November 26, 2013

SABS Update – CAT O’ 3 Tails: Court rules on multiple collisions contributing to CAT impairment

For the week of November 26 to November 29, 2013 

Dominion of Canada General Insurance Co. v. Chambers, [2013] O.J. No. 4802 (S.C.J.)

The Applicant, Dominion of Canada General Insurance Co. (“Dominion”) sought a determination of whether the respondent insured, Teresa Chambers was permitted to apply once for a finding of catastrophic impairment relying upon three separate collisions, or whether she was required to submit separate applications for each collision.

Dominion sought an order that s.45 of the Statutory Accident Benefits Schedule (“SABS”) “precludes an insured person from submitting an application for a determination of catastrophic impairment, which lists more than one car accident and purports to claim that the insured is catastrophically impaired, as a result of the cumulative effects of the multiple car accidents”.

Ms. Chambers had been in three collisions, dated May 18, 2003, June 20, 2003 and February 3, 2005.  In the first she sustained soft tissue injuries to her neck shoulder and left hand, headaches, tinnitus, impaired hearing and temporomandibular joint pain.  In the subsequent collisions, she sustained additional soft tissue injuries and exacerbated her prior injuries.  Following the final collision, she experienced depression and a mood disorder as well.

In 2012, Ms. Chambers applied for a determination of catastrophic (“CAT) impairment based on her Whole Person Impairment (“WPI”) rating.  Her family physician, Dr. Gale listed all three collision dates as the “Date of Accident”.  Dominion rejected the application, and requested separate forms for each collision.

On this application, Dominion accepted the proposition that several collisions can contribute to an insured’s present condition for purposes of determining WPI. It rejected the respondent’s position that if the CAT application was successful, she should have access to the enhanced benefits under the SABS for each collision.  Dominion claimed that the legislature could not have meant to have the benefit limits increase for each collision on the basis that it would be impossible for insurers to set reserves or calculate premiums accurately if a prior collision could retroactively attract CAT entitlement in the manner proposed.

After reviewing the legislation and applicable principles of statutory interpretation, Justice Rady agreed with Dominion.   She found that the wording of s.3 of the SABS clearly referred to a single precipitating event- the accident.  This accorded with common sense and presumed legislative intent to define CAT impairment by reference to a single collision.  She observed that neither of the first two collisions was sufficient to render Ms. Chambers catastrophically impaired, and that the third collision acted as the catalyst or “tipping point” that transformed a non-CAT situation into a potentially catastrophic one.

Justice Rady further agreed that this should not lead to access to threefold enhanced benefits.  It would be very difficult to accurately reserve a claim if it was possible to reach back in time to access benefits.  Her Honour proposed a scenario where three separate insurers were responsible for the three collisions and observed: “It seems untenable that an insurer for a relatively minor accident that adjusted and closed the file appropriately and promptly could find itself liable for benefits at some time in the future because injuries in a subsequent accident or accidents, taken cumulatively, cause the plaintiff to become catastrophically impaired.”

However, Justice Rady refused to grant the order as sought.  She expressed concern that the proposed wording (see above) might be interpreted as meaning that an application referring to a single collision may not claim that the insured is CAT as a result of the cumulative effect of multiple collisions.  Instead, she ordered simply that s. 45 of the SABS requires an insured to specify one accident in respect of which a determination of CAT impairment is requested.

IMPLICATIONS

This application represented something of a stealth attack by Dominion, masked by the reasonableness of its submissions.  The objective appears to have been slipping the second clause of the proposed order past the court, which would have stood as justification for rejecting numerous otherwise viable CAT applications until overturned on appeal.  Her Honour was, thankfully, unfazed.

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