Quantifying Capacity

By Brian C. Atherton
Atherton Barristers

The determination of an insureds LEC is to a large extent a function of rehabilitation. Virtually all of the insureds who will go through the process will either be in a program, or will have refused such program prior to 104 weeks from the date of loss. If there is no program in place, or it has not been proposed, the insurer will have virtually no way of determining the LEC for the purpose of makings its offer pursuant to Section 21 of the Regulations. The mathematics of arriving at insured's LEC seems fairly straight forward:

PEC - REC = LEC

In many instances, the insured's PEC will be determined as of the date of loss; for these individuals no specialized assessments, or experts need be obtained. However, in many other cases, i.e. self employed individuals, home makers, and "others" their PEC can only be determined through a personalized assessment focusing on their pre accident personal and vocational characteristics.

It is in the best interests of the Insurer to make the development of PVC information a part of the rehabilitation process. This information is best developed by the rehabilitation case manager upon the case manager's initial contact with the Insured. The recovery of information concerning the Insured's PVC ought not to be left to the vocational rehabilitation specialist as the claim may not call for the involvement of a vocational rehabilitation specialist until some months after the disabling event. By this time, the benefits of approaching the Insured as soon as possible will be lost.

It is important to note that in developing the information and opinion necessary to adequately assess the Insured's PEC and REC, the Insurer's file will come to contain a great deal of information which may or may not be detrimental to the Insurer's case. If and when the assessment comes to Arbitration or Court, that information and those opinions which are detrimental to the Insurer's LECB assessment and obtained before the commencement of the arbitration or litigation may be producible. The Insurer may therefore wish to retain counsel at an early stage with a view to protecting this information and opinion under the mantle of solicitor and client privilege.

In some cases the insured's pre-accident medical history may become important. A determination of the insured's personal vocational characteristics should also include an analysis as to whether they suffer from any medical affliction which could have affected their ability to earn employment as of the date of the accident.

The next step is to retain a vocational psychologist. After conducting tests of the insured, the vocational psychologist can collate the background information to arrive at a number of potential pre-accident occupations. This material can then be analyzed by the appropriate experts to arrive at a dollar figure for these positions. Once this process is complete the insured will be in a position to sustain its assessment of the insured's PEC.

An assessment of the insured's REC is a more complex process. As indicated, it is assumed the insured will already be involved in a rehabilitation program prior to the 104 week time period.

If no program is contemplated, or in place, it may be impossible for the insurer to arrive at any accurate estimate of the REC. The regulations do not contemplate any multi-disciplinary assessments by the insurer for this purpose. The only examinations permitted by the regulations pertain to weekly income disability benefits, rehabilitation, and attendant care expenses. If the insurer has not obtained its assessments of the insured through the rehabilitation process, it will be at a significant disadvantage when presenting its offer. Therefore it is paramount that the insurer's evidence as to the REC be obtained in advance of the 104 week deadline.

ASSEMBLING THE REC TEAM
Once a decision has been made to prepare a file for the REC Assessment, a multi disciplinary approach should be implemented. Presumably a vocational rehabilitation expert has already been assigned to the file. In some cases there will already be a number of specialists that have seen or treated the insured. However, the focus of treatment to date has probably been on an analysis of the injuries, and how it pertains to a return to the former occupation or employment. The focus must now shift to the capacity of the insured to engage in any occupation, subject to the guidelines in Section 30 of the regulations. Different experts will be called upon to arrive at the proper dollar value of the insured's residual earning capacity.

A survey of many of the widely used vocational rehabilitation experts indicates that, thus far, the have not specifically addressed their minds to the REC Assessment. Many are unfamiliar with the rather unique wording of the regulations and the implications that flow from the process. Although many of the skills employed by these professionals can be easily translated into the REC Process, there ought to be some refocusing of their goals. A typical multi-disciplinary team involved in this process and the order of their involvement might consist of the following:

(a) Vocational Rehabilitation Case Managers to co-ordinate the experts.
(b) Medical Specialist to define the "impairment"; and whether the proposed job would lead to deterioration of same.
(c) Occupational Health Specialist to classify the types of employment possible given the impairment.
(d) Vocational Psychologist to assess the Personal Vocational Characteristics.
(e) Ergonomists to ensure that the workplace is "accessible."
(f) Experts in remedial education which would comment on whether a proposed rehabilitation plan which calls for retraining is something which can be accomplished "without significant effort."
(g) Statistical Experts (i.e., Labour Market Economist, Placement Agency Specialists, Canada Manpower Specialists, etc. to match the list of suitable occupations, to the area in which the insured resides, and also to place a dollar value on same.

Depending upon the classification of the insured the process may be slightly altered and some experts may assume greater importance; i.e. self employed individuals, home makers, others who express an intention to return to the workforce, and students once they reach age 16. As with determining the insured's PEC, it becomes imperative to obtain as much background information as possible. Specifically medical records, emergency records of first treatment, employment records, school records, any previous vocational or psychological testing, occupational history, educational history, financial records, tax returns etc., will all be required to assist the vocational psychologist in accurately determining the PVC of the claimant. The scope of investigation should be broadened in cases involving minors, who at age 16 are put through the LEC Process. A number of studies have shown there is some correlation between the minor's environmental upbringing and prospects for future employment. Therefore information pertaining to the parents and sibling's educational and occupational background would also become important.

EVIDENTIARY ISSUES
As a practical consideration, any decision on the insured's REC must be able to withstand scrutiny by an Arbitrator and/or a Court of Law. Any opinion offered by a "specialist" becomes in theory an experts report. Not all persons who hold specialized degrees can be considered experts, i.e. a General Practitioner may be an "expert" in family practice, but by the same token he would not have the experience to qualify as an expert on the possibility of future impairment, and how it may effect someone's earning capacity. Similar analogies can be made with respect to orthopaedic experts, rheumatologist, neurologists, etc. The language of the regulation precludes any one individual being held as an "expert" in arriving at the dollar figure to be assigned to the Residual Earning Capacity of an insured. Therefore a primary consideration in choosing your experts should be whether they have been qualified as such in previous assessments, or whether they have sufficient practical experience to be qualified without any significant challenge by counsel for the insured.

BURDEN OF PROOF
In any civil action one party has the burden of demonstrating to the Court, on a balance of probabilities, that there is a maintainable cause of action. Different considerations may apply to the REC Process. This is especially so if a DAC has been utilized, and has determined that the REC is similar to that offered by one party. Under those circumstances the person seeking to revise the DAC Assessment will probably have the burden of proof. Normally this burden can only be resolved on a balance of probabilities test. In other words is it more likely than not that one party's assessment of the REC is correct. However, the LEC Process will be principally a "crystal ball" gazing exercise and the judge or arbitrator may not have many facts to work with. Under these circumstances the balance of probabilities test may be slightly amended to a percentage of probability test. This theory looks at the percentage of any contingency occurring, and the contingency with the greatest percentage possibility is accepted. Should either the OIC or the Courts adopt this approach, it will emphasize the need for a multi-disciplinary, in depth approach to strengthen the REC analysis. Appended to this paper is a summary of the Decision in Resendes v. Boutros which is extremely informative for understanding the comprehensive of nature of the loss of earning capacity assessment.

SUMMARY
In some cases the determination of insured's PEC is a straight forward mathematical calculation. However in other cases a personalized assessment will be required. Gathering background data at the first available opportunity is crucial. A good investigator will probably be retained in almost all of these cases. Medical experts may be retained do comment on any pre-accident "impairment" However in almost all cases a vocational psychologist will analyze the information gathered by the investigator, prepare a list of potential employment which will then be analyzed by labour market economists and accountants to determine an insured's PEC.

It is unclear whether the insurer or the insured will have the burden of proof. In many cases both parties will be called upon to present evidence on this issue. However, should one party assume the burden, it is unclear whether it will be displaced by a balance of probabilities or a straight probability approach. In either case it will become crucial to implement the REC Process at the earliest possible date. It will involve a multi-disciplinary team of specialists from many disciplines including medicine, occupational health and safety, physical rehabilitation, vocational rehabilitation, psychologists, and statisticians including job placement experts and labour market economist. Although these latter individuals will probably supply the actual dollar value utilizing the REC, they are only a small part of the process. Each must build upon the other's opinion to arrive at an REC which would be accepted by both the Courts and the O.I.C.

APPENDIX
The decision of Resendes v. Boutros (1989) 2 C.C.L.T (2nd) p.275 (Ontario Supreme Court) predates O.M.P.P. However, it is extremely informative from a perspective of the analysis of a judge in arriving at a loss of earning capacity.

In Resendes the plaintiff was injured in a motor vehicle accident. He suffered extensive facial injuries which permanently disrupted the nasal configuration of his sinus cavities. Reconstruction plastic and dental surgery was used to restore as much of the plaintiff's face and jaw as possible but he had been left with scarring, disfigurement, reduced jaw mobility and residual pain. His sinuses were permanent congested and painful, and which left him prone to severe nasal infections. There was some medical evidence that he had a significantly increased risk of infection migrating to the brain with potentially fatal results.

Only a few days before the accident the plaintiff had qualified as a professional diver and was actively seeking employment in that field. Since the accident his sinus pain and the awareness of risk of infection had discouraged him from continuing employment beyond his first few months. He decided to withdraw from that occupation and return to university and became a full time student. Aside from the normal assessment of general damages, the Court was asked to comment upon the plaintiff's potential loss of earning capacity. Firstly the Court heard from those doctors who had performed the original surgery to provide it with some indication as to the magnitude of the problem. Next the Court heard from three different experts who testified as to the possible consequences.

The third expert was an occupational medicine specialist. He was only a general practitioner but did have extensive experience in conducting pre-employment medicals for a number of industrial and commercial employers and counselling them on hiring and employment practices with a view to screening potential risks in the work environment from the point of view of productivity and potential liability. The purpose of his testimony was to comment on the dangers inherent in the plaintiff's workplace as it pertained to his injuries. It was his opinion that the plaintiff could not return to his work as a commercial diver as the risks for infection and further damage to the sinus cavities was too great.

Following upon this testimony, the Court heard from a psychologist. This doctor was head of a multi-disciplinary team which included medical doctors, psychiatrists, psychologists, occupational therapists and others. Their job was to look at the impact of medical or behaviour disability on all occupations and the integration of disabled persons to employment.

This specialist noted that there was a less than 50% chance of sinus infection, and even smaller risks of complication leading to death but that these risks were still too high for the insured to return to his former occupation. His testimony utilized the straight probability approach rather than a balance of probability.

As a result of extensive psychological interviews, together with background information, it was determined that the plaintiff was best suited for a number of occupations all of which would probably require upgrading his education and retraining.

A clinical psychologist who was experienced at the Worker's Compensation Board in assessing disability was called upon to outline those vocational choices which best suited the plaintiff's pre-accident "personal vocational characteristics". It was noted that the plaintiff had expressed an interest in returning to university with a view towards enrolment in medical school but given his "PVC" this was not deemed feasible. However, a return a education and obtaining a degree in a science related field was certainly within his academic and avocational range.

Finally, the Court heard from actuaries who calculated the potential wage loss. Although this expert would not normally be part of an REC Assessment, his place would probably be taken by a job placement labour market economist, forensic accountants who would offer the proper statistics, and put a actual dollar value on the insured's residual earning capacity.

The Resendes case is a blueprint for future REC Assessments. It illustrates the complexity of the problem as well as the proper manner in which to present the case. Although not every assessment will be as complicated, unless proper procedures and experts are retained, there is very little prospect of success.

For more information on how we can assist you, please contact us at Atherton Barristers at (416) 365-1030 or toll free (866) 237-1030.

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