Farmers' Mutual Insurance Company v. Crossey, 2007 ONFSCDRS 112

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 112

Appeal P05-00028

OFFICE OF THE DIRECTOR OF ARBITRATIONS

FARMERS' MUTUAL INSURANCE COMPANY

Appellant and Respondent

by Cross-Appeal

and

SYLVIA CROSSEY

Respondent and Appellant

by Cross-Appeal

BEFORE:

Nancy Makepeace

REPRESENTATIVES:

Darrell March for Farmers’ Mutual

David J. Gillespie for Mrs. Crossey

HEARING DATE:

November 28, 2006

APPEAL ORDER

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

1. The insurer’s appeal and Mrs. Crossey’s cross-appeal of the arbitrator’s order dated September 28, 2005 are dismissed.

2. Mrs. Crossey’s appeal of the arbitrator’s expenses order dated March 15, 2006 is dismissed.

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

June 8, 2007

Nancy Makepeace

Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

The insurer appeals the arbitrator’s decision that Mrs. Crossey is entitled to income replacement benefits (“IRBs”) under the SABS–1994¹ from November 21, 2000 and ongoing. Mrs. Crossey returned to work at General Motors (“GM”) in November 1994, some seven months after her April 6, 1994 accident, and worked until November 20, 2000, a period of six years. The insurer submits that the arbitrator erred in law by finding that Mrs. Crossey is entitled to IRBs despite her extended return to work, gaps in her medical records, and intervening events since the accident. For the same reasons, the insurer appeals the arbitrator’s award of medical expenses for chiropractic and massage treatment.

Both parties appeal the arbitrator’s decision on the amount of IRBs payable. The insurer submits that the arbitrator erred in finding that it was required to increase the benefit when Mrs. Crossey’s extended disability benefit (“EDB”) from Clarica, a deductible loss of income payment, was reduced on account of her GM disability pension, which is not deductible. Mrs. Crossey submits that the arbitrator erred by refusing to include the value of her employer-paid benefits in calculating her pre-accident income.

The insurer also appeals the arbitrator’s award of interest on overdue benefits under section 68 of the SABS-1994.

For reasons set out below, I am not persuaded the arbitrator erred with respect to income replacement benefits, medical expenses or interest, and the appeal and cross-appeal are dismissed on these points.

The main focus of the insurer’s appeal is the arbitrator’s order that it pay a special award of $10,000 under subsection 282(10) of the Insurance Act. The insurer disputes the arbitrator’s finding that it unreasonably withheld or delayed benefits and submits that no special award should have been ordered in any amount. Alternatively, the insurer claims the award is too high. Mrs. Crossey submits that the special award is too low. I am not persuaded the arbitrator erred in ordering a special award or balancing the appropriate factors in setting the amount of the award. Both appeals are dismissed on this point.

Finally, Mrs. Crossey appeals the arbitrator’s expenses assessment decision dated March 15, 2006. I am not persuaded the arbitrator erred.

II. BACKGROUND

The arbitrator found that Mrs. Crossey was an unbelted backseat passenger when the car being driven by a co-worker spun out of control and rolled several times before coming to rest at the bottom of an embankment. Mrs. Crossey was thrown through the rear window and knocked unconscious. Her initial injuries included a fractured right clavicle, a fractured right cheek bone, a concussion and various soft-tissue injuries; she was later diagnosed with post-traumatic stress disorder. She spent a week in hospital, and the next seven months at home. During this initial period of disability, the insurer paid IRBs and provided medical and housekeeping benefits.

On November 8, 1994, Mrs. Crossey returned to full-time work at GM. Her previous job was unavailable, so she was given a new job within the medical restrictions imposed by the plant doctor: no above shoulder work, no use of heavy torque guns. The insurer terminated IRBs in December 1994. Though Mrs. Crossey continued to complain of chronic pain in her back, neck, shoulders and head, as well as headaches and weakness in her right arm and shoulder, she continued to work full-time until November 20, 2000.

The arbitrator described the dispute about Mrs. Crossey’s post-accident history as follows:

Situations where honest attempts to return to work fail are common. What makes this case unusual, is the length of time between when Mrs. Crossey returned to work and when she stopped working because she felt that she was no longer able do her job. She worked full-time, with almost perfect attendance, from November 1994 until November 2000. Mrs. Crossey contacted Farmers’ in late 1999 to enquire whether Farmers’ would pay a medical benefit for chiropractic treatment (and, later, for massage therapy). Farmers’ arranged for a medical assessment (an insurer’s examination or “I.M.E.”) to be conducted in December 1999. A further assessment was later done at a medical and rehabilitation Designated Assessment Centre (the “med-rehab DAC”) in March 2001 to assess whether chiropractic treatment and massage therapy were reasonable and necessary. Based on the report of the initial assessment, Farmers’ refused to pay for chiropractic treatment. Based upon the med-rehab DAC report, Farmers’ maintained its position that it was not required to pay for chiropractic treatment or massage therapy. In November 2000, Mrs. Crossey advised Farmers’ that she had stopped working as a result of her medical condition. In October 2001, she requested that the income replacement benefits be reinstated. On October 23, 2001, Farmers’ advised Mrs. Crossey that it was denying her claim for income replacement benefits because (according to the testimony of the adjuster, Pam Beukeboom) Farmers’ had come to the conclusion that the medical problems Mrs. Crossey was experiencing at the time she stopped working (in 2000) were not related to the 1994 accident.²

When mediation failed to resolve the dispute, Mrs. Crossey applied for arbitration. The hearing was held over seven days in January and March 2005. The arbitrator gave his preliminary findings by letter dated June 10, 2005, and invited submissions on the remaining IRB calculation issues. He released his final decision on September 28, 2005.

The arbitrator accepted that Mrs. Crossey continued to suffer ongoing impairments as a result of the accident, but did not accept that she suffered a disability during the period of her return to work; in any event, her post-accident income would reduce any IRBs to zero during this period. Mrs. Crossey was awarded IRBs from the time she stopped working at GM (November 21, 2000) and ongoing.³ The arbitrator rejected Mrs. Crossey’s submission that in calculating her IRBs, her gross pre-accident income should be increased to recognize the value of her GM employer-paid benefits, but accepted her position with respect to collateral benefits deductibility. Finally, the arbitrator rejected Mrs. Crossey’s submission that her IRBs should be indexed starting on January 1, 1996. He concluded that pursuant to subsection 79(2) of the SABS-1994 indexation would begin on January 1, 2003, when IRBs would have been payable for more than a year. As a result, the arbitrator found that $44,274.00 was owing for IRBs to March 31, 2005.

The arbitrator also awarded medical benefits of $1,887.15 for chiropractic treatment between November 18, 1999 and February 27, 2003, and $1,350.00 for massage therapy from May 16, 2002 to March 11, 2003. He concluded Mrs. Crossey had not proven her entitlement to housekeeping expenses of $2,600 under section 55 of the SABS-1996 for services provided by her daughter.

The arbitration order also included interest on overdue benefits and a special award of $10,000.00.

On March 15, 2006, the arbitrator issued his expenses decision, ordering the insurer to pay Mrs. Crossey $29,704.60 inclusive of GST and disbursements. As the appeal and cross-appeal of the arbitrator’s first decision had already been commenced, Mrs. Crossey’s appeal was expanded to include the expenses issue.

III. ANALYSIS

A. Oral Ruling

At the conclusion of the appeal hearing on November 28, 2006, I made the following oral ruling, which I confirmed by letter the same day:

• The insurer’s appeal is dismissed with respect to Mrs. Crossey’s entitlement to income replacement benefits from November 21, 2000 and ongoing.

• I reserve my decision on Mrs. Crossey’s appeal from the arbitrator’s ruling that her employer-paid benefits should not be included in calculating her gross annual income before the accident.

• The insurer’s appeal with respect to the deduction of Mrs. Crossey’s GM pension as a collateral benefit is dismissed.

• The insurer’s appeal and Mrs. Crossey’s cross-appeal with respect to the special award are dismissed.

• The insurer’s appeal of the arbitrator’s interest order is dismissed.

• I reserve my decision in Mrs. Crossey’s appeal of the arbitrator’s expenses order.

My reasons are as follows.

B. Duration of Income Replacement Benefits

On appeal, the insurer submits that the arbitrator erred in law by failing to put the onus of proof on the claimant and making findings that were not supported by the evidence.

Mrs. Crossey’s six-year return to work was the main problem with her claim. As well, the arbitrator recognized there was little medical documentation of accident-related problems between 1996 and 1998. Mrs. Crossey did not claim medical or rehabilitation benefits between 1995 and late 1999, when she resumed chiropractic and massage therapy; her claim for benefits for that treatment was denied. The insurer submitted this showed she had made a full recovery by the end of 1995.

The insurer attributed Mrs. Crossey’s deterioration and ultimate disability to intervening events. In March 1999, she strained her right arm at work while untangling electrical wires she was installing in car doors; she was put on light work for a couple of days, then a co-worker was assigned to untangle the wires. In the spring of 2000, a torque gun was added to the line, and Mrs. Crossey complained that using it aggravated her neck, shoulder, and back pain. That summer, her son was injured in a serious accident, and she took several months off to look after him. The arbitrator stated: “The stress of her son’s accident (and possibly some other personal problems) probably contributed to another flare-up of her irritable bowel syndrome at that time.”⁴ When Mrs. Crossey returned to full-time work in September 2000, her job had been modified again, requiring more bending and twisting, and she deteriorated rapidly from then on until she stopped working two months later. It was the job change that led to her disability, in the insurer’s view, not the accident six years earlier.

The insurer’s position on causation was supported by the med-rehab DAC report prepared in March 2001 in response to Mrs. Crossey’s claim for chiropractic treatment and massage therapy in 1999. The assessors (Dr. Ian Cruikshank, a chiropractor, and Ms. Jane Oldfield, a physiotherapist), concluded that while the proposed treatments “are beneficial in a supporting role,” the insurer should refuse to pay because of “uncertainties” about causation.⁵

On appeal, the insurer submits that the arbitrator could not properly reach the conclusion he did in the face of this evidence.

The arbitrator recognized that the insurer had good reason to question Mrs. Crossey’s renewed claim, especially considering her demonstrated ability to work for six years after returning to work, the relative paucity of medical records between 1996 and 1998, and the apparent lack of contact with the insurer between early 1996, when the insurer closed its file, and 1999, when Mrs. Crossey claimed further treatment.⁶ He recognized that attributing any ongoing problems to factors unrelated to the accident “might well be a reasonable inference” “in the absence of any credible evidence to the contrary.”⁷ I agree. However, the arbitrator concluded that Mrs. Crossey had provided sufficient credible evidence to satisfy her burden of proof. I find no reason to interfere with his conclusion.

Some significant factors supported Mrs. Crossey’s claim. First, the insurer did not dispute the severity or cause of her initial injuries, which resulted in a lay-off of seven months. This was not a case of delay between the accident and the first appearance of symptoms; the delay was between Mrs. Crossey’s return to work and her lay-off in November 2001. As noted by the arbitrator, subsection 14(1) of the SABS-1994 expressly provides for reinstatement of IRBs after a failed return to work.⁸ As always, the claimant bears the burden of proving entitlement, and the evidentiary burden will be higher when there has been a significant lapse of time before a claimed recurrence. Nonetheless, a return to work that fails, despite the claimant’s good faith efforts, may provide strong evidence of disability.

There was no question that Mrs. Crossey suffered ongoing impairments after returning to work. For example, she continued to complain to Dr. Price, her family doctor, and Ms. Ren Jones, her physiotherapist, amongst others, about pain in her back, neck and head, and loss of strength and range of motion in her arms. She required physiotherapy and other treatment for more than a year post-accident.⁹ In December 1995, Marcia Hebert, of Voc-Care, relayed Dr. Price’s advice that Mrs. Crossey was developing arthritis in her neck because of her accident injury. She recommended a functional capacity evaluation or insurer examination, as well as a follow-up with Dr. Price and Mrs. Crossey. The insurer’s failure to follow this recommendation by its own expert was one of the arbitrator’s reasons for ordering a special award.¹⁰

The arbitrator’s reasons leave no doubt that he considered “the apparent ‘gap’” in the medical records between 1996 and 1998, but found it was not fatal to the claim. The arbitrator accepted that Mrs. Crossey was not a complainer,¹¹ and that she had, in fact, reported neck pain and headaches during this period, though her family doctor referred her to an allergist for investigation of these symptoms.¹²

A significant factor was the arbitrator’s finding that Mrs. Crossey was a credible witness:

Despite the paucity of corroborating medical evidence during this time period, I accept Mrs. Crossey’s evidence that her impairments from the accident continued from the date of the accident to the present. Mrs. Crossey was a credible witness. She told her story in a plain, straightforward manner and had, in general, an excellent recall of important events. She did not tend to exaggerate her symptoms or gloss over facts that might be prejudicial to her. She was not evasive on cross-examination. Mrs. Crossey appeared to be a pleasant, co-operative and honest woman who has a good understanding of her medical condition and the events that brought her to this arbitration. Several doctors, including those retained by Farmers’, have commented favourably on the demeanour and credibility of Mrs. Crossey. . . . ¹³

As a result, the arbitrator accepted Mrs. Crossey’s testimony that she continued to suffer neck and shoulder pain, headaches and fatigue between 1996 and 1998, when medical records of her problems were relatively sparse.¹⁴ An arbitrator’s assessment of credibility is deserving of particular deference. The insurer has given me no reason in this case to question the arbitrator’s approach to credibility or his conclusions.

After 1999, Mrs. Crossey’s deterioration was evidenced by the medical records of her doctors and the GM plant doctors, who expanded her work restrictions and continued them to the date of her lay-off in November 2000.¹⁵ The arbitrator described her condition at that time as follows:

An x-ray taken in November 2000 revealed that Mrs. Crossey had moderate to advanced degenerative disc disease at the C4-7 area of her spine, mild to moderate osteoarthritis throughout the cervical spine and mild degenerative disc disease at the mid- to lower-thoracic areas. She was in such pain that she took various pain medications even though she knew they would likely complicate her bowel problems; predictably, her gastro-intestinal complaints increased shortly thereafter. On examining the x-ray results, Dr. Cook wrote in December 1999 that “I don’t see this lady being able to do a job on the line at this time.” He deemed her unfit to return to work until the end of February 2001. He then extended this until April 2001.¹⁶

The insurer has given me no reason to doubt the arbitrator’s conclusion that Mrs. Crossey has been disabled from her pre-accident job from November 2000.

The real issue is causation. On that point, the insurer relied mainly on the DAC report, but the arbitrator rejected the assessors’ conclusions because he found they applied the wrong causation test. Dr. Cruikshank concluded:

While certainly the type of physical trauma to the spine and supporting structures she sustained in the motor vehicle accident could make her more susceptible to the development of other conditions and symptoms . . . it is difficult to directly relate the current problems with the motor vehicle accident, given the length of time since the accident, and numerous complicating factors and events which appear to have initiated and exacerbated her condition as outlined above.¹⁷ [emphasis added]

Ms. Oldfield also relied on a “direct” causation test, at p. 12 of the report. The arbitrator stated:

The repeated use of the word “directly” in the DAC report is of some concern because, under Bill 164, insured persons could be entitled to benefits if their impairments were caused either directly or indirectly by the use or operation of a motor vehicle. It also appears that neither Dr. Cruikshank nor Ms. Oldfield turned their mind to the issue of whether the accident materially contributed to the degeneration of Mrs. Crossey’s condition. Since, by Mrs. Crossey’s own admission, there were a number of factors that contributed in or around early 2000 to the more rapid deterioration of her condition, Dr. Cruikshank and Ms. Oldfield focussed on those other factors and concluded that her medical problems at the time of the examination were not the direct result of the accident. Section 36 of the Schedule states that the impairment must be “as a result of the accident”; it does not state that the impairment must be as a direct result of the accident. By only determining whether the 1994 accident was the direct and/or primary cause of the symptoms in 2000, Dr. Cruikshank and Ms. Oldfield took too narrow a view of causation. For these reasons, I do not accept the ultimate conclusion of their report. ¹⁸

The arbitrator’s statement of the law is correct, and the DAC assessors’ error on this point was sufficient reason to reject the report, which was otherwise cautiously supportive of the treatment plans. Also, because this was a med-rehab DAC, not a disability DAC, the assessors were not called upon to assess Mrs. Crossey’s ability to work. In any event, the arbitrator was not bound by the DAC report. He considered it along with all the other evidence, as he was obliged to do, and was well within his authority to prefer the evidence Mrs. Crossey relied on.

Before referring the treatment plans to a DAC, the insurer had commissioned insurer examinations by Dr. G.S. Conn, an orthopedic surgeon, Dr. J. Mayer, a neurosurgeon, and Mr. J. Cook, a physiotherapist. The insurer relied on these reports in its initial denial of the treatment claims. The arbitrator found the reports unhelpful:

Dr. Conn indicated that the degenerative changes to Mrs. Crossey’s cervical spine might be related to age but could also have been precipitated by the 1994 accident. Dr. Mayer commented that cervical disk disease is not unusual in a person of Mrs. Crossey’s age but he did not give an opinion as to whether the 1994 accident materially contributed to the degeneration of her condition or to the other problems (such as chronic pain) that Mrs. Crossey was experiencing at the time. Mr. Cook gave no opinion with respect to the causation issue.¹⁹

Not only was the report equivocal on causation, but two of the assessors (Dr. Conn and Mr. Cook) offered some support for the proposed treatment:

Dr. Conn, an orthopaedic surgeon, indicated in the I.M.E. report that he had no objections to Mrs. Crossey continuing with chiropractic treatments since they appeared to be helping her. He later clarified this statement to indicate that passive therapy would not likely be of any material benefit for rehabilitation of accident related injuries. He noted, however, that Mrs. Crossey reported symptomatic relief from her chiropractic treatments and that there was no orthopaedic reason for such treatment not to continue. He wrote, “such treatment would be considered to be for patient comfort and maintenance rather than for rehabilitation of accident related injuries.” Mr. Cook, a physiotherapist, indicated that the chiropractic treatment had just begun and its effects were not yet known. He concluded as follows, “Apart from her chiropractic treatments I would not recommend any additional rehabilitation intervention at this time.” While this may be open to interpretation, it is certainly not a clear finding that chiropractic treatment was unreasonable. Dr. Mayer, a neurosurgeon, stated that “no further formal therapy is reasonable or necessary.” ²⁰

The insurer’s selective reading of these reports, and its failure to consider pain relief as a legitimate goal for treatment, provided additional reasons for the special award.

When the hearing resumed after a two-month recess on March 29, 2005, the insurer moved to admit a recent report by Dr. Conn. After vigorous submissions from both counsel, the arbitrator refused to admit the report. On appeal, the insurer submits this was an error as the evidence was probative and required for the insurer to fairly present its case.

I am not satisfied the arbitrator erred. His main reason for refusing the motion was that the report was not produced in accordance with the pre-hearing disclosure rules of the Dispute Resolution Practice Code (the “Code”). Dr. Conn’s report was not the only evidence excluded; the arbitrator also denied Mrs. Crossey’s motion to admit Dr. Barry Malcolm’s report commenting on Dr. Conn’s report. As this discussion occurred on the fifth day of hearing, after Mrs. Crossey testified, the ruling helped focus the hearing and ensure its timely completion, especially given the insurer’s stated intention of calling Dr. Malcolm for cross-examination if his report was admitted. In any event, as the arbitrator’s comments on the record indicate, Dr. Conn’s amended report was likely to invite a challenge to his impartiality, and the resulting battle of the experts would probably have extended the hearing without providing much helpful evidence. Ultimately, it was the arbitrator’s role to decide whether the medical record was consistent with Mrs. Crossey’s claim, and he was in as good a position as Dr. Conn (or Dr. Malcolm) to make the assessment. The ruling was well within his authority. For the same reasons of timely disclosure and hearing efficiency, I am not persuaded the arbitrator erred in refusing to admit the insurer’s surveillance evidence, which was not disclosed in accordance with Rule 40 of the Code.

In any event, the arbitrator’s finding on causation was well supported on the evidence, which he summarized concisely in the following passage:

Doctors Sinha (the family doctor), Cook (the G.M. doctor), Rod (the doctor treating Mrs. Crossey at the pain clinic) and Fang (an orthopaedic surgeon who examined Mrs. Crossey on a couple of occasions in 2001) all relate Mrs. Crossey’s impairment to the 1994 accident. Dr. Sinha and Dr. Cook, both of whom had been following Mrs. Crossey’s progress for years, concluded that the accident was the cause of the pathology in her cervical spine. Dr. Fang concluded that her spinal disability was the result of a combination of: the 1994 accident; G.M. adding a torque gun to her job in April 2000; the stress of her son’s accident in the summer of 2000; and, changes to her job requirements that came into effect in September 2000. Dr. Rod testified that he was able to make a clear diagnosis that Mrs. Crossey was suffering from chronic pain and related problems; this included pain in her neck, right shoulder and upper and lower back, cervicogenic headaches (i.e. migraine-like headaches caused by neck pain), sleep problems and fatigue. Based upon information he gathered from Mrs. Crossey and from his review of the available medical documents, Dr. Rod testified that these problems were chronic since the 1994 accident, that there is no evidence that Mrs. Crossey suffered any of these symptoms prior to the accident and that the accident likely precipitated the development of these symptoms. Dr. Midha, neurosurgeon, confirmed that Mrs. Crossey had suffered from chronic neck pain since the 1994 accident. Even Dr. Conn, the orthopaedic surgeon involved in the I.M.E., stated that if Mrs. Crossey has had ongoing symptoms since the time of the accident, he would concur that the accident would “at least have been the precipitating reason for the development of neck symptoms.” ²¹

Though the insurer raised legitimate questions about the claim, I am not persuaded the arbitrator erred in concluding that the accident materially contributed to Mrs. Crossey’s disabling impairments. He heard conflicting evidence about the severity, duration and cause of her impairments, but I am persuaded there was ample evidence to support his conclusion that after November 2000 she suffered a substantial inability to perform the tasks of her pre-accident job as a result of the accident.

The insurer also submits that the arbitrator erred in refusing to make a third-party order for production of Mrs. Crossey’s entire GM employment file or her Clarica file, which presumably might have included additional medical records. The order was refused because the insurer had not given notice of motion to the third parties, as required by Rule 67 of the Code, and as Mrs. Crossey’s counsel stated that he had produced everything he had received, the arbitrator was not prepared to proceed just on the assumption there must be more. Finally, the arbitrator left it open for the insurer to call a witness from either company, but none was called.

On appeal, the insurer submits that as this issue came up at the very start of the hearing in January 2005, the arbitrator should have adjourned the hearing or made the motion returnable when the hearing resumed in March. Neither, however, did the insurer bring the appropriate motion at any time before the March resumption, and in any event, the basis for the motion was entirely speculative: on appeal, the insurer gives no reason to believe any documents obtained would have affected the outcome. Arbitration hearings are meant to be speedy and focused, and for that reason FSCO does not provide a full discovery process. In my view, the arbitrator was generous in allowing the insurer to present extended procedural arguments in this case. The rulings were entirely within his authority and he made no error.

C. Amount of Income Replacement Benefits

1. Inclusion of Employer-Paid Benefits in Income

The arbitrator found that Mrs. Crossey’s gross annual income at the time of the accident was $47,794.63, based on her pay stubs for the four weeks before the accident. There is no remaining dispute about this “base” figure, but Mrs. Crossey submits in her cross-appeal that the arbitrator erred by refusing to include the value of her GM employer-paid benefits – an additional 11.41 per cent of her gross income.

At the arbitration, Mrs. Crossey relied on a report signed by Ian Wollach and Arlene Garfinkle, of Rich Rotstein, chartered accountants, and on Ms. Garfinkle’s testimony at the arbitration hearing.

The arbitrator stated that Mrs. Crossey provided no authority for her position, though the Rotstein report referred to Howden and Pafco Insurance Company, (FSCO P00-00028, June 22, 2001), and Lacroix and Jevco Insurance Company, (FSCO A00-000163, June 27, 2002).²² The arbitrator accepted that these decisions “stand for the proposition that the value of employer-paid benefits can form part of gross income from employment,” but that the onus is on the claimant to bring evidence of “the exact nature and value of the employer-paid benefits in question.” There is no error in the arbitrator’s statement of the law, which was not challenged on appeal.

The arbitrator concluded that Mrs. Crossey “failed to adduce sufficient credible evidence as to the exact nature and value of the benefits she seeks to include.” According to a note to Schedule 3 of the Rotstein report, the basis for the 11.41 per cent figure was a letter from GM dated June 8, 2001,²³ but the arbitrator noted that the letter was not entered into evidence, Ms. Garfinkle did not testify about its contents, and no one from GM testified about Mrs. Crossey’s benefits. The arbitrator was not prepared to rely on the Rotstein report alone because of what he described as “serious flaws,” for example, the accountants’ failure to detect a significant error in the Employer’s Confirmation of Income form completed by GM.²⁴

On appeal, Mrs. Crossey submits that the arbitrator erred by refusing to consider this evidence. In particular, she notes that Ms. Garfinkle and Mr. Wollach co-authored the claimant’s accounting report in Lacroix, and Mr. Wollach testified in that case about the value of Mr. Lacroix’s employer-paid benefits at GM. Mrs. Crossey relies on R. v. Abbey, 1982 CanLII 25 (SCC), [1982] 2 S.C.R. 24 (S.C.C.) for the proposition that an expert opinion based on hearsay evidence is admissible if relevant.

I note, first, that the evidence in Lacroix included two GM letters, both dated June 8, 2001. According to Arbitrator Bayefsky’s reasons, the first letter set out the cost to GM of Mr. Lacroix’s various benefits, including 2.97 per cent of annual wages for employer pension contributions in 1994. In the second letter, GM stated that 2.97 per cent represented the “normal employer cost” (the “pension cost incurred for the employee’s current year of service”) but GM’s “required funding contribution” for 1994 also included “any special payments for unfunded actuarial liabilities related to past events” which would raise the employer contribution to 11.4 per cent.²⁵ Arbitrator Bayefsky rejected the higher figure because there was “no evidence of what the past events in question were, whether they involved Mr. Lacroix or whether Mr. Lacroix would benefit from the higher contributions General Motors made to cover those liabilities.”²⁶ He valued the employer’s pension contribution at 2.97 per cent of his gross annual income, but this was not mentioned in the Rotstein report on which Mrs. Crossey relied. The omission was another serious flaw and provided sufficient reason for the arbitrator not to accept Ms. Garfinkle’s evidence.

The Commission has long accepted that well-founded income estimates may be sufficient to calculate income replacement benefits where precise evidence is unavailable. There is less reason for flexibility when the employer is General Motors. It may be, as was suggested at the appeal, that Mrs. Crossey attempted to obtain this information and could not. This would have been a reason to summons a GM official with direct knowledge of the benefits provided. The amount claimed was significant, and the arbitrator was well within his authority to reject the poor quality evidence put forward on point.

2. Deduction of Collateral Benefits

There is no dispute about the arbitrator’s finding that Clarica paid Mrs. Crossey an extended disability benefit (EDB) of approximately $2,515 (gross) per month between November 24, 2000 and November 2002. There is also no dispute that this benefit was provided under an income continuation plan and therefore, pursuant to paragraph 2 of subsection 75(1) of the SABS-1994, the insurer is entitled to deduct the net (after-tax) amount from the income replacement benefit otherwise payable.²⁷ Finally, there is no dispute about the arbitrator’s finding that Mrs. Crossey’s EDB was reduced by the amount of the monthly disability pension benefit she received from GM starting in November 2002. The only issue is whether the insurer is required to increase the amount of Mrs. Crossey’s income replacement benefit after November 2002.

At arbitration, the insurer submitted that it was entitled to continue deducting the full amount of the EDB because it was available to Mrs. Crossey, though not received by her after she applied for and was granted the disability pension. Subsection 75(1) expressly allows an insurer to deduct benefits “received” (paragraph 1) and benefits “that have not been received . . . but are available,” unless the insured person has applied to receive them (paragraph 2). These provisions make accident benefits secondary to other disability benefits and provide an incentive for the insured person to apply for all available disability benefits.

A similar rule under the Clarica policy forced Mrs. Crossey to apply for the GM disability pension. The insurer does not dispute the arbitrator’s finding that Clarica gave Mrs. Crossey notice that it would reduce her EDB by the presumed amount of her disability pension effective November 1, 2002, whether or not she applied for it.²⁸ He concluded, “[s]he really had no choice but to apply . . . .” I agree.

The effect of the insurer’s position is to treat the disability pension as a deductible collateral benefit. The insurer relies on De Frias and Lumbermen’s Mutual Casualty Company, [2000] O.J. No. 603 (Ont. S.C.J.), which held that the plaintiff’s income replacement benefit under the SABS-1994 was to be reduced by the amount of the disability benefit paid under his collective agreement. However, while there had been a dispute as to whether his disability pension benefit was also deductible from his income replacement benefit, that issue was resolved in the plaintiff’s favour before the start of the hearing. The outcome is consistent with Lacroix and Jevco Insurance Company, (FSCO A00-000163, June 27, 2002), which held that the claimant’s extended disability benefit from Clarica was a payment for loss of income, but his GM disability pension was not, and with Wilcox and Economical Mutual Insurance Co., (FSCO A98-000058, January 26, 1999), confirmed on appeal, (FSCO P99-00015, March 2, 2000), the Commission’s leading case on point.

The arbitrator concluded there was no basis for finding that Mrs. Crossey’s disability pension benefit is deductible from her income replacement benefit. I am in the same position on appeal. I am not persuaded the arbitrator erred.

D. Medical Benefits

The arbitrator awarded medical benefits of $1,887.15 for Mrs. Crossey’s chiropractic treatment between November 18, 1999 and February 27, 2003, and $1,350.00 for massage therapy from May 16, 2002 to March 11, 2003. The insurer gave no specific grounds for disputing this award, apart from its general submissions on causation. The appeal is dismissed.

E. Interest on Overdue Benefits

The arbitrator ordered the insurer to pay interest on the benefits awarded from the date each payment became overdue, at the rate of 2 per cent per month compounded monthly, in accordance with section 68 of the SABS-1994. The arbitrator’s estimate of the interest owing on the IRBs awarded²⁹ assumes that each payment became overdue when not paid every second week, as required by subsection 62(2) of the SABS-1994. The insurer submits that the arbitrator erred in that payments only became overdue after he released his decision.

I reject this. The arbitrator’s interest order is consistent with many Commission decisions holding that interest flows from entitlement, not proof. Unless the claimant’s action or inaction effectively prevented the insurer from adjusting the claim (and there is no such evidence in this case), the insurer bears the risk of delayed payment. See, for example, Hejnowicz and Coachman Insurance Company, (FSCO P05-00024, August 3, 2006), and the decisions cited therein.

F. Special Award

The arbitrator ordered a special award of $10,000 in addition to the benefits and interest awarded. The insurer submits that the arbitrator erred by ordering a special award, or, alternatively, by failing to consider mitigating factors in setting the amount of the award. Mrs. Crossey submits that the award should have been higher.

The insurer submits that a special award should not have been ordered because Mrs. Crossey provide no information to support her disability claim following her extended return to work and because the insurer relied on the March 2001 DAC report in refusing to reinstate benefits. The insurer claims the arbitrator disregarded the principle that an insurer’s conduct should be judged in relation to the information available at the time and not from the perspective of hindsight, that an insurer should be held to a standard of reasonableness not perfection, and that consideration must be given to the entire context of the claim, including the conduct and information provided by the claimant.

I am persuaded the arbitrator’s decision is consistent with these well-established principles. I note, first, that the arbitrator dismissed Mrs. Crossey’s argument that a special award should be ordered on the basis that the insurer contravened the termination provisions of section 64 of the SABS-1994. Amongst other things, he recognized that when the insurer closed its file, Mrs. Crossey had been back at work with no income loss for about a year, which made the applicability of s. 64 questionable and meant Mrs. Crossey suffered no prejudice with respect to her IRBs. In my view, this reflects the arbitrator’s recognition that Mrs. Crossey’s apparently successful return to work quite properly informed the insurer’s approach to the file.

However, the arbitrator found unreasonable the insurer’s refusal to consider Mrs. Crossey’s treatment needs after that time. He was particularly critical of the insurer’s failure to follow the advice of its own rehabilitation specialist, Ms. Hebert, who, in December 1995, reported that Mrs. Crossey was developing arthritis in her neck because of the accident and recommended further medical investigation. In response, the insurer closed its file.

The arbitrator did not err in concluding this conduct merited a special award. For one thing, a claimant may qualify for medical and rehabilitation benefits under the SABS even after returning to work and ceasing to qualify for IRBs. In fact, this is quite common, especially if, as seems to have been the case here, the claimant is well-motivated to return to work despite continuing symptoms. Moreover, the arbitrator found that insurer’s failure to follow up on Ms. Hebert’s recommendations in 1995 contributed to the perceived lack of medical documentation on which the insurer relied in refusing Mrs. Crossey’s treatment claims in 1999 and her claim for a resumption of her IRBs in 2001. The arbitrator was well within his authority to find that the insurer acted unreasonably by failing to follow the recommendations of its own expert and failing to make reasonable enquiries to fairly assess Mrs. Crossey’s treatment needs.

The second reason for the special award also relates to the insurer’s refusal of the 1999 treatment plans. The arbitrator found that the insurer “quickly jumped to the conclusion that Mrs. Crossey’s complaints were not the result of the 1994 accident.”³⁰ After arranging an IE, the insurer took “the narrowest possible view” of the report, ignoring, especially, the parts of Dr. Conn’s report that were favourable to Mrs. Crossey.³¹ Again, the arbitrator did not err in finding that the insurer’s selective reading of the report of its own expert was an unreasonable basis for withholding or delaying benefits. The insurer’s failure to consider pain control as a legitimate goal of treatment was another basis for the special award, and this too was consistent with well-accepted principles.

The arbitrator gave three reasons for finding the insurer’s refusal to reinstate IRBs unreasonable. First, when Mrs. Crossey advised that she had stopped working because of accident-related neck impairments in November 2000, the insurer failed to make reasonable enquiries into her claim, and failed to advise her that she might be eligible for reinstatement of her IRBs. Secondly, the insurer relied on the March 2001 med-rehab DAC report in refusing IRBs, despite the different qualification criteria, and despite the DAC assessors’ reliance on the wrong causation test, problems that were obvious on the face of the report. I agree that an insurer should generally be able to rely on a DAC report without risking a special award, but this is subject to the overriding requirement of fair and reasonable assessment of the claim. Reading the arbitrator’s decision as a whole, I have the impression that the arbitrator saw the insurer’s misconduct as cumulative, reflecting a stubborn refusal to reconsider Mrs. Crossey’s ongoing problems once it had closed the file. I am not satisfied the arbitrator erred in finding that a special award was warranted.

Contrary to the insurer’s submission, I find that the arbitrator considered factors that were favourable to the insurer, the main one being the delay between Mrs. Crossey’s return to work and her renewed claims for treatment and IRBs:

This is, however, certainly not the most egregious case to come before this Commission and there are a number of factors that tend to weigh in Farmers’ favour. There is no evidence that Farmers’ was acting maliciously or that the errors Farmers’ made in handling this case form part of a larger pattern of misconduct. Given the passage of a substantial period of time (between 1995 and 1999) and Mrs. Crossey’s demonstrated ability to work full-time at G.M. during the intervening period, it was understandable that Farmers’ treated this claim with some level of skepticism. The medical records for the period of 1996 through 1998 did not (on their own) support Mrs. Crossey’s assertion that the impairments she suffered as a result of the accident continued uninterrupted from 1994 onwards; as a result, the credibility of Mrs. Crossey became a crucial issue. In such circumstances, it is understandable that Farmers’ might desire an arbitral determination of the issues in dispute.³²

However, the insurer’s ability to rely on the documentation gap was weakened by its own refusal to investigate Mrs. Crossey’s claims.

The arbitrator estimated that the maximum special award available was about $37,000. Bearing proportionality in mind, and considering all the circumstances, he found $10,000 to be the appropriate amount. I am satisfied that his analysis reflected an appropriate balancing of the factors identified in Persofsky and Liberty Mutual Insurance Company, (FSCO P00-000041, January 31, 2003), the leading special award case. The insurer’s appeal and Mrs. Crossey’s cross-appeal on the amount of the award are dismissed.

G. Arbitration Expenses

In his second decision, dated March 15, 2006, the arbitrator concluded that Mrs. Crossey was entitled to her arbitration expenses and fixed the amount of the order. Mrs. Crossey appeals his assessment of her allowable legal fees: $15,120.00 plus GST, for a total of $16,178.40. There is no dispute about disbursements. Mrs. Crossey submits that the arbitrator erred with respect to the hourly rate awarded for legal services, the number of hours allowed for attendance at the hearing, and the number of hours allowed for preparation time.

The arbitrator noted that while the regulation generally restricts the amount that can be awarded for legal fees to the Legal Aid rate, it also allows an arbitrator to award claimant’s counsel a higher amount, as allowed under the Code. Rule 78.1 of the Code allows an arbitrator to award up to $150 per hour where he or she is satisfied it is justified. I agree with the arbitrator that the discretion to award an enhanced rate is exercised where the Legal Aid rate would result in an “unreasonably low” expenses award or where “the experience of senior counsel permitted a complex case to be presented in a manner that facilitated a full, fair and efficient hearing of the issues in dispute.”

Mrs. Crossey sought the maximum hourly rate for the legal services of Mr. Gillespie, who, as noted by the arbitrator, was called to the bar almost twenty-five years ago. Mr. Gillespie has significant accident benefits experience at FSCO, and the arbitrator recognized that his experience “permitted him to present a complicated case in a manner that made the issues clear and, ultimately, that resulted in the Applicant’s success.”³³

However, the arbitrator awarded $120 per hour rather than the $150 claimed by Mrs. Crossey. He dismissed the insurer’s submission that Mr. Gillespie’s conduct tended to prolong the proceedings, noting that “both sides forcefully advanced procedural arguments” that prolonged the hearing, but reduced the amount he would otherwise order because of problems with Mrs. Crossey’s documentary evidence:

The organization and presentation of the documentary evidence, however, fell short of the level one would have expected from senior counsel. The failure of Mr. Gillespie to have all of the documentation properly organized and to have each page numbered so that the documents could be easily located during the hearing did result in both delay and frustration and his insistence on reading large portions of those documents into the record also tended to unnecessarily prolong the proceedings. Although I did advise counsel for both sides at the commencement of the hearing that I expected them to point out to me during the course of the hearing which of the large number of documents filed were of particular importance, I did not expect counsel to actually read to me excerpts from a large number of those documents.³⁴

For the same reason, the arbitrator awarded legal fees for 42 hours, over the seven days of hearing, rather than the 56 hours billed by Mr. Gillespie or the arbitrator’s 49 hour estimate.

The arbitrator was acting within his authority to control the proceedings when, at the beginning of the hearing, he stated that no document would be considered unless counsel referred to it specifically and explained its relevance and importance. Based on the transcript, it appears Mr. Gillespie spent a significant amount of time on three hearing days identifying the documents he would rely upon. Mr. March took the same approach with the insurer’s smaller number of documents, though this took much less time.

Mr. Gillespie’s desire to make sure the arbitrator considered the key documents is understandable because Mrs. Crossey bore the burden of proving her claim, and the insurer vigorously resisted it, bringing a number of time-consuming procedural motions. Moreover, the requirement to paginate exhibits and lead every document individually may not have been clear to counsel in advance of the hearing.

In the circumstances, I would be reluctant to penalize successful counsel for what appears to have been a good faith attempt to comply with the arbitrator’s ruling while presenting his case effectively during a difficult hearing. However, it is not my role on appeal to substitute the order I might have preferred. An arbitrator’s expenses award deserves considerable deference because the arbitrator was in a much better position than I am to assess counsel’s presentation of his case in the entire context of the hearing. In this case, I have no compelling reason to vary the award and I am not persuaded I should do so. Further, I am not persuaded there is any reason to vary the arbitrator’s order that two hours preparation time be paid for every hour of hearing attendance.

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.

June 8, 2007

Nancy Makepeace

Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule – Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended.
2. 2Arbitration decision, p. 7.
3. 3Having proven that she qualified for IRBs 104 weeks after becoming disabled, Mrs. Crossey would now be entitled to an offer of loss of earning capacity benefits. The issue was addressed in the mediation, application for arbitration and arbitration pre-hearing. At the arbitration hearing, the parties agreed that the issue should be deferred until the IRB issue was resolved.
4. 4Arbitration decision, p. 14.
5. 5Arbitration exhibit 5, tab 22, executive summary signed by Dr. Cruikshank and Ms. Oldfield.
6. 6Arbitration decision, p. 39.
7. 7Arbitration decision, p. 11.
8. 8Arbitration decision, p. 8.
9. 9Arbitration decision, p. 9.
10. 10Arbitration decision, pp. 10 and 35.
11. 11He also noted Mrs. Crossey’s excellent pre-accident attendance record, despite some minor pre-accident health problems (arbitration decision, p. 9).
12. 12Arbitration decision, p. 11.
13. 13Arbitration decision, p. 11.
14. 14Arbitration decision, p. 13.
15. 15Arbitration decision, p. 12.
16. 16Arbitration decision, pp. 14 – 15.
17. 17At p. 8 of the DAC report, arbitration exhibit 5, tab 22, quoted at p. 17 of the arbitration decision.
18. 18Arbitration decision, p. 17.
19. 19Arbitration decision, p. 16.
20. 20Arbitration decision, p. 31.
21. 21Arbitration decision, p. 15.
22. 22This decision was not appealed. In a second decision, dated June 16, 2004, the arbitrator found that the GM employer pension contribution was not taxable for purposes of calculating income from employment. The latter was confirmed on appeal, (FSCO P04-00025, March 23, 2005).
23. 23According to the note, accrued unpaid vacation pay or sick credits were excluded in accordance with Howden. Further, the GM letter said the cost of employer-paid benefits other than Canada Pension Plan, Employment Insurance and vacation and holiday pay was 16.41 per cent. This was reduced to 11.41 per cent by excluding the employer cost of the health premium and workers’ compensation coverage, in accordance with Lacroix.
24. 24See footnote 17 at p. 24 of the arbitration decision.
25. 25The reason for the discrepancy (11.4 versus 11.41 percent) and its significance, if any, is not clear.
26. 26At p. 9 of the arbitration decision dated June 27, 2002.
27. 27Arbitration decision, p. 25.
28. 28The Clarica letter, dated July 3, 2002, was marked Exhibit 3, Tab 2B.
29. 29At p. 29 of the arbitration decision.
30. 30Arbitration decision, p. 38.
31. 31Arbitration decision, p. 35. See the discussion at pp. 9-10 above.
32. 32Arbitration decision, p. 39.
33. 33Arbitration decision, p. 9.
34. 34Arbitration decision, p. 9.