Accident Benefit REPORTER. In this issue: A Catastrophic Upheaval. n Cyclists and Access to Accident Benefits: the Path toward Payments

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1 In this issue: Accident Benefit May 2011 n A Catastrophic Upheaval n Cyclists and Access to Accident Benefits: the Path toward Payments Darcy Merkur Partner Thomson, Rogers A Catastrophic Upheaval The rules for properly calculating whole person impairment (WPI) ratings in accordance with the important definition of catastrophic impairment in the Ontario Statutory Accident Benefits Schedule (SABS) are now up in the air following the decision in Kusnierz v. Economical Mutual Insurance Co., 2010 ONSC 5749 (S.C.J.). In Kusnierz, Justice Peter Lauwers rejected the accepted method for calculating WPI ratings established by Justice Harvey Spiegel in Desbiens v. Mordini [2004] O.J. No (S.C.J.). The Kusnierz decision is under appeal. The benefits available to motor vehicle accident victims in Ontario varies enormously depending on the categorization of the injuries suffered. The legislation allows accident victims suffering from a catastrophic impairment to qualify for additional benefits of close to $2,000,000. The definition of catastrophic impairment has remained largely unchanged since In the Kusnierz decision, as in the earlier Desbiens decision, the focus was on the interpretation of the definition of catastrophic impairment as set out in subsections 2(1.1)(f) and (g) of the SABS (now repeated verbatim in subsections 3(2)(e) and (f) of the new SABS effective on or after September 1st). These provisions state: (f) an impairment or combination of impairments that, in accordance with the American Medical Association s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in 55 per cent or more impairment of the whole person; or (g).an impairment that, in accordance with the American Medical Association s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in a class 4 impairment (marked impairment) or class 5 impairment (extreme impairment) due to mental or behavioural disorder. The question in both Kusnierz and Desbiens was whether the WPI may include psychological elements primarily those set out in Chapter 14 of the AMA Guides, 4th edition. In the earlier Desbiens case, the court allowed the combination of the two elements (physical and psychological) by concluding that, n The Use or Operation of an Automobile n Celebrate Our 75 th Anniversary... After all, Your Stories are a Big Part of it Top Five Personal Injury Law Firms We are pleased to announce that Thomson, Rogers has been recognized as one of Canada s Top 5 Personal Injury Law Firms by Canadian Lawyer Magazine, April In addition, we would also like to congratulate the following firms that made the list with us: Howie, Sacks & Henry, McLeish Orlando, Oatley Vigmond and Singer, Kwinter. Continued on page 2 A Thomson, Rogers Publication Volume 12 Issue 1 May 2011 ISSN

2 Accident Benefit A Catastrophic Upheaval Continued from cover story I find that it is in accordance with the Guides to assign percentages to Mr. Desbiens psychological impairments and to combine them with his physical impairments in determining whether he meets the definition of catastrophic impairment under clause (f). (see paragraph 252) In the recent Kusnierz case, the court (in paragraph 77) comes to an opposite conclusion and prevents the combination of the elements by stating: These reasons, taken individually and together, lead to the conclusion that the mental and behavioural impairments contemplated by clause 2(1.1)(g) of the SABS are not combinable with the impairments to be assessed under clause 2(1.1)(f). The purpose of the SABS legislation was front and center in the Kusnierz case. In his concluding remarks on the issue of legislative purpose, Justice Lauwers mentions that the determination of purpose in the context of this catastrophic definition debate must be more provisionspecific (see paragraph 34). Because the Kusnierz case was heard in January (although the decision was only released October 19th), the new Sept. 1st SABS was not before the court. However, a provision-specific review of the history leading up to the new SABS and the new SABS itself leads to the inescapable conclusion that the legislation purposely left the Desbiens interpretation intact. The new SABS make no changes whatsoever to the wording of the WPI provision, despite express requests by insurance industry stakeholders to amend the definition and overturn the Desbiens approach. For example, the submissions by the Co-Operators to the Financial Services Commission of Ontario (FSCO) in July 2008 regarding FSCO s Five Year Review of Automobile Insurance stated: If it is not the intent to combine physical and psychological impairments, this may be done by removing from (f) the words an impairment or combination of impairments that and replacing with a physical injury only that. This solves the issue where using the term impairment brings in the definition found in section 2 which includes physical, psychological and physiological impairments. (see page 5) In its Report on the Five Year Review of Automobile Insurance dated March 31, 2009, FSCO noted that, Insurers support an amendment to the Regulation that would restore the concept that clauses (f) and (g) are not to be combined. (see page 29) However, the Report concludes that, FSCO is unable to conclude based on stakeholder feedback to date, whether it is more appropriate to combine physical and psychological injuries or treat them separately. Further consultation with experts in this area is needed. (see page 29) If the purpose of the legislation was being undermined by the Desbiens approach then the legislation could have been changed in the new SABS as was suggested by the insurance industry but it was not changed. While the Kusnierz case is under appeal, catastrophic accident benefit applications relying on WPI ratings are at a complete stand still, much to the detriment of the rehabilitation of these seriously injured accident victims. Taking away catastrophic accident benefit entitlement only serves to increase the magnitude of the related tort claims and these related tort claims will likely be expedited to offset the delay caused by the inability to access the enhanced accident benefits in the interim. Darcy Merkur is a partner at Thomson, Rogers in Toronto practicing plaintiff s personal injury litigation, including plaintiff s motor vehicle litigation. Darcy has been certified as a specialist in Civil Litigation by the Law Society of Upper Canada and is the creator of the Personal Injury Damages Calculator. n n n 2

3 In Ontario, it is undisputed that cyclists injured in accidents involving motor vehicles have access to statutory accident benefits Cyclists and Access to Accident Benefits: Caroline Meyer Associate Thomson, Rogers the Path toward Payments It is an unfortunate story that personal injury lawyers hear all too frequently: a cyclist, navigating the treacherous streets of Toronto, is struck by a motor vehicle. Facing a long road to recovery, the last thing a cyclist wants to do is traverse the confusing legal landscape of accident benefits. Issues often arise as to whose insurer ought to pay accident benefits to the cyclist. A cyclist who has his or her own auto insurance policy, or who may be covered under the policy of a family member, may question whether to submit an application for accident benefits to his or her own insurance company, or to the insurer of the involved motor vehicle. A cyclist who potentially may be eligible for coverage by multiple automobile policies may question which insurer has a duty to pay. Further, a cyclist who is involved in an accident involving more than one vehicle may be completely unsure where to claim accident benefits. Cyclists can breathe easy: in Ontario, it is undisputed that cyclists injured in accidents involving motor vehicles have access to statutory accident benefits. Nevertheless, there is a priority system to determine which insurer ought to pay accident benefits to the cyclist. Cyclist s insurer If the cyclist, the cyclist s spouse or someone upon whom the cyclist is economically dependent (i.e. a parent): 1. owns a motor vehicle; 2. leases a vehicle; 3. has a rental vehicle with a contract to rent for more than 30 days; or 4. drives a company car which was made available for the cyclist s regular use, then the application should be sent to the insurer for that vehicle. Continued on page 4 3

4 Accident Benefit Cyclists and Access to Accident Benefits: the Path toward Payments Continued from page 3 4 If more than one of the above scenarios applies, the cyclist can choose to send the application to any of the insurers set out above. Listed driver policy If the cyclist is not covered by any of the above scenarios, and is a listed driver on another person s policy, then the cyclist should submit his application to that insurer. Insurer of vehicle that struck cyclist If the cyclist is not covered by any of the above scenarios, and is not a listed driver on another person s policy, then the cyclist should submit his application to the insurer of the motor vehicle that struck him. Insurer of vehicle involved If the motor vehicle that struck the cyclist is not insured, and none of the above scenarios apply, and the cyclist was involved in an accident involving more than one vehicle, the cyclist may submit an application to the insurer of any of the other involved vehicles, regardless of whether those vehicles actually struck the cyclist. Motor Vehicle Accident Claims Fund If none of the above apply, then an application for accident benefits should be submitted to the Motor Vehicle Accident Claims Fund (MVACF). The MVACF is the insurer of last resort for cyclists as well as others. Where a cyclist may potentially have coverage under more than one automobile policy, this should be stated on the application for accident benefits under Part 4 of the Application for Accident Benefits. It is important to note that while a cyclist should do his or her best to fill out the application to the best of his or her ability, the receipt of a completed application for benefits to any automobile insurer who could conceivably respond to the claim triggers an insurer s obligation to pay benefits. Under section 2 of Ontario Reg. 283/95, the first insurer that receives a completed application for benefits is obliged to pay the benefits to the cyclist, pending the resolution of any dispute as to which insurer is actually required to pay the benefits. This first insurer may serve a notice on other insurers to dispute its obligation to pay benefits, but most do so within 90 days of receipt of the completed application. Beyond the 90 day mark, the insurer who received the completed application for benefits must continue to pay benefits regardless of any dispute as to the appropriate insurer. A priority dispute may arise for many reasons. For instance, in Liberty Mutual Insurance Co. v. Zurich Insurance Co., (2007) 88 O.R. (3d) 629, a 13 year old cyclist was struck by a motor vehicle insured by Liberty. Liberty received an application for accident benefits on behalf of the cyclist, listing incorrectly that the cyclist was living with his mother and that the cyclist was not insured. The cyclist was actually living with his father, whose automobile insurer could have been in a position to respond to the claim. The Court nevertheless found that Liberty ought to have determined that the cyclist was living with his father and discovered the insurer within the 90 days. Since Liberty did not do so, Liberty was prohibited from proceeding with the priority dispute. In Echelon General Insurance Co. v. CGU Insurance Co. of Canada, [2008] O.J. No. 2224, a cyclist was involved in a motor vehicle accident with a vehicle insured by Echelon. An application for accident benefits on behalf of the cyclist was received by Echelon. Echelon conducted its own research and found that the cyclist may have been insured by several different insurers. Some enquiries were made, but Echelon failed to determine that the cyclist s father was insured by CGU within the 90 day period. Accordingly, the Court concluded that Echelon was the priority insurer. Continued on page 5

5 ...first insurer that receives a completed application for benefits is obliged to pay the benefits to the cyclist. What these decisions all speak to is the fact that in accordance with the interpretation of the SABS, the insured person s rights take precedence. Indeed, numerous decision makers have noted that the policy of pay now, dispute later underpins the SABS. In the decision of ING Insurance Co. of Canada v. TD Insurance Meloche Monnex, [2010] O.J. No. 3549, the Ontario Court of Appeal quoted with apparent approval the application judge, who found with respect to the claim for accident benefits that the regulation seeks to start statutory benefits flowing to entitled claimants as quickly as possible, without awaiting the resolution of priority disputes amongst insurers. It is important for injured cyclists to remember that priority disputes are disputes between insurers and should not delay the claimant s ability to receive benefits to which he/she is entitled under the SABS. The issue of priority disputes can be infinitely more complicated than the fact scenarios set out in this article and cyclists ought to consult a knowledgeable accident benefits lawyer to navigate the accident benefit path. n n n The Use or Operation of an Automobile Richard Halpern Partner Thomson, Rogers Adam Halioua Associate Thomson, Rogers By: Richard C. Halpern and Adam A. Halioua Statutory Accident Benefits are available to every person injured in a motor vehicle accident, regardless of fault. These benefits are available only where the injury arises directly out of the use or operation of a motor vehicle. Where an insurer claims the injury was not directly caused by an accident involving a motor vehicle, it can be years before the injured person receives any money. This is because the insurer is treating the policy as providing no coverage at all. In a recent accident benefits case we handled for two young clients, Johnston and Peel Mutual Insurance Company 1, a dispute arose as to what constitutes an accident under the Statutory Accident Benefits Schedule Accidents on or after November 1, (the SABS ). This outcome was vitally important for one of our young clients who had sustained a catastrophic injury. 1 FSCO A and A Ontario Regulation 403/96, as amended [ SABS ]. Continued on page 6 5

6 Accident Benefit The Use or Operation of an Automobile Continued from page 5 6 The Facts Our young client, D.J. (aged 9), was severely injured when he was struck by a trailer after it had been removed from the back of a vehicle. D.J., and his 11 year old brother, O.J., were traveling in a pickup truck, operated by their cousin, towing the trailer. The cousin s intention was to deliver the trailer to their uncle s home. Once they arrived at the home, the truck, with the attached trailer, backed up the incline of the concrete driveway of the home. The boys exited the vehicle and watched as their cousin disconnected the trailer from the truck. Unfortunately, the trailer was not properly secured. Once he was finished detaching the trailer from the truck, the cousin entered the truck to drive it away. As he began to slowly drive off, he instructed the boys to run into the truck to see who would ride in the front seat. Before D.J. could get into the truck, he noticed that the trailer had begun to slide down the driveway and he attempted to stop it. As a result of the momentum of the trailer, D.J. was pushed into a large concrete utility pole adjacent to the driveway. Tragically, he was crushed between the trailer and the utility pole. O.J. witnessed the entire event. D.J. suffered a significant brain injury as a result of the incident. He was intubated for nine days and was placed in an induced coma. His injuries met the requirements of the catastrophic designation in the accident benefits scheme in that he suffered a brain impairment resulting in a score of 9 or less on the Glasgow Coma Scale (GCS). D.J. remained in hospital and/or a rehabilitative treatment center for nearly 6 months after the incident. It was obvious that D.J. urgently required attendant care and medical/rehabilitation benefits. Further, he was going to require substantial attendant care benefits and non-earner benefits into the future as his capacity for work, if any, would be greatly diminished due to his catastrophic brain injury. Use or Operation of an Automobile Despite the severity of our clients injuries, the insurer denied coverage, alleging that the injury was not caused directly by the use or operation of a motor vehicle. A trailer, they argued, is not a motor vehicle. We claimed there was coverage, arguing three alternative positions. First, it was the movement of the pickup truck that caused the trailer to move, leading directly to the sequence of events causing injury. Second, the pickup truck moving down the driveway was the 3 R.S.O. 1990, c. I.8, as amended [ Insurance Act ]. 4 Ibid. at s. 224(1). 5 s of the standard Owner s Policy approved for use on or after January 1, dominant feature of an uninterrupted sequence of events which lead to the injuries, as there was no intervening act which broke the chain of causation. Third, the trailer qualified as an automobile as that term is defined in the Insurance Act 3. The Arbitrator found that the incident was an accident as it resulted from a well-known activity to which automobiles are put (i.e. towing a trailer) and that the truck caused the accident (i.e. had the truck not moved, the trailer would never have moved as it was never truly secured without the truck). The Arbitrator also addressed our alternative argument, namely, whether the trailer could be an automobile for the purposes of the SABS. The Insurance Act, the enabling legislation of the SABS, defines an automobile as a motor vehicle required under any legislation to be insured by a liability policy and one proscribed by regulation to be an automobile 4. Under the Ontario Automobile Policy, any trailer used in connection with an automobile is considered insured for accident benefits 5. Thus, a trailer should be considered an automobile, Continued on page 7

7 His injuries met the requirements of the catastrophic designation in the accident benefits scheme in that he suffered a brain impairment resulting in a score of 9 or less on the Glasgow Coma Scale (GCS). as defined in the Insurance Act, if it were being used in connection with another vehicle at the time of the incident. We argued that the trailer was being used in connection with the truck, as the process of both connecting the trailer to the truck and disconnecting it from the truck was part of the use of a trailer, which would attract the definition of automobile. Further, since the trailer was not properly secured, the process of disconnecting the trailer from the truck had not been completed, as it was the act of moving the truck away from an improperly secured trailer that allowed the trailer to be in motion. Ultimately, the Arbitrator agreed that without the trailer being secured properly after being removed from the hitch of the truck, the disconnection process was incomplete. Accordingly, the Arbitrator concluded that the trailer was an automobile and that the boys were entitled to Statutory accident benefits. The insurer appealed the decision 6. The Director s Delegate hearing the appeal considered whether the time, proximity, activity and risk involved indicated that the trailer was being used in connection with the truck. Due to the trailer moving shortly after it had been disconnected from the truck, the fact that the trailer was very near to the truck and the risk created for those nearby, the entire event was found to be one continuous action. Therefore, the trailer was still being used in connection with the truck at the time of the incident. The appeal was dismissed. The Director s Delegate did disagree with the Arbitrator s finding that the truck was the direct cause of the accident. The trailer was the direct cause of D.J. s impairments, not the truck. As the trailer was found to be an automobile, D.J. had suffered injuries directly caused by the use or operation of an automobile, in any event. Following the appeal, a substantial settlement was reached which included a considerable portion of interest arising from the delay in providing these necessary benefits to the boys, which they were entitled to. Where the injured party intends to challenge the insurance company s denial of coverage there are steps that can be taken to protect the rights of the injured person pending the outcome of the dispute resolution process. Establishing the claim for benefits by submitting all the claims despite the denial will help preserve the injured person s claim for interest on outstanding claims should success be achieved. n n n 6 Peel Mutual Insurance Company and Johnston, Appeal Order P

8 Accident Benefit Celebrate Our 75th Anniversary... After all, Your Stories are a Big Part of it February s Inspirational Story: Ed the Sock submitted by Ed Shaul. A fantastic example as to how a small gesture of support, made a great difference in someone s ability to cope. Good night Phyllis Ed has decided to make a donation to The Hospital for Sick Children (SickKids). March s Inspirational Story: Never give up! submitted by Jamie Fairless. A truly heroic story by a young head injury survivor who has decided to dedicate his life to helping others. Jamie has decided to make a donation to the Brain Injury Association of London and Region. By sharing your stories as part of our 75 th anniversary celebrations, it s our sincere hope that others will be comforted and inspired by what they read. If you have a story to share, please visit our inspirational stories page at: Should you like to include video and/or photographs with your story or if you would like to upload a story you already have, please contact Jenny Guest at jguest@thomsonrogers.com ( ). We will also be selecting a number of stories for our 75 th Anniversary Commemorative book that we intend to share with others so they too can find courage and strength. Be sure to follow the stories on twitter at or if you would like to receive updates on your cell phone via SMS, text follow thomsonrogers to Speaking Engagements and Seminars April 30, 2011: 2011 MADD Canada s Victims Weekend Impaired Driving Civil Cases, speakers David A. Payne and David R. Tenszen May 25, 2011: Belleville Piecing the Puzzle Together: Catastrophic Claims, Tort Claims and the New SABS, speakers Dr. Joanna Hamilton, Leonard H. Kunka, David R. Tenszen and Kellie Radley July 12, 2011: SickKids Symposium on Brain Injury in Children Pre- and Peri-natal Brain Injury, speaker Richard C. Halpern Thomson, Rogers In-House Education Seminars Last year we launched our very successful In-House Education Seminar series for health care workers, community organizations and hospitals. If you have a topic that you would like Thomson, Rogers to present to your organization, please contact Joseph Pileggi at to make arrangements. If you have any questions regarding the articles in this issue of the Accident Benefit Reporter, please contact the following authors: Darcy R. Merkur dmerkur@thomsonrogers.com Caroline Meyer cmeyer@thomsonrogers.com Richard C. Halpern rhalpern@thomsonrogers.com Adam A. Halioua ahalioua@thomsonrogers.com Accident Benefit Reporter is a publication of Thomson, Rogers Suite 3100, 390 Bay Street, Toronto, Ontario M5H 1W2 Tel Toll Free Fax Visit our web site at: The material in this newsletter is provided for the information of our readers and is not intended nor should it be considered legal advice. For additional copies or information about Accident Benefit Reporter, please contact Thomson, Rogers. 8