June 19, 2018, Kitchener, Ontario
Posted by: Robert Deutschmann, Personal Injury Lawyer
State Farm Mutual Insurance Company v. Economical
Date of Decision: May 5, 2018
Heard Before: Favreau J.
This appeal from an arbitration decision turns primarily on the issue of whether the arbitrator erred in finding that Richard Newman, who was a taxi driver, was involved in an "accident" when he developed severe back problems after sitting in a collapsed driver's seat for six shifts between May 20 and 29, 2014.
After he was injured, Mr. Newman made a claim for SABs against State Farm. State Farm accepted the claim, and then initiated a priority dispute against the insurer of the taxi, Economical.
At arbitration Economical took the position that it had no obligation to pay accident benefits because Mr. Newman's injuries were not caused by an "accident" and because Mr. Newman was not an "occupant" of the taxi when the injuries occurred. The arbitrator found that Mr. Newman's claim arose from an accident, and that Economical was the priority insurer because it was the owner of the vehicle occupied by Mr. Newman at the time of the accident. Economical appeals from the arbitrator's award.
For the reasons set out below, Justice Favreau found that the arbitrator's decision was reasonable, and the appeal is therefore dismissed.
Facts relevant to the appeal
The arbitration proceeded on the basis of an agreed statement of facts, which includes a number of facts on which the arbitrator based his decision. There was additional evidence before the arbitrator, including a number of medical reports and records. In May 2014, Mr. Newman was 66 years old, and he had been a taxi driver for approximately 40 years. Mr. Newman worked as a taxi driver for Citywide Taxi in Oshawa, where he had worked since 2009. The taxi was insured by Economical.
For his personal use, Mr. Newman owned a 2005 Dodge SX, which was insured by State Farm. As a taxi driver, Mr. Newman typically drove three to four twelve hour shifts per week. On May 20, 2014, before starting his shift, Mr. Newman noticed that the feet on the left side of the driver's seat in the taxi had collapsed. Mr. Newman claims that he reported the collapsed seat to Mr. Wright and to a manager at Citywide Taxi, but that nothing was done. He drove the taxi despite the collapsed seat.
Mr. Newman usually drove with his left arm out of the window or leaning on the armrest, and the collapsed seat put him at an awkward angle. He drove the taxi with the collapsed seat for six shifts between May 20 and 29, 2014 and began experiencing pain after the first three shifts. On May 26, 2014, he saw his family doctor, Dr. Charlene L, about the back pain, and she noted that his "back pain has increased". He drove three more shifts, but his back pain got worse. After his shift on May 29, 2014, Mr. Newman reported to the manager at Citywide that he was unable to continue working and that he planned to take six to eight weeks off. Mr. Newman never returned to work.
Mr. Newman saw Dr. L on June 18, 2014, and she noted that he had back pain triggered by driving in an abnormal car seat. Xrays revealed that he had disc space narrowing in two areas of his lower back and grade 3 spondylolisthesis in the same area. A physical and rehabilitation specialist reported that Mr. Newman's spondylolisthesis pre-existed the June 2014 back symptoms, and that this condition was likely rendered symptomatic as a result of the "unusual stressors that occurred earlier in the spring". In December 2014, Mr. Newman applied to State Farm for payment of SABs. State Farm approved the claim in January 2015.
State Farm arranged IEs by an orthopedic surgeon Dr. H, who prepared a number of reports generally stating that Mr. Newman’s injury was caused by a pre-existing condition and not by driving in the collapsed seat. There is some controversy, addressed further below, between the parties as to whether Dr.H's reports provide any support to finding that Mr. Newman's back condition was caused by the collapsed seat. Mr. Newman saw another orthopaedic surgeon, Dr. F, who prepared a report dated August 2016. Dr. F's opinion is that it was likely that Mr. Newman's back injury was caused by the defective seat.
In a decision released March 24, 2017, Arbitrator Fred Sampliner found that Economical was responsible for paying Mr. Newman's statutory accident benefits, finding that, while Mr. Newman did have pre-existing health conditions, the cause of his back injury was the defective seat in the taxi which he accepted constituted an "accident" for the purposes of the Insurance Act, R.S.O. 1990, c. I.8. He also found that Mr. Newman was an occupant of the taxi at the time of the accident, rejecting Economical's argument that Mr. Newman's injury was caused by the long term effects of driving the taxi and his own car.
Standard of Review
After a review of the Law, Fevreau J., agrees with State Farm that the standard of review is reasonableness and that it has not been altered by the Supreme Court's decision in Ledcor. The appeal may move forward.
Fevreau J. then went on to review the relevant legislative provisions regarding accident benefits in Ontario.
The Insurance Act sets out a scheme for determining which insurer is responsible for paying statutory accident benefits to people who may have access to SABs from more than one insurer and sets out the priority for paying statutory accident benefits as between insurers. A person involved in a motor vehicle accident first has recourse against his or her own insurer, and, only where there is no such insurer does the person have recourse against the insurer of the vehicle he or she occupied:
The following rules apply for determining who is liable to pay statutory accident benefits:
- In respect of an occupant of an automobile,
- the occupant has recourse against the insurer of an automobile in respect of which the occupant is an insured,
- if recovery is unavailable under subparagraph i, the occupant has recourse against the insurer of the automobile in which he or she was an occupant…
The Schedule deems an individual as a "named insured" when the vehicle is being made available for regular use by a corporation or other similar entity and the person is an occupant of that vehicle at the time of the accident:
(f) an individual who is living and ordinarily present in Ontario is deemed to be the named insured under the policy insuring an automobile at the time of an accident if, at the time of the accident,
(i) the insured automobile is being made available for the individual's regular use by a corporation, unincorporated association, partnership, sole proprietorship or other entity…
Accordingly, if the taxi was made available to Mr. Newman by his employer "at the time of the accident", then he is a deemed insured under the Economical policy. Under these circumstances, he could make a claim against State Farm or Economical subject to the provisions reviewed below.
In cases where there may be two insurers that appear to be in equal priority, section 268(4) of the Insurance Act provides that the insured person can choose against which insurer to make a claim:
(4) If, under subparagraph i or iii of paragraph 1 or subparagraph i or iii of paragraph 2 of subsection (2), a person has recourse against more than one insurer for the payment of statutory accident benefits, the person, in his or her absolute discretion, may decide the insurer from which he or she will claim the benefits.
Nevertheless, in combination, subsections 268(5), 268(5.1) and 268(5.2), provide that an insured cannot make an election where the person is the named insured of the vehicle occupied at the time of the incident. In such circumstances, the claim is to be made to the insurer of the vehicle occupied at the time of the incident:
(5) Despite subsection (4), if a person is a named insured under a contract evidenced by a motor vehicle liability policy or the person is the spouse or a dependant, as defined in the Statutory Accident Benefits Schedule, of a named insured, the person shall claim statutory accident benefits against the insurer under that policy. 1993, c. 10, s. 26 (2); 1999, c. 6, s. 31 (9); 2005, c. 5, s. 35 (13).
(5.1) Subject to subsection (5.2), if there is more than one insurer against which a person may claim benefits under subsection (5), the person, in his or her discretion, may decide the insurer from which he or she will claim the benefits. 1993, c. 10, s. 26 (2).
(5.2) If there is more than one insurer against which a person may claim benefits under subsection (5) and the person was, at the time of the incident, an occupant of an automobile in respect of which the person is the named insured or the spouse or a dependant of the named insured, the person shall claim statutory accident benefits against the insurer of the automobile in which the person was an occupant. 1993, c. 10, s. 26 (2); 1999, c. 6, s. 31 (10); 2005, c. 5, s. 35 (14).
Ontario Regulation 283/95 deals with disputes between insurers, and section 2.1(6) provides that the first insurer that receives a claim is to pay the benefits until the dispute between insurers is resolved. The regulation also provides that disputes between insurers are to be resolved by arbitration.
Issues and analysis
Economical raises the following issues:
- Whether the arbitrator erred in finding that an "accident" can include an injury caused over time;
- Whether the arbitrator erred in finding that Mr. Newman's injuries were caused by the defective seat;
- Whether the arbitrator erred in finding that Mr. Newman was an occupant of the taxi at the time of the accident;
- Whether the arbitrator erred in finding that Mr. Newman had regular use of the taxi at the time of the accident; and
- Whether the arbitrator erred in finding that Mr. Newman had a right to elect the insurer against which he would make a claim.
While each of these issues is framed as a discrete issue Favreau J. determined the starting point for the analysis must be whether the arbitrator's determination that the collapsed seat caused Mr. Newman's injuries was reasonable. If the arbitrator erred in his assessment of causation, then the rest of the decision falls apart because there clearly was no accident and Mr. Newman was therefore not an occupant of the taxi at the time of the accident nor did he have regular use of the taxi at the time of the accident. However, if the collapsed car seat caused Mr. Newman's injuries, the next key issue is whether the arbitrator's finding that Mr. Newman's injury was caused by an "accident" was reasonable. The answers to the subsequent issues flow from there.
Accordingly consideration was given to the analysis of issue of whether the arbitrator's finding of causation was reasonable.
Was the arbitrator's finding that the collapsed seat caused Mr. Newman's injury reasonable?
Economical argues that the arbitrator made an error in finding that the collapsed seat caused Mr. Newman's injury. Economical claims that this was a legal error because there was no evidence on which the arbitrator could reach this conclusion. Economical argues the arbitrator misapprehended the evidence, and that Mr. Newman's injury was caused by longstanding health issues and the wear and tear on his body of driving both his own car and the taxi.
As the issue of whether the collapsed seat caused Mr. Newman’s injury is a question of fact, significant deference is owed to the arbitrator's decision as was recently explained by Kristjanson J. in Aviva Insurance Co. of Canada v. Security National Insurance Co., 2017 ONSC 4924 (CanLII), 2017 ONSC 4924 (Sup. Ct.), at paras. 65 and 66:
65 The standard of review of reasonableness requires deference to the Arbitrator's findings of fact and inferences from fact unless "the evidence, viewed reasonably, is incapable of supporting a tribunal's findings of fact", a standard that "precludes curial re-weighing of evidence, or rejecting the inferences drawn by the fact-finder from that evidence, or substituting the reviewing court's preferred inferences for those drawn by the fact-finder:" British Columbia (Workers' Compensation Appeal Tribunal) v. Fraser Health Authority, 2016 SCC 25 (CanLII),  1 SCR 587, at para. 30 per Brown, J. for the majority).
66 Disputes concerning inferences or weight are questions of fact. This court on appeal is not to re-weigh or re-evaluate the evidence, or the sufficiency of evidence that has some probative value. The issue on appeal is whether there is some evidence upon which the Arbitrator could have relied to make the disputed findings of fact, and whether the decision was reasonable.
In reaching his conclusion on the issue of causation, the arbitrator weighed the evidence before him, preferring the evidence of Dr. F and Dr. L over the evidence of Dr. H. With respect to Dr. H’s evidence, the arbitrator gave his evidence little weight, finding that it was inconsistent on the issue of whether the collapsed seat was the cause of Mr. Newman's injuries.
Economical argues that the arbitrator made an error in his assessment of Dr. H's evidence pointing to many passages in Dr. Hummel's reports throughout the period of assessment which it says show that he was consistent in his view that the injury was due to a pre-existing condition and not caused by the collapsed seat.
Favreau J. determined that there is no basis for interfering with the arbitrator's decision on causation. As pointed out by State Farm, while Dr. Hummel may not have gone so far as reversing his position, there was some acknowledgement on more than one occasion that the collapsed seat could have worsened Mr. Newman's condition.
Economical is essentially inviting this Court to reweigh the competing evidence on the cause of Mr. Newman's injury. As held in Aviva, para. 66, this is not the proper role of the Court when reviewing an arbitration decision. Favreau J. was satisfied that there was evidence upon which the arbitrator could make the determination that Mr. Newman's back was injured by the collapsed seat, and that his decision on this point was reasonable.
Was the arbitrator' finding that Mr. Newman's injuries were caused by an "accident" reasonable?
Economical takes the position that the Arbitrator erred in his interpretation of the word "accident", arguing that an accident must be an "incident" that occurs at a specific point in time. Economical argues that, given that the arbitrator did not identify the point in time when Mr. Newman was injured, it was an error to find that his injuries resulted from an accident. Favreau reviewed the legislation and found that:
"Accident" is defined in section 3(1) of the SABS Regulation as follows:
"accident" means an incident in which the use or operation of an automobile directly causes an impairment or directly causes damage to any prescription eyewear, denture, hearing aid, prosthesis or other medical or dental device
"Incident" is not defined in the regulation or in the Insurance Act. "Impairment" is defined as follows:
"impairment" means a loss or abnormality of a psychological, physiological or anatomical structure or function.
The arbitrator considered and rejected Economical's argument that it was necessary to pinpoint a moment in time when the accident occurred:
There are no explicit words in the SABS definition of an "accident" or the dictionary definition of "incident" that lead me to accept Economical's submission that multiple minor injuries are excluded from the definition of "incident". The Legislation Act 2006 also indicates the word should be "…interpreted as being remedial and given such fair, large and liberal interpretation as best suits the attainment of its objects", which is consumer protection…Economical's position on the term "incident" leads it to propose that State Farm must produce an expert report identifying the exact place and time of the accident injury. I can reasonably infer that accepting such an argument would tend to encourage more insurers to dispute the accident injury time and mechanism in priority disputes, establish an additional burden to obtain expert evidence and thereby increase costs, complexity and undermine the efficiency of the priority scheme. This is an absurd result to be assiduously avoided. I reject Economical's position that an "incident" is necessarily limited to a single specific moment in time, and instead focus my attention on the causation issue.
The arbitrator then went on to make the finding referred to above that the collapsed seat was the cause of Mr. Newman's impairment. It is implicit in his decision that the "incident" that caused the injury was the collapse of the taxi seat and its impact on Mr. Newman when he drove the taxi for six shifts. Up to May 20, 2014, Mr. Newman's taxi did not have a collapsed seat nor did his back condition prevent him from working. It was the collapse of the seat around that date that caused Mr. Newman's impairment.
Notably, neither Economical nor State Farm was able to identify a case in which the issue of what constitutes an "incident" has been considered. The cases dealing with the definition of "accident" tend to focus on the issue of whether the use or operation of the vehicle was the direct cause of the impairment.
Favreau J. determined that the Chisholm test, as it applies to this case, can best be set out in the form of two questions:
- Was the use or operation of the vehicle a cause of the injuries?
- If the use or operation of a vehicle was a cause of the injuries, was there an intervening act or intervening acts that resulted in the injuries that cannot be said to be part of the "ordinary course of things"? In that sense, can it be said that the use or operation of the vehicle was a "direct cause" of the injuries?
Here the use of the car had ended without injury being suffered, the insured had physically left the car; no automobile contributed physically to the insured's injuries; and there was temporal distance between the end of the use of the car and the injuries. In this case, with the arbitrator's finding that the factual cause of Mr. Newman's impairment is his use and operation of the taxi with the defective seat for six shifts, there is no question that the use or operation of a vehicle was the direct cause of Mr. Newman's impairment. The use of the vehicle caused the injury and there was no intervening event that caused the injury. The only issue is whether what occurred was an "incident".
Favreau J. determined that the arbitrator's conclusion that the word "incident" does not require the identification of a specific moment in time when the accident occurred is reasonable. The word "incident" certainly connotes the occurrence of a discrete event, but there is no basis for finding that the consequences of the event must be immediate or occur instantaneously. The arbitrator's decision is not based on a finding that Mr. Newman's back condition was caused by the ongoing wear and tear of driving, but rather by the awkward position in which he had to sit due to the collapsed seat. The collapsed seat is a discrete event that directly caused Mr. Newman's impairment; in other words, the collapsing of the seat is the incident and the consequences of this incident developed over the next few days.
Economical makes a floodgates argument, arguing that allowing the arbitration will mean that anyone who develops any kind of repetitive injury due to the use of a motor vehicle could make a claim for accident benefits. The flaw in Economical's argument is that the basis for the arbitrator's decision was that Mr. Newman's impairment was caused by the collapsed seat, and not by the ongoing strain caused to his body by driving generally. In this respect, it is noteworthy that Economical's battle is with State Farm and not with Mr. Newman. It is evident that, while State Farm takes the position that Economical is the priority insurer, it initially accepted Mr. Newman's claim and accepted that Mr. Newman’s impairment was caused by an accident.
While a different arbitrator may have reached a different conclusion, the arbitrator's decision that Mr. Newman was involved in an accident falls within "a range of possible, acceptable outcomes" given the facts and the law. Accordingly, in my view, the arbitrator's finding that Mr. Newman's impairment was caused by an accident is reasonable.
Whether the arbitrator erred in finding that Mr. Newman was an occupant of the taxi at the time of the incident?
As indicated above, section 268(5.2) of the Insurance Act provides that where there is more than one insurer against which an insured can make a claim for SABs, the claim is to be made against the insurer of the vehicle occupied by the person making the claim "at the time of the incident". Economical argues that the arbitrator's finding that Mr. Newman was an occupant of the taxi at the time of the incident was not reasonable because his impairment was not caused by the collapsed seat. While it goes to the issue of priority as between Economical and State Farm, this argument turns on the issue of causation and the interpretation of the word "incident" as addressed above.
There is no merit to Economical's argument given Favreau J.’s finding that the arbitrator's determination on these issues was reasonable. Accordingly, there is no basis for finding that the arbitrator's determination that Mr. Newman was an occupant of the taxi at the time of the incident was unreasonable.
Whether the arbitrator erred in finding that Mr. Newman had regular use of the taxi at the time of the accident
The SABS Regulation deems an individual a "named insured" when a vehicle is being made available for regular use by a corporation, unincorporated association, partnership, sole proprietorship or other entity at the "time of the accident". Again, Economical's argument turns on the issues of whether the collapsed seat in the taxi was the cause of Mr. Newman’s impairment and whether he was involved in an accident. Given the findings above, there is no basis for disrupting the arbitrator's finding that Mr. Newman was deemed to be insured by Economical.
Whether the arbitrator erred in finding that Mr. Newman had a right to elect the insurer against which he would make a claim
Economical argues that, given that Mr. Newman drove the taxi and his own vehicle during the time frame when he developed the severe back pain, Economical and State Farm are in equal priority and Mr. Newman's choice of State Farm should be respected. Given the finding that the incident that caused Mr. Newman's injury occurred while he was an occupant of the taxi, as referred to above, section 268(5.2) of the Insurance Act applies and it is not open to Mr. Newman to choose his insurer. As provided for by the regulatory scheme, once Mr. Newman made a claim against State Farm, it had an obligation to pay. However, it was open to State Farm to then use the dispute resolution mechanism provided for in the regulation to determine the priority insurer, which the arbitrator found was Economical.
For the reasons above, the appeal is dismissed.