Lastowski v. State Farm Mutual Automobile Insurance Company, 2017 ONFSCDRS 291

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2017 ONFSCDRS 291

Appeal P16-00066

OFFICE OF THE DIRECTOR OF ARBITRATIONS

HENRY LASTOWSKI

Appellant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Respondent

BEFORE:

Edward Lee

REPRESENTATIVES:

Ryan Steiner for Mr. Lastowski

Paul Omezeri for State Farm

HEARING DATE:

September 25, 2017

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990 c. I.8 as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Regulation 664, R.R.O. 1990, as amended, it is ordered that:

1. The appeal of the Arbitrator’s order of August 2, 2016 is allowed in full. The decision is rescinded, and the matter returned to arbitration to be heard before a different arbitrator.

2. If the parties are unable to agree about the expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

November 7, 2017

Edward Lee Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Mr. Lastowski (“the Appellant”) appeals the Order of the Arbitrator rendered on August 2, 2016. In his Order, the Arbitrator determined that the Appellant was not entitled to post 104-week income replacement benefits (“IRBs”), and that State Farm Mutual Insurance Company (“State Farm”) was not liable to pay a special award to the Appellant.

The Appellant submits that the Arbitrator, in making his decision, failed to demonstrate proper analysis and reasoning for the conclusions reached, failed to recognize and consider evidence, and based his decision on improper considerations and mischaracterized the post-104 week test for income replacement benefits.

For reasons that follow, I find the Arbitrator gave inadequate reasons for his decision, and also mischaracterized the post-104 week test for income replacement benefits.

The appeal is allowed.

II. BACKGROUND

The Appellant, Mr. Lastowski, was injured in a motor vehicle accident on January 18, 2011, and sought benefits from State Farm, payable under the SABS.¹ He applied for arbitration after mediation did not resolve the disputes that arose in regard to the claim.

At the hearing, there was no dispute that Mr. Lastowski had suffered a substantial inability to perform the essential tasks of his pre-accident employment. State Farm had paid him IRBs until the 104-week mark. The question for the arbitrator was to determine whether Mr. Lastowski was entitled to post-104 week IRBs.

The evidence before the Arbitrator included Mr. Lastowski’s oral testimony, various medical reports, and vocational reports provided by each of the parties. In his decision, the Arbitrator noted the Appellant was fifty years old and had been steadily employed as a stair builder since 1995. He had completed high school thirty-three years before.

The Arbitrator then described the essential tasks of the Appellant’s stair building job, noted the Appellant’s skills with tools, and described some of the physical injuries he had sustained as a result of the accident.

The conclusion from this evidence is that the Applicant is not capable of any overhead work or overhead lighting. … the Applicant has difficulties with prolonged standing, walking, and in particular, climbing and walking on uneven ground. He walks with a limp thus limiting the length and distance he is able to walk and stand. It is not anticipated that further recovery will occur.”²

He then cited the test for post-104 week IRBs:

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

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

Finally, the Arbitrator noted the vocational reports adduced by each of the parties. In his conclusion he stated the following:

The onus is on the applicant to establish that he suffers a complete inability to engage in any employment to which he is reasonably suited. In that regard the Applicant has failed to do so and I therefore conclude that he is not entitled to post 104 week income replacement benefits.³

III. ANALYSIS

1. Did the Arbitrator err by failing to provide proper analysis and adequate reasons for his decision?

In its decision in Kanareitsev v. TTC Insurance Company Limited,⁴ the Court of Appeal examined the jurisprudence regarding the requirement on an arbitrator to provide adequate reasons. The principles were summarized by Delegate Rogers in his decision of Doyon and Allstate Insurance Company of Canada.⁵ He set out those principles as follows:

Determining adequacy of reasons is a contextual exercise. The essential question is whether reasons provide the basis for meaningful judicial review.

The reasoning process must set out and reflect the consideration of the main relevant factors.

It is insufficient to summarize parties’ positions and baldly state conclusions.

Factors to be considered include the decision maker setting out essential findings of fact and the evidence upon which they are based. The reasons must address the main points in issue.

Particularly when results turn on credibility and involve fact-driven analysis, appellate review must take proper account of the distinct advantage of the decision maker’s assessments.

Appeal officers must not try the case de novo or substitute his or her view.

To this list, I would add the clarification of the Court in Kanareitsev to the words, “meaningful appellate review”:

At the trial level, the reasons justify and explain the result. The losing party knows why he or she has lost. Informed consideration can be given to grounds for appeal.⁶

With these principles in mind, I turn now to the Arbitrator’s decision. His discussion of the main issue in dispute (Did the applicant suffer a complete inability to engage in any employment or self-employment for which he was reasonably suited by education, training, or experience?) commences at the middle of page 4 and ends at the middle of page 5. The Arbitrator states as follows:

In the present arbitration, both the Applicant and State Farm presented onto evidence Vocational Reports setting out the Applicant’s vocational skills, abilities, suitable jobs and limitations. Although each of the Applicant and State Farm cited flaws in the other’s reports, it was apparent to me that there were jobs that the Applicant could properly do as contained in the reports that would not require significant training such as order desk clerk, telephone sales agent, bench assembler and bench woodworking [italics and emphasis mine].

This section represents the totality of the analysis given to the two office or clerical jobs suggested in the vocational report of the Insurer.⁷ The decision goes on to discuss the bench and woodworking jobs further and I will deal with that analysis later.

First, I find the reasons do not set out the essential findings of fact and evidence upon which they were based. The Arbitrator recognized that vocational reports from both sides provided conclusions as to whether the insured was completely disabled from engaging in any employment for which he was reasonably suited by education, experience and training.⁸ These reports contained conflicting evidence in regard to the insured’s mental abilities, learning, verbal, numerical aptitudes and skills; and conclusions regarding his education, experience, and training.

In the excerpt cited above, the Arbitrator noted that “Although [the two sides] cited flaws in the other’s reports, it was apparent to [him] that there were jobs the Applicant could properly do as contained in the reports that would not require significant training such as …”

In his decision, the Arbitrator does not identify what evidence supported his finding, despite noting each party had cited errors in the reports. Further, his reasons do not demonstrate how he determined one report to be more probative or convincing than the other. He does not demonstrate which facts in the reports he accepted and which he rejected.

He states it was “apparent” to him there were jobs the Applicant could “properly do,” but once again, the Arbitrator’s reasons do not demonstrate how that conclusion was “apparent” to him. None of the essential facts on which he had to base his determination are identified; there is no discussion of the evidence which would be required to support his findings.

The Arbitrator simply notes the parties’ different positons, and then “baldly’ states his conclusion.

Second, the Arbitrator did not set out the reasoning process used in reaching his conclusions. He did not demonstrate any consideration of the main relevant factors, which would necessarily have included the Appellant’s education, training, and experience.

The uncontested evidence was that the Appellant only had a high school education and had been employed since 1995 as a stair builder. He had never worked in an office environment or as a telephone sales agent or an order desk clerk. He had no computer skills. He had no training as an order desk clerk or telephone sales agent. Therefore, the desk order clerk and telephone sales agent jobs could not have been suitable for him by training or experience. The Arbitrator would then have had to consider the Appellant’s education and aptitudes.

The Insurer’s report which suggested the Appellant could perform the four jobs mentioned above also described his general functional skills and aptitudes as follows:

Word Reading: Below Average Range

Sentence Comprehension: Below Average Range

Spelling: below Average Range (Grade 7.7)

Math Computation: Below Average Range Grade 5.1)

General Learning Ability: Low Average⁹

The uncontroverted evidence before the Arbitrator concerning the “Order Desk Clerk” job included the following requirement:

Applicants with good communication, conflict resolution skills, bilingualism and/or multilingualism will have the best prospects.¹⁰

The evidence was that Mr. Lastowski did not possess good communication, conflict resolution skills, and was neither bilingual or multilingual. The Arbitrator failed to demonstrate he had considered these relevant factors to decide that “Order Desk Clerk” was suitable employment for Mr. Lastowski.

The Arbitrator also failed to address main points in issue such as how Mr. Lastowski would been suitable for such work, given his low average Verbal Aptitude, somewhat limited English vocabulary development, his general difficulty understanding the meanings of more complex words, and his problems expressing information and ideas clearly.¹¹

Similarly, the Arbitrator demonstrated no consideration of Mr. Lastowski’s low average numerical aptitude, and the difficulties he might experience in completing certain types of arithmetic operations quickly and accurately, his difficulty in keeping time, or production records, observing differences in copy, proofreading words and numbers, and arithmetic computations, as well as his below average performance in reading work orders, specification, dials, gauges, and measuring devices.¹²

The job information for the position of “Telephone Sales Agent” included the following: “Two employers stated that they need a candidate with strong English skills. Two employers reported that basic computer literacy skills were beneficial.¹³

As mentioned above, the evidence was that Mr. Lastowski did not possess strong English skills, and he might have problems expressing information and ideas clearly. He did not possess basic computer literacy.

Most importantly, the report also verified that his General Learning Aptitude score was Low Average, with an accompanying “… low average ability to “catch on” to new tasks, instructions, and underlying principles ...”¹⁴, and Mr. Lastowski might “… take longer mastering self-instructional texts used in training and in understanding reference materials used in a work situation.”¹⁵

The Arbitrator failed to demonstrate he had considered whether Mr. Lastowksi could learn new skills and assimilate training, even if the Arbitrator himself believed the new jobs did not require significant training.

In regard to the Bench Assembler and Bench Woodworking jobs, the Arbitrator ignored or omitted to consider the uncontested evidence that the Appellant was only “… able to function at light physical demands level on a full time basis.”¹⁶ There was no evidence that the Appellant could function at a higher physical demand.

The uncontroverted evidence from the National Occupational Classification Index (NOC) rated the Bench Assembler and Bench Woodworking jobs as requiring “Medium level strength, upper limb coordination, and working in ‘other body positions,’ including sitting, standing, walking and low-level work.”¹⁷[emphasis mine]

Again, the Arbitrator failed to demonstrate his reasoning process and consideration of this relevant evidence. Further, the decision do not provide the basis for meaningful judicial review as the reasons do not justify and explain the result.

I find that the Arbitrator failed to meet the Kanareitsev requirements. I find he erred in law by failing to provide adequate analysis and reasons for his decision.

2. Did the Arbitrator err by basing his decision on improper considerations and mischaracterizing the post 104-week test for income replacement benefits?

Even if I am wrong in my determination that the Arbitrator erred by failing to provide adequate reasons for his decision, I also find that he committed an error in law by basing his decision on improper considerations and mischaracterizing the test for post-104 week IRBs.

The last part of the Arbitrator’s analysis is found at the bottom of page 4 and the top of page 5 of his decision.

What was significant to me in hearing the evidence presented was that at no time was there evidence presented of efforts made by the Applicant to secure suitable employment; he arguably being resigned to the fact that he could not work. … The conclusion I draw from the lack of effort and supporting evidence was that the Applicant did not desire to do anything else that was not his former job and skill. … The mere effort to of attempting to do so could have supported the Applicant’s position that he is not employable. That did not occur and as a result I have concluded that he refuses to engage in any employment for which he may have been suited. The onus is on the Applicant to establish that he suffers a complete inability to engage in any employment to which he is reasonably suited. In that regard the Applicant has failed to do so and I therefore conclude that he is not entitled to post 104 week income replacement benefits. [emphasis mine]

The Arbitrator determined the Appellant “… did not desire to do anything else that was not his former job and skill.” As a general proposition, arbitral jurisprudence has recognized that an honest but failed attempt to return to work can be strong evidence that a person is disabled from performing that employment. Nevertheless, the converse is not always true. A person who wishes only to do his former job is not necessarily able to perform other suitable jobs.

Further, the test for entitlement to post-104 week IRBs (under section 6(2)(b) of the Schedule) is whether a person suffers a complete inability to engage in any employment or self-employment for which he or she is reasonably suited by education, training, or experience. It is not whether the person “… did not desire to do anything else that was not his former job or skill.”

State Farm cites the arbitral decision of Smillie and State Farm Mutual Automobile Insurance Company¹⁸ to support the Arbitrator’s conclusion that the desire to do nothing that was not the Appellant’s former job and skill disentitles the Appellant from post 104-week IRBs. I find that is based on an incomplete reading of Smillie. The entire analysis from Smillie is as follows:

The issues in this case thus turn on the range of all suitable jobs and the extent of Mr. Smillie’s inability to perform the duties of the possible suitable jobs. The Disability DAC identified “… Protective Services Manager” and “… Retail Sales” as suitable alternative jobs for Mr. Smillie, within his limitations. Mr. Smillie rejected these jobs and only looked for them just before starting the hearing.

Since he rejected the DAC’s suggested jobs, the initial onus on Mr. Smillie is to present evidence that he made a bona fide effort to identify, try to find or attempt some sort of “suitable” employment but failed because his injuries prevent him from engaging in that employment. I find that Mr. Smillie does not meet that initial onus.

Therefore, Mr. Smillie has the onus to adduce strong medical evidence to make out a prima facie case for his total disability beyond 104 weeks. Mr. Smillie and his experts testified that his chronic pain makes him totally disabled from employment. I find Mr. Smillie has not met this onus.

However, if I am incorrect, and Mr. Smillie has made out a prima facie case for disability beyond 104 weeks, it has been said that the onus is then on the Insurer “to provide credible, specific employment alternatives that would be within [his] capabilities, and fulfill the criteria set out by the Schedule. I find State Farm has met this onus.¹⁹ [emphasis mine]

In the present case, the Arbitrator found the Appellant had failed to present evidence that he had made a bona fide effort to try to find or attempt some sort of suitable employment, but the Arbitrator’s reasons do not adequately demonstrate (as required under Smillie), that he had also considered the medical evidence for disability and whether the suggested employment alternatives were within the Appellant’s capabilities and fulfilled the criteria set out by the Schedule.

Therefore, I find the Arbitrator erred in law by basing his decision on improper considerations and misconstruing the post-104 week test for income replacement benefits.

3. Did the Arbitrator err in law by failing to allow relevant evidence in the absence of prejudice?

The Appellant argues the Arbitrator erred by refusing to permit the Appellant to call three lay witnesses who had not been identified as potential witnesses in any of the prehearing proceedings. The Arbitrator refused to allow them to testify at the hearing, citing the witness provisions in the Dispute Resolution Practice Code.

I have reviewed the Appellant’s submissions and find no error in the Arbitrator’s decision to refuse to allow those witnesses to testify.

IV. EXPENSES

If the parties are unable to agree about expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

November 7, 2017

Edward Lee Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule—Effective September 10, 2010, Ontario Regulation 34/10, as amended.
2. 2Decision of Arbitrator at Page 3
3. 3Ibid., at Page 5
4. 42008 CanLII 26262 (ON SCDC), [2008] O.J. No. 2132
5. 5(FSCO P16-00070, September 25,2017)
6. 6Kanareitsev at Paragraph 26, as cited from R. vs. Sheppard 2002 SCC 26, [2002] 1 S.C.R. 869
7. 7Vocational Assessment with Transferable Skills Analysis and Labour Market Survey, prepared by R. Billet.
8. 8The Insured submitted the Medical Legal Situational Assessment Report from Ross Rehab, and the Insurer submitted the Vocational Assessment with Transferable Skills Analysis and Labour Market Survey prepared by R. Billet.
9. 9Vocational Assessment at Pages 6 and 9
10. 10Ibid., at Page 14
11. 11Ibid., at Page 8
12. 12Ibid., at Pages 8 and 9
13. 13Ibid., at Page 16
14. 14Page 8 of Billet report
15. 15Ibid., at Page 8
16. 16Page 11 of Billet report
17. 17Medical Legal Assessment Report, at Page 22, prepared by Maria Ross, Occupational Therapist.
18. 18(FSCO A02-000039, September 12, 2003)
19. 19Ibid., at Pages 4-5