Insight Seminar - April 11, 2006

There has been no shortage of papers and speeches discussing the possible changes facing the personal injury bar and motorists in Ontario as a result of the ‘Bill 198 threshold’ as enacted in October 2003. To date there has been no judicial determination of the changes made to the threshold. Until then, we are still right back in 1993 using Meyer v. Bright (1993), 15 O.R. (3d) 129, to provide our analytical framework.

In December 2005 Our Court of Appeal affirmed the Meyer v. Bright framework again in the decision of Jones v. Mazzola [2005] O.J. No. 5541 and confirmed that the question of what is “serious” must be decided on a case-by-case basis. Furthermore the Court reiterated that it “ was not prepared to prescribe a formula” to decide these questions. The question of whether an impairment is serious is to be answered subjectively by looking at the particular circumstances of individual Plaintiffs. By enacting regulations that seek to further define what a permanent serious impairment of an important physical, mental or psychological function is, has the Government of Ontario sought to further restrict the rights of innocent victims to compensation? Has the regulation inserted an element of objectivity into the analytical framework or is it simply a codification of court rulings to date?

It is helpful to step back a few years and remember that with a provincial election looming in the fall of 2003, automobile insurance became a bit of a political football with all parties claiming they had a solution for rising premiums.

When Bill 198 was initially passed with ‘regulations to follow’, it was justified as a response to control rising premiums. The governing Conservative party explained in June of 2003 that:

“We passed legislation last year that laid out a legislative framework to improve the auto insurance system to make sure we could stabilize rates and provide benefits for consumers, and also try to fight the fraud and abuse that had slipped back into the system (emphasis added).

Shortly after this the Ministry of Finance issued a white paper titled “Automobile Insurance Affordability Plan for Ontario: Next Steps” in July 2003. The Governments focus was to address rising premiums and the White Paper listed the factors that resulted in higher premiums:

• Higher cost of vehicle repair reflected by a growing number of expensive vehicles and the more sophisticated nature of repairs;
• Higher health care costs;
• Higher costs from fraud in the system;
• Lower returns from investments;

Amending the threshold would not address any of the causes of rising premiums. Changes to the legislation such as introducing the Pre-approved Framwork (PAF) program of care clearly dealt with higher health care costs and introduction of a paralegal code of conduct would protect consumers while the right to an examination under oath could assist insurers in investigating fraudulent claims.

Additional actions included reviewing the role of Designated Assessment Centres (DACs), establishing affordable health care provider fees and doubling the existing $7,500.00 and $15,000.00 deductibles for FLA claims and pain and suffering awards. An unattributed comment in the white paper states that “it has been suggested that, over time, court awards for minor injuries have increased and the deductible levels have become less effective.” It is unclear what evidence, if any, there is to support this, however the deductibles were duly increased as the intent of the deductibles “is to reduce costs and pressure on the auto insurance system”.

Near the end of the white paper future options included “tort reform” and “reviewing the threshold at which an injured party can sue for pain and suffering”. The Insurance industry maintained that the portion of auto insurance premiums that can be attributed to court awards had been rising rapidly and that tort reform was necessary. Proposals to address this included changing the threshold so that only people with physical injuries could sue for pain and suffering or address “rising costs” associated with the threshold by having it more clearly defined in a new regulation.

Somehow clarifying the threshold was supposed to reduce the number of individuals able to sue. The language in the white paper regarding defining the threshold is unusual. It suggests that there was confusion with respect to how to interpret the threshold yet the Court of Appeal provided a very simple and functional framework in 1993 with Meyer v. Bright. Any confusion with applying the threshold framework did not arise from the statutory wording but rather from the unique and peculiar facts of each case, no two of which are the same.

A review of the case law does not suggest that Judges in the Ontario courts struggled with the wording of the threshold. If the intention of providing a regulatory definition was to further restrict the right to sue for pain and suffering will it accomplish that?

DEFINITION OF PERMANENT SERIOUS IMPAIRMENT OF AN IMPORTANT PHYSICAL MENTAL OR PSYCHOLOGICAL FUNCTION

KEEPING UP WITH THE JONES:

If Maria Jones had the misfortune of getting into a car accident in October 2003 instead of November 26, 1996 would the outcome have been any different in Jones v. Mazzola? Ms. Jones was 28 when the accident happened and 35 at the time of trial. She had 3 children between 3 and 13. She was on maternity leave at when she was injured. She went on to develop chronic neck and back pain and migraine headaches that could last from 5-30 minutes making her nauseas and dizzy. Sleeping became a problem and she would average two hours per night. She returned to work in June 1997 working off and on. She claimed that that she could just “cope” with work as an inventory control analyst. She took extra strength Tylenol and muscle relaxants.

Her chronic pain and fatigue interfered with her ability to carry on her activities of daily living outside work. She no longer coached soccer for her daughters team and did not go to games. She required ongoing help to complete all of her housework. Her social life was restricted and she interacted less with her children. There was no indication of any pre accident health problems and most importantly, she was found to be a credible witness.

Interestingly her supervisor testified that he was aware of her headaches and sleep problems but described her work performance as excellent before and after the accident. So while Ms. Jones took pride in her work and was able to cope, albeit with great difficulty “her injuries have had an impact on her ability to do household chores, share activities with her children and enjoy a social life”.

Justice Herman concluded that while her job performance does not seem to have suffered, her limitations described above constituted physical impairments. The impairments were deemed to be permanent since seven (7) years had passed and they were likely to continue indefinitely.

On the question of whether the functions that had been impaired were important it was noted that “the ability to sleep is important. So too, is the ability to care for ones children, share activities with them and otherwise lead a normal life without significant discomfort” Finally the impairment was deemed to be serious because there was a significant effect on the plaintiff’s enjoyment of life and her ability to perform her usual daily activities, in particular her activities outside the workplace.

In applying the new threshold definition, one could not argue that Ms. Jones met criteria in s. 4.2 (1) 1. i or s. 4.2 (1) 1. ii since her regular employment was not substantially interfered with nor was she training for a career when she was hurt. However s. 4.2 (1) 1. iii could apply since her impairments did “substantially interfere with most of the usual activities of daily living, considering the persons age. Ms. Jones was a working mother and her ability to function as a mother and wife were substantially interfered with.

Is the impaired function important? Ms. Jones would meet the exception in section 4.2(1) 2.iv as the impaired function was surely “important to the usual activities of daily living” of Ms. Jones.

The question of permanence in s. 4.2(1) 3.iii raises a potentially interesting issue. The balance of the sections seems to mirror language used in the past by judges. However the final requirement states that the impairment must:

Be of a nature that is expected to continue without substantial improvement when sustained by persons in similar circumstances.

This could invite someone to try to compare injuries on some sort of objective basis to group individuals into healing categories. Medically it would be difficult and an attempt to use Quebec Task Force WAD designations would be inappropriate. Still after seven years, it is probably safe to say that under the new regulations, a judge would find that Ms. Jones impairments were permanent.

Last and least, the regulations (s. 4.3) require the plaintiff to adduce medical evidence of at least one physician that explains the impairment. The onus of proving his/her case was always squarely on the plaintiff and this adds nothing to the debate on the meaning of the threshold.

CONCLUSION:

In the end the expanded definition of the threshold will not make a tremendous difference in the type of claims that are or are not threshold exceptions. The more serious problem becomes the $30,000.00 deductible which will not apply to damages assessed at more than $100,000.00. The practical effect of the increased deductible is that without a loss of income or loss of earning capacity claim, some claims may not be financially feasible. Retired people or stay at home spouses will have to contend with a significant reduction in their claims simply because they do not work although they suffer from serious impairments. And in most other cases, insurers get to keep another $15,000.00 in their pockets. A cynic would suggest that this was the real reason for the amendments. On June 4, 2003 MPP Shelly Martel quoted in the legislature an article in the February 17, 2003 Thompson’s World Insurance News discussing the absence of growing existing capital through investment gains:

"The only real solution is more capital…finding ways to increase the flow of capital into the market is the key. It is hoped that this can be achieved by improving the prospect for profit through the current auto reforms. This is precisely the goal, said MPP Rod Sampson, who is spearheading the legislative reform"

A more fair result would be to have a threshold or a deductible but not both. That battle was fought and lost 10 years ago.