Canadian Underwriter

Redefining Catastrophic

October 1, 2015   by Greg Meckbach, Associate Editor

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For Ontario auto claimants injured in collisions on or after June 1, 2016, new criteria will apply to catastrophic impairment. And while the criteria for psychiatric and psychological impairment will change, claims will still be able to combine psychiatric and physical impairments.

The Insurance Brokers Association of Ontario (IBAO) may see the province’s new criteria for catastrophic impairment as contributing to efforts to combat fraud and abuse. But some lawyers specializing in accident benefits caution that there will be a period of uncertainty, as well as a learning curve for accident benefits professionals, when the new criteria come into force.

Ontario law requires that auto policyholders purchase coverage of $50,000 for medical and rehabilitation benefits – in addition to $36,000 for attendant care – for non-catastrophic injuries. Limits for catastrophic impairments currently stand at $1 million for attendant care and $1 million for medical and rehab benefits.

However, all this changes for auto accidents occurring on or after June 1, 2016.

The move fulfills a promise made by Ontario finance minister Charles Sousa this past April. Ontario is “the only province that provides catastrophic coverage, which is expensive,” Sousa said at a press conference before tabling the province’s 2015-2016 budget in the legislature.

“We are modifying it somewhat,” the minister reported at the time, with the budget document stating the criteria for catastrophic impairment will be updated to “ensure, where possible, that insurance coverages reflect the most relevant scientific and medical knowledge on identifying and treating injuries from automobile accidents.”

That assurance was followed in August by the Financial Services Commission of Ontario’s (FSCO) announcement that the criteria for catastrophic impairment will change for traumatic brain injuries, amputations, ambulatory mobility, loss of vision and mental and behavioural impairments. There will also be a new process for combining physical with mental and behavioural impairments, FSCO reported at the time.


The new definition will help combat fraud and abuse, while providing clarity and benefits to the accident victims who most need support, suggests IBAO president Michael Brattman. “With a more clearly defined catastrophic definition, insurance companies will be able to price accordingly, which, ultimately, benefits the consumer in terms of more affordable insurance,” Brattman says.

The new definition is based, in part, on recommendations made in 2011 by the Catastrophic Impairment Expert Panel, which included using the American Spinal Injury Association (ASIA) classification for spinal cord injury.

Currently, Ontario’s Statutory Accident Benefits Schedule (SABS) stipulates that paraplegia or quadriplegia caused by an accident is a catastrophic impairment. But with the new definition, a claimant with paraplegia or quadriplegia would also need to meet certain criteria on the ASIA impairment scale.

In the old system, paraplegic or quadriplegic “are terms that we understand and that adjusters understand,” notes Philippa Samworth, a partner with Dutton Brock LLP whose specialties include insurance defence and accident benefits.

“Now, we are going to the ASIA impairment scale and you have to meet specific criteria on that,” Samworth says. Those criteria are “supposed to make this an easy, objective way of determining” whether or not a victim is catastrophically impaired, she says, pointing out that in all categories of impairment, the government is introducing criteria that the expert panel “thought would be very helpful” and would provide an “evidence-based scientific approach.”

As a lawyer, though, Samworth says she finds it difficult. “When I sit and look at the definition – whether I’m a plaintiff lawyer or a defence lawyer – I can’t tell you today whether somebody who was a paraplegic on one of my files last year would qualify under the new system,” she reports. “Ostensibly, they should, because it’s supposed to be clarifying and making a clearer definition, but it’s just a whole new criteria for everything, which opens up incredible uncertainty and confusion,” she adds.

The new criteria are “much stricter,” Samworth argues, noting that the definition of brain impairment will no longer refer to the Glasgow Coma Scale (GCS), which she describes as “one of the looser tests.”

Tara Lemke, an associate lawyer with Nelligan O’Brien Payne LLP in Ottawa, suggests that removing the GCS is good for both insurers and claimants. “The changes will, on one hand, make it clearer as to who actually should be considered catastrophic and will, hopefully, screen out some of the people who have been found catastrophic for one reason or another who probably technically should not have been,” says Lemke, whose areas of expertise include insurance defence, personal injury and auto accident benefits.

Lemke expects that changes to the tests for psychiatric and psychological impairment will make it more difficult for an accident victim to be considered catastrophically impaired.

For example, to have a mental or behavioural impairment that qualifies as a catastrophic impairment under the new definition, a claimant would need to have a Class 4 (marked) impairment in three or more areas of functioning, or a Class 5 (extreme) impairment in at least one functional area. That differs from the current system, under which a claimant can be deemed catastrophically impaired if he or she has a Class 4 impairment in only one functional area.

Aviva Canada previously argued in court that to have a catastrophic impairment, a claimant requires an “overall impairment in all four of the functions: activities of daily living, social functioning, concentration and adaptation,” Justice Kathryn Feldman of the Court of Appeal for Ontario wrote in a 2012 ruling. In Pastore v. Aviva Canada Inc., the appeal court upheld a FSCO arbitrator’s ruling that a claimant only needs to have a Class 4 impairment in one of the functions to be defined as catastrophically impaired.


With the changes that take effect next year, a claimant can be considered catastrophically impaired if he or she has a mental or behavioural impairment, excluding traumatic brain injury, that when combined with a physical impairment, results in a “55% of more impairment of the whole person.”

In this regard, the government went against the advice of the expert panel, which recommended that there be no combination of psychiatric and physical impairments. “The panel had trouble understanding how combinations of physical and psychiatric conditions that independently do not meet the criteria for catastrophic impairment could be equated to a severe injury to the brain or spinal cord or to blindness,” then superintendent of financial services Philip Howell wrote in December 2011 in a report on the catastrophic definition.

Under the new definition, Samworth points out, the method of combining physical and psychiatric conditions will be different.

Asked if she believes the new criteria could reduce insurers’ costs, Samworth says it is a matter of wait and see. “The plaintiffs’ lawyers are going to take a look at it and say, ‘Wait a minute, this is all new. I don’t know how this ASIA thing works, so I’m going to go and get my own doctor to take a look,'” she predicts.

“We are going to have – much like we did under the old system – quite a few years of interpretation and fighting over how some of these things are applied, what they actually mean, how people fall within the cracks, or outside the cracks. So it may, ultimately, end up being less expensive, but I can’t imagine it’s going to be like that at the beginning.”

Samworth notes that while the current definition cites the fourth edition of the American Medical Association’s (AMA) Guides to the Evaluation of Permanent Impairment (published in 1993), the new definition refers both to the fourth and sixth (published in 2008) editions.

“There is going to be a growth period, a learning curve any time there is such a fundamental change to how these things are dealt with,” says Lemke, but notes that is not necessarily a bad thing.

“From what I have read about the sixth edition, it actually provides a rating for the mental and behavioural impairments, which has been, up until now, more or less lacking in previous versions of the AMA guides. From what I’ve read, the sixth edition is also meant to be clearer, more evidence-based.”

Lemke suggests that after the changes come into force, it will be “more challenging” for catastrophically impaired victims. Instead of having separate $1-million limits – for attendant care and medical/rehab benefits – the new standard auto policy will have just one such limit for both attendant care and medical/rehab benefits.

For non-catastrophic injuries, the mandatory coverage for consumers to purchase will be reduced to $65,000 for medical, rehabilitation and attendant care expenses, compared to the current mandatory limits of $50,000 for medical/rehab and $36,00 for attendant care. Those are half the mandatory limits that were in place before the province brought in auto insurance reforms five years ago in 2010.

Policyholders can still purchase optional additional coverage, but Lemke suggests that after the mandatory coverage was reduced in 2010, “virtually nobody purchased the optional benefits because the increased premium costs associated with getting that enhanced level of coverage pretty much offset the additional benefit.”

When optional coverage is available, “it is paramount that clients have a proper advisor who can explain their coverage options,” Brattman emphasizes. “Clients need to understand how auto reform changes impact them personally so they can make an informed decision,” he adds.