Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2006 ONFSCDRS 199

Appeal P05-00031

OFFICE OF THE DIRECTOR OF ARBITRATIONS

KINGSWAY GENERAL INSURANCE COMPANY

Appellant

and

JOSE PEREIRA

Respondent

Before:

David Evans

Representatives:

Tricia McAvoy for Kingsway

Jose Pereira for himself

Hearing Date:

August 4, 2006

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal is allowed. Paragraph 1 of the arbitrator’s order dated October 14, 2005 is amended to read as follows:

Mr. Pereira’s claim for income replacement benefits is denied.

If the parties are unable to agree on appeal expenses, a hearing may be requested in accordance with Rule 79 of the Dispute Resolution Practice Code.

December 20, 2006

David Evans Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Kingsway General Insurance Company appeals the arbitrator’s decision, dated October 14, 2005, awarding Mr. Pereira income replacement benefits (“IRBs”) pursuant to s. 4 of the SABS–1996.¹

II. BACKGROUND

Mr. Pereira was injured in a motor vehicle accident on September 11, 2001. For the previous five years he had worked as a construction labourer, lately as a concrete cutter. Mr. Pereira’s family doctor, Dr. Choi, and a chiropractor treated him for the soft tissue injuries to his shoulder, back, hip and neck resulting from the accident.

Kingsway paid Mr. Pereira IRBs until it terminated them on April 4, 2003, based on assessments by a physiatrist and a psychologist. Mr. Pereira claimed the IRBs up to the time he returned to work in early 2004, along with attendant care and housekeeping expenses. The arbitrator did not award the latter but did award IRBs to May 4, 2004.

On a preliminary note, Mr. Pereira stated at the beginning of the appeal hearing that he was not aware of the arbitrator’s subsequent decision on expenses of April 11, 2006. I advised him that he could appeal it; to date, he has not. In the expenses decision, the arbitrator ordered each party to bear their own expenses of the arbitration proceeding because, despite Mr. Pereira’s successful IRB claim, Mr. Pereira’s attendant care and housekeeping claims were fabricated and therefore frivolous.

The findings with respect to the housekeeping and attendant care expenses were set out in the substantive decision as follows:

Before he withdrew the claims for housekeeping expenses and attendant care expenses, Mr. Pereira could give no reliable evidence with respect to those claims. He had no records or memory of who provided what services. I find it unbelievable that a person who was in dire financial circumstances and had to borrow money to survive² would spend $50 to $70 a day, three times a week, on housekeeping services without some memory of what those services were and without some record of what he spent.

I did not find Mr. Pereira a credible witness. I find that he would say anything in an attempt to prove his claim, whether it was true or not.

Therefore, I do not accept his testimony, by itself, that he was unable to work until May 4, 2004.³

The arbitrator noted that Mr. Pereira claimed IRBs beyond 104 weeks after the accident:

Under section 4 of the Schedule, for the first 104 weeks following an accident, Mr. Pereira is entitled to income replacement benefits if he suffers a substantial inability to perform the essential tasks of his employment. After 104 weeks, he is entitled to income replacement benefits if he suffers a complete inability to engage in any employment for which he is reasonably suited.

The arbitrator found that general labour work in construction, similar to concrete cutting, was suitable work. He found that Mr. Pereira did not meet either the pre- or post-104 week test based on any physical disability. The arbitrator also rejected various functional abilities evaluations, two of which (the insurer’s of April 2002 and January 2003) found symptom magnification and one of which (Mr. Pereira’s of November 2003) did not. He rejected the report of Dr. S. W. Joseph Wong, the physiatrist who—two months before Mr. Pereira returned to work—thought that he could not do so. The arbitrator noted that Dr. Philippe de Bosset (the rheumatologist to whom Dr. Choi had referred Mr. Pereira) thought that he could work without any restriction as of January 2003: “As others, Dr. de Bosset noted Mr. Pereira’s inconsistent examination responses.” Accordingly, the arbitrator found “no reliable evidence that Mr. Pereira suffered a substantial inability to perform the essential tasks of his employment or suffered a complete inability to engage in suitable employment on account of a physical impairment.”

However, with respect to psychological impairment, the arbitrator preferred the report of Dr. Judith Pilowsky over that of Dr. P. Marton. Dr. Pilowsky, psychologist, treated Mr. Pereira from November 2001 to August 2002; Dr. Marton, psychologist, assessed Mr. Pereira for Kingsway in January 2002. The arbitrator explained his preference for Dr. Pilowsky’s report and answered a question he had posed to himself as follows:

One of the questions I consider is why did Mr. Pereira give up a fairly good income and live a financially stressful life for one year in exchange for the hope of recovering less than one-half his financial loss from Kingsway?

I prefer the opinion of Dr. Pilowsky because she at least recognized and took into consideration that Mr. Pereira made a good living before the accident. Dr. Marton did not.

On the evidence I heard, the only reasonable explanation as to why Mr. Pereira gave up a good living in exchange for weekly benefits of about one-half his salary and then went without income for one year before returning to his job in construction, was that the depression and anxiety he suffered as a result of the motor vehicle accident prevented him from returning to this work.

On that basis, the arbitrator awarded IRBs for an additional year.

III. ANALYSIS

Appeals are restricted to questions of law.⁴ As set out in Lombardi and State Farm Mutual Automobile Insurance Company, (FSCO P01-00022, February 26, 2003), errors of law include findings of fact made in the complete absence of supporting evidence, made on the basis of conjecture, or made on the basis of a misapprehension of the evidence caused by a misdirection on a legal principle. Furthermore, inferences can be attacked at two distinct levels: if the appellant can demonstrate the arbitrator made an error of law when he made the findings of fact on which the inference was based, or if the arbitrator made an error of law in the inference- drawing process itself.

The arbitrator made some of these errors in his decision. For instance, the arbitrator reached his conclusion on entitlement referring only to the pre-104 week test. Although he discussed the post-104 week test in relation to Mr. Pereira’s physical injuries, he failed to do so for the psychological disability. This is an error of law. Furthermore, there was no recent psychological evidence to confirm that Mr. Pereira’s impairment met the stricter post-104 week test. Dr. Pilowsky had last seen and reported on Mr. Pereira in August 2002, and in her “treatment update” of August 9, 2002, she wrote: “Mr. Pereira is not able to work at his pre-accident employment. His depression and anxiety symptoms (PTSD) preclude him from working at this time.” [Emphasis added.] Mr. Pereira reached the 104 week mark in September 2003. If the arbitrator made any assumption that Mr. Pereira’s psychological impairment would automatically meet the new test at 104 weeks based on a year-old report dealing with a different test, it was conjecture.

More broadly, I find the arbitrator’s inference-drawing process flawed with respect to the psychological impairment. I note that Mr. Pereira’s alleged psychological impairment played no role in the arbitration hearing itself: Mr. Pereira did not testify about it, he was not cross-examined on it, the arbitrator did not raise it in his somewhat lengthy questioning of Mr. Pereira, and it was only raised in Kingsway’s submissions as follows:

The Psychological Insurer’s Examination was done in early-January 2002. That report from Dr. Marton is at tab 76 of the brief, and Dr. Marton concludes that there’s no ongoing psychological impairment.

Mr. Pereira was attending with [Dr. Pilowsky] for treatment, and her letters and update reports are contained in the brief. It appears that he attended treatment with her until the summer of 2002, and that there’s no ongoing psychological treatment past that point.⁵

Therefore, the arbitrator’s decision turned on the psychological reports of Dr. Pilowsky.⁶ The arbitrator stated that he preferred the opinion of Dr. Pilowsky “because she at least recognized and took into consideration that Mr. Pereira made a good living before the accident.” However, Dr. Pilowsky made no reference to Mr. Pereira making a good living before the accident in her treatment update of August 9, 2002. That leaves her first and only other report of November 14, 2001, where she noted that Mr. Pereira had “ruminating thoughts about his current health and employment situation.” On page 8 she wrote: “His level of anxiety increased when he reflected on the details of the accident and his concern for his ability to work. . . . He was employed at a job that paid him a good income and he enjoyed his work duties.” She noted that he felt discouraged since the accident and was distressed by the possible loss of income if his health continued to deteriorate. She then recommended 10 sessions, including pain management interventions “to prevent the development of pain focused behaviour, avoidance behaviour and ruminative thinking that may interfere with his confidence to work.”

However, while Dr. Pilowsky mentioned Mr. Pereira’s pre-accident income, she did not take it into consideration in reaching her determination. In particular, she did not suggest that the mere fact that Mr. Pereira had not returned to work proved his disability. That was the arbitrator’s inference, not Dr. Pilowsky’s, an inference that I find untenable in these circumstances. The arbitrator failed to consider the central issue—whether Mr. Pereira’s not working was due to disability—because he found Mr. Pereira disabled because he was not working. He found no physical disability, and he found Mr. Pereira not credible. However, as Dr. Pilowsky stated at the end of her November 2001 report:

I would like to note that the contents of this report are based on Mr. Pereira’s presumed truthfulness. Therefore, any inconsistencies or inaccuracies in this client’s reporting may well have an impact on my diagnostic impressions and conclusions.

In this case, the arbitrator specifically stated that he did not accept Mr. Pereira’s testimony, by itself, that he was unable to work until the spring of 2004. However, he then relied on a psychological report that turned on Mr. Pereira’s presumed truthfulness. Dr. Pilowsky’s report does not constitute supporting evidence where the arbitrator specifically found that Mr. Pereira “would say anything in an attempt to prove his claim, whether it was true or not.” I find the arbitrator made an error of law in the inference-drawing process itself: Dr. Pilowsky did not draw the inference that the arbitrator did, and the arbitrator could only have drawn that inference if he had found Mr. Pereira credible.

In conclusion, I have no basis to find the arbitrator made any errors of law in rejecting Mr. Pereira’s credibility and his physical disability after his benefits were terminated. However, in light of the arbitrator’s credibility findings, the psychological reports cannot support Mr. Pereira’s claims, and the arbitrator committed an error of law in granting benefits based on them. Accordingly, I find that the arbitrator committed an error of law in concluding that Mr. Pereira was entitled to IRBs from April 5, 2003.

IV. EXPENSES

If the parties are unable to agree about expenses of this appeal, a hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.