Mihaela Cariati v. Wawanesa Mutual Insurance Company, 2018 ONFSCDRS 146

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2018 ONFSCDRS 146

Appeal P17-00082

OFFICE OF THE DIRECTOR OF ARBITRATIONS

MIHAELA CARIATI Appellant

and

WAWANESA MUTUAL INSURANCE COMPANY Respondent

BEFORE:

Edward Lee

REPRESENTATIVES:

Stanley Razenburg for Ms. Cariati Seth Kornblum for Wawanesa

HEARING DATE:

August 8, 2018

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. paragraphs 6(a) and 6(b) of the “Result” in Arbitrator Smith’s order are rescinded and the determination of entitlement to the costs of these examinations are remitted to a different arbitrator.

2. all other paragraphs of the “Result” in Arbitrator Smith’s order are confirmed.

Edward Lee Director’s Delegate

October 12, 2018

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This matter involves the SABS–2010.¹

This is an appeal by Mihaela Cariati, (“the Appellant”) of a decision by Arbitrator Smith (the Arbitrator”) dated October 30, 2017. In his decision, the Arbitrator determined that post-accident funds that were paid by the Appellant’s employer to a service provider for the benefit of the Appellant amounted to income as defined under the SABs. Accordingly these funds could be deducted from any income replacement benefit (“IRB”) that was otherwise payable to the Appellant.

Further, the Arbitrator also determined that the Appellant was not entitled to any attendant care benefits because the service providers had not provided attendant care services before the accident.

For reasons that follow, I have allowed parts of this appeal and rejected others.

II. BACKGROUND

Ms. Cariati was injured in a motor vehicle accident on March 5, 2014 and sought benefits from Wawanesa Mutual Insurance Company (the Respondent”). Disputes arose between the parties and Ms. Cariati applied for arbitration at the Financial Services Commission of Ontario.

At the arbitration, the parties agreed to the following facts:

Ms. Cariati was the employee and titular president of a family-owned company run and controlled by her husband. In her capacity as president, she attended at the bank, performed errands, and picked up odds and ends as required by her husband. Occasionally, she stopped at job sites to ensure that the company’s employees were properly dressed and looked professional. She was paid $3,500.00 per month in salary by the company.

Before her accident, Ms. Cariati and her husband employed a woman named Maria as a housekeeper for their home. After the accident, Ms. Cariati and her husband continued to employ Maria to perform housekeeping and attendant care tasks. Maria was not trained as, and had never worked as a healthcare professional, nurse, personal support worker, or health care aid. Maria also suffered no economic loss in providing post-accident services to Ms. Cariati.

In addition, the security guards employed at Ms. Cariati’s condominium also periodically assisted Ms. Cariati. They, too, did not suffer any economic loss in providing those services and were not trained as health care professionals.

Immediately following the accident, the company provided funding of approximately $2,200.00 per month to pay Maria for services she provided to Ms. Cariati. For the taxation year 2014, these amounts were not included on Ms. Cariati’s T4 slip, but commencing in 2015, these amounts were included on Ms. Cariati’s T4 slip. Further, it is the intention of the company to attribute the same amounts to Ms. Cariati’s T4 slip for 2016.

The Arbitrator ruled that the funding of Maria’s wages amounted to post-accident income for Ms. Cariati, and determined the quantum of the IRB that might otherwise have been payable to Ms. Cariati was reduced to zero because of this deduction.

Further, the Arbitrator determined the Appellant was not entitled to attendant care benefits because neither Maria nor the security guards had provided services “in the course of the employment, occupation, or profession in which they would ordinarily have been engaged, but for the accident.”

The Appellant seeks to overturn these rulings of the Arbitrator.

III. ANALYSIS

A. The income replacement benefit

(i) Did the arbitrator err in law by dismissing the claim for IRBs as that was not the issue before him?

The Appellant argued the Arbitrator misinterpreted the questions that were put to him, and he was not supposed to decide if there had been any post-accident income, but merely to determine that here had been an IRB. Further, because Wawanesa had conceded that the Appellant could not perform her pre-accident work, she had to be entitled to an IRB.

I reject this argument. One of the issues in dispute before the Arbitrator was whether the Appellant was entitled to IRBs.² The Arbitrator had to determine the quantum of any IRB to which the Appellant might have been entitled.

Accordingly, the Arbitrator was obliged to consider all aspects concerning entitlement to, and quantum of any IRB that might have been payable to the Appellant under sections 4 and following of the SABs, including section 7(3) which allows for the deduction of post-accident employment income. Based on the findings of fact made by the Arbitrator, he ultimately determined that no IRB was payable to the Appellant. This was not an error of law.

(ii) Did the Arbitrator err in law in finding that monies allotted to the domestic service provider were post-accident ‘income’ in the hands of the Appellant?

The Arbitrator made a finding of fact that moneys used to pay Maria, the third-party service provider, were indeed post-accident income that was deductible from any IRB that might otherwise have been payable to Ms. Cariati.

Appeals of arbitrators’ decisions are limited to errors of law, and I find no reason to disturb the Arbitrator’s factual finding, given that he had evidence in the form of a November 28, 2016 letter written by Ms. Cariati’s husband, who ran and controlled the family business:³

To Whom It May Concern,

Mihaela Cariati has been on leave of absence from her position as president of my company due to the accident that occurred in march (sic) 2014. She is currently receiving monetary payment as illustrated in her income filed T4 statements from my company for the sole purpose of having some money on hand when she requires. As has been reported prior from our accountant she used to earn 3,500 a month before the accident.

Respectfully

Antonio Cariati

[Emphasis mine]

The Arbitrator made this ruling:

I agree that in the present context the logic of Bapoo should be followed i.e., just as moneys withheld by a third party and remitted directly to the Canada revenue agency could be interpreted as “received” by the taxpayer, in the present context, the word “received” should be interpreted broadly to include the funds transferred for the benefit of the applicant, from the company to the Applicant’s service provider.⁴ [Emphasis mine]

He thus determined the funds had been “transferred for the benefit of the applicant” (thereby allowing him to apply the exception in Bapoo). In fact, the letter even suggests the moneys were accessible by the Appellant herself.⁵

Therefore, I find no error in law in the Arbitrator’s decision that the funds allotted to Maria amounted to post-accident income that could be deductible from the Appellant’s IRB.

(iii) Did the arbitrator err in law in finding that monies paid to the third-party service provider as ‘income’ would reduce the Appellant’s IRB to nil?

I have already determined that the Arbitrator made no error in law in deducting moneys allotted to a third-party service provider as post–accident income. The Arbitrator also determined that the deduction of the post-accident income would reduce the IRB to nil. This was another finding of fact.

In the present case, the Arbitrator based his determination on the vive voce evidence of the Appellant’s own accounting expert witness who testified the IRB that would have been received by the Appellant would be “negated” if the amounts received by the third-party service provider were considered “income.”⁶ The Arbitrator accepted this evidence and dismissed the claim for IRB accordingly.⁷

Therefore I find no error in law in the Arbitrator’s determination of the quantum of IRB.

B. The Attendant Care Claim

(i) Did the Arbitrator err in law by determining that Ms. Cariati was not entitled to the attendant care benefits from March 5, 2014 to March 5, 2016?

The Arbitrator reasoned that for Ms. Cariati to be entitled to attendant care, she had to prove that she “incurred” the attendant care expenses as defined under section 3(7)(e) of the SABs.

(e) subject to subsection (8), an expense in respect of goods or services referred to in this Regulation is not incurred by an insured person unless,

(i) the insured person has received the goods or services to which the expense relates,

(ii) the insured person has paid the expense, has promised to pay the expense or is otherwise legally obligated to pay the expense, and

(iii) the person who provided the goods or services,

(A) did so in the course of the employment, occupation or profession in which he or she would ordinarily have been engaged, but for the accident, or

(B) sustained an economic loss as a result of providing the goods or services to the insured person;

In the present case, the Arbitrator had the uncontroverted evidence that Maria, one of the Appellant’s service providers (the others being the security guards at the condominium), had been Ms. Cariati’s housekeeper for years before the accident. Her function had always been to perform housekeeping for the Cariati household. The security guards had always previously acted as security guards.

I do not accept the Appellant’s argument that the Arbitrator erred in law by reading in a requirement not in the SABs itself. The goods and services of Section 3(7)(e) refer to attendant care services, and any provider of such services must do so “… in the course of the employment, occupation, or profession in which he or she would ordinarily have been engaged, but for the accident …”

In the present case, the Arbitrator applied his factual findings and considered the decisions of Josey v. Primmum,⁸ and Shawnoo v. Certas.⁹ He determined that neither Maria nor the security guards had provided services to the Appellant “… ín the course of the employment, occupation, or profession in which he or she would ordinarily have been engaged, but for the accident.”¹⁰

He thus determined Ms. Cariati had failed to satisfy the criteria set out in the SABs. I find no error in the Arbitrator’s factual findings and see no reason to disturb his conclusion.

(ii) Did the Arbitrator err in law in denying the Appellant’s claims for an attendant care assessment and a follow-up attendant care assessment?

The Arbitrator denied these claims, applying the following analysis:

As explained above, the Applicant has not met the threshold requirements of the Schedule so as to entitle her to make a claim for attendant care benefits. Attendant care assessments would therefore be pointless.

The claims for a further attendant care assessment and a follow-up attendant care assessment are therefore denied.¹¹ [Emphasis mine]

Here, the Arbitrator erred in law. The test was not whether the Applicant met a threshold test for entitlement to attendant care (decided by an arbitrator at a hearing), but whether the fees were reasonable and necessary as set out at 25(4) of the SABs:

25(4). Reasonable fees charged by an occupational therapist or a registered nurse for preparing an assessment of attendant care needs under section 42, including any assessment or examination necessary for that purpose. [emphasis mine]

The Arbitrator also seemed to categorize the examinations as “further” assessments, suggesting they had not yet occurred at the time of the Arbitration, and were thus pointless because of his threshold determination, but he could not make this finding without ignoring the assessments filed at Tab 3 of section A of the Arbitration Appeal Brief, which demonstrated the assessments had indeed taken place. This, too, would amount to an error of law.

I am therefore allowing this part of the Appellant’s appeal.

(iii) Did the Arbitrator err in law in denying the Appellant’s claim for a speech language assessment?

In this regard, the Arbitrator considered the testimony of two conflicting witnesses concerning speech difficulties the Appellant might have had. He made a factual determination to prefer the testimony of one witness over another, and I find no error of law in his determination.

(iv) Did the Arbitrator err in law in denying the Appellant’s claim for a special award?

The Arbitrator considered the evidence and determined that a special award was not warranted in the present case. This was a determination based on the facts before him. Nothing in the factual determinations he made leading to this conclusion convinces me he committed an error of law.

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.

Edward Lee Director’s Delegate

October 12, 2018

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Page xx of decision
3. 3Tab 146 of Arbitration Appeal Brief
4. 4Page 11 of Decision of Smith
5. 5In Garic and Markel Insurance Company of Canada (Appeal P10-00003, May 9, 2012), accessibility of the funds in question was considered a factor in determining if moneys paid amounted to post-accident income
6. 6Transcript of proceedings, page 103 testimony of Mr. Wallach
7. 7Page 16 of decision
8. 8[2014] O.F.S.C.D. No. 241
9. 9[2014] O.J. 6213
10. 10Page 21 of Decision
11. 11Page 30 of Decision