Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2008 ONFSCDRS 83

FSCO A05-002849

BETWEEN:

LEON FRANCIS ROCHELEAU

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before: Arbitrator Denise Ashby

Heard: December 17, 18, 19 and 20, 2007, in London, Ontario.

Written submissions were completed on March 6, 2008.

Appearances: Karl Arvai for Mr. Rocheleau Ian D. Kirby for Allstate Insurance Company of Canada

Issues:

The Applicant, Leon Francis Rocheleau, was injured in a motor vehicle accident on September 28, 2000. He applied for and received statutory accident benefits from Allstate Insurance Company of Canada (“Allstate”) payable under the Schedule.¹ Allstate stopped payment of weekly income replacement benefits on May 7, 2003. The parties were unable to resolve their disputes through mediation, and Mr. Rocheleau applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Is Mr. Rocheleau entitled to receive a weekly income replacement benefit pursuant to subsection 5(2)(b) of the Schedule?

2. What is the amount of the weekly income replacement benefit that Mr. Rocheleau is entitled to receive pursuant to section 6 of the Schedule?

3. Is Mr. Rocheleau entitled to interest for the overdue payment of benefits pursuant to subsection 46(2) of the Schedule?

4. Is Allstate liable to pay a special award pursuant to subsection 282(10) of the Insurance Act?

5. Is Allstate liable to pay Mr. Rocheleau’s expenses in respect of the arbitration pursuant to 282(11) of the Insurance Act?

6. Is Mr. Rocheleau liable to pay Allstate’s expenses in respect of the arbitration pursuant to 282(11) of the Insurance Act?

Result:

1. Mr. Rocheleau is entitled to receive a weekly income replacement benefit pursuant to subsection 5(2)(b) of the Schedule.

2. Mr. Rocheleau is entitled to receive a weekly income replacement benefit at the rate of $400.00, less post-accident income and any payments made by Allstate, pursuant to section 6 of the Schedule.

3. Mr. Rocheleau is entitled to interest for the overdue payment of benefits pursuant to section 46(2) of the Schedule.

4. Allstate is liable to pay Mr. Rocheleau a special award fixed at $25,000.00 pursuant to subsection 282(10) of the Insurance Act.

5. The issue of expenses is deferred.

EVIDENCE AND ANALYSIS:

On Thursday, September 28, 2000, Mr. Rocheleau was involved in a motor vehicle accident when the car he was driving was struck by a vehicle which failed to stop at the intersection. At the time of the accident, Mr. Rocheleau was employed as a gravel truck driver. As well, he owned and operated a 40-acre standard bred horse farm.

Mr. Rocheleau and his wife testified at the hearing. Both were forthright in their evidence and I found them both to be credible. Where Mrs. Rocheleau’s evidence differed from that of her husband, in respect of the farm operation, I prefer Mr. Rocheleau’s evidence as he has a much more detailed knowledge of horse breeding and training. Mr. Rocheleau testified that he depends on his wife’s memory for details of their life since the accident including dates and numbers as he has noticed a post-accident deterioration in his memory. Therefore, I prefer Mrs. Rocheleau’s evidence where their evidence differed in respect of details of their lives following the accident.

Mr. Rocheleau testified that he recalls seeing the vehicle which hit him just prior to impact. His next memory is speaking to the elderly woman who was driving the vehicle which hit him. Mr. Rocheleau decided against calling the police out of sympathy for her. His mother had previously been involved in an accident and it was a very stressful episode in her life. He did not want this woman to have a similar experience.

Following the accident, Mr. Rocheleau drove the approximately eight miles to his home. The car was never driven again. He later noticed that the damage to his vehicle included a bent steering wheel and brake pedal.

Entitlement to Post-104 Week Income Replacement Benefits:

In order to successfully claim for post-104 week income replacement benefits, Mr. Rocheleau must establish on a balance of probabilities that he meets the test set out in subsection 5(2)(b) of the Schedule as follows:

(2) The insurer is not required to pay an income replacement benefit,

(b) for any period longer than 104 weeks of disability, unless as a result of the accident, the insured person is suffering a complete inability to engage in any employment for which he or she is reasonably suited by education, training or experience.

Arbitral decisions have held that this test is not to be construed literally but rather in the context of the whole of the insured person’s education, training and experience, such that an individual is able to meet reasonable standards of productivity in a competitive market place.²

Allstate submits that from the date of the accident to March 2005, when the farm was sold, Mr. Rocheleau engaged in the business of horse breeding and training. Therefore, Mr. Rocheleau cannot meet the test set out in subsection 5(2)(b). Further, it submits that the sale of the farm was a choice made by Mr. Rocheleau to pursue his interest in travel.

In support of its submission that Mr. Rocheleau was gainfully engaged in employment as a farmer it provided the following chart of the farm’s pre-accident and post-accident earnings.

Year	Gross Income	Net Income
1998	$9,637	($311)
1999	$8,295	($8,750)
2000 (year of accident)	$37,572	($8,599)
2001	$49,042	$523
2002	$90,736	$750
2003	$85,063	$7,603
2004	$97,807	$236
2005 (farm sold)	$31,334	$6,127

Mr. Rocheleau submits that although he did not sell the farm until March 2005, he was unable to engage in farming in a manner that was financially viable. During the period between the accident and the sale of the farm, he and his wife attempted to save their dream of developing a standard bred boarding and training centre. However, it became apparent that his physical condition would not improve sufficiently for him to resume the essential duties and meet the physical demands of his pre-accident farming activities. Further, Mr. Rocheleau submitted that he has limited education and his employment history since his teens has found him engaged in physical labour. As a consequence of the limitations caused by the impairments he suffers as a result of the accident, he cannot meet competitive standards in any employment for which he is reasonably suited by education, training or experience.

Mr. Rocheleau believed his injuries were relatively minor and would heal. Therefore, he did not seek immediate medical attention. Mr. Rocheleau testified that during the weekend following the accident he noticed blood in his urine. He did not inform his wife as he believed she would have insisted he go to the hospital. In order to avoid her discovering his problem he would go to the barn to urinate. Mr. Rocheleau has little recollection of returning to work the day following the accident. However, he recalls going to work on the Monday. After leaving work early he went to the hospital emergency department.³ Monday, October 2, 2000, was the last day that Mr. Rocheleau worked as a truck driver.

Mr. Rocheleau testified that following the accident he experienced right shoulder pain and severe lower back and unremitting left groin pain. He described the right shoulder pain as manageable. It has not presented a significant impediment to either his farm work or to his present activities of daily life. It is the lower back and groin pain which requires large doses of analgesic medication. He testified that presently if he over extends himself he will spend a day or so in bed until the pain resolves sufficiently for him to resume his sedentary life style.

Mr. Rocheleau viewed portions of the surveillance conducted on behalf of Allstate. He testified that following the 9 holes of golf shown on the surveillance he did not leave his motor home the next day. He notes that this is borne out by the surveillance as well.

Since the accident, Mr. Rocheleau has continued his pre-accident practice of going south for the winter. Mr. Rocheleau and his wife testified that a major impetus for continuing this travel is to help Mr. Rocheleau deal with his depression. As well, the warm climate ameliorates his symptoms and makes his pain more manageable. The couple testified that they take it very slow, stopping every hour or two. Mrs. Rocheleau testified that it is not unusual to stop for a day or more to permit her husband to stay in bed until his pain returns to manageable levels. Subsequent to the sale of the farm, they purchased a motor home which has an “air ride,” a hydraulic shock system which reduces the impact of rough roads. This is their home year round. Prior to leaving for the winter, Mr. Rocheleau obtains sufficient quantities of prescription medication to take him through the winter.

Employment History:

At the time of the accident, Mr. Rocheleau was 54 years of age. He had left school after graduating from grade eight. Until the purchase of the farm in 1996, he had been regularly employed as a truck driver for various firms. This work was very physical. During the approximately 30 years of his pre-accident career there was only a brief period when Mr. Rocheleau was unsuccessfully self-employed in more sedentary work.

In May 1999, Mr. Rocheleau took seasonal work as a gravel truck driver to cover living expenses and contribute to the building of a new barn. Until the purchase of the farm, Mr. Rocheleau had been employed as a driver. His work as a gravel truck driver required him to climb the three steps into the cab. The cab was approximately 4 feet off the ground. He would get in and out of the cab approximately four to six times for each load. Lifting was restricted to pulling up on the tail gate which was quite heavy. Also, when he was required to load a different material, for example changing from gravel to sand, he would have to climb into the box to clean it of any residual material from the previous load.

Mr. Rocheleau testified that although, he earned his living driving trucks, he was an active horseman: breeding, training and racing standard breds. The purchase of the farm was the realization of a life time dream. Mrs. Rocheleau testified that she came to share her husband’s love of horses.

When they purchased the farm in 1996 it had one barn. They added a half mile training track. As well, they built additional stalls in the existing barn. They stabled their own horses and rented some of the stalls to other trainers. Their plan was to expand the operation by building two additional barns and enlarging the training track. They had customers who had agreed to stable their horses with them if the expansion went ahead. Mrs. Rocheleau testified that a local training centre was closing and the trainers who boarded horses at that facility were interested in moving to their farm.

Following the accident, they had an additional barn built. It provided an additional 40 stalls. One trainer had contracted to rent 20 of these stalls. As well, the training track was widened from 25 feet to 40 feet. These enhancements were undertaken as an attempt to implement the pre-accident plans for expansion.

Prior to the accident, Mr. Rocheleau did the majority of the farm work. His wife’s assistance was confined to assisting with cleaning the barns and driving the tractor at haying time. The farm operation was a year round endeavour. Mr. Rocheleau had approximately 3 acres for hay and 13 acres in a combination of corn, soy beans and oats.

In his evidence, Mr. Rocheleau detailed the very physical nature of the work of caring for his horses, maintaining the training facilities and training his horses. As well, the operation of the farm equipment, particularly use of the tractors, required a lot of twisting at the waist which would aggravate the groin and lower back pain to extreme levels resulting in his taking to his bed until it resolved to a manageable level.

Mr. Rocheleau testified that harvesting his hay, conditioning his track, ploughing snow in winter and managing the manure pile with a front-end loader all required him to turn in the cab to watch behind him. Haying and track conditioning were time sensitive.

Haying required that the work be done quickly and steadily before rains destroyed the crop. Horses will not eat moldy hay. After cutting the hay it was necessary to bale it. Mrs. Rocheleau would drive the tractor and he would stack the hay from the baler on the wagon. The bales were approximately 65 to 70 lbs. The bales would be stacked on the wagon to a height of 7 feet. The bales would then have to be off loaded into the drying shed for storage. He would handle approximately 750 bales. Following the accident, Mr. Rocheleau was unable to do this work.

The track maintenance had to be done early in the morning to ensure it was ready for the horses to run by 7 a.m. It was very important to the success of his enterprise. His horses and those boarded at his farm were race horses. Their success was in part determined by their training regime. If the track was not maintained then trainers would go elsewhere.

After the accident, his wife and a man who boarded horses with him usually maintained the track (tenant). In the winter when it was necessary to remove the snow before starting the conditioning process it was particularly difficult. Mrs. Rocheleau testified that she could condition the track with the truck. When she did it with the tractor it was necessary for Mr. Rocheleau to be with her and she could only do it in the summer. In the winter, the tenant usually conditioned the track. In return for this work he was given a free stall and a paddock to turn out his horses. In summer when there were good dry conditions, it might take 20 to 30 minutes to condition the track. In winter and when it was wet, it would frequently take 3 hours.

Mr. Rocheleau described the implement which is used for conditioning the track. It is 8 feet wide with 56 teeth which would cut the dirt on the track to about half an inch. Each tooth has to be adjusted to the same height to ensure an even result. Adjusting the teeth is very difficult and requires a lot of bending. Torque wrenching the bolts to adjust the height can be heavy work if they are dirty or rusted. Prior to the accident, Mr. Rocheleau was able to adjust the teeth with little difficulty. After the accident, he let the maintenance of the conditioner lapse.

Mr. Rocheleau testified that because his was a small operation he could not afford to hire someone to do the work. As well, it is difficult to find staff to do the arduous work of moving the manure piles, removing snow and conditioning the track in the early morning. For the 4½ years he kept the farm following the accident he relied on the efforts of his wife and the volunteer work of tenants and friends. In the end, Mr. Rocheleau had to accept that his health was not going to improve and he could not continue to pursue his dream.

Medical Evidence:

The family physician, Dr. Despard, testified on behalf of Mr. Rocheleau. Dr. Taylor, an orthopaedic surgeon, testified on behalf of Allstate.

The hospital records indicate that Mr. Rocheleau was examined on October 2, 2000 for right shoulder and flank pain and blood in his urine. He returned to the hospital on October 3, 2000 for x-rays and an ultrasound.⁴ On October 18, 2000, Dr. Despard completed a Disability Certificate in which she recommended physiotherapy for approximately 6 to 8 weeks in order to reduce the pain and restore function.⁵

Dr. Despard testified that she first met Mr. Rocheleau in connection with their common interest in horses. He had severe asthma which interfered with his work with horses. Mr. Rocheleau became Dr. Despard’s patient in October 1991 because she had a special interest in the treatment of asthma. With the exception of the treatment for asthma, she described Mr. Rocheleau as very healthy.

Following the accident, Mr. Rocheleau’s physical health was significantly changed. He suffered from severe lower back and groin pain. In Dr. Despard’s opinion, the severity of the pain prevented him from working at either of his pre-accident jobs. She was aware that he continued to farm in a limited manner. In February 2001, Mr. Rocheleau broke his ankle while dismounting from his tractor. The medical records indicate that the fracture healed with no lasting effects.

On May 2, 2001, Dr. Despard reported to Allstate, stating that “his prognosis for resolution was grave.” She diagnosed him as having direct renal contusion with associated deep visceral back pain and hematuria with severe cremasteric muscle spasms. Among others, she characterized him as suffering from chronic pain with associated depression.⁶

On July 27, 2001, Dr. Despard provided Allstate with a further report. She reiterated her diagnosis of May 2001. She set out the medications he was taking as dilaudid, Vioxx, hydromorphin contin, Ativan, Paxil and Elavil. She was of the opinion that while the medications might make his pain bearable, it was unlikely that he would be able to return to either pre-accident employment or level of functioning.⁷

Mr. Rocheleau was treated for clinical depression. His treating psychologist, Dr. MacDonald, was of the opinion that Mr. Rocheleau’s depression resulted from the pain he was experiencing and the limitations it placed on his life. He diagnosed Mr. Rocheleau as having chronic pain and features of post-traumatic stress disorder.⁸

On October 4 and 12, 2001, Mr. Rocheleau underwent a neuropsychological assessment. Dr. Sweeney, the psychologist who assessed Mr. Rocheleau, was of the opinion that his “clinical presentation is very compatible with characteristics of neuropsychological impairment associated with exposure to violent acceleration forces in motor vehicle accidents identified through studies conducted in our laboratory and published in major journals.” The assessor concluded that: “However, considering this man’s age, he will probably be left with a permanent alteration in neuropsychological state comparable to that demonstrated in the present evaluation.”⁹

Dr. Despard referred Mr. Rocheleau to a number of other specialists. It was accepted that he suffered from chronic, debilitating left groin and low back pain. However, they were unable to diagnose its nature. The theories were neuralgic pain syndrome or referred pain from his lumbar spine or inguinal nerve entrapment pain.¹⁰

A Rehabilitation Ergonomics Inc. assessor conducted a functional abilities evaluation at Mr. Rocheleau’s residence on March 26, 2001. This assessor found Mr. Rocheleau to be cooperative and to have put forth maximum voluntary effort during the testing. She recommended counseling for depression which she understood was being arranged through Dr. Despard.¹¹

On March 29, 2001, another assessor met with Mr. Rocheleau to conduct a worksite analysis of his farm operation. It is a very limited report focusing on the narrow issue of feeding and watering the horses. The assessor notes that Mr. Rocheleau advised that he has been unable to work and has someone else perform the daily requirements of the farm. Mr. Rocheleau also reported that while he attends to his horses, he “does not perform any of the heavy activities of his farming requirements.” It is apparent that Mr. Rocheleau gave some indication that his operation required more than feeding and watering the horses. However, there is no information as to what the heavy activities of his farming activities might be. There is no assessment of Mr. Rocheleau’s ability to do those tasks. There is no mention of who has assumed those tasks. There is no indication that any attempt was made to discuss the farm operation with those who were doing the work. There is no mention of the fact that Mr. Rocheleau breeds and trains horses for racing.¹²

There is a further report by the worksite assessor in which he amends his original report to reflect that Mr. Rocheleau is a horse breeder. As well, he makes two references to the weights of the pails Mr. Rocheleau carries to feed the horses. The assessor notes Mr. Rocheleau’s concerns that the initial report does not accurately reflect the job demands of his farm operation. The assessor responds by suggesting that Mr. Rocheleau was asked to detail the essential duties and physical demands and any omission was due to Mr. Rocheleau’s failure to provide the information.¹³

I do not believe that Mr. Rocheleau failed to describe himself as a standard bred horse breeder and trainer during the initial meeting with the assessor. It was an essential element of his self-identity. It seems incongruous that there would have been no mention of the horse track or its use. There is no mention of a tractor. It is difficult to accept that a worksite assessor would not notice farm equipment or, in its absence, inquire about what equipment is used on the farm. I find that the initial worksite evaluation to be fundamentally flawed. It did not reasonably reflect the farm work detailed by Mr. Rocheleau in his evidence. The subsequent report did not rehabilitate the flaws in the initial report.

On May 16, 2007, Dr. Taylor assessed Mr. Rocheleau on behalf of Allstate. In his eight-page report dated June 4, 2007, he refers to worksite evaluations as follows:

…indicated that Mr. Rocheleau did not meet the physical demands of his pre-accident job of a gravel truck driver but did meet the documented physical demands of the essential tasks for breeding his horses, which included feeding and watering the animals and general clean-up tasks. There does not appear to have been a significant interval change in Mr. Rocheleau’s status between 2002 and the present. It is my opinion that Mr. Rocheleau could have carried on with his farm operation from 2002 to the present if he so desired.

Dr. Taylor concludes:

It is also my opinion that with appropriate restrictions as outlined above, Mr. Rocheleau could have continued with modified employment from 2002 to present. Therefore, it is my opinion that he did not suffer a complete inability to engage in any employment for which he was reasonably suited by education, training or experience beyond September of 2002.

Among the restrictions Dr. Taylor set out were: avoidance of repetitive overhead use of “his right upper extremity, lifting above mid chest level with his right upper extremity, heavy lifting in excess of 10 kg., repetitive bending or twisting at the waist and prolonged twisting at the waist and prolonged periods of sitting or standing.”¹⁴

On May 29, 2007, Mr. Rocheleau was assessed by Dr. Andrew Kertesz, a neurologist, on behalf of Allstate. He too generated an eight-page report. Dr. Kertesz concluded that although Mr. Rocheleau appears to have chronic pain syndrome which prevents him from working: “he has no objective neurological impairment underlying his pain.”¹⁵ I did not find Dr. Kertesz’ report to be of any assistance in respect of the impact of Mr. Rocheleau’s chronic pain on his ability to be competitively employed.

On October 19, 2007, Dr. Scott H. Garner, a specialist in physical medicine and rehabilitation, assessed Mr. Rocheleau. Dr. Garner generated a 19-page report in which he concludes, as did Dr. Taylor, that Mr. Rocheleau has physical limitations which limit his tolerance for excessive movement or activity. Dr. Garner noted that Mr. Rocheleau cannot tolerate prolonged sitting or standing or heavier lifting or carrying. He concluded that:

He has limited education. He indicates that his reading skills are limited as are his abilities to communicate, use computers or handle numbers. He has never worked in an office…

…In addition, he will likely have difficulty working in any occupation for which he would be able to consider employment either on a part-time or full-time basis and for all intents and purposes I believe that he is not competitively employable. ¹⁶

While Doctors Taylor and Garner reach similar conclusions regarding the restrictions Mr. Rocheleau faces, they differ on the impact those restrictions have on his employability. Dr. Taylor was of the opinion that Mr. Rocheleau was employable. I found this opinion inconsistent with the restrictions he set out in his report. Dr. Taylor relied on the flawed reports of the worksite assessor when considering the farm work that Mr. Rocheleau was required to do. His opinion is therefore compromised by his reliance on its deficiencies.

I conclude that the preponderance of the medical evidence leads to the conclusion that Mr. Rocheleau suffers from severe chronic pain of the lower back and left groin and associated depression. I prefer Dr. Garner’s opinion and conclusion regarding Mr. Rocheleau’s employability.

As well, I accept Dr. Despard’s opinion that Mr. Rocheleau is unemployable due to chronic pain. She has had a long association with Mr. Rocheleau as his treating physician. I find that her reference to right groin pain was an error in notation and does not undermine the reliability of her evidence.

I accept the evidence of Mr. Rocheleau and Mrs. Rocheleau regarding the physical nature of the farm work. I find that their evidence accurately reflects the essential tasks of Mr. Rocheleau’s pre-accident self-employment as a farmer.

Mr. Rocheleau’s practice of traveling south in the winter does not alter my conclusion. Personal travel, when there are no timelines, does not bring with it the competitive demands of the work place. I accept Mrs. Rocheleau’s evidence that they accommodate Mr. Rocheleau’s impairments by taking their time. Further, I accept that the challenges in traveling south for the winter are offset by the ameliorative effects of a warm climate.

I find that the surveillance evidence does not support an inference that Mr. Rocheleau could be competitively employed. It failed to show the totality of the golf game, including the times he and his wife allowed other golfers to play through while they rested. I agree with Mr. Rocheleau’s evidence in respect of the deficiencies of the surveillance. I also agree that it appears to support an inference that Mr. Rocheleau did not leave his mobile home the following day.

On the basis of the foregoing, I find that Mr. Rocheleau’s physical restrictions caused by chronic pain prevent him from engaging competitively in physically demanding work. He is unable to meaningfully engage in: crop production, track and barn maintenance, care and training of horses. The farm continued to operate due to the Herculean efforts of Mr. Rocheleau and his wife in their quest to maintain their dream of a horse training centre. In the end, his physical impairments and the financial reality of being unable to hire someone to replace his pre-accident contribution resulted in the sale of the farm. Mr. Rocheleau should not be penalized for his efforts. I conclude that Mr. Rocheleau is unable to productively engage in farming.

I find that the evidence supports the conclusion that Mr. Rocheleau is unable to competitively engage in the essential tasks of truck driving as a consequence of his accident related impairments.

I find that Mr. Rocheleau’s lack of education and inability to tolerate prolonged periods of sitting or standing prevent him from engaging in more sedentary employment.

On the basis of the foregoing, I find that the preponderance of the evidence leads to the conclusion that Mr. Rocheleau is suffering a complete inability to engage in any employment for which he is reasonably suited by education, training or experience.

Quantum of Income Replacement Benefits:

Mr. Rocheleau claims a weekly income replacement benefit at the rate of $400.00. He disputes Allstate’s deduction of his pre-accident farming losses against his income earned as a truck driver. Mr. Rocheleau relies on the decision in Henderson-Briehl and ING Insurance Company of Canada which was followed in Lisowecki and Dominion of Canada General Insurance Company.¹⁷ He provided an accountant’s report which calculates his income replacement benefit in a manner which is consistent with the case law upon which he relies.¹⁸

Mr. William Stuart, a chartered accountant retained by Allstate to calculate Mr. Rocheleau’s income replacement benefit, testified at the hearing. Mr. Stuart testified that he does not agree with the decision in Henderson-Briehl which was followed in Lisowecki. In his opinion, section 62 of the Schedule requires him to apply the Income Tax Act (Canada) in calculating the benefit. Allstate submits that as neither Arbitrator considered this section in their decisions, I should not follow them when reaching my decision. Allstate relies on the appeal decision in McLellan and Aviva Canada Inc. in which the Director’s Delegate stated:

…reaffirmed the Commission’s ‘functional approach that prefers substance over form,’ and relied upon the well established principle that the objective is to ‘ensure that the insured person receives an income replacement benefit that fairly and realistically reflects her actual income situation, avoiding both over- and under-compensation.¹⁹

I agree that this is the analytical approach taken at the Commission. I do not find that either Henderson-Briehl or Lisowecki are inconsistent with this approach. The Director’s Delegate was considering the manner in which the applicant distinguished his businesses while the arbitrators were considering the interpretation of the statute. The Arbitrator in Henderson-Briehl found as follows:

Section 6 of the current Schedule uses the words ‘losses from self-employment’ to provide for the calculation of an income replacement benefit where the insured has losses from self-employment before the accident which increase after the accident.

In my view, the inclusion of the words ‘losses from self-employment’ in section 6 and its omission from section 8 shows a legislative intent that ‘losses from self-employment’ are not included in the calculation of ‘gross income’ in section 8.

I concur with the reasoning of my colleagues who are appointed pursuant to the Insurance Act to interpret its provisions. Therefore, I find that Mr. Rocheleau is entitled to a weekly income replacement benefit at the rate of $400.00, less post-accident income and any payments made by Allstate.

In the event I have erred, then I prefer the accounting report submitted by Mr. Rocheleau in respect of the deductions to be made.²⁰ I found Mr. Stuart too inclined to interpret expenditures, such as the new truck and its percentage of business use, to Mr. Rocheleau’s disadvantage. Mr. Rocheleau’s expenses were accepted by the Canada Customs and Revenue Agency. An accountant acting for an insurer should only take issue with amounts accepted by this Agency on clear and convincing evidence that the reporting to the Agency is inaccurate or patently unreasonable.

INTEREST:

Mr. Rocheleau is entitled to interest on all overdue benefits pursuant to subsection 46(2) of the Schedule. Interest on overdue benefits resulting from Allstate’s reliance on its accountant’s calculations to reduce Mr. Rocheleau’s weekly income replacement benefits shall commence the day upon which the benefit was reduced. Interest on post-104 week benefits shall start to accrue from the date of stoppage and ongoing.

SPECIAL AWARD:

Mr. Rocheleau seeks a special award at the highest rate available, 50 percent of the outstanding income replacement benefit plus accrued interest.

Subsection 282(10) of the Insurance Act gives an arbitrator discretion to award a lump sum of up to 50 percent of the outstanding benefit plus interest payable thereon where the arbitrator finds that an insurer has “unreasonably withheld or delayed payments.” This phrase has been interpreted to mean: “… behaviour which was excessive, imprudent, stubborn, inflexible, unyielding or immoderate.”²¹

Allstate stopped Mr. Rocheleau’s weekly income replacement benefit on May 7, 2003, pursuant to a Notice of Stoppage of Weekly Benefits (Notice) dated April 23, 2003.²² The documentary evidence makes it clear that Allstate was at all times, prior to the issuance of the Notice, aware that Mr. Rocheleau continued to operate the farm post-accident. Allstate’s Notice provides no basis for the sudden termination of the income replacement benefit other than the farm’s operation. Notwithstanding, Allstate paid Mr. Rocheleau post-104 week benefits for a period in excess of seven months.

Allstate was advised in 2001 that Mr. Rocheleau did not agree with the worksite evaluation which concluded he could engage in farming. As set out above, I found the report to be fatally deficient. In the two years that followed its receipt of these reports, Allstate failed to obtain a further report. Rather, in his note dated June 25, 2001, the adjuster dismissed the problem on the basis that Mr. Rocheleau had failed to give the assessor all the information.²³

The preponderance of the medical evidence, within Allstate’s possession in the spring of 2001, leads to the conclusion that Mr. Rocheleau was unable to engage in physical labour. Allstate failed to have Mr. Rocheleau’s vocational skills assessed in order to determine if there was suitable sedentary employment that he might seek and if necessary assist him in retraining for such employment.

I find Allstate’s failure to fully investigate whether Mr. Rocheleau could competitively engage in farming or some other form of employment fell well below the reasonable standard expected of an insurer. This failure was aggravated by its arbitrary stoppage of Mr. Rocheleau’s income replacement benefit in the absence of any evidence that there had been any change in either the circumstances of the claim or Mr. Rocheleau’s medical condition. Therefore, I find that Mr. Rocheleau is entitled to a special award.

To obtain the highest level of award, the conduct of the insurer must be particularly egregious. The adjustor’s log notes indicate the file was closed in or about July 21, 2004. Between the Notice date and the closing there are only a couple of references to income replacement benefits.²⁴ There is no evidence that Mr. Rocheleau repeatedly attempted to have Allstate reconsider its position or provided evidence which would have reasonably caused it to reconsider its position. There is no evidence that the delay between the stoppage and the hearing was as a consequence of Allstate’s conduct.

In the recent case of Melchiorre and Wawanesa Mutual Insurance Company, confirmed on appeal,²⁵ the Arbitrator determined that an award at the high end of the range should be awarded based on the egregious conduct of the insurer. In order to deal with the approach taken by the then Director of Arbitrations in Persofsky and Liberty Mutual Insurance Company²⁶, he resumed the hearing to deal with quantum of the award. I find the approach taken in Persofsky to be unduly complicated for most circumstances in which a hearing Arbitrator might properly exercise his or her discretion to assess a special award. Had the legislature intended such a protracted procedure it would have set it out in the legislation. However, I agree that where an arbitrator is inclined to make an award of the maximum allowable, then submissions as to what is outstanding at the date of the order are essential to the accurate calculation of the award.

In the circumstances of this matter, I find that an award at the low end of the mid-range allowable is appropriate to meet the principles of deterrence and proportionality. As the award I intend to make is well below the maximum allowable, it is sufficient to base it on a reasonable estimate of what is outstanding. This approach is consistent with the mandate of an administrative tribunal to provide a just, quick and inexpensive resolution.²⁷

Mr. Rocheleau has provided an accounting of the income replacement benefits overdue on August 9, 2006, the date of the pre-hearing, plus interest of $134,564.91.²⁸ I accept this amount as the amount outstanding at the pre-hearing. Although this amount is significantly less than the amount which would be outstanding today, it provides a bench mark upon which to assess a lump sum which is consistent with the principles of proportionality and deterrence at the low end of the mid-range. I fix the special award in the amount of $25,000.00.

EXPENSES:

The parties made no submissions with respect to expenses. I encourage them to resolve the issue, failing which they may request an expense hearing before me in accordance with the Dispute Resolution Practice Code.

May 23, 2008

Denise Ashby Arbitrator

Date

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2008 ONFSCDRS 83

FSCO A05-002849

BETWEEN:

LEON FRANCIS ROCHELEAU

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

ARBITRATION ORDER

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

1. Allstate shall pay Mr. Rocheleau a weekly income replacement benefit pursuant to subsection 5(2)(b) of the Schedule.

2. Allstate shall pay Mr. Rocheleau a weekly income replacement benefit at the rate of $400.00, less post-accident income and payments made by Allstate, pursuant to section 6 of the Schedule.

3. Allstate shall pay Mr. Rocheleau a special award fixed at $25,000.00, pursuant to subsection 282(10) of the Insurance Act.

4. Mr. Rocheleau is entitled to interest on all overdue payment of benefits pursuant to section 46(2) of the Schedule.

May 23, 2008

Denise Ashby Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Mack and Kingsway General Insurance Company, (FSCO A04-001040, March 28, 2007)
3. 3Exhibit 1, Tab 1
4. 4Exhibit 1, Tab 1
5. 5Exhibit 1, Tab 2
6. 6Exhibit 1, Tab 2
7. 7Exhibit 1, Tab 2
8. 8Exhibit 1, Tab 11
9. 9Exhibit 1, Tab 12 at pages 7 and 8
10. 10Exhibit 1, Tabs 8 and 9
11. 11Exhibit 6, Tab 2, Report dated April 3, 2001
12. 12Exhibit 6, Tab 2, Report dated April 9, 2001, at page 2
13. 13Exhibit 6, Tab 2, Report dated July 9, 2001, at page 1
14. 14Exhibit 2, Tab 3 “A”
15. 15Exhibit 2, Tab 3 “B”
16. 16Exhibit 1, Tab 16, at page 18
17. 17(FSCO A07-000610, August 25, 2003), pages 11 to 13; (FSCO A07-000610, November 14, 2007), pages 8 to 10
18. 18Exhibit 6, Tab 1
19. 19(FSCO P06-00041, October 4, 2007)
20. 20Exhibit 6, Tab 1
21. 21Plowright and Wellington Insurance Company (OIC A-003985, October 29, 1993)
22. 22Exhibit 4, Tab 4
23. 23Exhibit 6, Tab 4
24. 24Exhibit 6, Tab 4
25. 25(FSCO A05-000492, April 20, 2007); conf’d on appeal (P07-00014, April 25, 2008)
26. 26(FSCO A00-00041, January 31, 2003)
27. 27Statutory Powers Procedure Act, R.S.O. 1990, Chapter S.22, section 2
28. 28Exhibit 6, Tab 1, page 2