Citation: Baranov vs. Aviva General Insurance, 2020 ONLAT 19-011094/AABS

Released Date: 10/14/2020

In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8., in relation to statutory accident benefits.

Between:

Michael Baranov

Applicant

and

Aviva General Insurance

Respondent

DECISION AND ORDER

ADJUDICATOR: Avril A. Farlam

APPEARANCES:

For the Applicant: Cary N. Schneider, Counsel

For the Respondent: Aryeh Samuel, Counsel

HEARD: By Way of Written Submissions

REASONS FOR DECISION AND ORDER

OVERVIEW

1Michael Baranov (“applicant”) was involved in an automobile accident on February 7, 2019 (“accident”) and sought benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (the ''Schedule'').¹ The applicant was 27 years old at the time of the accident.

2Aviva General Insurance (“respondent”) denied income replacement benefits (“IRB”) and other benefits. The applicant disagreed with the denials and submitted an application to the Licence Appeal Tribunal – Automobile Accident Benefits Service (Tribunal) for dispute resolution.

ISSUES

3The issues to be decided are:

i. Is the applicant entitled to receive a weekly IRB, quantum in dispute, for the period of February 14, 2019 to date and ongoing?

ii. Is the applicant entitled to a medical benefit in the amount of $1,797.34 ($4,093.09 less the partially approved amount of $2,295.75) for psychological treatment recommended by Dr. Larisa Levitas in a treatment plan (OCF-18) submitted on August 7, 2019, and denied on August 28, 2019?

iii. Is the applicant entitled to payment for the cost of examination in the amount of $2,500.00 for an accounting report recommended by Clarity CPA in a treatment plan (OCF-18) submitted on June 12, 2019 and denied on July 30, 2019?

iv. Is the applicant entitled to a medical benefit in the amount of $2,044.50 ($3,641.00 less the partially approved amount of $1,596.50) for psychological treatment recommended by Dr. Singh in a treatment plan (OCF-18) submitted on October 4, 2019, and denied on October 4, 2019?

v. Is the applicant entitled to a medical benefit in the amount of $4,279.05 for physical therapy treatment recommended by Dr. Hook in a treatment plan (OCF-18) submitted on October 2, 2019, and denied on November 25, 2019?²

vi. Is the applicant entitled to a medical benefit in the amount of $3,385.60 for physiotherapy treatment recommended by Dr. Babaloui in a treatment plan (OCF-18) submitted on June 26, 2019, and denied on November 25, 2019?³

vii. Is the applicant entitled to an award under Ontario Regulation 664 because the respondent unreasonably withheld or delayed the payment of benefits?

viii. Is the applicant entitled to interest on any overdue payment of benefits?

RESULT

4I find that the applicant is not entitled to IRB as claimed by the applicant but is entitled to the amount of IRB calculated by the respondent together with interest under s. 51 on any unpaid amounts. I find that the applicant is not entitled to the balance of the two disputed treatment plans in issues 3(ii) and 3(iv). No award is made. Issue iii was resolved by payment prior to the hearing and is not before me. Issues v and vi were withdrawn by the applicant prior to the hearing and are not before me. The applicant’s requests for costs was not an issue referred to me and will not be determined by me.

LAW

5Section 5(1)2 of the Schedule provides that an insured person can be eligible for IRB if they were self-employed at the time of the accident and they suffer, as a result of and within 104 weeks after the accident, a substantial inability to perform the essential tasks of their self-employment.

6Section 4(3) of the Schedule outlines how IRB is calculated if the claimant was a self-employed person at the time of the accident. Section 4(3) provides that IRB is calculated on income from the most recent completed taxation year. This section provides that the weekly income or loss from self-employment at the time of the accident is 1/52 of the amount of the person’s income or loss from the business for the last completed taxation year.

7Section 7 of the Schedule outlines how the amount of an insured’s weekly IRB is calculated. Section 7 (2) provides that the “weekly base amount” of an insured is determined to be 70 per cent of the amount, if any, by which the insured’s gross weekly employment income and weekly income from self-employment exceeds the amount of the insured’s weekly loss from self-employment, if the weekly IRB is for one of the first 104 weeks of disability, or the greater of this calculated amount and $185.00 after the first 104 weeks of disability.

8Sections 14, 15 and 16 of the Schedule provide that an insurer is only liable to pay for medical and rehabilitation expenses that are reasonable and necessary as a result of the accident.

9The onus is on the applicant to establish, on a balance of probabilities, entitlement and quantum of IRB, and also that any proposed treatment plan he or she seeks is reasonable and necessary.⁴

ANALYSIS

Is the Applicant Entitled to IRB and, if so, in What Amount?

10Both parties agree that the applicant is entitled to IRB. However, the quantum of the IRB is in dispute because each party has calculated it differently.

Applicant’s Calculation of Pre-Accident Income

11The applicant based his calculation of income on the 52 weeks before the accident because he designated the 52-week period prior to the accident as the period to be used to calculate his IRB pursuant to s. 4(3) of the Schedule.

12This is confirmed by the applicant’s accountant, Clarity CPA Forensic Services (“Clarity”), in its June 6, 2019 report. Using this method of calculation, Clarity found the total IRB payable after the accident and to June 6, 2019 to be $2,533.47 plus $46.57 in interest for a total of $2,580.04 and $192.45 per week thereafter, should the applicant be unable to return to work.

13In a second report dated May 22, 2020, Clarity provided an updated calculation from June 7, 2019 to May 14, 2020 because the applicant continued to work in a limited capacity during this period and also worked briefly as an employee for The Auto Provider between November 2, 2019 and February 7, 2020. After February 7, 2020, the applicant did not work in any capacity.

Respondent’s Calculation of Pre-Accident Income

14The respondent based its calculation of applicant’s income on the last fiscal year of business prior to the accident.

15The respondent determined that the applicant met the definition of a self-employed person in s. 3(1) of the Schedule at the time of the accident, acknowledged that a self-employed person can designate the last 52 weeks or the last fiscal year (if one has been completed) prior to the accident and also acknowledged that the applicant had indicated the last 52 weeks on his OCF-1. However, the respondent calculated the applicant’s income using the last fiscal year completed prior to the accident because it requested but was not provided with invoices to support the claimant’s self-employment income in the last 52 weeks pre-accident. This is confirmed in the respondent’s May 27, 2020 report from in-house accountant, Nyrie Telemi.

Applicant’s Objection to the Respondent’s Accounting Report

16The applicant objects to the respondent relying on its expert witness accountant to determine IRB because it failed to comply with Rule 10.2 of the Licence Appeal Tribunal, Animal Care Review Board and Fire Safety Commission Common Rules of Practice and Procedure, October 2, 2017 as amended. The applicant submits that the report was never produced and it is impossible for the expert to certify that opinion satisfies s. 10.2 (b) (i) as the opinion cannot be “fair, objective and non-partisan” when the expert is employed by the respondent.

17Although the applicant submits that the respondent’s report was never produced, he also states in his submissions that the respondent on May 27, 2020 produced an internal accounting report. The internal accounting report mentioned in the applicant’s submissions is the Nyrie Telemi report and therefore I find that the respondent’s report was indeed produced to the applicant. Given that the Tribunal’s case conference Order made February 13, 2020 (“Order”) required productions by April 6, 2020, if the applicant objected to the timeliness of this production, he could have brought a motion to deal with that issue prior to this hearing.

18The Order required the respondent to produce the résumé of its “internal accountant” by April 6, 2020 and also allowed expert evidence to be submitted by reports. The Order does not identify the respondent’s “internal accountant”. While Nyrie Telemi is a CPA, the respondent identifies this individual in its submissions as the “member of Aviva’s in-house accounting team” who calculated the IRB as set out in the May 27, 2020 report and not as an “expert witness”. Therefore, I find that Nyrie Telemi, even though a CPA, is relied on in this hearing as a fact witness, not as an expert witness by the respondent. Nyrie Telemi’s report is admitted as evidence.

Applicant’s Lack of Records of Self-Employment Income

19Given that the respondent concedes that the applicant was self-employed and could and in fact did designate on his OCF-1 that his income should be calculated based on the last 52 weeks pre-accident, the question to be determined by me is whether the applicant has proven the quantum of his self-employment income on which his accountant’s calculation is based.

20Based on the evidence before me, I find that the applicant has not proven on a balance of probabilities the amount of his self-employment income on which his accountant’s calculation is based.

21The reports from Clarity filed at the hearing do not contain the supporting documentation referred to in the reports. Clarity’s June, 2019 report indicates at the time of the accident the applicant was self-employed as a sole proprietor, not registered for HST, providing labour to Royal Line Renovations and sales services to North Guard Windows and Doors and, from March 1 to May 1, 2018, was an employee at Volvo. Clarity reports “The Claimant represented to us that he does not keep accounting books and records for his self-employment. Mr. Baranov deposits all earnings (cash or cheque) and makes all payments for expenses to/from his bank account. These transactions were summarized for his tax year end using his bank statements. In this regard, we have used his bank statements to tabulate revenues and expenses which were consistent with what was filed in his 2018 T1, T2125 form.” Appendix 1 listed the documents relied on, specifically the applicant’s 2018 income tax return (filed, not assessed), T4 and OCF-2 from Volvo for 2018 and bank statements for the applicant’s chequing and savings accounts from January 1, 2018 to June 12, 2018. Appendix 4 notes “The Claimant represented to us that all income earned from self-employment was paid to him in cash, and subsequently deposited into his chequing account.”

22None of the Appendix 1 documents were attached to the report filed by the applicant at the hearing. Clarity’s report dated May 22, 2020 filed by the applicant at the hearing also does not contain attachments referred to. This report also relies on information provided to Clarity by the applicant.

23Further, in the June 2019 report, Clarity appears to have calculated the applicant’s 2018 self-employment income based solely on his bank statements even though the statements listed in Appendix 1 cover only part of 2018.

24The applicant has not filed purchase orders, invoices, any sales summary or time records relating to the services provided as a self-employed contractor. Clarity appears to have accepted and relied on what it was told by the applicant.

25I find that it is not credible or reliable financial information, that the applicant’s customers, which appear to be businesses in their own right, would always pay him without any documentation, often in cash and that all of that cash would be deposited into the applicant’s bank accounts. No evidence was put forward from the applicant’s customers to confirm this method of dealing or to corroborate how much his customers paid him in the 52 weeks preceding the accident. I give Clarity’s reports little weight because they are based entirely on information provided by the applicant which is uncorroborated and not reliable because Clarity seems to have accepted at face value that the applicant was getting all this income from businesses without issuing invoices and getting payment in cash or cheques that were deposited to his bank account.

26In addition, the applicant has never provided any invoices or sales summaries to the respondent as requested on multiple occasions. On April 24, 2019, the respondent requested from the applicant under s. 33 of the Schedule his 2018 income tax return, Statement of Business Activities and Notice of Assessment from Canada Revenue Agency (“CRA”), monthly summary of revenues for the last 52 weeks prior to the accident starting February 2018 (ie. invoices, sales summary, bank statements). Section 33 requires that information requested must be provided within 10 days.

27On April 30, 2019, the respondent acknowledged receipt of applicant’s T4 and additional tax information and bank statements. The respondent made another s. 33 request for the applicant’s 2018 income tax return including Statement of Business Activities and Notice of Assessment as these were not included in the additional tax information sent. It repeated the request for a monthly summary of revenues for the last 52 weeks prior to the accident (ie. invoices, sales summary, bank statements) and a summary of post-accident revenues earned up to the present (ie. invoices, sales summary, bank statements).

28On May 23, 2019, the respondent notified the applicant that his IRB would be suspended until the requests for information have been complied with or a reasonable explanation for the delay provided. On June 13, 2019, Clarity sent an email to the respondent forwarding its report with all supporting documentation.

29On July 30, 2019, the respondent acknowledged receipt of Clarity’s report received June 13, 2019 and again requested the applicant’s 2018 income tax return, including Statement of Business Activities and Notice of Assessment and a monthly summary of income earned in the last 52 weeks commencing February 2018 (ie. invoices, sales summary, bank statements) and requested an explanation of all deposits to the applicant’s bank accounts from Ruscan Doors.

30In an Explanation of Benefits dated August 2, 2019 the respondent repeated its request for information made in its April 24, April 30, May 23 and July 30 letters. The respondent also requested bank statements beyond June 5, 2019 and details of any income earned beyond June 5, 2019. In addition, it advised that it disagreed with Clarity’s calculation because there was other income deposited to the applicant’s bank account in 2019 from Ruscan Doors ignored by Clarity and therefore post-accident income was understated. The respondent put forward a preliminary calculation of $125.40 per week.

31The respondent issued payment to the applicant from February 15, 2019 to June 5, 2019.

32In an EOB dated August 28, 2019, the respondent notified the applicant that his IRB is suspended until the requests for information have been complied with or a reasonable explanation for the delay is provided and asked for an explanation of certain deposits to the applicant’s bank accounts from Ruscan Doors, bank statements after June 5, 2019 and details of any income earned after June 5, 2019.

33In an EOB dated May 28, 2020, the respondent acknowledged receipt on May 25, 2020 of the applicant’s 2019 income tax return and Statement of Business Affairs, post-accident bank statements up to May 14, 2020, pay statements from The Auto Providers from November 1, 2019 to February 15, 2020 and Clarity reports. Payment of $6,727.30 was approved together with a bi-weekly payment of $351.34 up to 104 weeks post-accident provided the applicant remains eligible for IRB.

34In his submissions the applicant concedes that he is a “young man who earned a relatively modest income and did not keep “invoices” of his e-transfer transactions of denominations of $5.00, etc.” The applicant further submits that the produced bank statements are reliable sources of information and were used to determine the applicant’s pre-accident income. The applicant also argues in reply that other adjudicators⁵ have found that a self-employed applicant is not held to the standard of precise determination of their income but rather the goal is to find a reasonable basis for quantifying the entitlement. Lastly, the applicant submits that delay in responding to Clarity’s June 2019 report puts the respondent in non-compliance with s. 36 of the Schedule.

35I disagree with the applicant’s position. There is no basis for a s. 36 argument in respect of an accounting report. Section 36(5) provides that the applicant must comply with the s. 33 request before the insurer’s ten days to either pay the benefit or give notice under s. 33(4)(b). In other words, if the applicant never complied, which the evidence indicates, then the insurer’s ten days never started.

36While Clarity chose to rely on the bank statements as the only documentation, I find that in this particular case for purposes of establishing income at this hearing for IRB calculation, on a balance of probabilities, the bank statements, without more documentation, are not sufficient. Further, although the Morabito case is not binding on me, I have considered it and decline to follow it. Here, the applicant has no documentation to support his self-employment income other than his bank statements and did put forward any evidence from his customers to substantiate his gross income even though he only had two customers pre-accident.

37The onus of proof of income is on the applicant on a balance of probabilities. I find that he has failed to meet it. As a result, the applicant is not entitled to the quantum of IRB as he calculated it but is entitled to the quantum calculated by the respondent.

Is the Applicant entitled to $2,500.00 for the Cost of an Accounting Report?

38Both parties submit that this amount was paid with interest prior to the hearing. I therefore find this issue was resolved prior to the hearing and is not before me.

39The applicant in his submissions claims a special award based, in part, on the cost of the June 2019 accounting report. This and the applicant’s other bases to claim an award are dealt with below.

Is the Applicant entitled to $1,797.34 being the Balance of a Psychological Treatment Plan recommended by Ms. Levitas (“first treatment plan”) and $2,044.50 being the Balance of a Psychological Treatment Plan recommended by Dr. Singh (“second treatment plan”)?

40The applicant claims the full cost of both treatment plans which would be the balances of $1,797.34 for the Levitas treatment plan and $2,044.50 for the Dr. Singh treatment plan.

41The respondent has partially approved these two treatment plans but submits that the unapproved balances of the treatment plans are not reasonable and necessary.

42The partial approval for both disputed treatment plans is primarily because the fees proposed for 12 sessions of counselling in each plan by Larisa Levitas, a psychotherapist, is $224.42 per hour. The respondent determined that although Ms. Levitas is an unregulated practitioner and has a maximum hourly rate of $58.19 plus tax under the Professional Services Guideline (“Guideline”), out of good faith and because she has the same education as a physiotherapist (Master’s degree) and that the respondent would pay $99.75 per hour for treatment.

43The applicant argues that Ms. Levitas, highly accomplished and licensed psychotherapist with a Master’s degree in psychology and a specialty in cognitive behavioural therapy is entitled to a higher hourly rate and the applicant is therefore entitled to the balance of the cost of the Levitas treatment plan.

44It is clear from the case law cited that psychotherapists, because they are not listed in the Guideline, are not automatically entitled to a higher rate than $58.19 per hour but have been awarded a higher amount by the Tribunal on at least one occasion.⁶ However, in this case, I decline to follow the J. V. case because it is factually distinct from this case. Unlike the J.V. case, the two proposed treatment plans make no reference to cognitive behavioural therapy and instead specifically propose only psychotherapy treatment. Further, unlike the J.V. case, in this case the psychotherapy treatment proposed is not aligned with a service also provided by a psychologist.

45The proposed rate for Ms. Levitas is substantially above the Guideline rate for even a fully qualified psychologist, specifically some one-and-one-half times the maximum hourly rate for a psychologist which is not reasonable. As a result, I find that a reasonable rate for the psychotherapist in both disputed treatment plans is $99.75 per hour already approved by the respondent because of her educational level and experience.

46The respondent also submits that the proposed documentation support activity is not reasonable and necessary in the second treatment plan.

47I agree. This does not appear to be a reasonable and necessary cost given the injuries the applicant has sustained from the accident. Accordingly, I find that the applicant is not entitled to $200.00 being the documentation support activity cost in the second treatment plan.

Award

48Section 10 of Ontario Regulation 664 provides that a special award may be granted if the respondent unreasonably withheld or delayed payments. I find that there was no payment unreasonably withheld or delayed. It was the applicant’s lack of self-employment income records that led to delays in calculation of the IRB. The applicant also argues that despite knowing that the applicant suffers a disability and is a “fragile individual both physically and mentally”, the respondent has taken a high-handed approach to the overall adjusting of the case which has caused the applicant anxiety and inappropriately denied and delayed payment of his benefits. The applicant also argues that the respondent “targeted” him and treated him in bad faith.

49I disagree. It was the applicant’s lack of self-employment income records that led to delays in calculation of the IRB. Again, it was not unreasonable for the respondent to request further information and documentation from the applicant, particularly with respect to his self-employment income.

50Although the applicant argues that the respondent has treated him in bad faith, denial of an applicant’s claim is not, in itself an act of bad faith, even if the claim later succeeds. Here, the respondent disagreed with the applicants claims for the reasons it expressed. On the evidence before me, I do not find that the respondent acted in bad faith or engaged in any conduct that would warrant sanction by an award.

51The applicant also argues that the respondent’s conduct generally breaches Ontario Regulation 7/00, Unfair or Deceptive Acts or Practices. On the evidence before me, I see no basis to find that the respondent breached this Regulation.

52For these reasons, there is no award.

Interest

53The applicant requests interest. No interest is payable on IRB except as set out below. On the evidence before me, no payments went overdue because the respondent was unable to calculate the applicant’s IRB due to lack of self-employment income records and, once able to calculate it, paid the applicant.

54The applicant submitted in reply that “as of July 21, 2020 Mr. Baranov told his counsel that he has not received a cheque for $6,727.30.” This submission is not supported by any evidence. However, given the suggestion that some IRB as calculated by the respondent may be unpaid, I order that the applicant is entitled to the amount of IRB calculated by the respondent together with interest under s. 51 on any unpaid amounts to date.

55The applicant is not entitled to $200.00 for the second treatment plan.

Costs Requested by Applicant

56The applicant requests cost in the amount of $2,000.00 because the applicant “has had to spend an inordinate amount of time to fight the insurer every step of the way to advance his rights under the Schedule”.

57This issue was not referred to me by the Tribunal’s case conference Order and will not be determined by me.

58However, had the request for costs been referred to me, I would not have awarded any costs to the applicant as I am not satisfied that the applicant’s conduct has risen to the level of acting unreasonably, frivolously, vexatiously or in bad faith as required by Rule 19 of the Safety, Licencing Appeals & Standards Tribunal Ontario Common Rules of Practice & Procedure, October 2, 2017.

Length of Submissions of Both Parties

59The respondent requested leave to amend the case conference Order to provide it with the opportunity to provide more than 15 pages of submissions in light of the unanticipated need to respond to the applicant’s submissions which were more than 15 pages.

60The Tribunal’s case conference Order made February 6, 2020, made on consent of both parties, provided that the submissions of both parties would not exceed 15 pages. Contrary to the Tribunal’s case conference Order, the applicant submitted 18 pages and the respondent submitted 17 pages.

61The length of both submissions are in breach of the Tribunal’s Order. Neither party brought a motion seeking an Order to increase the length of submissions prior to commencement of the hearing although the respondent sought leave at this hearing.

62While the breach of the Tribunal’s Order is always a concern, in this particular case, I am allowing both submissions. As a result, an amendment of the case conference Order is not necessary.

ORDER

63I find that the applicant is not entitled to IRB as claimed by the applicant but is entitled to the amount of IRB calculated by the respondent together with interest under s. 51 on any unpaid amounts. I find that the applicant is not entitled to the balance of the two disputed treatment plans. No award is made. Issue iii was resolved by payment prior to the hearing and was not decided by me. Issues v and vi were withdrawn by the applicant prior to the hearing and were not decided by me. The applicant’s requests for costs was not an issue referred to me and was not decided by me.

Footnotes

1. 1O.Reg. 34/10.
2. 2Issue v. was withdrawn by applicant in a Notice of Withdrawal (noted to be a Partial Withdrawal on a Without Prejudice Basis) signed June 29, 2020.
3. 3Issue vi. was withdrawn by applicant in a Notice of Withdrawal (noted to be a Partial Withdrawal on a Without Prejudice Basis) signed June 29, 2020.
4. 4Scarlett v. Belair, 2015 ONSC 3635 (Div. Crt.)
5. 5See for example: Morabito v. Liberty Mutual Insurance Company, FSCO Appeal No. P03-00008, [2004] O.F.S.C.D. No. 145, 2004 CarswellOnt 6521 (Director’s Delegate Makepeace)
6. 6J.V. v. Intact Insurance Company, 2019 CanLII 130366 (ON LAT) Reconsideration.