Incorrect Test Applied - Appeal Allowed

January 15, 2018, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Mohammad and Allstate

Decision Date: December 19, 2017
Heard Before: Adjudicator Jeffrey Rogers

BUT FOR TEST: incorrect test applied by the arbitrator; arbitrator applied material contribution test rather than but for test; appeal allowed by Allstate; cross appeal allowed for applicant with regard to the NEBs

APPEAL ORDER     

1. Allstate’s appeal is allowed.
2. Ms. Mohammad’s cross-appeal is allowed as it relates to her claim for NEBs.
3. Ms. Mohammad’s cross-appeal is denied as it relates to ACBs and HK.
4. Paragraphs 1 and 4 of the Arbitrator’s order are rescinded.
5. The issues of whether Ms. Mohammad sustained a catastrophic impairment and her entitlement to NEBs are remitted for re-hearing by a different Arbitrator.
6. If the parties are unable to agree about expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

I.          NATURE OF THE APPEAL

Both parties appeal the Arbitrator’s order of December 19, 2016. Allstate appeals the Arbitrator’s ruling that Ms. Mohammad sustained a catastrophic impairment as a result of the accident. Allstate submits that the Arbitrator erred in applying the “material contribution” test and not the “but for” test, and that the Arbitrator erred in any event because he incorrectly applied the “material contribution” test. Ms. Mohammad appeals the Arbitrator’s denial of her claim for Non-Earner Benefits (NEBs), Housekeeping and Home Maintenance Benefits (HK), and Attendant Care Benefits (ACBs). She submits that the Arbitrator misapprehended or failed to consider relevant evidence in ruling that she was not entitled to these benefits and he failed to provide adequate reasons for his conclusions.

For the reasons that follow, Arbitrator Rogers concluded that the Arbitrator should have applied the “but for” test and not the “material contribution” test.  Although claiming to apply the “material contribution” test, the Arbitrator actually engaged in the “but for” analysis. However, the Arbitrator misapprehended critical evidence in his analysis and therefore his finding that Ms. Mohammad sustained a catastrophic impairment cannot stand. Allstate’s appeal is therefore allowed. Arbitrator Rogers further conclude that the Arbitrator misapprehended the evidence and he did not give an adequate explanation for his determination that Ms. Mohammad is not entitled to NEBs. Arbitrator Roberts was not satisfied that the Arbitrator erred in making the factual findings to support his denial of HK and ACBs. Ms. Mohammad’s appeal is therefore also allowed with regard to NEBs, but it is denied with regard to HK and ACBs.

II.   BACKGROUND

Ms. Mohammad was injured in a car accident on November 20, 2010. She applied for and was paid accident benefits, payable by Allstate under the Schedule, but applied for arbitration after mediation did not resolve disputes about some of the accident benefits she claimed. The issues that came for hearing before the Arbitrator were as follows:

1. Catastrophic Impairment: Ms. Mohammad claimed that the accident caused her to sustain a marked impairment due to mental or behavioural disorder and she therefore met the definition of catastrophic impairment under s. 3(2)(f) of the Schedule.
2. NEBs: Ms. Mohammad claimed that the accident caused a complete inability to carry on a normal life and she was therefore entitled to payment of NEBs from May 20, 2011 and ongoing.
3. HK: Ms. Mohammad claimed that the accident caused an inability to engage in her pre-accident housekeeping and home maintenance activities and that she incurred expenses for replacement services. She claimed that she was therefore entitled to payment of HK for the 2 years following the accident.
4. ACBs: Ms. Mohammad claimed that the accident caused an inability to engage in her self-care activities and that she incurred expenses for replacement services. She claimed that she was therefore entitled to payment of ACBs for the 2 years following the accident.
5. Assessments or Examinations: Ms. Mohammad claimed payment of $3,100 for the cost of examinations.

The Arbitrator found that Ms. Mohammad is entitled to the cost of the examinations she claimed. That ruling has not been appealed.  The Arbitrator ruled that Ms. Mohammad sustained a catastrophic impairment as a result of the accident. He found that her accident-related impairments were “a material contributing factor” to her mental disorder and her resulting loss of function. The dispute regarding catastrophic impairment was about causation and not about impairment. Allstate’s position is that the accident did not cause Ms. Mohammad’s catastrophic impairment. Rather, the causes were her pre-existing medical conditions and a previous accident. Allstate submits that the Arbitrator erred in two ways when he found otherwise. First, he should have applied the “but for” test and not the “material contribution” test. Second, he improperly applied the “material contribution” test.

Allstate raised a new issue at the hearing. Allstate proposed to argue that the Arbitrator also erred by using the “holistic” approach to determining whether Ms. Mohammad sustained a catastrophic impairment. Allstate proposed to argue that the Arbitrator should only have determined whether Ms. Mohammad sustained a catastrophic impairment after first identifying her various functional impairments and ruling on which of them the accident caused. Allstate did not take this position at the arbitration and did not identify it as an issue in the Notice of Appeal or written submissions. Ms. Mohammad had no notice that Allstate would make this argument. She was therefore unprepared to address it and she objected on those grounds. Arbitrator Rogers ruled that it would be unfair in the circumstances to allow Allstate to pursue the new argument.

The Arbitrator found that Ms. Mohammad is not entitled to the claimed NEBs. He found that Ms. Mohammad did not satisfy her burden of proving that the accident caused a complete inability to carry on a normal life and she was therefore not entitled to the claimed NEBs. Ms. Mohammad submits that the Arbitrator failed to consider all of the evidence, misapprehended the evidence, and he failed to give adequate reasons for his conclusion.

The Arbitrator ruled that Ms. Mohammad is not entitled to the claimed HK and ACBs because the expenses were not “incurred” as defined and some of the services were not provided. Ms. Mohammad submits that the Arbitrator also failed to consider all of the evidence and misapprehended the evidence on this issue, and he failed to give adequate reasons for this conclusion.

III.  ANALYSIS

Allstate submits that the Arbitrator erred when he applied the “material contribution” test in determining whether Ms. Mohammad’s accident-related impairments caused her to sustain a catastrophic impairment. Allstate submits that the Arbitrator should have applied the “but for” test.

Allstate further submits that, even if the correct test is “material contribution” the Arbitrator incorrectly applied it. Arbitrator Rogers concluded that, although he said he was applying the “material contribution” test, the Arbitrator’s analysis shows that he really applied the “but for” test. Nevertheless, the Arbitrator’s order cannot stand because he erred in making critical factual findings.

Until recently, it was generally believed that the “material contribution” test is to be applied in accident benefits cases while the “but for” test applies to tort claims. That belief found authority in the Court of Appeal decision in Monks v. ING Insurance Co. of Canada. There, the Court endorsed the trial judge’s use of the “material contribution” test, noting that the appellant could hardly complain when it had urged the trial judge to use this test, and that this test had been used for some time in arbitral decisions dealing with accident benefits.

At this arbitration hearing, Allstate urged the Arbitrator to consider that Monks had been misread. Allstate relies upon the most recent decision on the issue by the Court of Appeal, in Blake v. Dominion of Canada General Insurance Company. In Blake, the situation in Monks was somewhat reversed. Here, the trial judge applied the “but for” test to a claim for accident benefits. The plaintiff did not object. The plaintiff appealed, arguing that Monks required the trial judge to apply the “material contribution” test.  The Court disagreed, citing failure to raise the issue earlier as the “primary reason” for rejecting the submission. However, the Court also appeared to endorse the “but for” test as the test of general application in accident benefits cases. The Court stated:

The primary reason for not accepting Ms. Blake’s submission is that she is raising the issue for the first time on this appeal.  At trial she did not make submissions on which causation test should be applied. That distinguishes this case from the circumstances in Monks v. ING Insurance Company of Canada, in which this court held that having advocated at trial for the adoption of the material contribution test in a statutory accident benefits case, the insurer could not fault the trial judge for applying the test.

Here, Ms. Blake did not ask the trial judge to depart from the general “but for” test of causation as described by the Supreme Court of Canada in Clements v. Clements, at para. 46. Under those circumstances, Arbitrator Rogers saw no error in the trial judge’s having applied the “but for” causation test to the facts of this case.

The Arbitrator decided that this statement by the Court did not erode the established approach.  He stated:

Regarding the effect to be given to the decision in Blake, I see no clear direction from the Court in that decision that the material contribution test is no longer applicable to statutory accident benefits disputes.

The Arbitrator went on to refer to his similar conclusion in Sabadash and State Farm Mutual Automobile Insurance Company. Delegate Evans has since rescinded the Arbitrator’s decision in Sabadash. Delegate Evans ruled that Blake means that the correct causation test in accident benefits cases is “but for” and not “material contribution”.  He ruled that “material contribution” is only available where it is not possible to apply the “but for” approach. Arbitrator Rogers agreed with Delegate Evans. At the heart of it is the reference in Blake to the Supreme Court’s decision in Clements. Clements is the most recent pronouncement on causation by the highest Court. Blake cited Clements as the current authority on causation in accident benefits cases. Delegate Evans agreed, and he described the interplay between “but for” and “material contribution”.

In this case, Ms. Mohammad has had two surgeries performed because of the RA, a C1-C2 fusion of her neck vertebrae in July 2009 and a further procedure in November 2011. The surgeries were an attempt to correct a condition described as basilar invagination, or the gradual protrusion of the bones at the base of the skull cap up into the skull. This condition was diagnosed in May 2009. Ms. Mohammad received physiotherapy treatment after the 2009 operation which continued until five days before the accident.

After reviewing the evidence, the Arbitrator noted that there appeared to be no dispute that Ms. Mohammad met the definition of catastrophic impairment due to mental or behavioural disorder, but the real issue was causation.  The Arbitrator went on to note that the parties disagreed about the applicable causation test and he rejected Allstate’s submission that he should apply the “but for” test. Applying what he described as the “material contribution” test, he found Ms. Mohammad to be catastrophically impaired as a result of the accident.  However, the Arbitrator’s findings describe circumstances that required both the accident and the pre-existing conditions for the resulting impairments. He stated:

Allstate submits that the accident had “no impact whatsoever” on Ms. Mohammad’s degree of impairment. However, I find that a review of the evidence leads to the conclusion, on a balance of probabilities, that the accident was a material contributing factor.

The Applicant herself testified that there was a significant change to her life after the accident. This assertion was at least partially supported by the testimony of her daughter and brother. Evidence showed multiple impairments which would not have occurred without the accident.

Although the Arbitrator said that he was applying the “material contribution” test, he in fact applied the “but for” test as described in Athey. Since the Arbitrator found that it was necessary to have both the pre-existing conditions and the accident for Ms. Mohammad’s impairments to occur, he effectively found that they would not have occurred but for the accident.

Even though he used the wrong term in applying it, the Arbitrator’s factual finding would ordinarily attract deference. Nevertheless, Arbitrator Rogers that the Arbitrator’s order cannot stand because he later went on to erode the findings he made with regard to Ms. Mohammad’s catastrophic impairment. 

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