Adjuster must properly and fully assess file.

November 10, 2010, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Arbitrator: John Wilson
Decision Date: October 15, 2010

Mr. Cowans was injured in a motor vehicle accident on April 2, 2007. He applied for and received statutory accident benefits from Motors Insurance Corporation. Motors terminated income replacement benefits on the basis of a determination that Mr. Cowans did not meet the post-104 week test for entitlement to benefits. The parties were unable to resolve their disputes through mediation, and Mr. Cowans applied for arbitration at the Financial Services Commission of Ontario.

Prior to the arbitration, Mr. Cowans and Motors were able to come to an agreement on all issues in dispute, with the notable exception of Mr. Cowans' claim for a special award.The purpose of this hearing was to determine whether or not Mr. Cowans was entitled to a special award.


This case was a "stand-alone" special award claim, since all other elements of Mr. Cowans' claims had been dealt with prior to this hearing. It arose because Mr. Cowans believed that in cutting off his income replacement benefits after the 104 week mark, Motors acted unreasonably.

To a degree, as well, Mr. Cowans' claims brought into question the way Motors and perhaps other insurers deal with the determination of entitlement to benefits in a post-DAC world and how the system of insurer's assessments that replace the DAC system fits into such determinations.

Mr. Cowans worked as a shipper with Muir's Cartage Limited in Brampton Ontario, a job that entailed working as a forklift operator, as well as loading, and unloading boxes by hand, and shrink-wrapping loaded skids.

Mr. Cowans was born and raised in Jamaica where he completed the equivalent of Grade 10. Following emigration to Canada, he worked in a variety of jobs including a body shop before settling in at Muir's, a trucking company with warehouse services in Brampton.

Mr. Cowans had been with Muir's since 1998, and worked significant overtime, with hours of work said to reach at times as high as 90 hours per week. Mr. Cowans' remuneration from Muir's reflected this high level of work. Indeed, the Employer's Confirmation Form (OCF-2) issued on April 12, 2007 showed a gross income of $49,739.44 in the 52 weeks prior to the accident, and an income of $1,376.75 in the week prior to the accident.

The foundation for Mr. Cowans' claim for a special award was his allegation that Motors failed to properly consider his education, training and experience, especially his demonstrated ability to maintain a significant income stream in making its determination as to entitlement to income replacement benefits after the 104 week mark.

Mr. Cowans asserted that, had there been a reasoned assessment of the alternative jobs proposed by Motors in making its determination as to entitlement, including the level of remuneration generally received by Mr. Cowans, the proposed jobs could not have been considered in good faith to be “employment for which he was reasonably suited by education, training or experience.”

Arbitral decisions have held that this test is not to be construed literally but rather in the context of the whole of the insured person's education, trainingand experience, such that an individual is able to meet reasonable standards of productivity in a competitive market place.
Arbitrator Seife has summarized comments in the arbitration forum about the question of "suitable employment" in the following four ways:
1. The question of suitable employment in every case is a question of fact: the work must be suitable for that applicant, viewed fairly and realistically in the context of his or her educational and employment background.

2. Suitable work is not limited to what the applicant was doing at the time of the accident, provided that it is not unrelated to his or her previous experience. However, work is not necessarily suitable because an applicant has done a stint of it in the past. If the job is substantially different in nature, status, or remuneration it may not be an appropriate alternative.

3. In deciding suitable employment, one must consider such factors as the nature and status of work compared with what the applicant did before, the hours of work and level of remuneration, the applicant's employment experience and length of time spent in different jobs, his or her age, and his or her qualifications and technical training and know-how.

4. The primary focus is on an applicant's functional limitations; however, job-market considerations are relevant in determining suitable employment.

Prior to the hearing of this matter, Motors agreed to an order reinstating Mr. Cowans' income replacement benefits "as of May 17, 2009", the date of termination. By consenting to this order Motors implicitly agreed that Mr. Cowans continued to meet the requirements for ongoing income replacement benefits after the 104 week mark, and that it was wrong in its initial determination.
Earlier arbitral decisions however have established the principle that merely being wrong did not oblige an insurer to pay a special award. As Arbitrator McMahon noted in Cripps and AXA:With the clarity of hindsight it is easy to say that the Insurer ought to have made inquiries to ascertain how someone as severely injured as Mr. Cripps had managed to make such a remarkable recovery, and to satisfy itself that the surveillance material was not being misinterpreted. However, the standard is not one of perfection.”
While a standard of perfection is not necessarily demanded of insurers, reasonableness in making determinations of entitlement is.

In Plowright and Wellington, Arbitrator Palmer enunciated the classic statement of an insurer's standard of conduct in dealing with accident benefits:The standard expected of an insurer's examiner and her supervisors is one of sound and moderate judgment.”
In an insurance context, while the standard of conduct of an insurance adjuster making decisions on benefit entitlement may not generally be as high as that demanded of a trustee, it is however significant.

It is important to note that intent is not a fundamental part of a finding of unreasonable delay or withholding of benefits. An insurer with the best of intentions can fall below the standard of reasonable conduct. Nor is there a requirement of an independent actionable wrong to provide the foundation for a special award.

That is not to say that intention is irrelevant. The presence of malice or malicious intent would serve to underline the unreasonableness of a particular decision and speak eloquently to an arbitrator's discretion in fixing the amount of the special award.

Simply "papering" a termination by obtaining a compliant report from an assessor is not necessarily a protection against a special award if an insurer closes its mind to other information potentially available to it that might have cast its decision or actions in doubt.

Motors' position in the matter was quite clear. It maintained that it, in good faith, made a determination that Mr. Cowans was no longer entitled to income replacement based on the opinions of qualified experts that it retained to examine and evaluate Mr. Cowans. Given that its determination was backed by these opinions, its termination and consequent withholding of the benefits could not be "unreasonable."

It further asserted that as information became available, it reconsidered its prior determination and, indeed, ultimately, made the decision to reinstate benefits without waiting for an arbitration to be completed.

It was clear from the evidence, however, that neither the assessor, Mr. C, nor the actual adjuster, Ms. N, were actively involved in obtaining relevant assessment reports. Rather, it was apparent that the process was delegated to Health Impact Multidisciplinary Assessment Centres, which arranged for separate assessments by a psychiatrist, a physiatrist, a labour market analyst and vocational assessor, and a kineticist who performed functional abilities evaluations.

Mr. C testified that on receipt of the reports from Health Impact, Motors simply acted on the recommendations of the assessors. This was reflected in the internal notes of the Motors adjuster Ms. N:
 “I reviewed the section 42 multidisciplinary post 104 week IE report. The report finalizes that the claimant continues to suffer from chronic pain despite the recent completion of a pain program, and ongoing psychological counselling and support. There were no significant findings reported by the physiatrist, who suggested that there was no reason why the claimant should not be able to operate a forklift. In functional testing, the claimant revealed better results as far as ability and tolerance from an assessment completed 1 year prior. The psychiatrist evaluated that the claimant suffered from Adjustment Disorder with Mixed Anxiety and Depressed Mood, but did not otherwise suffer a complete inability to carry on a normal life. The psychiatrist did recommend a review of the anti-depressant medication taken by the claimant, with a shift to a more effective medication. The vocational evaluation identified 6 alternative occupations that were with the claimant's functional ability and tolerance, and for which he was suited by education, training and experience, and are readily available in the community where the claimant lives, and are similar in status and remuneration to his pre-Motor Vehicle Accident occupation. In light of the post-104 IE, it is OK to stop IRB benefit. Rebuttal available. Recommendation regarding psychiatric medication outlined. OK to send letter/ OCF 9.”
 This memo was quoted in its entirety since it seemed to completely summarize the extent of the determination process. This was reflected in the termination letter sent to Mr. Cowans by Ms. N on May 8, 2009. In fact the letter was even more precise. Motors relied solely on the opinion of Mr. J, the vocational assessor, in terminating benefits.

Mr. C also confirmed that he and his staff were aware that knowledge of pre-accident income was a critical element in any analysis of whether an alternative occupation was appropriate to any particular insured.

It was clear from Mr. C's testimony that although he professed to have read the I.E. reports leading to the determination, he could not have given them any close scrutiny, or analyzed their conclusions in a critical manner. Rather, the arbitrator suspected that he engaged in the same process as outlined in Ms. N's report: a short review of conclusions followed by a decision to adopt the recommendation of the most favourable report.

The arbitrator noted specifically that although the I.E. reports were called a multidisciplinary assessment, there was no attempt to bring forward a consensus report as to collective recommendations made by an assessment team. Rather, the report was prefaced by a "Synopsis" prepared by a Dr. G, MD, who was not listed among the examining assessors. Dr. G provided a simple summary of the opinions of the assessors, without attempting to interrelate the findings or observations of the different assessors.

The arbitrator’s impression from both the Insurer's notes and Mr. C's testimony was that Motors did not live up to its obligation to make its decision only after assessing and critically examining these opinions. Rather, Mr. C made it clear that although he was aware that pre-accident income was a necessary part of the alternative employment analysis, he did not feel inclined to call the assessor, or to question the assessor as to the absence of such information in the documents reviewed. Indeed, he was clear that he relied upon the assessor to have made the correct decision and accepted the recommendation of the most favourable assessor without any critical analysis.

At the time of Motors' determination, there was credible information in the hands of the Insurer casting the recommendations of Mr. J, the vocational assessor, into doubt. In fact, even a critical reading of the "multidisciplinary assessment" ought to have raised question marks about the conclusions that Motors ultimately relied upon in its termination of benefits.

Mr. J made certain assumptions about Mr. Cowans' abilities that were reflected in his suggestions of alternative employment. Foremost amongst these was that Mr. Cowans was most suited to employment where one could learn on the job.

Mr. J apparently extrapolated an ability to learn on the job from the absence of evidence of academic achievement and Mr. Cowans' employment history. Mr. J also noted that Mr. Cowans indicated that he participated in 'on the job training' when working. There was no evidence of just what such training involved, but in the context of the relatively basic nature of Mr. Cowans' employment, it was unlikely that included a significant apprenticeship or even the acquisition of complex skill sets in the context of employment.

Indeed, Mr. J concluded that Mr. Cowans would be limited in his ability to work in settings where reading and writing are involved or required as an essential demand of the job. Mr. J also reported that:
“The combination of these two factors (average reasoning abilities and low average general learning abilities) would suggest that this individual may require additional opportunities for practice and repetition when learning new skills. He may struggle when learning new information; this would be less of a struggle when information is presented orally and more difficult when information is presented in a more forma (sic) manner (i.e. requiring reading and writing).”
Yet, according to Mr. J:“Mr. Cowans' current training and education would allow him to consider jobs with the following employment requirements: no formal education or training requirements, on the job training or experience, and some high school education.”
It was safely assumed that there is a substantial disconnect between someone with a reading level of Grade 3, and a spelling and arithmetic level of Grade 4 meeting a job requirement of "some high school education." The same might also be said for "on the job learning" for someone who "may struggle when learning new information."

The conclusion that Mr. Cowans could meet reasonable standards of productivity in a competitive market place as a final inspector/packager of small products, a plastic products inspector, an inspector/tester of electrical appliances/apparatus, a process control operator, a rubber products inspector, or a repairer/servicer of small/light products strains credulity. Each occupation seemed to require some product or process knowledge that would have been substantially different from loading and unloading pallets.

There was also the important question of economic compatibility of the proposed jobs. Mr. J's employment survey listed ranges from $12 to $14 per hour for an electrical tester position, $9.50 to $12.35 per hour for a process control operator, and $13 to $18 per hour for a repairer/servicer. As Motors was well aware from the OCF-2 prepared by Mr. Cowans' employer, his gross weekly income in the week prior to the accident was $1,376.75. At $12 per hour, a 40-hour week would only have brought in a gross revenue of $480. Even $18 per hour would have brought in about $720 per week.

Mr. C explained away the significant discrepancies in income by pointing out that Mr. Cowans generally worked overtime, and stated that the real comparative income for Mr. Cowans was somewhere between $30,000 to $35,000 rather than the $49,000 that he actually earned. By that calculation, the repairer/servicer position whose upper range of wages was $18 per hour would have been a roughly equivalent position. The $12 per hour starting rate would not have been, however.

Mr. C acknowledged that it was highly unlikely that an employer would offer an untrained person such as Mr. Cowans a starting salary in the high range. Still, neither he nor the adjuster called Mr. J in an attempt to understand how the alternative occupations were economically comparable.

Mr. C also soon had in his hands an August 24, 2009 report by Mr. A and by January 2010 a further vocational report by Mr. B.

Mr. A opined as to Mr. Cowans' training and skill sets:He had never been trained or educated to do more complex forms of work and he had no finely tuned skills that would allow him to compete for more complex jobs in the workforce. He was just barely literate in English and had negligible computer skills.”
Mr. A further commented as to the physical aspects of the proposed work:However, I think Mr. J has minimized the physical demands of those jobs for which Mr. Cowans was allegedly suited, especially with regard to the required standing/walking demands and the demands that require a combination of body movements needed to accomplish the essential tasks of the employment.”
Mr. A then examined the wage potential of the proposed occupations noting:Even if one accepts that these jobs are suited to him based on his education, training and experience (which I do not) one notes that it will not be before year 10 in any of those occupations that he would be able to approximate his pre accident income.”
Mr. A concluded thatthe significant wage difference when compared to his pre accident wage was evident. This would make any of the proposed jobs unsuitable for that reason alone.
Mr. C testified that he discounted Mr. A’s report because of what he considered an obvious discrepancy in the attribution of pre-accident income. Nor did he act on the report, or even re-examine the assumptions of Mr. J’s report when those assumptions were critiqued by Mr. A.

By the time that the reports were received an application for arbitration had been filed and out of "respect for the dispute resolution process", Mr. C felt it was somehow inappropriate for Motors to act on Mr. A’s report. Once the arbitration begun Mr. C believed that there was no reason to send out any reports received from Mr. Cowans for consideration.

Another less charitable conclusion was that Mr. C, having made a determination, was not inclined to revisit it on behalf of Motors, notwithstanding that there was credible evidence in Motors' hands that challenged both the assumptions and the conclusions of the assessor Motors relied upon in terminating and refusing to pay ongoing income replacement benefits.

While an insurer's decision as to benefit entitlement may not be elevated to the level of a statutory power of decision, the use of the word "determination" (determiner) to describe the decision-making process suggests that the legislators have high expectations of the insurer's decision-making process.

It was also clear from the approach that Mr. C took to this process that much of the need for a critical assessment of relevant information was more or less delegated to the assessors, whose "professionalism" Motors relied upon.

While the assessment protocols relied upon by Motors may well be common in the industry they are not a substitute for a balanced and considered determination by an insurer.

Dr. F's testimony provided some insight into the details of the assessment process in this matter. Dr. F, of course, was part of the multidisciplinary assessment arranged by Health Impact. Dr. F's prime occupation was doing psychiatric assessments, principally for a variety of insurers mostly in the automotive sector.

Dr. F also confirmed that Mr. Cowans' assessment was a brief, one-time interview, one of up to 45 to 50 he might do in a month.

Although it was possible to infer even higher numbers of examinations from Dr. F's cross-examination, for the purpose of this analysis the arbitrator accepted that the number was intended to be on a monthly basis, a presumption that would be consistent with Dr. F's projected income from assessments being in the range of some $600,000 per year.

He would receive the paperwork, including the documents indicated on his report, proceed to the assessment location, interview the insured, and then write a report. Given the volume of examinations, it could not be supposed that there was significant time for detailed reflection on each assessment.

With the exception of the provision of the FAE report, there was no evidence of a co-coordinated attempt to reach a consensus between assessors or to deal with disability other than in the narrow view of each discipline. Given that Mr. Cowans claimed that he was disabled due to a mixture of psychological problems, pain issues, and physical constraints, such an omission, was highly problematic.

Assuming for example that the 40–50 assessments figure related to a month, that would have meant that Dr. F on some weeks may have performed at least 10 assessments per work week. The time permitted to review, assess and report on any individual would have been at most 4 hours from start to finish, including the reading of voluminous documentation.

Whether Dr. F was biased or prejudiced or not, the arbitrator found that it tested credulity to believe that an assessment mill such as described by Dr. F could ever generate meaningful results.

Where Motors began to go astray in the determination process is in the absolute trust it appeared to give to Health Impact to get the assessments right. Motors had no input into the choice of assessors or the assessment protocols − that was apparently done by Health Impact. In fact, other than reading the conclusions of the various assessors, it remained a totally hands-free assessment process as far as Motors was concerned.

It should be remembered that disability in accident benefit matters is a legal test, albeit one which usually requires medical input. Making a determination requires the application of the medical evidence – all the available medical evidence to the legal test. Since it is the Insurer who makes the determination, it is incumbent upon an insurer to critically review the available evidence and to apply it to the test for entitlement.

In Motors' case, delegating the investigation, unsupervised, to what seems to have been an assessment mill, and merely reciting the summary of the assessment before terminating benefits was not "a reasonable and competent investigation."

Although Mr. C testified that he had read the reports that were commissioned by Motors, the arbitrator did not accept that he could have done so closely or analytically. Otherwise he would have noticed internal inconsistencies and key missing evidence that would have been necessary for a sustainable finding that Mr. Cowans was indeed capable of doing remunerative work at an appropriate occupation.

The absence of any consensus report also ought to have raised concerns on behalf of Motors, especially given that each assessor, quite properly, refused to answer questions that each deemed to be outside of his or her expertise, with the result that there were serious gaps in the conclusions made.

Read together, the reports of Mr. Cowans continuing to suffer from chronic pain despite the recent completion of a pain program, Adjustment Disorder with Mixed Anxiety and Depressed Mood, and Mr. J's comments that Mr. Cowans would be limited in his ability to work in settings where reading and writing are involved or required as an essential demand of the job, should have set the alarm bells ringing, or at the very least triggered further enquiry on behalf of Motors.

The problem of whether Mr. J's suggested alternative occupations actually responded appropriately to the criterion of equivalent remuneration should have been apparent upon any critical analysis.

The test was essentially a legal test, but there was no suggestion that either Mr. C or Ms. N sought legal advice either to clarify their understanding of the test to be met or to deal with the inconsistencies in their own expert reports.

Motors had in its possession credible information provided by Mr. Cowans that supported his contention that he remained disabled.

The arbitrator found that Motors' decision to terminate benefits owed to Mr. Cowans was not only wrong but unreasonable. The finding of such an unreasonable withholding of benefits automatically attracted a special award.

Quantum of Special Award:

There is a strong representation of recent immigrants, such as Mr. Cowans, and persons with low income or limited attachment to the workforce amongst accident benefits claimants.

This is likely because of the deductibility of collateral benefits, whether through employment or private insurance schemes, which makes accident benefit claims irrelevant to much of the comfortably employed population.

In Mr. Cowans' case, although an immigrant with few formal qualifications, he had demonstrated an ability to earn an above average income over a period of years. This was not necessarily because he had specific skills that were attractive to employers, but rather because he was willing to work long hours of extensive overtime on a regular basis.

The record in this matter showed that Mr. Cowans' financial distress was communicated to the Insurer. Mr. C in his testimony conceded that he was aware of Mr. Cowans' plight when Motors terminated income replacement benefits on the basis of a patently flawed assessment process.

As Arbitrator Blackman stated in Murray and Wawanesa, "The effect of the Insurer's unreasonable withholding or delaying of payments on the Applicant is also a factor to be taken into consideration in making a special award."

In addition to whatever financial embarrassment that Mr. Cowans may have suffered, it was also appropriate to consider that a person suffering, as the Insurer itself noted, "Adjustment Disorder with Mixed Anxiety and Depressed Mood" would be negatively impacted by Motors' failure to uphold "this reasonable expectation of security."

Some consideration was also given providing Motors with an incentive for re-considering its assessment and determination process. Too low a special award might have made it more acceptable for Motors to continue with its current, flawed process, and to just consider a small special award as the cost of doing business efficiently.

But for the settlement, in light of Mr. Cowans' vulnerability, Motors intransigence, and its failure to understand its obligations to make a fair and dispassionate determination, the arbitrator would have made a special award towards the maximum 50% mark. Given the settlement, albeit late and, at least in the case of Mr. C, grudgingly, the arbitrator reduced that amount by some 6%.

The arbitrator also recognized that some of the key reports in the hands of counsel for Mr. Cowans might not have been delivered on a timely basis. While the arbitrator held that the timing might not have made any difference, it still does not sit well to demand respect of the principle of timeliness from only one side. The arbitrator reduced the percentage award by a further 4% in recognition of this fact.

Notwithstanding the above comments, the arbitrator still found the withholding of benefits to be egregious and meriting a 40% special award.

Posted under Accident Benefit News, Automobile Accident Benefits, Car Accidents, Chronic Pain, Disability Insurance, Pain and Suffering, Slip and Fall Injury

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About Deutschmann Law

Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit or call us toll-free at 1-866-414-4878.

It is important that you review your accident benefit file with one of our experienced personal injury / car accident lawyers to ensure that you obtain access to all your benefits which include, but are limited to, things like physiotherapy, income replacement benefits, vocational retraining and home modifications.

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