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. 4735 (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 1996. 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,

” …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 Ontario and is the creator of the Personal Injury Damages Calculator.