A PARTIAL (BUT STILL IMPARTIAL) REVIEW OF RECENT FSCO CASELAW Schedule

A PARTIAL (BUT STILL IMPARTIAL) REVIEW OF RECENT FSCO CASELAW
Please note: what follows is not meant to be either authoritative or complete. Many recent
decisions are not mentioned at all and those that are may be subject to appeal or judicial review.
Note also that the cases referred to deal only with the current Schedule.
The definition of accident
Section 2(1) of the current Schedule defines “accident” to mean “an incident in which the use
or operation of an automobile directly causes an impairment...”. This is, of course, different
than the definition contained in the earlier Schedules which allowed an incident involving the
use or operation of an automobile to be either the direct or the indirect cause of the impairment.
As pointed out by the Court of Appeal in Chisholm v. Liberty Mutual Group 60 O.R. (3d) 776,
this change means that the indirect causation test accepted by the Supreme Court of Canada in
Amos v. Insurance Corp. of British Columbia [1995] 3 S.C.R. 405, CanLII 66 can no longer be
relied upon. The new direct causation test, according to Chisholm, requires “an unbroken chain
of events” with no “intervening act, independent of the vehicle’s use or operation”. See also the
Court of Appeal’s decision in Greenhalgh v. ING 72 O.R. (3d) 338.
Still, the purpose test enunciated in Amos – “did the accident result from the ordinary and wellknown activities to which automobiles are put? - maintains its importance under the new
definition. As stated by Mr. Justice Laskin in Chisholm: “An intervening act may not absolve an
insurer of liability for no-fault benefits if it can fairly be considered a normal incident of the risk
created by the use or operation of the car - if it is ‘part of the ordinary course of things.’”
This new requirement for an “unbroken chain of events”, unfolding in “the ordinary course of
things”, is well illustrated by the decision in Belair and Seale (P02-00005, January 28, 2003)
where the Director’s Delegate’s wrote:
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When her van slid down the hill, [the claimant] followed it, again doing the ordinary
thing. She did not, as her counsel put it, decide to get a coffee first, then fall on the way.
She walked down the road because the sidewalk was impassable. She fell because the
road was icy, the same reason she had lost control of her van. There was “a perfect chain”
between the two events, in my view. Putting it another way, the entire sequence of events
was once incident. This distinguishes Mrs. Seale’s case from the assault cases, and the
cases involving unusual hazards unrelated to use or operation of an automobile. Unlike in
the assault cases, I find that use or operation of an automobile was the dominant feature
of the incident.
For a good illustration of how an assault may constitute an intervening event that breaks the
chain of causation, see Baljit S. Kumar and Coachman Insurance (P01-00026, August 9, 2002),
upheld on judicial review, leave to appeal denied by both the Court of Appeal and the Supreme
Court. On the other hand, a claimant who is intentionally struck by an automobile or the
survivors of a person who intentionally uses an automobile to kill himself may still, despite these
plainly unordinary uses of automobiles, be able satisfy the new definition of accident: see the
Court of Appeal’s decision in Vijeyekumar v. State Farm (1999) 44 O.R. (3d) 545.
The “without a valid driver’s licence” exclusion
One of the exclusions contained in the earlier Schedules stated that a driver was not entitled to
IRBs and other weekly benefits if he/she “was not authorized by law to drive the automobile” at
the time of the accident. The exclusion contained in the current Schedule states that a driver is
not entitled to educational, visitor and housekeeping expenses, as well as IRBs and non-earner
benefits, if he/she did not have “a valid driver’s licence”.
This new focus on the validity of the driver’s licence initially generated questions about the
eligibility of drivers who had “valid” licences but who, at the time of the accident, were
operating their vehicles in violation of conditions stipulated in those licences. Some FSCO
Arbitrators held that the new exclusion was still effective against such drivers: see, for example,
King and Dominion (FSCO A02-001163, August 27, 2003). However, a Superior Court Judge
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reached the opposite conclusion in Gipson and Pilot 2005 CanLII 1495. He relied on both the
change in wording in the Schedule and on Ontario Regulation 304/90 under the Highway Traffic
Act which states that a ‘“valid driver’s licence” means a driver’s licence that is not expired,
cancelled or under suspension”. The Court decision was followed by the Director of Arbitrations
in Manzanares and Pembridge (P03-00023, April 11, 2005).
But can a driver whose licence was suspended or expired still escape the exclusion by proving
that he/she was unaware of the suspension or expiry? No, not if there was actual or effective
compliance with the notice of suspension requirements under the Highway Traffic – see Bodo
and Royal Insurance (OIC A96-001102, October 23, 1997). But contra, yes, if the driver took all
reasonable steps to avoid the expiration or suspension – see Giordano and Royal and
SunAlliance (FSCO A05-001174, April 12, 2006). The pending appeal of the Giordano decision
will likely resolve the conflict between these two decisions. Either way, however, it should be
noted that a claimant can avoid the exclusion by obtaining an order for relief from forfeiture
under section 129 of the Insurance Act in the Superior Court – see, for example, Spezzano v.
Spezzano (2002) 60 O.R. (3d) 118. Arbitrators have no jurisdiction to grant this relief.
The insurer’s duties to inform: Smith & Co-operators
The fall-out from the Supreme Court of Canada’s decision in Smith & Co-operators General
Insurance Co. [2002] 2 S.C.R. 129 was bound to be substantial. The Court did more than just
decide that the insurer had not complied with one of the notice provisions of one of the three
SABS régimes in effect since 1990. The Court also affirmed that a main objective of automobile
insurance law is consumer protection and it declared that when an insurer is required to provide
information to an insured person, it must do so using “straightforward and clear language,
directed towards an unsophisticated person.”
The issue in Smith was the insurer’s obligation to inform the insured person “of the procedure for
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resolving disputes” following a refusal of benefits. The Court held that the insurer was required
to describe “the most important points of the process, such as the right to seek mediation,
the right to arbitrate or litigate if mediation fails and the relevant time limits that govern
the entire process.” Since this information had not been provided, no valid refusal of benefits
had been issued and since the limitation period under the Insurance Act could only be triggered
by a valid refusal, the claim was not out of time. As subsequent decisions applying Smith have
shown, this is not the only obligation to inform which the legislation imposes on insurers.
The decision in R.B. and Dominion (FSCO A00-000447, May 17, 2002) dealt with the insurer’s
obligation to inform the insured person of the purpose of an insurer’s medical examination
under section 42 of the Schedule.
In Antony and RBC (FSCO A02-000217, March 12, 2003), upheld on this point in RBC and
Antony (Appeal P03-00023, July 22, 2004), the Arbitrator applied Smith to the insurer’s
obligation under section 32(2)(d) of the Schedule to provide the insured person with
“information on any possible elections relating to income replacement, non-earner and
caregiver benefits”. The Arbitrator held that these words should be interpreted to impose upon
the insurer the obligation to provide information about how the benefit which pays the most
money might not be the benefit which continues for the longest period.
A few months later, in Horvath and Allstate (FSCO A02-000482, June 9, 2003), the issue was
whether the insurer’s obligation under section 32(2)(c) of the Schedule to provide “information
to assist the person in applying for benefits” covered information about how the insured
person was required by section 32(3) to submit an application for benefits within thirty days of
receiving the application form from the insurer. The Arbitrator held that information about this
time limit must include information about the potential consequences of failing to either comply
with it or to provide a reasonable explanation for non-compliance.
The insurer’s obligation to inform the insured person about another important time limit was
considered in the case of Najafi Far and Echelon (FSCO A03-001122, September 14, 2004).
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Section 32(1) of the Schedule requires the insured person to notify the insurer of his/her
“intention to apply for a benefit” within either 30 or 7 days of the accident, depending on
whether the accident happened before of after October 1, 2003. The Arbitrator agreed that an
insurer could not be required to inform an insured person of this time limit without itself first
being informed of the accident. However, he held that “the goal of consumer protection is best
promoted by requiring insurers who have been notified of accidents to promptly inform the
insured persons involved in those accidents that there is a time limit for making claims for
accident benefits and that there is a potential consequence for not complying with that time limit
unless a reasonable explanation is provided.”
Arbitrators have invoked Smith in determining whether the insured person had a reasonable
explanation for failing to comply with a time limit imposed by Part X of the Schedule, as
permitted by section 32, see Dicerbo and Citadel (FSCO A04-000594, May 30, 2005), and in
determining the size of the special award for unreasonably withholding benefits, see Michalski
and Wawanesa (FSCO A03-001363, December 13, 2005).
Finally, Smith has also been applied by the Superior Court of Justice in determining whether the
insurer had provided the insured person with the information required by the Settlement
Regulation. In Navage v. Pilot Insurance Co., 2004 CanLII 15034, Mr. Justice Lederman
observed that “a voluminous and complicated Statutory Accident Benefits Schedule” would not
permit an unsophisticated person “to make a meaningful comparison between a proposed
settlement payment and the value of the statutory accident benefits”. As Arbitrators have done
under the Schedule, the judge held that the fact that such a person might be represented by
counsel “does not alleviate the insurer of fully complying with the informational components of
the Settlement Regulation”: see C.R. and Lombard (FSCO A02-001057, December 22, 2003).
Causation
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There are two kinds of causation issues in the SABS context. The first arises out of the definition
of accident which, as already discussed, now requires that the use or operation of an automobile
be the direct cause of an impairment. The second arises out of the requirement that the
impairment giving rise to entitlement to benefits be the result of the accident. In addressing the
second issue, FSCO Arbitrators apply the well-established principles governing causation in tort
law as enunciated by the Supreme Court of Canada in Athey v. Leonati (1996), 140 D.L.R. (4th)
235. The question is not, therefore, whether the accident was the direct cause of the impairment
but whether the accident materially or significantly contributed to the impairment.
A Director’s Delegate has held that any adverse complications resulting from the treatment or
assessment of accident-related impairments are compensable under the Schedule unless the
insurer establishes that an “intervening error on the part of a health professional is of a nature
and degree that [it] relieves [the insurer] from further liability to pay benefits”: see TTC and
Correia (P00-00061, July 16, 2001). Extending that logic, a Director’s Delegate also recently
agreed with the arbitrator’s decision that the claimant’s post-accident drug addiction was a result
of the accident, despite his pre-accident recreational use of drugs: see Belair and McMichael
(P05-00006, March 14, 2006).
Medical and Rehabilitation Benefits
Effective March 1, 2006, DACs have been eliminated. This will obviously alter the procedure for
claiming medical and rehabilitation benefits but there are still no decisions illustrating how.
From an Arbitrator’s point of view, it is also still difficult to say how the Pre-approved
Framework Guidelines for Grade I or II Whiplash Injuries have affected med/rehab claims: see
sections 37.1, 37.2 and 38, in force since October 1, 2003. In Ritorto and Allstate (FSCO A04­
001395, March 3, 2006), currently under appeal, the Arbitrator held that he was only bound to
consider, not follow, these Guidelines. He then rejected the opinion of a doctor who agreed with
the Guidelines about how much treatment was required for the type of injuries sustained because
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the doctor “did not have the opportunity to assess [the claimant’s] pre-existing condition or the
possibility that her symptoms might fall outside... the Guideline’s treatment protocols.”
Eligibility for medical benefits turns on the reasonableness and necessity of the treatment
claimed: see section 14. The Arbitrator’s decision Amoa-Williams and Allstate (FSCO A97­
001864, June 5, 2000) identified the following list of factors for consideration: whether the goal
of returning the claimant to work or his/her pre-accident state are being met; the type of
treatment available in the market; whether treatment complied with accepted professional
protocols; the subjective benefit to the person; whether the treatment helped relieve pain, without
encouraging an inappropriate or indefinite dependency; the cost having regard to professional fee
guidelines and protocols and the cost of comparable services.
In Amoa-Williams, the Arbitrator had found that the claimant was entitled to recover $50 per
hour for kinesiology treatment involving an indeterminate number of patients. In Allstate and
Putter (P00-00068, December 21, 2001), the Director’s Delegate accepted that this general
approach relieves clinics of the need to provide minute-by-minute accounts of the services they
provide to each patient. However, the Director’s Delegate also accepted that due to Mrs. Putter’s
advanced age, frailty and pre-existing conditions, she required more supervision and a longer
period of treatment at an hourly fee of $80 per hour.
Eligibility for rehabilitation benefits also turns on the reasonableness and necessity of the
measures claimed - see section 15 - but in Driver and Traders (P03-00006, November 18, 2003),
the Director’s Delegate explained the difference between medical benefits and rehabilitation:
…. section 14 provides entitlement for treatment of impairment, which is defined as “a
loss or abnormality of a psychological, physiological or anatomical structure or
function.” Entitlement to medical benefits requires proof of impairment, but not proof of
disability. In contrast, s. 15 provides entitlement to rehabilitation “to reduce or eliminate
the effects of any disability resulting from the impairment or to facilitate the insured
person’s reintegration into his or her family, the rest of society and the labour market.”
“Disability” refers to the criteria for entitlement to weekly benefits, but s. 15 is not
limited to reducing or eliminating disability. As noted by the Arbitrator, the first clause of
s. 15(2) provides benefits “to reduce or eliminate the effects of any disability.” Moreover,
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the second clause of s. 15(2) invokes an even broader rehabilitative goal that is not
directly related to disability: “reintegration into his or her family, the rest of society and
the labour market.” The breadth of the rehabilitation measures embraced by s. 15 is
further illustrated by s. 15(4), which states:
(4) In determining whether a measure is reasonable and necessary for the purpose
of subsection (3), the insurer shall consider the insured person's personal and
vocational characteristics.
This indicates that a “one size fits all” approach is not appropriate. Rather,
the inquiry must be tailored to the insured person’s needs.
Income Replacement Benefits (IRBs)
IRBs based on future contracts of employment have been eliminated for accidents which
occurred on or after April 15, 2004: see section 4(2). It should also be noted that a claimant who
had already started to work at the time of the accident cannot not use this category to claim an
IRB rate based on the salary stipulated in his/her contract of employment: see the Court of
Appeal’s decision in Daley v. Economical [2005] O.J. 5516 (December 14, 2005).
If a claimant had just started or returned to work at the time of the accident, his/her IRB may be
significantly higher if he/she was employed rather than self-employed. This is because an
employed claimant’s IRB rate can be based on earnings in either the four weeks prior to the
accident or the 52 weeks prior to the accident, thus permitting the exclusion of the first 48 of the
previous 52 weeks during which the claimant may have had little or no earnings. The selfemployed person’s rate, on the other hand, must be based on one of two 52 week periods, either
the 52 weeks before the accident or the last fiscal year completed before the accident, resulting
in a much lower rate: see section 8. Nevertheless, the Director’s Delegate’s decision in Allstate
and Malik, (P00-00007, July 17, 2000) established that section 62 of the SABS-1996 links profit
and self-employed status. Therefore, a cab driver who relied on earning a profit - fares and tips
exceeding his expenses for rent, gas and car washes – was properly categorized as self-employed
even though he had not worked for much of the pre-accident 52 week period.
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The Pre-approved Framework Guidelines also limit claimants to 12 or 16 weeks of IRBs if
their impairments fall under the Grade I or Grade II Whiplash Guideline: see section 5(2)(d) and
(e). However, in Kieffer and Economical (FSCO 05-000494, May 9, 2006), the Arbitrator
observed that “the scheme is full of exceptions and exemptions”. He went on:
By my reading of the Grade II Whiplash Guideline as a whole (with particular emphasis
upon section 2), a person who suffers a WAD II injury can be excluded from the Grade II
Whiplash Guideline if:
1. 2.
3.
the insured person’s complaints include radicular back symptoms;
the insured person has other significant impairments (distinct from the WAD II)
arising from the same accident; or
the insured person has additional symptoms associated with the WAD II that
require separate treatment from that provided under the Guideline [in this case,
psychological treatment]
The Schedule now permits the insurer to send the claimant a notice of non-compliance with
his/her responsibilities to participate in rehabilitation and seek employment and, ten days
later, to stop paying IRBs until the claimant does comply: see sections 55 and 56. However,
these sections should not be read as codifications of the common law duty to mitigate. In Little
and Aviva (FSCO A04-002278, September 16, 2005), the Arbitrator observed:
...there is no free-standing duty to mitigate in the Schedule. The duty to mitigate as
captured in section 56 of the Schedule does not exist in isolation from the insurer’s
obligations to fund reasonable and necessary measures under sections 14 and 15, as well
as the insured’s obligations to seek rehabilitation under section 55. Indeed, the
obligations are mutual and require the insurer and the insured to identify and utilise
reasonable and necessary measures to return injured persons to the work force as soon as
possible without causing further injury to the insured person.
In the post-104 week period, the question is no longer whether the claimant “suffers a
substantial inability to perform the essential tasks” of his/her pre-accident employment but
whether he/she “is suffering a complete inability to engage in any employment for which ... she
is reasonably suited by education, training or experience”: see sections 4 and 5. The Director’s
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Delegate’s decision in Pembridge and Howden (P02-00031, November 20, 2003) confirmed that
the words “complete inability” create a stricter test of eligibility than the words “substantial
inability”. But do the words “complete inability” mean that a post-104 week claimant must prove
that he/she is incapable of performing all of the tasks of any otherwise reasonably suitable
employment? Or does the absence of the words “to perform the essential tasks” in the post-104
week test mean that the claimant’s complete inability to engage in such employment can be
proved in some other way? FSCO Arbitrators have favoured the latter approach by refusing to
adopt a literal interpretation of the words “complete inability”. As stated by the Arbitrator in
Shubrook and Lombard (FSCO A03-000361, November 26, 2004):
It is not appropriate to simply identify a discrete series of employment competencies that
an individual may be able to demonstrate under artificial testing situations and then to
cobble these together into a theorized ability to engage in employment. This sort of
analysis misses the whole dimension of employment being a living relationship between
the employer and the employee. The Regulation talks about an ability to “engage in
employment” not simply to perform discrete job tasks. In my view, to “engage in
employment” is to participate actively in the work relationship over some reasonable
period of time. In addition, the employee must be able to meet normal employer
expectations.
Non-earner and Caregiver Benefits
The words “complete inability” are also found in the phrase “complete inability to carry on a
normal life”, that being the test of eligibility for both non-earner benefits under section 12 and
for post-104 week caregiver benefits under section 13(4). This phrase is further defined in
section 2(4) to require the claimant to establish that he/she suffers from “an impairment that
continuously prevents [him/her] from engaging in substantially all of the activities in which
[he/she] ordinarily engaged before the accident”. In Todd and State Farm (FSCO A00-001314,
November 25, 2003), the Arbitrator reviewed the FSCO case law interpreting this phrase.
First, in relation to the scope of activities to be considered, it has been determined that
the test for complete inability encompasses substantially all of the insured person’s
activities, and not simply her essential activities. The test is not met by establishing that
the insured person is unable to engage in a “goodly number” or even a majority of her
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pre-accident activities.
Second, when considering the insured person’s post accident function, a qualitative
analysis is merited. For example, if an insured person’s ability to perform an activity is
severely restricted or takes an excessive amount of time, it may be said that the insured
person is prevented from participating in that activity. One isolated attempt at an activity
after the accident is not sufficient to warrant a finding that the person is able to engage in
that activity.
Finally, ...“ ..any qualitative analysis of the person’s ability to engage in an activity must
be done against the backdrop of the ultimate question – whether he or she is continuously
prevented from engaging in that activity. ”
Nevertheless, in Walker v. Ritchie [2003] O.J. 18, Mr. Justice Brockenshire referred to a number
of unspecified FSCO decisions and then levelled the following criticism:
I have considered the many arbitrators’ decisions which Mr. Adams assembled for me. I
found in many of them that the arbitrator was unfortunately led into detailing a whole
shopping list of various physical activities and into a consideration of whether or not the
person was completely prevented from doing that activity, despite the fact that what was
done was being done so poorly it could not be said to have contributed to a “normal life”.
Where caregiver benefits are concerned, the issue is often whether the claimant was a “primary
caregiver” as required by section 13. It has been decided that where the person requiring care has
been institutionalized, his/her relatives are no longer primary caregivers – see, for example,
McCabe and Guarantee (FSCO A03-000938, December 5, 2003).
“Expenses Incurred”
Many types of benefits are only payable in respect of “expenses incurred”. Can a claimant
maintain that expenses were “incurred” if he/she never actually received or paid for the
goods, treatment or services in question because the insurer denied the claim? This question
was addressed most recently in Belair and McMichael (P05-00006, March 14, 2006). The
Director’s Delegate acknowledged that while some claimants might benefit from goods or
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treatment provided late, in accordance with Arbitrators’ decisions that they were wrongly
refused in the first place, no order can require the retroactive provision of certain kinds of
services, in that case, attendant care services. She nevertheless rejected the argument that
benefits could not be ordered for past periods because no services had been received or expenses
incurred. That argument, she held, would compromise the “procedural integrity” of the claims
process by allowing insurers to rely upon their own refusals to pay, even if those refusals were
later determined to be wrong. It would also, as the Arbitrator below had observed, “allow the
insurer to set up the inability of an insured to pay for a benefit as a shield from its obligation
under the policy of insurance.” However, it should be noted that the Director’s Delegate’s
decision is being challenged on judicial review.
Proof that expenses were incurred is easily obtained when the services or items were provided by
professional persons or businesses. But what if the services are provided by the claimant’s
family members or friends as specifically allowed by section 2(7)? This question is of
particular importance for claims involving caregiver benefits - section 13, dependant care
benefits - section 28, attendant care benefits - section 16, housekeeping and home maintenance
expenses - section 22 and transportation expenses - section 14(1)(g). In Zurich and Stargratt
(P01-00045, March 31, 2003), the claimant received caregiver and attendant care services from
family members but did not pay, or promise to pay, for these services. The Director’s Delegate
agreed with the Arbitrator that expenses could be “incurred” without proof of either promises to
pay or out-of-pocket expenditures and then observed:
Insurers are entitled to require documentation of caregiver and attendant care services
claimed, and they have reason to ask more questions when family members provide the
services. Although detailed contemporaneous record-keeping is ideal, evidentiary
requirements should be tailored to the informal context.
However, when she turned to the facts of the case under appeal, the Director’s Delegate linked
proof of services provided by family members to the insurer’s obligation to inform. Noting that
the claimant had not maintained a log of the services rendered by her family, she wrote:
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This would have been very damaging to Ms. Stargratt’s claim if Zurich had explained to
her that she could claim for services received from family members, or invited her to
provide particulars of the services provided….Zurich’s failure to explain that she could
pay her family for looking after her is the critical factor in my decision that the Arbitrator
did not err.
It follows that the adequacy of the claimant’s proof must be assessed in light of the information
he/she received from the insurer. Still, this does not mean that a claim can be based solely on the
insurer’s failure to inform the claimant that services could be provided by family members or
friends. In A.K.P. and ING (FSCO A04-000219, May 3, 2006), the Arbitrator found that the
Insurer had not discharged this and other obligations to inform but nevertheless stated:
…the “bright-line boundaries” approach, endorsed by the Supreme Court of Canada in
Smith, discourages any enquiry into the question of whether the claimant would have
acted any differently had the insurer discharged its own obligations to inform. In other
words, the Insurer’s failure to inform vitiated the limitation defence but it did not
establish Ms. P’s entitlement to benefits. She still had to prove her entitlement on the
merits.
The issue of “expenses incurred” has also arisen in relation to the expenses which family
members may incur while visiting their injured relative during his/her treatment or recovery: see
section 21. In Co-operators and Moons (P00-00033, May 28, 2001), a Director’s Delegate
distinguished between expenses - “transportation, accommodation, food or even babysitting –
expenditures necessary to make the trip” - and income losses resulting from any absences from
work. Only the former, he held, were reimbursable under section 21.
Death Benefits
Disputes about death benefits under section 25 are typically about whether the claimant was the
“spouse” of the deceased person – see, for example, Liberty and Stewart (P04-00038, December
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7, 2005) - or “principally dependent” on that person “for financial support or care” – see, for
example, Chou and ING-Halifax (FSCO A02-001343, May 8, 2003). But the benefit payable to
parents following the death of a child has also required Arbitrators to examine the scope of the
legal fiction “en ventre sa mère” in the SABS context. While Whale and Guarantee (FSCO A01­
000545, January 18, 2002) held that no benefits were payable in respect of the death of an
unborn child, Virk and Liberty (P04-00027, July 5, 2005) decided in favour of parents whose
child was born the day after the accident but died shortly thereafter as a result of either injuries
sustained in utero or the premature birth brought on by the accident. Note, however, that, in
accordance with section 25(4.1), the benefit must be “divided equally among the persons in
respect of whom the insured person was a dependant”.
Education Benefits
Whereas weekly disability benefits were payable under an earlier Schedule, the only educational benefits
payable under the current Schedule are for “expenses incurred before the accident for tuition, books,
equipment or room and board” in respect of a program which the claimant was unable to continue as a
result of the accident: see section 20.
Collateral Benefits
IRBs and other benefits are reduced by the payments received (or available to but not applied
for) by the claimant as a result of the accident under any income continuation benefit plan: see
sections 7(1) and 12(4). Following the Court of Appeal’s decision in Cugliari v. White et al.
(1998) 38, OR (3d) 641, the Schedule was amended to deem CPP and certain employment-based
insurance plans to be income continuation benefit plans for claimants injured on or after January
1, 2002: see section 2(9) and (10). While this amendment obviously catches CPP payments, there
are still no cases deciding which employment-based insurance payments are deductible. There is,
however, a Director’s Delegate’s decision dealing with a pre-2002 accident which held that a
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disability retirement pension plan was not an income continuation benefit plan: see State Farm
and Scott (P03-00021, P04-00015, August 5, 2005). This decision was unsuccessfully
challenged on judicial review, see the Divisional Court’s decision reported at [2006] O.J. No.
2928.
Whereas sections 7(1) and 12(4) state that no deduction can be made if the claimant has applied
to receive any income continuation collateral benefit, the deductibility of other collateral benefits
under section 60 of the current Schedule does not impose an obligation on the claimant to apply
for them. Nevertheless, in Allstate and Da Rosa (P04-00033, May 25, 2006), a Director’s
Delegate interpreted the words “reasonably available…under any insurance plan or law or under
any other plan or law” - found in both an earlier Schedule and in section 60(2) of the current
Schedule - to mean that:
… where an application has been made and refused, the [claimant] is entitled to rely on
the collateral payer’s rejection as proof that the benefit is neither received nor available.
She is not required to pursue legal remedies against the collateral payer. The [insurer]
bears the onus of proving the plaintiff is “entitled” to the collateral benefit, and cannot
meet that onus if the application has been made and rejected.
Interim Benefits
Subsection 279(4.1) of the Insurance Act gives Arbitrators the discretionary authority to make
interim orders pending the final order in any matter. In determining whether interim benefits
should be awarded, two major criteria have been identified by Arbitrators: the merits of the case
for entitlement and the existence of an element of necessity or urgency. However, as the
Arbitrator in Kulasekarampillai and State Farm Mutual Automobile Insurance Company (FSCO
A03-001063, January 21, 2004) has observed:
Arbitrators do not agree on the standard of proof they should apply to the merits
of the applicant’s case. On one end of the spectrum, the test is expressed as:
. . . an Applicant must establish a prima facie case, in the sense that “the insured
person must produce evidence which, if unanswered and believed, is sufficient to
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render reasonable a conclusion in favour of entitlement.” See Ramalingam and
State Farm (FSCO A02-001646, September 5, 2003).
On the other end of the spectrum, the test is expressed as:
. . . the standard of proof should be somewhat higher than at a
hearing . . . the arbitrator should find it not only reasonable, but
also very probable, that an applicant will be found to be entitled to
the benefits sought. See Cripps and AXA Insurance (Canada)
(OIC A-013360, August 8, 1997)
In Federow and Kingsway General Insurance Company (FSCO A00-001032, October 20, 2000)
the Arbitrator adopted a third, more flexible, approach: “I believe the standard of proof varies
depending on the urgency and the potential prejudice to the insurer in granting an interim order.”
Catastrophic Impairment
A claimant who has been catastrophically impaired by the accident is entitled to claim enhanced
transportation expenses, attendant care benefits, case manager services, med/rehab/attendant care
limits, visitors’ expenses, housekeeping expenses and examination expenses. To establish
entitlement, the claimant must satisfy the definitions of catastrophic impairment. There are two:
one for accidents occurring before October 1, 2003, see section 2(1.1), and another for accidents
occurring after September 30, 2003, see section 2(1.2). The second definition expands the list of
impairments to include the loss of both legs and also authorizes analogous measurements for
persons who are too young (under the age of 16 years) to be assessed using the Glasgow Coma
Scale, the Glasgow Outcome Scale or the American Medical Association Guides to the
Evaluation of the Permanent Impairment. FSCO case law interpreting these definitions has, so
far, addressed three main issues.
First, both definitions state that catastrophic impairment includes brain impairment that results in
a Glasgow Coma Score of 9 or less - assuming for purposes of the second definition that the
person is at least 16 years old - but only if the required test is “administered within a reasonable
period after the time of the accident”. In Liberty Mutual and Young (P03-00043, June 25, 2005),
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the Director’s Delegate stated:
In my opinion, that reasonable period varies depending on whether the scores can be said
to have resulted from a brain impairment. Liberty Mutual submits that the arbitrator’s
interpretation of the test [administered within an hour of the accident] could mean that a
person who was in an accident where glass exploded and cut her extensively in the face
could lead to a score below 9 as well. However, as always, the issue is whether a brain
impairment led to a low score. If, instead, something else such as extensive bleeding led
to a low score, then that would not be as a result of a brain impairment, so the person
would not pass the test.
This decision was unsuccessfully challenged in the Divisional Court, see 2006 CanLII 7286,
[2006] O.J. No. 952, an application for leave to appeal to the Court of Appeal was refused but an
application for leave to appeal to the Supreme Court of Canada is pending.
Second, in Belair and McMichael (P05-00006, March 14, 2006), the Insurer challenged the
Arbitrator’s view that since section 2(1.1) paragraph (f) - 55 % impairment of the whole person and section 2(1.1) paragraph (g) - marked or extreme impairment due to mental or behavioural
disorder - create alternative categories, the claimant could be found to be catastrophically
impaired under paragraph (g) but not under paragraph (f). The Director’s Delegate rejected this
challenget:
I agree with the arbitrator that the definitions of catastrophic impairment in s. 2(1.1) are
alternatives. For one thing, the use of the word “or” after paragraph (f) suggests this is a
disjunctive list. Indeed, Belair concedes that a claimant is catastrophically impaired if he
satisfies any one of the definitions in paragraphs (a) through (g). It is easy to see that this
must have been within the contemplation of the drafters, since, for example, a claimant
who qualifies as a quadriplegic under paragraph (a) may have no visual or brain
impairments, thus “failing” paragraphs (d) and (e).
Underlying Belair’s argument is the observation that while paragraphs (a) through (e)
describe specific types of impairment, paragraphs (f) and (g) take a different approach,
offering different ways of assessing global impairment. However, the same analysis
applies. It is easy to see that a claimant may satisfy paragraph (f) because of a
combination of orthopaedic injuries, for example, without suffering any impairment due
to a mental or behavioural disorder – or vice versa. Another claimant may have a visual
impairment that does not qualify under paragraph (d) (“total loss of vision in both eyes”)
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but does qualify under paragraph (f) when combined with other injuries. I am persuaded
these outcomes were intended by the drafters.
This decision is being challenged on judicial review, though perhaps not on this particular point.
Third, Ms. G. and Pilot (FSCO A04-000446, March 16, 2006) addressed the question of whether
impairments due to mental or behavioural disorder described in paragraph (g) could be assigned
a percentage and combined with other impairments in the assessment of whole person
impairment (the “WPI”) under paragraph (f). The Arbitrator followed the Superior Court
decision in Desbiens v. Mordini [2004] O.J. No. 4735 which held that psychological impairments
can be included in the WPI assessment even if those impairments are neither “marked” nor
“extreme”.
The Arbitrator then went on to state that while each impairment must be appropriately rated, it
must not be counted twice. Accordingly, he granted a zero WPI for headaches on the ground that
they were not distinct from mental and behavioural disorders that he had already rated. The
Arbitrator also set out the formula for calculating the combined WPI under which, for example,
psychological impairment was given an individual WPI% of 14 but added only 11% to the
combined WPI. This decision has been appealed.
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