Frank Rodrigues v. Jevco Insurance Company, 2009 ONFSCDRS 152

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 152

FSCO A08-002458

BETWEEN:

FRANK RODRIGUES

Applicant

and

JEVCO INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before: Jeffrey Rogers

Heard: September 16, 2009, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Mr. Frank Rodrigues, self-represented Mr. Chris T. J. Blom, solicitor for Jevco Insurance Company

Issues:

The Applicant, Frank Rodrigues, was injured in a motor vehicle accident on May 25, 1996. He applied for and received statutory accident benefits from Jevco Insurance Company (“Jevco”), payable under the Schedule.¹ The parties disagree on how much Jevco is required to pay Mr. Rodrigues for Income Replacement Benefits when he misses work as a result of his ongoing accident-related impairments. They were unable to resolve their dispute through mediation, and Mr. Rodrigues 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:

What is the amount of the income replacement benefit that Mr. Rodrigues is entitled to receive for the period from January 3, 2006 to present, pursuant to section 10 of the Schedule?
Is Jevco liable to pay a special award pursuant to section 282(10) of the Insurance Act?
Is either party liable to pay the other’s expenses in respect of the arbitration, under section 282(11) of the Insurance Act?

Result:

From January 3, 2006 to present, Mr. Rodrigues is entitled to receive an income replacement benefit of one-fifth of his weekly quantum for each day of leave without pay that he takes as a result of accident-related impairments.
Jevco is liable to pay Mr. Rodrigues a special award pursuant to section 282(10) of the Insurance Act.
The issue of expenses is deferred, to be determined pursuant to Rules 75 to 79 of the Dispute Resolution Practice Code.

EVIDENCE AND ANALYSIS:

Background

Mr. Rodrigues suffered serious injuries in the accident. Although he returned to work about three weeks after the accident, he continued to have medical problems. He had several surgeries in 1996. In November 1999, he began work as a customs officer and he remains in that position on a full-time basis. Despite his return to work, Mr. Rodrigues has days when he cannot work as a result of ongoing accident-related impairments. After he uses up his entitlement to sick days, he takes days off without pay.

This is the second arbitration hearing on the issue of Mr. Rodrigues’ entitlement to IRBs as a result of the accident of May 25, 1996. The first hearing took place in January 2006. The Arbitrator issued a decision on September 27, 2006.² He ordered Jevco to pay Mr. Rodrigues IRBs for forty-nine-and-a-half days that he took leave without pay (“LWOP”), at a daily rate of $145.06. That daily rate is one-fifth of the weekly quantum of IRBs. The payment covered the period from February 2000 to November 2005. The Arbitrator also ruled that payments of sick leave benefits to Mr. Rodrigues were payments under an income continuation plan. Consequently, Jevco could deduct them from any IRBs payable.

In this arbitration, Mr. Rodrigues claims payment for LWOP days that he has taken since the first hearing. Jevco paid Mr. Rodrigues IRBs for his LWOP days at the rate of one-fifth of his weekly IRB, as the Arbitrator ordered. The principal issue in the first hearing was whether Mr. Rodrigues was entitled to payment of IRBs for those days. Jevco concedes that Mr. Rodrigues continued to miss days from work as a result of accident-related impairments after the first hearing. However, it takes the position that he is to be paid at a different rate than the one ordered.

Immediately after the first hearing Jevco took the position that Mr. Rodrigues’ entitlement was one-seventh of his weekly IRB, not one-fifth. It appears that Jevco paid at that rate for the years 2006 and 2007. In November 2008, Jevco received an accounting report it commissioned from McCully & Associates Inc.³ For the first time, that report considered post-accident earnings in calculating Mr. Rodrigues’ ongoing entitlement. In 2008, Jevco paid $131.77 of the $2669.60 that Mr. Rodrigues claimed. Jevco has not paid him any of the $3,097.05 he claimed for 2009.⁴

Mr. Rodrigues argued that the first hearing resolved the issue of quantum of his IRBs. He submitted that he is therefore entitled to ongoing payment at a rate of one-fifth of his indexed IRB for each LWOP day. Jevco submitted that quantum was not an issue in the first hearing and that Mr. Rodrigues’ ongoing entitlement is properly calculated by deducting his concurrent earnings. Mr. Rodrigues argued that, regardless of the first order, Jevco’s approach is wrong because he has no income on the days that he does not work. He submitted that there is therefore nothing to deduct.

Res Judicata

In the first decision the Arbitrator described the history of the proceeding and the relevant issues as follows (emphasis added in bold):

There were numerous pre-hearing conferences in this matter to clarify the issues in dispute. For completeness, I have reproduced in its entirety, the portion of the pre-hearing letter prepared by Arbitrator Blackman following his arbitration turned into pre-hearing conference of September 19, 2005, which sets out the issues in dispute.

These issues were identified and agreed to by the parties:

Is Mr. Rodrigues entitled to receive a weekly income replacement benefit for the dates set out in the attached Summary of Claim for Loss of Sick Days, claimed pursuant to section 8 of the Schedule, on the basis that Mr. Rodrigues suffers a substantial inability to perform the essential tasks of his pre-accident employment as a paralegal?

A subsidiary issue encompassed within the question of the Applicant’s entitlement to income replacement benefits (“IRBs”) is subsection 14(2) of the Schedule, that is, whether Mr. Rodrigues is not entitled to IRBs on the basis that he returned to employment for periods of more than ninety days.

Are the sick leave benefits received by the Applicant payments for loss of income received as a result of the accident under an income continuation plan, and can Jevco deduct them from the IRB payable under Part II of the Schedule pursuant to paragraph 75(1)(1) of the Schedule?

This issue was added on consent of both parties. I wish to confirm that paragraph 75(1)(1) of the Schedule was the only collateral benefit defence ultimately raised by the Insurer.

The Arbitrator ruled as follows on the issue of entitlement to IRBs:

I find that Mr. Rodrigues is entitled to receive IRBs for the days listed in his Summary of Claim for Loss of Sick Days when he was unable to work because of impairments caused by his motor vehicle accident, and during which he was on leave without pay. This amounts to forty-nine-and-a-half days, at the agreed rates of IRBs, which adds up to $7,869.64.

It is clear from the above that Mr. Rodrigues did not simply claim entitlement to IRBs in the first arbitration. He claimed IRBs for specific dates at a specific rate as set out in his Summary of Claim for Loss of Sick Days.⁵ The rate claimed was one-fifth of the weekly IRBs for each LWOP day. Jevco did not challenge that rate. In fact, as the Arbitrator noted, Jevco agreed that this was the applicable rate.

Jevco had the opportunity to challenge the rate, but it did not. The Arbitrator noted that there were “numerous pre-hearing conferences in this matter to clarify the issues in dispute.” The matter was then set for hearing before Arbitrator Blackman and he converted the hearing into a pre-hearing conference and further clarified the issues. At that late stage of the proceedings, Jevco raised for the first time the issue of deducting sick leave benefits. That issue was added to the arbitration, on consent. Arbitrator Blackman pointed out that this was the only issue of deductibility that Jevco raised. In the result, the Arbitrator fixed the rate, with the consent of Jevco. I find that Jevco cannot now raise the further issues of deductibility of post-accident earnings or of pro-rating IRBs, based on a seven-day week instead of a five-day week.

The principle of res judicata prevents a party from re-litigating an issue upon which there has already been a final determination by a tribunal of competent jurisdiction, in a dispute between the same parties. The principle encompasses not only issues that were raised, but issues that could have been raised, but were not. It is defined in Black’s Law Dictionary⁶as follows:

An issue that has been definitively settled by judicial decision. An affirmative defense barring the same parties from litigating a second lawsuit on the same claim, or any other claim arising from the same transaction or series of transactions and that could have been − but was not − raised in the first suit…

Jevco submitted that it did not pursue the issue of post-accident earnings at the first arbitration because, if it had succeeded on the issue of entitlement, the issue of quantum would have been moot. However, the converse is also true. If Jevco did not succeed on the issue of entitlement, it was foreseeable that it would be faced with an ongoing claim. To allow Jevco to now change its position would be no different than allowing Mr. Rodrigues to claim payment at a higher rate, after succeeding on the issue of entitlement.

In this arbitration, Mr. Rodrigues filed a Summary of IRB days Claimed.⁷ Jevco does not dispute the weekly rates he used or that the days he claims were LWOP days. I calculate the total amount unpaid as follows:

Year

Amount

2006

$1,201.75

2007

$1,773.99 and $3,240.68

2008

$2,537.82

2009

$3,097.05

Total

$11,851.29

I find that Jevco is liable to pay Mr. Rodrigues $11,851.29, plus interest pursuant to section 68 of the Schedule.

Calculation of Quantum

Since I have found that Jevco is bound by the quantum already determined, it is not necessary to decide whether the approach Jevco now proposes for calculating quantum is the one the Schedule mandates.

Special Award

Mr. Rodrigues claims a special award on the grounds that it was unreasonable for Jevco to engage him in a dispute about the quantum of his IRB entitlement, after conceding the issue in the first hearing.

section 282(10) of the Insurance Act requires an Arbitrator to order payment of a special award, in addition to benefits and interest to which an insured person is entitled, upon finding that an insurer unreasonably withheld or delayed payment of benefits.

The touchstone definition of unreasonable conduct is found in the decision of Arbitrator Palmer in Plowright and Wellington Insurance Company ⁸:

“Unreasonable” behaviour by an Insurer in withholding or delaying payments can be seen as behaviour which was excessive, imprudent, stubborn, inflexible, unyielding or immoderate.

Jevco owed a duty to Mr. Rodrigues to promptly calculate his entitlement to IRBs, based on the information that he supplied. Jevco knew everything it now knows about Mr. Rodrigues’ post-accident employment, before the first arbitration hearing. The history of this matter does not support Jevco’s contention that it conceded the issue of quantum only because it did not foresee an ongoing claim. The fact that it continued to pay a daily rate, without reference to post-accident income, refutes that suggestion. In my view, the history of this matter shows that, faced with the ongoing claim, Jevco chose to mount an unreasonable and incremental attack on the concession it made in the first hearing.

The first salvo in the attack was paying at a one-seventh rather than a one-fifth rate. I heard no reasonable explanation for the change in position. The Schedule does not directly address the issue. Having conceded the one-fifth approach, it was unreasonable for Jevco to unilaterally institute a different approach.

The second salvo was the deduction of post-accident income. As noted above, Jevco knew at all times that Mr. Rodrigues was earning post-accident income. When asked, Mr. Rodrigues provided Jevco with copies of his T-4 slips for 2006, 2007 and 2008.⁹ But Jevco did not raise the issue of post-accident income being a part of the calculation until 2008. In fact, Jevco continued to change its position until the eve of the hearing before me. Two weeks before the hearing, Jevco for the first time sought production of information on Mr. Rodrigues’ earnings on a week to week basis, contending that it needed information on his concurrent weekly earnings in order to properly calculate his net IRB in any week in which he took LWOP.

I find that, even if Jevco did not think that it was bound by the decision from the first hearing, the reasonable approach was to seek clarification of that issue before changing the rules. Because the quantum order was made on consent, the options available to Jevco for challenging the order by way of appeal were limited. Instead of taking the available options, Jevco attacked the order the Arbitrator issued with its consent and forced Mr. Rodrigues back to arbitration by its continual shifting of position. I find that Jevco took an imprudent and immoderate course of action. I therefore conclude that Jevco is liable to pay Mr. Rodrigues a special award.

The issue of the quantum of the special award remains to be determined. The parties are encouraged to attempt to resolve this issue on their own. Jevco is directed to provide Mr. Rodrigues with a statement, showing the amount upon which the special award is to be calculated, as prescribed by section 282(10) of the Insurance Act, no later than 45 days after the date of this decision. If Jevco does not provide the statement within 45 days or, if the issue remains unresolved 30 days after the statement is delivered, I will resume the hearing to determine the quantum of the special award, at the request of either party.

EXPENSES:

The parties made no submissions on expenses. If they are unable to resolve this issue, either party may make an appointment for me to determine the matter in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

November 4, 2009

Jeffrey Rogers Arbitrator

Date