Psyched Out

Physical injury claims today are frequently accompanied by associated allegations of psychological or psychiatric impairment, particularly anxiety, stress and depression disorders.

In the legal arena, questions abound as to whether or not these psychological-related claims are compensable. What is a “recognized” psychiatric impairment? How “reasonably foreseeable” was the psychiatric injury caused to a plaintiff? What is expected of the average citizen’s state of mind or “fortitude and robustness?”

Increased Frequency of Psych Claims

In the accident benefits sphere, particularly in Ontario, psychological injury claims have jumped significantly over the past 10 years, according to sources. Hard evidence is scattered across multiple insurance companies’ claim files, but many note a clear trend towards more psychological injury cases. “Without doubt, the frequency of these claims has been increasing in recent years,” says lawyer Lee Samis, principal of Samis & Company Barristers & Solicitors. “My sense is that this increase in activity is largely related to changes in the Ontario automobile injury compensation models. Successive reforms have increased the economic incentives associated with these types of claims.“

Subjectivity of Psych Claims

Lisa Fazzari, claims technical advisor for accident benefits at The Economical Insurance Group, says many legitimate psychological injuries arise out of car accidents. At the same time, she observed, “we have so many claimants who are in accidents that result in $300 damage to their cars’ bumpers, and there is a psychological injury claim. Often it is for post-traumatic stress. I thought the diagnosis for post-traumatic stress was a bit more stringent than that. We have soldiers coming back from Afghanistan who don’t necessarily have that diagnosis.”

A clear challenge with psychological claims is the cause and scope of the disorder in question. “The problem lies in the subjective nature of the injuries,” notes Fazzari. “A fracture you can see on an X-ray. With psychological claims, it really comes down to a psychiatrist or psychologist saying: ‘You have to trust what I’m saying.’ From my standpoint, it is difficult to know how objective these assessments are.” 

Many psychological claims involve multiple causes and overlapping impairments. “Prior susceptibility is very often an issue,” Samis says. “The heavy reliance on self-reporting makes this area vulnerable to magnification, embellishment or fraud.”

Psych Claims in Tort

On the tort side, courts have attempted to clarify the kinds of psychological claims compensable through negligence.
One landmark case heard by the Supreme Court of Canada was Mustapha v. Culligan (2008), the so-called “fly-in-the-water-bottle” lawsuit. Waddah “Martin” Mustapha had discovered a fly in his water cooler, supplied by Culligan. He claimed psychological trauma, including nervous shock and depression, and was originally successful when a trial judge awarded him $341,000 in damages. Culligan appealed and the Ontario Court of Appeal dismissed the case.

The Supreme Court dismissed the appeal in May 2008, although it found the plaintiff did suffer legitimate psychological damage. But “the law expects reasonable fortitude and robustness of its citizens and will not impose liability for the exceptional frailty of certain individuals,” the court ruled. It also found Culligan, while it had breached a duty of care to Mustapha, could not be found liable since the company could not have “reasonably foreseen” the customer’s psychiatric injury.

Legal professionals have since lauded the Supreme Court judgment for its common-sense approach. Nevertheless, more recent rulings have clouded the issue.

One example is Frazer v. Haukioja (2010). In this case, Grant Frazer lost control of his motorcycle and suffered injuries to both ankles. Dr. Haukioja initially diagnosed a left ankle fracture and a soft-tissue injury to the right ankle. However, weeks later, a radiologist examined the plaintiff’s x-rays and discovered a talar fracture in the right ankle. Dr. Haukioja did not tell Frazer about the x-ray result until later.

When Frazer realized the full extent of his injuries, the court noted, he became focused on Dr. Haukioja’s alleged misdiagnosis and the delay in informing him of the injury’s severity. Frazer saw a psychiatrist, who found that Frazer suffered from an anxiety disorder with features of panic disorder. A trial judge found Frazer’s psychiatric diagnosis was the result of Dr. Haukioja’s failure to properly treat his patient. Frazer was awarded more than $2.6 million in damages and costs.  The doctor appealed to the Ontario Court of Appeal, which upheld the original ruling in its judgment released in April 2010.

Legal tests in these cases revolved around negligence issues. But other factors included whether or not the injury was a recognized psychiatric impairment, and if the injury would be expected of an individual with reasonable robustness and fortitude. These rules are interpreted on a case-by-case basis, lending some unpredictability in interpretation of negligence for psychiatric injury.

“I perceive there is some desire from the courts to limit the nature of the claims that will receive compensation, whether by measurement of compensation in relation to ‘reasonably robust’ victims or by limiting compensation to ‘recognized’ impairments,” says Samis. “These concepts are helpful as far as they go, but they are far from being clear rules.”

In cases in which compelling evidence exists and the claimant is credible, there is often a favourable ruling on psychiatric injury, says lawyer Kadey Schultz, a civil litigation specialist and partner at Hughes Amys Barristers & Solicitors. “I think this is true even over and above the opinions of medical experts,” she says. “It really comes down to the claimant — it is a subjective test based on the plaintiff’s credibility.”

Ontario Accident Benefits

On the accident benefits side of auto insurance, insurance companies and lawyers have seen a significant rise in the number of psychological injury claims, especially in Ontario. “If you look at the rate of psychological claims by jurisdiction, it doesn’t make sense,” Fazzari says, citing a pattern noted by other sources. “I work with claims across the country and the numbers in Alberta and Atlantic Canada are not nearly the same as in Ontario. Does that mean there are fewer psychological injuries in those jurisdictions, or that more health care practitioners are diagnosing these in Ontario?”

Some have also noticed a condensed time period for the filing of psychological claims. “One thing we have seen on the AB side is . . . the initial claim for anxiety or depression comes in two to three weeks after the accident,” says Schultz. “This is alarming. Normally, you wouldn’t see that develop until after a period of time. That can really trigger how insurance companies have to deal with this.”

In fact, many argue adjusters and insurance company claims handlers have to deal with psychological claims in a different and much more proactive manner. “Handling these claims really comes down to best practices,” says Schultz. “One thing you have to do at the start is what we call ‘front-loading’ the claim file. That is gathering relevant information about pre-existing mental health issues of the claimant before the accident.”

Insurers should also consider the appropriate use of surveillan
ce if there are inconsistencies in a psychological claim, Schultz says. “In many cases, claimants say they are too depressed to shop or too anxious to drive a car,” she says. “Working together with a private investigator, insurers can use surveillance as an appropriate option.”

An insurer can also request an examination under oath under Section 33 in Ontario, which allows for a formal statement to be taken under some conditions. Issues such as the nature of the injury, the type of compensation and whether or not any psychological assessment has taken place can be verified through this examination.

Fazzari stressed there are legitimate psychological injuries. “But this should not be the case for as many claimants as we are seeing,” she says. “The number of these types of claims should be fewer and farther between.”