Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2007 ONFSCDRS 222

FSCO A07-000610

BETWEEN:

CONNIE LISOWECKI

Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY

Insurer

Before: Jeffrey Rogers

Heard: October 22 and 24, 2007, in Thunder Bay, Ontario.

Appearances: Ms. Lisowecki, in person Ms. Tracy Cresswell, solicitor for Dominion of Canada General Insurance Company

Issues:

Connie Lisowecki’s daughter was killed in a motor vehicle accident on October 30, 2004. Ms. Lisowecki applied for and received statutory accident benefits from Dominion of Canada General Insurance Company (“Dominion”), payable under the Schedule.¹ Disputes arose about her entitlement to further benefits. The parties were unable to resolve their disputes through mediation, and Ms. Lisowecki applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Preliminary and Procedural matters

The hearing was scheduled to take place in Thunder Bay on October 22, 23, 24 and 25, 2007. Upon opening the hearing I reviewed the issues in dispute with the parties. Ms. Lisowecki was under the impression that several issues not listed in the pre-hearing letter would be decided in the hearing. I told her that some of the issues she was prepared to address were not properly part of the hearing. She asked that they be added. I decided that, despite the late request, a decision should be made on the merits of her request to add issues, before starting the hearing.

Having made that decision, it became apparent that there were factual disputes to be resolved, in order to decide whether the issues should be added. That required evidence from Ms. Lisowecki. After Ms. Lisowecki testified, Dominion thought it necessary to call the adjuster as a witness. However, the adjuster was not scheduled to attend until the third day set for the hearing. I decided that, because Dominion could not reasonably have anticipated that the adjuster would be required earlier, the decision on adding issues would await testimony from the adjuster.

I suggested to the parties that the intervening time could be used to resolve three issues that were properly before me on which there appeared to be no factual disputes. They agreed. The issues proposed were:

Whether Ms. Lisowecki’s pre-accident losses from self-employment were properly deducted from her income from all sources, in calculating her income replacement benefit;
Whether Ms. Lisowecki was entitled to a death benefit under section 25(3) of the Schedule, in addition to the payment made to her under section 25(5) of the Schedule, and;
Whether Ms. Lisowecki is precluded from proceeding with the claim for lost educational expenses, as set out in the pre-hearing letter.

It later became apparent that there were factual disputes to be resolved before the third issue could be decided. That issue therefore remains to be resolved as part of the main hearing.

On October 24, 2007, after hearing the adjuster’s evidence and submissions from the parties, I gave an oral decision on the procedural and preliminary issues the parties had addressed, except for the issue of how Ms. Lisowecki’s pre-accident losses should be treated in calculating her income replacement benefit. I reserved my decision on that issue. These reasons record my oral decision. My reserved decision is also provided below.

Main Hearing

Because the question of adding issues was not resolved until the end of the third day of the four days set for the hearing, there was no possibility of finishing the hearing in the scheduled time. I decided that the hearing should be adjourned instead of starting to hear evidence on the substantive issues remaining in dispute. Nevertheless, in order to avoid his re-attendance, I did hear the evidence of Bruce Webster, an accountant who had come from Toronto to testify. He prepared a report upon which Dominion had based its decisions about the quantum of income replacement benefits to be paid. Ms. Lisowecki indicated that she disputed his calculation of her post-accident losses from self-employment. Mr. Webster’s evidence was limited to that issue.

I declined Dominion’s request to qualify Mr. Webster as an expert on the meaning of the Schedule. I heard his evidence on the calculation of Ms. Lisowecki’s post-accident losses and how he used them in calculating her income replacement benefit, with reference to how he was guided by the relevant sections of the Schedule. After he gave his evidence, Ms. Lisowecki indicated that there was no dispute on the facts and did not cross-examine him.

ORAL DECISION

This hearing was scheduled to start on October 22, 2007. Upon opening the hearing, Ms. Lisowecki requested that I add new issues to the arbitration. The new issues are:

Whether Ms. Lisowecki suffered a catastrophic impairment as a result of the accident;
Whether Ms. Lisowecki is entitled to payment of $6,880 for treatment for chronic pain, as set out in a treatment plan by Dr. Milo, dated September 12, 2007, and;
Whether Ms. Lisowecki is entitled to $820 for transportation and meals associated with a treatment plan for post-traumatic stress, dated September 12, 2007 (the treatment itself was approved).

Dominion opposed adding the issues on several grounds:

The issue of catastrophic impairment had not failed mediation because the mediator’s report of October 7, 2007 indicates that the issue is not in dispute;
Ms. Lisowecki failed to attend section 42 assessments regarding catastrophic impairment;
Ms. Lisowecki failed to attend section 42 assessments regarding the proposed treatment plan and the dispute had not been mediated.

Dominion also raised the issue of whether Ms. Lisowecki’s claim for ongoing income replacement benefits could proceed, arguing that post-104 IRBs had not been mediated and Ms. Lisowecki had failed to attend section 42 assessments regarding entitlement to post-104 IRBs.

Because there appeared to be disputed facts regarding Ms. Lisowecki’s attendance at section 42 assessments, I heard evidence from Ms. Lisowecki on the issue. The evidence she gave required rebuttal evidence from Karen Robinson, the adjuster. Ms. Robinson was not in attendance on October 22nd. Counsel advised that she was unable to attend until October 24, 2007. I ruled that, in the circumstances, her absence was not unreasonable. Had the hearing proceeded as originally constructed, she would not likely have testified before October 24th. The decision on adding issues would therefore have to await her attendance.

I decided that, in the interim, the rest of October 22nd could be used to address other preliminary issues on which there appeared to be no factual dispute. They are:

Whether pre-accident losses from self-employment are to be deducted from income from all sources in determining the quantum of Ms. Lisowecki’s income replacement benefit, and;
Whether Ms. Lisowecki is entitled to a death benefit under section 25(3) of the Schedule, in addition to the payment made to her under section 25(5) of the Schedule.

Death Benefits

After hearing submissions, I ruled that Ms. Lisowecki does not fit within the class of persons entitled to benefits under section 25(3), because she was neither a dependant of her deceased daughter nor a person to whom her daughter had an obligation at the time of the accident to provide support, under a domestic contract.

Calculation of IRBs

The decision on calculation of income replacement benefits is reserved.

Adding Issues

On the issue of mediation of post-104 IRBs and catastrophic impairment, I find as follows: IRBs have been an issue from the onset. The pre-hearing letter indicated that there is a claim for ongoing IRBs. There is no necessity to mediate separately a claim for post-104 IRBs when there is an ongoing arbitration in which IRBs are claimed. IRBs have never not been in dispute, after the application was filed, as Dominion claimed. Even if IRBs were reinstated for a time, the issues of quantum and interest remained in dispute.

The issue of catastrophic impairment has been in dispute since at least March 2007, when Ms. Robinson sent Ms. Lisowecki an OCF-9 indicating that Dominion did not accept her application to be designated as catastrophic (Exhibit 14). Therefore, I cannot accept the mediator’s opinion in Exhibit 12 that the issue is not in dispute. Clearly, Ms. Lisowecki wanted to mediate the issue. Clearly, Dominion believed it to be in dispute because it sent the OCF-9 and had arranged section 42 assessments before the mediation took place on October 7, 2007. I find that the issue has failed mediation.

When an insurer receives an application for a catastrophic designation, section 40(2) of the Schedule requires it to either accept that the applicant is catastrophic, or give notice that examinations are required, within 30 days. There is no dispute that Dominion arranged for timely assessments in Toronto on May 2, 3, 4 and 5, 2007. Ms. Lisowecki says that she was prepared to attend. Dominion says that Ms. Lisowecki, through her counsel, agreed to postpone them. Ms. Lisowecki argued that the letter from her counsel, dated April 20, 2007, purporting to agree to the postponement, must be a fabrication, because she did not retain counsel until April 18th, when she signed a direction to get a copy of her file, while the letter refers to a conversation with Dominion on April 12th. But the letter does not indicate that counsel got authority on April 12th. It says that counsel now has authority. That is consistent with Ms. Lisowecki’s evidence that she did not retain counsel on April 12th, although she admits that she met with him on that date.

There is nothing unusual about counsel discussing the matter with Ms. Robinson on April 12th. Perhaps he wanted some idea of the scope of the dispute, before agreeing to represent Ms. Lisowecki. In any event, by the time he sent the letter of April 20th, he had been retained. That gave him apparent authority to agree to postpone the assessments, whether or not Ms. Lisowecki gave him specific authority to do so. I therefore do not accept that Dominion is to be blamed for the assessments not taking place in May. After that, I see no evidence that Ms. Lisowecki was interested in moving forward with the assessments.

Turning to the assessments scheduled in August 2007, there is no dispute that verbal notice of the first assessment, scheduled for August 3, 2007, was given on July 26, 2007. That was followed by written notice, admittedly received by e-mail on August 1, 2007. Section 42(8) of the Schedule allows verbal notice, if written confirmation is given as soon as practicable afterwards.

Ms. Lisowecki says that she intended to attend the assessment on August 3, 2007, after speaking to Ms. Robinson on July 26, 2007. She then decided not to attend, after receiving the notices on August 1, 2007. She e-mailed Ms. Robinson saying that she would not attend. She did not give a reason.

I find that the notice for the August 3rd assessment was properly given. There is no dispute that the notices for the subsequent assessments were properly given. I find that the failure to attend the assessments was unreasonable. Ms. Lisowecki has never been assessed under section 42. I do not accept that the notices themselves are confusing. Upon reviewing Exhibit 2, there is a complete explanation of the purpose and nature of the assessments. If Ms. Lisowecki was in fact confused as she now claims, by the number and nature of the notices, there were several other reasonable options available. She could have challenged the validity of the notice for August 3rd and proposed to attend another day. She could have inquired about the necessity of attending assessments for post-104 IRBs. She could have given the reason for non-attendance that she now gives, that the appointments were inconveniently spaced. Instead she simply refused to attend.

With regard to the treatment plan for chronic pain and the transportation and meal expenses, if the issue of mediation remains in dispute, I note that Exhibit 12 indicates that the issue of accommodation expenses while attending a chronic pain program was mediated. I find that the current claim is so closely associated with what was mediated that it should be added to the arbitration. I also note that the letter from Dr. Van Der Loo (Exhibit 15) which Ms. Robinson said she considered to be a treatment plan, indicated only that there is a requirement of 6 weeks accommodation, including food and lodging, in Thunder Bay, without setting out an amount.

The notices for section 42 assessments for the chronic pain program were given upon Ms. Robinson’s decision to treat Exhibit 15 as a treatment plan. That is commendable. Insurers are not required to insist on strict compliance with the Schedule and have been criticized for doing so, when a pattern of non-compliance has been established. However, in this case, the established pattern was requiring strict compliance. Ms. Robinson had declined to consider at least one prior proposal because no proper treatment plan, containing the specific amounts proposed, had been submitted. I do not see the qualitative difference she found in Exhibit 15. There are no particulars of the proposed expense. I therefore find that the assessments regarding the chronic pain program, scheduled for September 5 and 8, 2007, before receiving the treatment plan upon which the claim is based, were not reasonable and necessary.

The result is therefore as follows:

The claim for post-104 IRBs is properly part of this arbitration. As a result of her failure to attend assessments scheduled for August 15th and September 12th, Ms. Lisowecki is precluded from proceeding to arbitration of a claim for entitlement to IRBs after August 15, 2007, until she attends reasonably required assessments in that regard.
Ms. Lisowecki’s request to add the issue of catastrophic impairment is denied. The request may be renewed, should Ms. Lisowecki attend reasonably required assessments in that regard.
Ms. Lisowecki’s claim for the two matters associated with treatment plans of September 12, 2007 is added to the arbitration.

RESERVED DECISION

Ms. Lisowecki was self-employed for about 5 months prior to the accident. During that time, her expenses exceeded her income from self-employment by $6,829. Because she had not completed a fiscal year before the accident, Ms. Lisowecki’s IRB was required to be based on her income in the 52 weeks prior to the accident, by operation of section 8(2) of the Schedule. In the 52 weeks prior to the accident, Ms. Lisowecki also received E.I. Benefits of $6,246 and she earned employment income of $7,553.

The accountants that Dominion retained to calculate Ms. Lisowecki’s IRB deducted her losses from self-employment from her income from other sources, thereby reducing her average weekly income. Ms. Lisowecki’s position is that her losses should only have been deducted from her income from self-employment. She relies on the only decision on the issue, Henderson-Briehl and ING Insurance Company of Canada.² Dominion made no submissions on this issue, except that the Bill 198 amendments to the Schedule after the decision in Henderson-Briehl support its approach. I was not referred to any specific amendment.

The facts in Henderson-Briehl were similar. The applicant was self-employed at the time of the accident, and incurred losses in the 52 weeks prior to the accident. The applicant also had other employment income. Arbitrator Renahan found that the Schedule does not permit deduction of the losses, except from the income from self-employment. He reasoned as follows: The rules for calculating gross income, set out in section 8 of the Schedule, make no reference to losses from self-employment, and no provision in the Schedule specifically requires that deduction in calculating gross income. However, section 6 of the Schedule which sets out the rules for calculating the amount of the IRB, specifically provides for compensation for increased losses from self-employment that result from the accident. Specific inclusion in section 6 while excluding the term from section 8 shows a legislative intent that losses are not included in the calculation of gross income.

Arbitrator Renahan distinguished the earlier decision in Morin and Lumbermens Mutual Casualty Company ³ in which it was found that losses were to be included in the calculation of gross income, on the grounds that Morin was decided under an earlier version of the Schedule that contained no reference to losses from self-employment.

The Schedule was amended after the decision in Henderson-Briehl, but section 8 was not amended. Section 6 was amended to clarify the issue of whether post-accident losses could result in entitlement to a weekly IRB of more than $400. There is therefore no merit to Dominion’s submission that subsequent amendments support its approach.

I agree with Arbitrator Rehahan’s conclusion. The rules for calculation of gross income are fixed by section 8. The rules for calculating net income are set by section 61. Neither section makes reference to losses from self-employment. I agree that the specific provision for losses in section 6, along with the absence of that term in sections 8 and 61, must be interpreted to mean that losses are not to be deducted.

The accounting report upon which Dominion based its calculations was filed as Exhibit 17. Although not referred to in the hearing, the report contains a supplement dated March 10, 2006. The supplement indicates that Ms. Lisowecki sent an e-mail on March 9, 2006, requesting that the calculation of her IRB be revised, based on Henderson-Briehl. The request was referred to the accountant who declined the request. He referred to the right to compensation for losses in section 6, the right to deduct losses in the calculation of taxable income and the possible injustice that would result from a self-employed person operating a sporadically profitable business, being able to exclude pre-accident periods when the business was operating at a loss, while including its profitable periods. Although not stated directly, the inescapable inference is that the accountant concluded that Henderson-Briehl was wrongly decided.

As noted above, section 6 plays no part in the calculation of either gross income or net income. Those calculations are specifically provided in the Schedule. They are not based on general accounting principles or taxable income. It appears that Dominion based its position on the legal opinion of its accountant, and not on any amendment to the Schedule.

When the losses are not deducted, Ms. Lisowecki’s average weekly income is $265.37 and her net weekly income is $259.42. Her basic IRB entitlement is 80% of that, which is $207.53. Dominion is required to pay her IRBs for the periods that it has paid, based on that amount, plus interest pursuant to section 46(2) of the Schedule.

REMAINING ISSUES:

The hearing has been adjourned to January 14, 15, 16 and 17, 2008, in Thunder Bay. The issues that remain in dispute and are currently part of the hearing are as follows:

Entitlement to ongoing IRBs from April 15, 2007 to August 15, 2007;
Entitlement to $281 for chiropractic treatment by Dr. Holm, $130 for massage therapy at Homewood, $6,880 for treatment for chronic pain, as set out in a treatment plan by Dr. Milo, dated September 12, 2007, $820 for transportation and meals associated with a treatment plan for post-traumatic stress, dated September 12, 2007, and an undetermined amount for prescription medication;
Entitlement to lost educational expenses in the amount of $15,000;
Interest;
Expenses;
A special award (although not listed in the pre-hearing letter, Dominion agreed that this issue has been part of the arbitration from the onset).

After my oral ruling, Ms. Lisowecki indicated that she will be attending the assessments and that she will be advising Dominion of her availability and any restrictions on her ability to attend. The new date for the hearing was set on the assumption that the assessments can be completed by then. Barring unforeseen circumstances, the hearing will proceed on the adjourned dates. Although it is preferable to have all issues resolved in one hearing, it is unlikely that the hearing will be further adjourned because of procedural disputes.

November 14, 2007

Jeffrey Rogers Arbitrator

Date