Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2009 ONFSCDRS 157

Appeal P09-00002

Appellant

and

Respondent

BEFORE:

Delegate Lawrence Blackman

Mr. Lee Samis for the Appellant, Economical Mutual Insurance Company

Mr. Jamie R. Pollack and Ms. Amanda M. Lennox for the Respondent, Ms. Maria Augello

October 22, 2009

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

The January 15, 2009 Notice of Appeal is dismissed and the Arbitrator’s December 18, 2008 order is confirmed.

November 17, 2009

Lawrence Blackman Director’s Delegate

Date

I. THE NATURE OF THE APPEAL

The Respondent, Ms. Maria Augello, was injured in a September 7, 2002 motor vehicle accident and applied to her first party insurer, the Appellant, Economical Mutual Insurance Company, for statutory accident benefits payable under the Schedule.¹

The Appellant’s medical experts, Custom Rehab & Assessments Canada Ltd., state that the Respondent was a twenty-year old, single, only child of an immigrant family who was a seat-belted passenger of a motor vehicle when she was injured. At the time of the accident, the Respondent was attending university in a Bachelor of Arts program in Italian while working part-time. There was no indication of any pre-existing medical condition.

The Appellant’s neurological assessor opined that the Respondent’s accident-related injuries included “traumatic retinal injury to the right eye with complete loss of vision which will be permanent.” The Appellant’s psychiatric assessor indicated that the Respondent was fully cooperative with the interview process, but was “very quick to display her feelings of heightened anxiety and depression” and that “negative thoughts and worry about her future often dominate her daytime as well as nighttime thinking.”

In September 2008, the parties came before Arbitrator Wilson (the “Arbitrator”) to determine whether the Respondent was entitled to a finding of catastrophic impairment under clause 2(1.1)(f) of the Schedule. The latter provision provides that:

(1.1) For the purposes of this Regulation, a catastrophic impairment caused by an accident that occurs before October 1, 2003 is,

(f) subject to subsections (2) and (3), an impairment or combination of impairments that, in accordance with the American Medical Associations Guide's to the Evaluation of Permanent Impairment, 4th edition, 1993, results in 55 per cent or more impairment of the whole person;

The issue in arbitration, simply put, was whether in determining whole person impairment (“WPI”), physical and psychological impairments were to be combined. The Arbitrator’s December 18, 2008 decision held that physical and psychological impairments were to be combined and that the Respondent was entitled to a finding of catastrophic impairment.

The Respondent’s submission was that she had sustained a 40% physical WPI and a 21% psychological WPI. In accordance with the Combined Values Chart at pages 322 to 323 of the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4^th edition, 1993 (the “Guides”), this resulted in a 53% WPI. The Respondent’s final estimated WPI, rounded in accordance with page 2/9 of the Guides’ Rules for Evaluation, was 55%. This met the catastrophic impairment definition of clause 2(1.1)(f) of the Schedule.

The Appellant submitted that the Respondent had sustained a 44% WPI for her physical injuries and a 20% psychological WPI. The assessors upon whom the Appellant relied agreed with the Respondent’s assessors that the physical impairments included a 24% WPI for loss of right eye vision. The Appellant’s assessors also rated a 23% musculoskeletal WPI and 5% for facial asymmetry. If physical and psychological impairments were combined, a 55% WPI resulted.

The Arbitrator held that he was bound by the approach taken by Spiegel J. in Desbiens v. Mordini 2004 CanLII 41166 (ON SC), [2004] O.J. No. 4735. In the event that he was not so bound, the Arbitrator held that there were cogent reasons for following Desbiens, namely:

Issue estoppel applied to this proceeding. Director Draper had already decided between these same parties, in Augello and Economical Mutual Insurance Company, (FSCO A07-001204, December 4, 2007), that mental and behavioural disorders could be assigned a percentage rating and be included in the WPI determination in clause 2(1.1)(f) of the Schedule.
The following principles of statutory interpretation entitled one to assign percentages to an insured person’s psychological impairments and to combine them with the person’s physical impairments in determining whether the insured person met the clause 2(1.1)(f) definition of catastrophic impairment:

(a) Such an interpretation was consistent with “the statutory goal of prompt payment for necessary services” noted by the Divisional Court in Belair Insurance Company v. McMichael, 2007 CanLII 17630 (ON SCDC), [2007] O.J. No. 1972, citing Arbitrator Baltman in Kennelly and Wawanesa Mutual Insurance Company, (FSCO A99-000139, January 21, 2000). It was also inconsistent with the principle that the Schedule “is remedial, that is to be interpreted in a broad and liberal way, and that its principal object is to provide a ‘fair and adequate income stream to those who are injured and disabled from work,’” as stated in Gill v. Zurich, 1999 CanLII 36826 (ON SC), [1999] O.J. No. 4333, upheld on appeal, Gill v. Zurich Insurance Co., 2002 CanLII 20772 (ON C.A.), citing Arbitrator Mackintosh in Edgar and Wellington Insurance Company, (OIC A-005441, April 13, 1994).

(b) The Supreme Court of Canada held in Smith v. Co-operators General Insurance Co. 2002 SCC 30, [2002] 2 S.C.R. 129, that “[t]here is no dispute that one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance.”

Not to combine physical and psychological impairments in calculating WPI would leave insured persons who suffered psychological sequelae to a motor vehicle accident at a disadvantage when attempting to access the higher range of benefits available to a catastrophically impaired individual.

(c) The Ontario Court of Appeal, in Alie v. Bertrand & Frere Construction Co. Ltd., 2002 CanLII 31835 (ON CA), 62 O.R. (3d) 345, held that “[o]f paramount concern among the various guides to interpreting insurance contract in this case … is the principle that where more than one reasonable interpretation of a defence covenant is open, an interpretation which favours the insured by recognizing a duty to defend will carry the day.”

Thus, if given competing interpretations of a provision, any confusion or discrepancy in the legislative scheme, and hence in the insurance contract, should be interpreted in a manner that favours the insured person.

The Appellant submitted that the Arbitrator erred in law in concluding that the Respondent had sustained a catastrophic impairment arising out of the September 7, 2002 accident, in:

Finding that he was bound by the principle of stare decisis in following decisions of the Superior Court, specifically Desbiens, that have ruled on similar issues.
Concluding that the principle of issue estoppel applied with respect to whether mental and behavioural impairments could be assigned a percentage value and included in the determination of WPI in clause 2(1.1)(f) of the Schedule.
(a) Concluding that percentage values must be assigned to mental and behavioural impairments under the Guides; and,

(b) Combining mental and behavioural impairments with physical impairments to determine whether an insured person sustained a catastrophic impairment under clause 2(1.1)(f) of the Schedule.

Accordingly, the Appellant seeks (1) an order setting aside the Arbitrator’s December 18, 2008 order, (2) an order specifying that the Respondent was not catastrophically impaired as defined by the Schedule, and (3) its legal costs of the arbitration and of this appeal.

The Respondent submits that the Arbitrator did not err in law. Whether the Respondent had sustained a catastrophic impairment was an issue within the specialized expertise of arbitrators at the Financial Services Commission of Ontario (the “Commission”) and merits a standard of review of reasonableness. In any event, the Arbitrator’s decision was both reasonable and correct.

I now turn to the individual grounds of this appeal.

II. WAS THE ARBITRATOR BOUND BY DESBIENS?

The Respondent agrees with the Appellant “that a decision of a first instance court does not necessarily create a binding authority for a tribunal with concurrent jurisdiction.”

I agree with Director Sachs in Sittler and Canadian General Insurance Company; Sittler and Pilot Insurance Company, (OIC P-000951, V-000951, P-004495, V-004495, August 11, 1995):

In discharging their function as adjudicators concerned with the provision of statutory accident benefits to claimants, arbitrators enjoy a concurrent jurisdiction with the courts. The Commission provides an “alternative dispute resolution” mechanism, as claimants may choose either court proceedings or an arbitral process after mandatory mediation has proved unsuccessful. While it is preferable for courts and tribunals occupied with the same issues to, if not concur, at least not come to opposite conclusions on their resolution, such conflicts may inevitably arise.

The doctrine of stare decisis (binding precedent through various levels in the court system) … is not applicable to administrative decision makers at the same level. Nor does a decision of a first instance court necessarily create a binding authority for a tribunal of concurrent jurisdiction …

The Arbitrator determined that a decision of a judge of the Superior Court, the latter being created under section 96 of the Constitution Act 1867, was binding on a Commission adjudicator, as the “Legislature of Ontario does not have the jurisdiction to usurp the historical function of a s. 96 judge.” The Arbitrator relied on Rothstein J.A., in Canada (Commissioner of Competition) v. Superior Propane Inc. 2003 FCA 53, [2003] F.C.J. No. 151, that:

The principle of stare decisis is, of course, well known to lawyers and judges. Lower courts must follow the law as interpreted by a higher coordinate court. They cannot refuse to follow it … This principle applies equally to tribunals having to follow the directions of a higher court as in this case. On redetermination, the duty of a tribunal is to follow the directions of the reviewing court.

Canada (Commissioner of Competition) dealt with a distinguishable situation where an appellate court had referred a matter back to a tribunal for redetermination. In Desbiens, Spiegel J. was not sitting as a higher, reviewing court, but rather as a judge at first instance, who, under section 281 of the Insurance Act, had concurrent jurisdiction with first level Commission adjudicators. I agree with Arbitrator Leitch in Miller and Optimum Insurance Company Inc., (FSCO A07-000214, July 10, 2008), that:

I certainly acknowledge that judicial control over the decisions of this tribunal is exercised by Superior Court judges sitting as members of the Divisional Court. I also agree that, if relevant, FSCO arbitrators should always give careful consideration to decisions of individual judges sitting in the Superior Court. However, so far as I am aware, there is no authority for the proposition that FSCO arbitrators are bound by such decisions.

In Aviva Canada Inc. v. Murugappa, [2009 CanLII 34045 (ON S.C.D.C.)](https://www.minicounsel.ca/odc/2009/34045), leave to appeal refused (M37916, November 13, 2009), the Divisional Court stated, on judicial review of a Commission decision, that:

As noted in Dunsmuir v. New Brunswick, 2009 SCC 9, [2009] S.C.J. No. 9 (at paras. 54, 55 and 60) the standard of review for questions of law may depend on the nature of the question of law. Where the question at issue is one of general law that is both of central importance to the legal system as a whole and outside the adjudicator’s specialized areas of expertise, a standard of correctness will apply. Deference will usually result where a tribunal is interpreting its own statute or statutes closely connected to its function, with which it will have particular familiarity. Deference may also be warranted where an administrative tribunal has developed a particular expertise in the application of a general common law or civil law rule in relation to a specific statutory context.

The Director’s Delegate decision is protected by a full privative clause, found in s.20(2) of the Insurance Act. A measure of deference is appropriate where the Act provides a tribunal with specialized adjudicative regime for resolving disputes that includes an appeal process on questions of law. Deference will usually result where a tribunal is interpreting its own statute with which it will have particular familiarity. The interpretation of the SABS and of the benefits available under that regime is at the very core of the tribunal’s specialized expertise as is the interpretation ... All of the above factors warrant a deferential “reasonableness” standard.

The subsection 20(2) privative clause of the Insurance Act applies, in addition to the Director and his or her delegate, to proceedings before an arbitrator. It would be a somewhat odd result for the Divisional Court to give deference to specialized Commission adjudicators in areas within their expertise while the same adjudicators were simultaneously bound by the decisions of first level generalist Superior Court judges.

The Respondent submitted, however, that the Arbitrator was bound by the appeal decision in Ms. G and Pilot Insurance Co., (FSCO P06-00004, September 4, 2007) that psychological impairments should be combined with physical impairments to arrive at a WPI.

I agree with Delegate Makepeace in Coachman Insurance Company and Hejnowicz, (FSCO P05-00024, August 3, 2006) and Delegate Evans in Aboufarah and Allstate Insurance Company of Canada, (FSCO P03-00038, February 1, 2006) that a Director’s Delegate is not bound by other appeal decisions, including those of the Director.

The Arbitrator also referred in his decision to Arts v. State Farm, 2008 CanLII 25055 (ON SC), 91 O.R. (3d) 394, where Mackinnon J. “opted for Spiegel J.’s approach, including consideration of all impairments, however caused, and where appropriate, adding them together to determine whole body impairment.” Ferguson J, in Arts (Litigation Guardian of) v. State Farm Insurance Co., [2008] O.J. No. 5740, in denying the Defendant leave to appeal to the Divisional Court, stated that:

I very carefully read the reasons of Mackinnon J. One of the defendant’s position[s] is that the A.M.A. guidelines recommended against the use of percentage ratings regarding psychological impairments and to combine them with physical impairments. Spiegel, J. made his decision to combine the impairments after hearing more than eight weeks of evidence, including expert evidence as to the interpretation of the A.M.A. guidelines. Mackinnon, J agreed with that analysis. He agreed that 2(1)(f) of the schedule requires consideration of all impairments however caused and that they be totalled together in determining whole person impairment.

Mackinnon, J also considered the plain reading of the Schedule that psychological impairments must be included in determining whole person impairment; the fact that the A.M.A. Guidelines do not prohibit inclusion of psychological impairment; the purpose of the Schedule, the fact that the legislature did not limit the whole person impairment to physical impairment; and the use of and adherence with Desbiens by the Financial Services Commission.

There is no good reason to doubt the correctness of Mackinnon J.’s decision. It was well reasoned and consistent with the existing law.

[emphasis added]

I inquired of the parties whether the decision of Ferguson J. was binding on the Arbitrator and on me. An interesting exchange ensued regarding Rule 62.02 of the Rules of Civil Procedure, the Practice Direction under section 21 of the Courts of Justice Act, R.S.O. 1990, Chap. C.43, the practice in Toronto versus elsewhere in the Province and whether Ferguson J. was sitting as a judge of the Divisional Court when he issued his decision.

Succinctly, the Appellant submitted that the decision of Ferguson J. in Arts was not binding, the Respondent, that it was. As I agree with and follow Ferguson J.’s reasoning (and that of Mackinnon J.), it is not necessary for me to determine whether the decision was otherwise binding.

III. DOES THE PRINCIPLE OF ISSUE ESTOPPEL APPLY?

The Supreme Court of Canada, in Danyluk v. Ainsworth Technologies Inc. (1999) CarswellNat 2434, held that an “issue, once decided, should not generally be re-litigated to the benefit of the losing party and harassment of the winner.” In Angle v. M.N.R., 1974 CanLII 168 (SCC), [1975] 2 S.C.R. 248, citing from Lord Guest in Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2)[4], the Supreme Court stated that the requirements of issue estoppel were:

… (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised their privies….

The Respondent agrees that the issue of whether the Respondent sustained a catastrophic impairment was not determined by Director Draper. Rather, the latter’s decision only decided that he would not state a case to the Divisional Court pursuant to section 285 of the Insurance Act.

I agree that the Director was neither asked nor did he finally decide the question put before the Arbitrator, namely, whether the Respondent had suffered a catastrophic impairment. Rather, Director Draper held that the Appellant was “to pursue its arguments at arbitration and, if it chooses, through appeal and perhaps judicial review.” The Appellant cannot be faulted, nor should it be denied a decision on the merits, for having done exactly what the Director directed. I find, respectfully, that the Arbitrator erred in law in applying the principle of issue estoppel in this case.

IV. CAN PSYCHOLOGICAL IMPAIRMENTS BE ASSIGNED PERCENTAGES IN ORDER TO COMBINE THEM WITH PHYSICAL IMPAIRMENTS IN CLAUSE 2(1.1)(f) OF THE SCHEDULE?

The Appellant’s submissions in this regard, are as enumerated below:

The reasoning in Desbiens concerning assigning percentages to psychological impairments for the purpose of combining them with physical impairments under clause 2(1.1)(f) of the Schedule was completely obiter, as the Court found that the plaintiff had met clause 2(1.1)(f) on the basis of physical impairments alone.

The Respondent submitted that Desbiens directly addressed these questions and the decision in this regard cannot reasonably be considered obiter dictum, that is, words of an opinion entirely unnecessary for the decision of the case.

I agree with the parties that Desbiens, by itself, is neither binding on Commission arbitrators or on its appellate officers. Whether obiter dictum or ratio, the question remains as to the decision’s persuasiveness and the weight of subsequent decisions.

The question of how broad coverage should be and the balancing of costs and other criteria that go into this formula is a question for the Legislature. The reasoning in Desbiens ignores the express statutory wording and the legislative intent.

In oral submissions, I inquired of the parties as to the intent of the Schedule’s clause 2(1.1)(f).

Both parties, without prejudice to their other arguments, argued that clause 2(1.1)(f) of the Schedule is unambiguous.

The Appellant argued that clause 2(1.1)(f), in plain language, is the cornerstone of a tiered compensation scheme intended to keep the insurance system and insurance rates stable by denying compensation for otherwise reasonable and necessary needs.

The Appellant was not able to readily identify case law enunciating such legislative intent. The Appellant, however, submitted that while it may have been understandable, and perhaps even laudable, for judges and arbitrators to use principles of statutory interpretation to stretch bright line boundaries to allow increased coverage in certain unfortunate cases, as the legislation was unambiguous, the adjudicators had erred in failing to give effect to the legislative intent.

I find that clause 2(1.1)(f) of the Schedule is unambiguous.

Subsection 2(1.1) of the Schedule, by means of a definition of catastrophic impairment, provides an enhanced tier of coverage for victims of motor vehicle accidents who have suffered more severe injuries. The question is not whether a tiered compensation scheme exists in the legislation and that effect should be given to same. The case law has recognized and has respected this legislative intent. The question, rather, is where precisely has the Legislature drawn a “bright line” between those injured victims of motor vehicle accidents who come within the catastrophic definition and those who do not.

I agree with Mackinnon J., in Arts (accepted by Ferguson J.) regarding the purpose of the Schedule, and adopt his reasoning that:

The legislature’s definition of “catastrophic impairment” is intended to foster fairness for victims of motor vehicle collisions by ensuring that accident victims with most health needs have access to expanded medical and rehabilitation benefits. That definition is intended to be remedial and inclusive, not restrictive. The legislature has determined that an injured person who has only a moderate psycho-emotional impairment, but no other impairments, does not meet the test for catastrophic impairment. The rationale is that such a person is likely to have lesser medical and rehabilitation needs than a person with a marked psycho-emotional impairment. However, the injured victim at bar has both demonstrated psycho-emotional and physical impairments. It accords with the purpose of the Schedule (i.e., – to ensure that accident victims with greatest needs obtain enhanced benefits) to consider the combined impact of both psycho-emotional and physical impairments in determining Whole Person Impairment (WPI) under s. 2(1)(f) of the Schedule.

An injured victim may fall short of being found catastrophically impaired on the basis of any one of the other seven parts to the definition of catastrophic impairment, but when all of his/her impairments are considered, he/she may well have a 55 per cent Whole Body Impairment. To deprive Ontario motor vehicle accident victims in these circumstances the right to recover needed attendant care and medical- rehabilitative benefits is both unreasonable and unjust. That cannot have been the intention of the provincial legislature.

The SABS are remedial and constitute consumer protection legislation. As such, they are to be read in their entire context and in their ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of the legislature. The goal of the legislation is to reduce the economic dislocation and hardship of motor vehicle accident victims and as such, assumes an importance which is both pressing and substantial.

In his decision, Mackinnon J. was referencing the Supreme Court of Canada in Smith, noted above, that one of the main objectives of automobile insurance law is consumer protection. Mackinnon J. was also referencing subsection 64(1) of the Legislation Act, 2006, S.O. 2006, c. 21, that states that:

An Act shall be interpreted as being remedial and shall be given such fair, large and liberal interpretation as best ensures the attainment of its objects.

Clause 2(1.1)(f) of the Schedule refers in plain language to “an impairment or combination of impairments,” without any preceding restrictive or modifying adjectives. Subsection 2(1) of the Schedule specifically and clearly defines “impairment” as “a loss or abnormality of a psychological, physiological or anatomical structure or function.” As stated by Spiegel J. in Desbiens, “it is difficult to conceive of a more inclusive definition.”

As also stated by Spiegel J., if “the intention were to exclude psychological impairments from clause (f), the insertion of the word ‘psychological’ before the word ‘impairment[s]’ would easily have achieved that purpose.” Clause 2(1.1)(f) is not limited to “physical” impairments, nor does its plain reading exclude Chapter 14 mental or behavioural impairments of the Guides.

MacKinnon J., in Arts, agreed with Desbiens “that there was nothing in the Schedule that suggest that a combination of physical and psychological impairments is not permitted to be considered.” Arbitrator Muir in McMichael and Belair Insurance Company, (FSCO A02-001081, March 2, 2005), confirmed on appeal (FSCO P05-00006, March 14, 2006), application for judicial review dismissed, 2007 CanLII 17630 (ON SCDC), [2007] O.J. No. 1972, stated that “practical difficulties aside, the Schedule requires the addition of all impairments, however caused, together in arriving at the appropriate WPI.”

I agree.

It is argued that the words in clause 2(1.1)(f) “in accordance with the American Medical Associations Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, restrict the term “impairment[s]” to those that are physical in nature. I do not agree.

Firstly, I find that these words modify not “impairment[s]” but rather the latter part of clause 2(1.1)(f), the words “results in 55 per cent or more impairment of the whole person.” It is not the conflicting (as discussed below) definitions of impairment in the Guides that are to be used in determining an insured’s WPI. Rather, “in accordance with” the Guides means that the latter’s methodology (and most fundamentally, the Combined Values Chart, modified by such guides as rounding, noted above) are to be applied in calculating WPI and in advancing the legislative intent.

Secondly, the Guides would be of little assistance in defining the term “impairment,” as the Guides are themselves internally inconsistent in this regard. At page 1/1, the Guides take an inclusive and non-restrictive approach:

In the Guides, impairments are defined as conditions that interfere with an individual’s “activities of daily living” …

Consistent with this inclusive approach, Chapter 14 of the Guides in the Table at page 301 classifies “impairments” specifically due to mental and behavioral disorders in four areas of functioning, including “activities of daily living.” The Glossary of the Guides, however, at page 315, provides a contradictory definition of impairment as “the loss, loss of use, or derangement of any body part, system or function.”

Thirdly, in any event, to the extent there is any conflict regarding the definition of “impairment” or “impairments” between the Schedule and in the Guides, as submitted by the Appellant itself, such conflict should be resolved in favour of the Schedule.

Fourthly, the Schedule confirms its paramountcy at subsection 2(3) that provides that if an impairment is not listed in the Guides, the impairment shall be that which is listed that is most analogous to the sustained impairment.

Accordingly, I find that the Legislature, in plain language, has drawn a bright line in clause 2(1.1)(f) of the Schedule in including as impairments losses or abnormality of psychological, physiological or anatomical structure or function.

If I am incorrect in finding clause 2(1.1)(f) unambiguous, I turn to the words of Laskin J., in Bapoo v. Co-Operators General Insurance Company, 1997 CanLII 6320 (ON CA), 36 O.R. (3d) 616, citing Professor Sullivan in Driedger on the Construction of Statutes, 3^rd ed. (Toronto: Butterworths, 1994) at 131, that:

There is only one rule in modern interpretation, namely, courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of the legislation, the consequences of proposed interpretations, the presumptions and special rules of interpretation, as well as admissible external aids. In other words, the courts must consider and take into account all relevant and admissible indicators of legislative meaning. After taking these into account, the court must then adopt an interpretation that is appropriate. An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is, its compliance with legislative text; (b) its efficacy, that is, its promotion of the legislative purpose; and (c) its acceptability, that is, the outcome is reasonable and just.

I find that excluding from the term “impairment” in clause 2(1.1)(f) of the Schedule psychological, mental or behavioural impairments cannot be justified and, hence, is inappropriate.

Such an interpretation is implausible as being inconsistent with this remedial legislation. Excluding psychological impairments from clause 2(1.1)(f) can also not be justified in terms of efficacy. Rather than promoting the legislative purpose of providing enhanced benefits for a higher stratum of actual impairment, such an interpretation unjustifiably favours physical diagnoses over psychological ones. As set out in the pivotal decision of Arbitrator Makepeace in Quattrocchi and State Farm Mutual Automobile Insurance Company, (OIC A-006854, September 29, 1997), the general intent of the Schedule is to provide compensation not for specific diagnoses but for loss of function.

Regarding acceptability, Laskin J. stated in Bapoo “[a]voiding unjust or unacceptable results is an essential part of the court’s task in interpreting statutory language.” I agree with Spiegel J. in Desbiens that:

If a mental impairment caused by a dysfunction of the brain or nervous system can be included in the calculation of whole person impairment, but a similar psychological impairment under Chapter 14 is excluded, then some people with psychological impairments would be denied much needed benefits, not because they were less seriously impaired, but simply because their impairment is attributed to a different cause. This would be an unreasonable outcome …

The Legislature has crafted a particular definition of catastrophic impairment that includes, by express reference, the 4^th edition of the Guides. The reasoning in Desbiens is not in accordance with the practices, procedures and objectives of the Guides.

The Appellant cites R. v. St. Lawrence Cement Inc., 2002 CanLII 45010 (ON C.A.), in which the Ontario Court of Appeal stated that:

… the legislative device of incorporation … enables the legislative draftsman to include provisions of earlier statutes or other documents into statutes or regulations without actually reproducing the language of the statute or document … incorporation by reference is a common device of legislators in accordance with the maxim verba relata hoc maxime operantur per referentiam rit it eis inesse videntur (words to which reference is made in an instrument have the same operation as if they were inserted in the instrument referring to them). The effect of incorporation by reference is that the material incorporated is considered to be part of the text of the legislation.

The Appellant submits that the Guides, which are specifically noted in the Schedule, are part of the text of the legislation by reason of incorporation by reference.

The Guides, as the Appellant acknowledged in oral submissions, in certain respects are completely contrary to the Schedule. At page 1/5, the Guides state that “[t]he American Medical Association strongly discourages the use of any but the most recent edition of the Guides, because the information in it would not be based on the most recent and up-to-date material.” Nonetheless, the Schedule mandates the use of the Guides' outdated, fourth edition.

More fundamentally, the Guides strongly state that the impairment percentages derived from the Guides’ criteria should not be used to direct financial awards or to make direct estimates of disabilities. However, as noted in Desbiens and in Snushall v. Fulsang [2003] O.J. No. 1493 (S.C.J.), “the insurance legislation in Ontario appears to require precisely what the Guides themselves discourage.”

I agree with the Appellant’s oral submission that to the extent there are conflicts between the Guides on the one hand and the Schedule and the Insurance Act on the other, the Insurance Act and the Schedule take precedence, being superior legislation. I agree with the Arbitrator that:

Whatever the original creators may have intended when they developed the AMA Guides, the Guides, as included in the Statutory Accident Benefits Schedule have developed a life of their own, independent of the wishes and opinions of their creators.

Since the Guides, as included in the Schedule, are necessarily seen as part of subsidiary legislation, the courts judges and arbitrators have, through their decisions over time, added a gloss, or an interpretation that is helpful in integrating them into the scheme as a whole. This is exactly how jurisprudence in the common law provinces of Canada is meant to develop. There is no reason why the AMA Guides, as incorporated, should be subject to any different rule.

I also agree with Mackinnon J. in Arts that:

The Guides were clearly not designed by the AMA for the purpose directed by the Ontario Legislature. They must be interpreted in a manner that is contextually consistent with the language of the SABS.

One cannot simply “cherry pick” through the Guides taking a sentence from one section or a passage from another to undermine the intent and overall context of the Schedule and the Insurance Act. With this in mind, I turn to the “practices, procedures and objectives of the Guides” that the Appellant submits are contrary to the Arbitrator’s decision.

Clause 2(1.1)(f) was intended to address physical impairments alone as evidenced by the numerical 55% threshold and the absence of percentage values to psychological impairments in the fourth edition of the Guides.

The Appellant submits that the Guides, after considerable thought and discussion, deliberately did not assign percentages to mental or behavioural disorders in Chapter 14 and specifically and consistently advise against assigning percentages to psychological impairments.

The Appellant further argues that reference in the Guides at page 14/301 to the earlier Second Edition that do provide a percentage rating of mental and behavioural impairments is not sanctioned by the Schedule. If the Legislature had intended the use of anything but the fourth Guides, it would have said so expressly. The Appellant submits that “[t]o find that another edition of the AMA Guides is applicable to this case, in order to enable the assigning of percentages to psychological impairments for the purposes of combining both physical and psychological impairments, is to re-write the legislation, not to interpret it.”

Respectfully, there are inaccuracies in these submissions.

Table 3 of the Guides, at page 142 in Chapter 4 on the nervous system, notes the interrelationships between the fields of neurology and psychiatry. Table 3 specifically assigns percentage WPIs on the express basis of “Emotional or Behavioral Impairments.” Table 2, on the same page, provides mental status impairments by percentage rating. Chapter 4 further notes that emotional or behavioral disturbances:

… may be the result of neurologic impairments but may have psychiatric features as well, which may range from irritability to outbursts of rage or panic and from aggression to withdrawal. These illnesses may include depression, manic states, emotional fluctuations, socially unacceptable behavior, involuntary laughing or crying, and other kinds of central nervous system responses. The criteria for evaluating these disturbances (Table 3, below) relate to the criteria for mental and behavioral impairments (Chapter 14, p. 291). [emphasis added]

I noted during oral submissions that in Knechtel and Royal & SunAlliance Insurance Company of Canada, (FSCO A07-000011, June 15, 2009) Arbitrator Sampliner held that “psychological problems should not be added as a percentage WPI unless the individual has a structural nerve or brain impairment.” Arbitrator Sampliner indicated that in this regard he agreed with Arbitrator Renahan in George and State Farm Mutual Automobile Insurance Company, (FSCO A03-001062, August 9, 2004), confirmed on appeal (FSCO P04-00028, December 6, 2005), and in H and Lombard General Insurance Company of Canada, (FSCO A06-000209, October 4, 2007).

I do not see, however, that Arbitrator Renahan specifically addressed Table 3 from page 4/142 of the Guides in his decisions. In any event, it is not clear why the emotional or behavioural psychiatric features of depression or emotional fluctuation accompanying a neurological impairment should and, indeed, must be percentage rated (in fact using Chapter 14 mental and behavioural criteria), but that such emotional or behavioural sequelae accompanying the impairments in the loss of vision in an eye as in this case or the loss of a leg, as in B.P. and Primmum Insurance Co., (FSCO A05-001608, December 21, 2006), should not and cannot be percentage rated.

In any event, the Appellant agreed in oral submissions that it would have been proper for the assessors in this case to have used Table 3 in Chapter 4 to assess mental or behavioural WPI. The assessors erred, it is submitted, only in using Chapter 14 in making their percentage ratings.

This, however, is inconsistent with the Appellant’s overall argument that would mandate that Table 3 (that specifically addresses emotional or behavioural impairments) whether interrelated with neurological or with other fields of medicine, must, in addition to Chapter 14 ratings, be excluded in all cases from consideration in clause 2(1.1)(f) of the Schedule.

Nor, following Bapoo, would it be a plausible, efficacious or acceptable result that the word “impairment” in clause 2(1.1)(f) should be further refined to mean excluding some (i.e. Chapter 14), but not all (i.e. Table 3 in Chapter 4), mental, emotional or behavioural impairments.

Page 301 of Chapter 14 of the Guides discusses the decision not to use percentages for estimates of mental impairment, at least for that particular chapter. The concern in using percentage ratings in Chapter 14 is that unlike the situations with some (but, importantly, not all) organ systems, there are no precise measures of impairment in mental disorders:

The use of percentages implies a certainty that does not exist, and the percentages are likely to be used inflexibly by adjudicators, who then are less likely to take into account the many factors that influence mental and behavioral impairment. Also, because no data exist that show the reliability of the impairment percentages, it would be difficult for Guides users to defend their use in administrative hearings. [emphasis added]

This passage, however, is inconsistent with the overall approach of the Guides, at page 1/2:

An impairment percentage derived by means of the Guides is intended, among other purposes, to represent an informed estimate of the degree to which an individual’s capacity to carry out daily activities has been diminished.

[emphasis added]

The passage is further inconsistent with the following passage at page 1/3 of the Guides:

If the Guides contributors have been unable to identify objective data on the normal functioning of an organ system, they have estimated the extent of impairments on the basis of clinical experience, judgment, and consensus …

It should be understood that the Guides does not and cannot provide answers about every type and degree of impairment, because of the considerations noted above and the infinite variety of human disease, and because the field of medicine and medical practice is characterized by constant change in understanding disease and its manifestations, diagnosis, and treatment. Further, human functioning in every-day life is a highly dynamic process, one that presents a great challenge to those attempting to evaluate impairment.

In addition to being internally inconsistent with the overall approach of “informed estimates” and the acknowledged limitations of the Guides, the necessity for “certainty” in Chapter 14 of the Guides is inconsistent with basic concepts of law.

The onus on an insured person is not to establish catastrophic impairment ratings on the basis of “certainty.” Nor is the onus on the insured person to establish impairment ratings beyond a reasonable doubt. Rather, the civil standard of a balance of probabilities applies.

It would be unjust and unacceptable to assign a different onus of proof to different impairments, specifically when the Guides themselves accept mental, emotional or behavioural WPIs as reliable in Table 3 in Chapter 4. Indeed, the Guides state at page 14/301 that one valid reason for using ranges of percents for mental impairments is that Chapter 14 would then be consistent with the Guides chapters for the other organ systems.

It would be even more unacceptable to restrict clause 2(1.1)(f) of the Schedule to physical impairments simply to satisfy the concerns of some of the authors of the Guides² that a higher onus of certainty is required to prevent judges and arbitrators (the latter having the statutory duty under subsection 282(3) of the Insurance Act to “determine all issues in dispute”) from erring in applying percentages to mental, emotional or behavioural impairments.

In Ms. G. and Pilot Insurance Company, (FSCO A04-000446, March 16, 2006), affirmed on appeal (FSCO P06-00004, September 4, 2007), I stated that:

The Guides note a concern that “percentages are likely to be used inflexibly by adjudicators, who then are less likely to take into account the many factors that influence mental and behavioural impairment.” Even if that is true, insured persons should not be penalized by excluding an impairment rating because medical science lacks a more objective, scientific means of rating psychological, mental or behavioural impairment.

However, in the comment on page 301 on the lack of percents in the Fourth Edition, the Guides detail the percentage ratings for categories of impairment from the earlier, Second Edition of the Guides. If these mental or behavioural WPI ratings are indeed irrelevant, why delineate them with such particularity?

The Respondent noted that the Guides, earlier on the same page 301, do not categorically exclude the use of numerical rating. Rather, the Guides state that, referring to mental or behavioural impairments:

In those circumstances in which it is essential to make an estimate, the ordinal or numeric scale might be of some general use.

I agree with Arts that the Guides do not “prohibit” including mental or behavioural WPI percentage ratings. Rather, I find that whatever the advice of the authors of Chapter 14 of the Guides, the paramountcy of clause 2(1.1)(f) of the Schedule makes such WPI ratings not merely essential but mandatory, and that the ratings on page 301 of Chapter 14 and Table 3 on page 4/142 provide avenues for attaining requisite percentage ratings.

In Ms. G, I stated that:

Dr. Ameis testified that once causal connection is established and the necessary examinations are completed, one looks to the Guides for the method or methods appropriate to score the impairment. In using the Guides, Dr. Ameis testified that one should run a parallel analysis of several methods in order to see if the results agree. If the different methods yield roughly the same score, then one has some confidence that the result is valid. One would then pick the highest of the alternate methods as the applicable WPI rating.

In giving effect to the legislative intent that all impairments are to be rated as accurately as possible, I am persuaded that it is reasonable and correct to use the ratings incorporated by reference on page 301 of the Guides as an admissible aid, especially, but not limited to, in endeavouring to obtain a more reliable percentage rating by running “a parallel analysis of several methods in order to see if the results agree.”

The Legislature never intended clauses (f) and (g) to be combined, or that mental and behavioural disorders that are evaluated under clause 2(1.1)(g) of the Schedule are also to be evaluated under clause 2(1.1)(f). That the two clauses are separated by the word “or,” they are not intended to be conjunctive. Rather, the use of the word “or” suggests that it is intended to be a disjunctive list.

The Appellant submitted that in adopting the Fourth Edition of the Guides, which was intended “to bring greater objectivity to estimating the degree of permanent impairment,” the Legislature incorporated and deliberately distinguished between a qualitative rating of mental and behavioural impairments under Chapter 14 (that provides descriptive levels of impairment) from those impairments that are objectively quantifiable. There is, it is submitted, no method provided for combining “qualitatively” rated psychological impairments with “quantitatively” rated physical impairments.

Clause 2(1.1)(g) of the Schedule provides that:

(1.1) For the purposes of this Regulation, a catastrophic impairment caused by an accident that occurs before October 1, 2003 is,

(g) subject to subsections (2) and (3), an impairment that, in accordance with the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in a class 4 impairment (marked impairment) or class 5 impairment (extreme impairment) due to mental or behavioural disorder.

I agree with the Appellant that the use of the word “or” separating clauses 2(1.1)(f) and (g) of the Schedule means that the clauses are disjunctive. The Concise Oxford Dictionary of Current English, Eighth Edition, Clarendon Press, Oxford, 1990, defines “disjunctive,” in part, as expressing alternatives. In the context of subsection 2(1.1) of the Schedule, this means that an insured person does not have to meet the criteria of every separate clause to be found to be catastrophically impaired. The failure of an insured person to meet the descriptive criteria in any of the other clauses does not mean that the impairments listed elsewhere cannot alternatively be percentage rated and combined in clause 2(1.1)(f) of the Schedule.

I stated in Ms. G. that:

In my view, the word “or” serves to separate not merely “f” from “g,” but also each of the seven listed alternative meanings of catastrophic impairment from each other. To accept the “f” versus “g” argument, one must equally accept that since paragraph 2(1)(d) of the Schedule provides that one is catastrophically impaired if one suffers the total loss of vision in both eyes, the total loss of vision in one eye, while insufficient to meet the requirement of “d,” could not be included in “f.” Likewise, paragraph 2(1)(b) states that one is catastrophically impaired if one has suffered the amputation causing the total and permanent loss of both arms. Accepting the same argument, the loss of only one arm, while insufficient to meet the definition in “b,” could not be counted in “f.” I am not persuaded that this was the intent of the drafters of this legislation, either in terms of plausibility, efficacy or acceptability, as those terms are understood in Driedger.

In this case, the Appellant concedes that the mention of loss of vision in both eyes (which the Respondent did not sustain) in clause 2(1.1)(d) of the Schedule (the clause failing to itself reference any percentage rating) does not mean that loss of vision in the Respondent’s right eye alone cannot be percentage rated under clause 2(1.1)(f) and combined with her other impairments. That clause 2(1.1)(g) provides a qualitative rating of impairment specific to one area of impairment does not mean that a percentage WPI can not be assessed, in the alternative, for that same area of impairment should the insured not meet the qualitative definition.

Regarding clause 2(1.1)(g) of the Schedule, the qualitative rating scheme on page 301 of the Guides sets out five classes of impairment due to mental or behavioural disorders. A Class 4 or 5 rating merits a finding of catastrophic impairment. The percentage ratings noted on the same page from the Second Edition also have five classes of impairment, although slightly renamed (i.e. Class 1 in the “qualitative table” is entitled “No impairment;” Class 1 in the “quantitative table” is entitled “normal”).

I am not persuaded that it is merely coincidental that Class 4 in the “quantitative” rating is 55% (55% being the threshold under clause 2(1.1)(f) of the Schedule) to 75%, while Class 5 is more than 75%.

Rather, it is entirely consistent, whether for mental or behavioural impairments, amputation or loss of vision, that one looks first to the clause that addresses a specific psychological, physiological or anatomical area of impairment. If the insured meets that specific definition, there is a finding of catastrophic impairment. If the insured person does not meet that specific definition, one looks at the alternative clause 2(1.1)(f) and includes in this analysis percentage ratings of all areas of impairment.

I thus agree with Spiegel J. in Desbiens that:

… clause (f) ensures that persons who do not suffer any of the specific injuries or conditions described in the other clauses of ss. 5(1), but nevertheless have an impairment, or a combination of impairments, that is so severe that they are among those with the greatest need for health care are able to recover the expenses of that health care. In effect the legislature, with clause (f), included a catch-all provision for the benefit of those who were likely in the greatest need of health care.

Subsection 2(3) of the Schedule indicates that an impairment that is sustained by an individual but that is not listed in the Guides is deemed to be the impairment listed in the Guides that is most analogous to the impairment sustained by the person. “Listed” means to set down in a list and is defined as “mentioned specifically,” “designated,” or “expressly named.” As mental and behavioural disorders are listed and specifically mentioned in Chapter 14 of the Guides, they cannot be considered “not listed.” To consider such impairments as not listed “is a distortion of the legislation and the Guides.”

In this regard, I agree with the reasoning of Mackinnon J. in Arts that:

I agree with the reasoning of Spiegel J. who noted that even if it was determined that percentage ratings could not in law be assigned to psycho-emotional impairments under the Guides, section 2(3) of the Ontario Schedule directs that psycho-emotional impairment be deemed to be the impairment listed in the Guides that is most analogous. Psychological impairments are the most analogous to the listed mental or behavioural impairments. I agree with the Desbiens reasoning that it is proper to interpret the words “not listed” in section 2(3) as encompassing both impairments that are not identified and impairments that are identified but not assigned any percentage.

V. CONCLUSION

The onus is on the Appellant to establish that the Arbitrator erred in law in finding that this Respondent suffered a catastrophic impairment.

I am persuaded that the Arbitrator erred in law in finding that he was bound by Desbiens and that issue estoppel applied to the arbitration proceeding.

I am not persuaded that the Arbitrator erred in law, either on the basis of reasonableness or correctness, in assigning percentages to mental and behavioural impairments or in combining or including both psychological and physical impairments in clause 2(1.1)(f) of the Schedule. I am, thus, not persuaded that the Arbitrator erred in law in finding that the Respondent suffered a catastrophic impairment as defined by clause 2(1.1)(f).

More specifically, I am persuaded that:

Clause 2(1.1)(f) is not ambiguous, that it plainly includes as impairments losses or abnormality of psychological, physiological or anatomical structure or function.
If clause 2(1.1)(f) is ambiguous, it should be interpreted as including as impairments losses or abnormality of psychological, physiological or anatomical structure or function.
The Guides do specifically allow and do provide a method of assigning percentage ratings to mental, emotional and behavioural impairments in Table 3 at page 4/142.
It is reasonable and correct to use the ratings incorporated by reference on page 301 of the Guides as an admissible aid in determining percentage WPI.
The failure of an insured person to meet the exact criteria in the other clauses of subsection 2(1.1) of the Schedule does not mean that the impairments described elsewhere cannot be percentage rated and combined in clause 2(1.1)(f).
More specifically, that one does not meet the qualitative definition of catastrophic impairment under clause 2(1.1)(g) of the Schedule does not preclude mental or behavioural impairments that are not, on their own, catastrophic from being given a percentage rating and combined with all other areas of impairment.
It is proper to interpret the words “not listed” in section 2(3) of the Schedule as encompassing both impairments that are not identified and impairments that are identified but not assigned any percentage.

I am not persuaded that denying the Respondent (whose combined impairments the parties agree would meet the catastrophic definition) an enhanced level of coverage complies with the legislative text. I am not persuaded that denying the Respondent an enhanced level of coverage would be consistent with either the plain language or with a fair, large, liberal and remedial interpretation of the statute that best ensures attaining its legislative object. I am not persuaded that the consequence of denying the Respondent this enhanced level of coverage promotes the legislative purpose of ensuring that victims of motor vehicle accidents at a higher tier of accident-related impairment have access to an expanded scope of statutory benefits.

I am persuaded that denying the Respondent a catastrophic designation because her impairments include mental or behavioural impairments is inconsistent with the inclusiveness of the Schedule and would be an unreasonable outcome.

Accordingly, this appeal is dismissed and the Arbitrator’s December 18, 2009 decision is confirmed.

VI. EXPENSES

I recognize the considerable work done by counsel for both parties in preparing and presenting their respective written and oral submissions. I wish to again thank counsel for their most helpful assistance and for their utmost professionalism throughout.

If the parties are unable to agree on the legal expenses encompassed in this appellate matter, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.