entitlement to an income replacement benefit in her application for mediation. It was not clear until the hearing what the test for disability was. Liberty did not act unreasonably.

Lastly, it was not clear in fact or law that Mrs. Austin-Gallagher's employment with Westin brought her up to 26 weeks of employment in the 52 weeks before the accident.

I am not satisfied that Liberty unreasonably denied or delayed payment of benefits.

EXPENSES:

The parties asked that I not deal with the expense issues. If the parties cannot resolve the issues of entitlement to or amount of expenses of the arbitration proceeding, they may apply to me in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition).

March 26, 2003

William J. Renahan Arbitrator

Date