Clarifying Catastrophe

In Kusnierz v. Economical Mutual Insurance Company, the Ontario Court of Appeal confirmed on Dec. 23, 2011 that psychological impairments should be combined with physical impairments to determine whether a person injured in a car accident has sustained a “catastrophic impairment.” The Ontario Court of Appeal’s decision in Kusnierz has a number of implications for automobile insurers and persons injured in car accidents in Ontario.   

Among other things, the appeal decision confirms that physical and psychological impairments should be combined under the 55% definition of catastrophic impairment in the Statutory Accident Benefits Schedule (SABS), and that psychological impairments should not be considered exclusively under the mental/behavioural definition. The appeal decision therefore ends the uncertainty created by the Kusnierz trial decision regarding combination of physical and psychological impairments under the 55% definition, and it restores the consistency in the case law that had existed following Desbiens v. Mordini.

The Court of Appeal’s decision in Kusnierz will also likely be relevant to its upcoming determination of the appeal in Pastore v. Aviva Canada Inc. (argument was scheduled for January 2012). The Pastore appeal involves competing interpretations of the mental/behavioural definition of catastrophic impairment. When it rules on Pastore, the Appeal Court may well reference Ontario Court of Appeal Justice James C. MacPherson’s findings in Kusnierz regarding the purpose and proper interpretation of the applicable legislation.  

Finally, the Court of Appeal’s decision in Kusnierz will likely be relevant to any future amendments the Ontario government might contemplate making to the definition of catastrophic impairment. The Financial Services Commission of Ontario (FSCO), the province’s insurance regulator, created an expert panel to review the definitions of catastrophic impairment in December 2010. The panel issued its report in April 2011. The panel’s report recommended that physical and psychological impairments not be combined under the 55% definition, and that further investigation of this issue was needed. A number of stakeholders in Ontario’s auto insurance system criticized this recommendation. It will be interesting to see what impact the Kusnierz appeal decision has on the Ontario government’s consideration of this recommendation.

COMPETING INTERPRETATIONS

Facts in Kusnierz

Robert Kusnierz suffered serious physical injuries in a 2001 car accident, including a below-knee amputation. He also developed psychological impairments. He sued  The Economical Mutual Insurance Company, which was responsible for providing him with accident benefits.

Kusnierz and Economical agreed the only potentially applicable definition of catastrophic impairment in this matter was the 55% whole person definition. They disagreed about whether Kusnierz’s psychological impairments should be assigned percentage ratings and combined with percentage ratings for his physical impairments to determine whether he satisfied the 55% definition.

Trial decision

Ontario Superior Court Justice Peter Lauwers released reasons in October 2010 following Kusnierz’s trial. He concluded that psychological impairments could not be combined with physical impairments under the 55% definition. He also found that Kusnierz could not meet the 55% definition on the basis of his physical injuries alone. He therefore determined Kusnierz was not catastrophically impaired.  

Prior case law

Lauwers’ decision in Kusnierz was inconsistent with Ontario Superior Court Justice Harvey Spiegel’s 2004 decision in Desbiens v. Mordini, the leading trial decision regarding catastrophic impairment. Philippe Desbiens, for whom the writer acted, was a paraplegic prior to a car accident in which he suffered further significant injuries. Spiegel’s decision found, among other things, that Desbiens met the 55% whole person definition by assigning a percentage to his psychological impairments and combining them with the percentage for his physical impairments.  

Desbiens confirmed catastrophic impairment status could be attained by a broader group of injured persons than many insurers had maintained. The insurers’ position was that only physical impairments should be considered under the 55% definition.

Prior to Lauwers’ decision, the court had followed Desbiens in Arts (Litigation Guardian of) v. State Farm Insurance Co. in 2008. In addition, the Financial Services Commission of Ontario, the administrative body that regulates accident benefits, followed Desbiens in several arbitration decisions.

Appeal decision

In allowing Kusnierz’s appeal, MacPherson’s written decision for the Ontario Court of Appeal preferred the reasons of Spiegel in Desbiens and Ontario Superior Court Justice Robert MacKinnon in Arts to those of Lauwers. MacPherson discussed five principal reasons in support of his conclusion.

First, he found a proper interpretation of the 55% definition was consistent with Kusnierz’s interpretation. He expressly adopted Spiegel’s analysis in Desbiens on this point. That analysis included findings that:
•    the drafters of the legislation intended the definition of catastrophic impairment to be inclusive rather than restrictive;
•    the definition of “impairment” was extremely broad; and
•    the 55% definition ensured that persons who did not suffer the specific injuries or conditions described in the other definitions, but who nonetheless had a severe impairment or combination of impairments, were able to recover needed health care expenses.

Second, MacPherson noted the purpose of the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, used to define impairments under SABS, supported combination. He found Lauwers had erred in concluding that combining physical and psychological impairments would contradict the Guides’ express purpose of providing an objective and standardized system for evaluating impairment. He noted the Guides’ parallel aim of assessing the total effect of a person’s impairment. He stated that to disregard the mental and behavioural consequences of a person’s injuries because they are too hard to measure would defeat the purposes of the Guides.

Third, MacPherson noted the Guides described at least five situations in which an assessment of a person’s physical impairment should take mental and behavioural impairments into account. Unlike Lauwers, he found these situations were illustrative rather than exhaustive.

Fourth, MacPherson felt that combining physical and psychological impairments produced results consistent with the purpose of the accident benefits legislation. He stated that interpreting the 55% definition to allow assessment of physical impairments in combination with psychological impairments was not inconsistent with the intention that catastrophic impairment determinations should remain rare.

Finally, MacPherson found that combining physical and psychological impairments promoted fairness and the objectives of the statutory scheme. He stated it seemed unfair to deny a person with combined physical and psychiatric impairments the enhanced benefits that were available to persons with similarly extensive impairments that fell entirely into the physical category or psychiatric category. He disagreed with Lauwers’ conclusion that the legislator chose to forbid the combination of physical and psychological impairments.