Sky’s the Limit

The increasing scope of punitive damage awards in auto injury cases seems limited only by the plaintiff counsel’s imagination, Jamie Trimble, a partner at Hughes Amys LLP in Toronto, warned the crowd attending the Ontario Risk and Insurance Management Society (ORIMS)’s Professional Development Day in Toronto.

The conference included seminars on a wide variety of topics, including the calculation of damages, construction risk, changes and evolution within the insurance industry, environmental liability, and D&O liability issues from around the world.

In his seminar, ‘Calculating Damages: Basic Principles and Unbelievable Examples,’ Trimble outlined what he sees as an emerging issue for insurers – the ballooning of damage awards in personal injury cases. He gave two reasons for the phenomenon: “the expanding heads of damages,” and an expanding number of injury types.

The expanding heads of damages occurs in three primary ways, he explained. First, the plaintiff might claim a loss of competitive advantage. Second, there might be a claim for the lost opportunity to have interdependent relationships. Finally, a claim might be made for the loss of insurability.

“I really want to tell you in a nutshell what [these heads of damages] are, because frankly they are misused,” Trimble said. Such misuse is perplexing, he added, because it happens even though the courts have defined the heads of damages very particularly.

MISSING THAT EDGE

According to Trimble, “a loss of competitive advantage applies to situations in which the injured party goes back to work at their job – and can do their job – but their loss, because they are now essentially ‘damaged goods,’ is that they won’t get that promotion.” In other words, the injured party would not get the increase in their salary at the same rate as a non-injured employee.

Trimble said plaintiffs make this claim as a way of saying they are back to work, yes, but they’ll never be working as well. “It’s all very fuzzy,” Trimble observed. “It’s a very specific award and plaintiff lawyers often misuse it to squeeze more money out of general damages.”

The most common misuse of this particular head of damage occurs when the plaintiff lawyer confuses it with loss of future income suffered by a plaintiff who has to take lesser work following an accident due to injury, Trimble said.

He cited the 1997 Ontario case Colonna v. Mitchell as an example. In Colonna, the plaintiff worked as a public health nurse whose goal of obtaining a Masters of Science in nursing and eventually becoming public health nurse manager was no longer possible because of her injury. “In assessing her claim for loss of competitive advantage, the Ontario Court of Justice found that the plaintiff’s accident prevented her from acquiring clinical experience and made her first choice occupation more difficult to obtain,” Trimble explained. “For these reasons, she was awarded $40,000 for loss of competitive advantage.”

Such sizeable awards are typically not the case, he acknowledged. Because it is a “fuzzy” kind of damage, the courts require strong proof.

For a judge or arbitrator, determining heads of damages requires a fair amount of crystal-ball gazing. “And because you’re looking into a crystal ball, the courts tend to award fairly nominal amounts, usually between Cdn$5,000 and Cdn$10,000,” Trimble said. “If you can really prove the case, I have seen awards up around Cdn$40,000 and Cdn$50,0000. But relative to the injuries that give rise to the claim, they’re pretty modest.

ONE IS A LONELY (AND EXPENSIVE) NUMBER

Lost opportunity for interdependent relationships typically arises in actions involving catastrophic injuries, Trimble explained. “Lost opportunity for interdependent relationships – I’ll never get married,” Trimble explained to the crowd, adding that this realization has two central components.

First of all, “on the one hand, the person is now lying in a hospital bed and will never know the joys of being married and having children, etc,” Trimble noted. This, he contended, is a general damages loss, not a true lost opportunity for interdependent relationships.

The second component, Trimble said, “is based on the theory that two people are cheaper than one. In other words, married people pay one mortgage, not two. It really addresses the issues of economies of scale.”

Awards for lost opportunity can only be awarded in the most significant of injury cases, Trimble noted. But it can be quite a sizeable award. For example, in Ontario, in the 1999 case of Osborne (Litigation guardian of) v. Bruce (County), the 14-year-old plaintiff was a brain-damaged paraplegic. “She was awarded [Cdn]$125,000 for lost opportunity for interdependent relationships, on the basis that she would never marry or enter into a dependent relationship and obtain the economies of scale that one realizes by virtue of being married,” Trimble said.

These awards, though, are tough to get. “You have to have a really serious injury and you have to be able to prove a case,” Trimble said. “In other words, you have to prove that they would have gotten married; that their spouse would or would not have had an income [because that affects the dollar equity]; that they would have stayed married and not divorced; etc.”

“It’s the same crystal-ball gazing [for lost opportunity] as [it is for] lost competitive advantage,” Trimble added. “Tough to get, but if you ring the bell, it’s worth some money.”

HIGH AND DRY

Trimble defines a claim for loss of insurability as “a claim for the increased cost of life or disability insurance for the plaintiff because of the injury.” This includes the cost of treatment the plaintiff requires – a cost that the insurer would ordinarily pay for, but now the coverage is no longer available because of the accident. In such cases, the plaintiffs will argue that, as a result of their uninsurability, they will be forced to pay the full costs of their medical care for the rest of their lives, because that’s what their policies would have paid for.

Trimble said this is not an appropriate claim. Medical costs are already covered under a separate head of damages, he noted, and so to collect as well on a loss of insurability would be an example of double recovery.

Instead, the issue is really that the benefits are not available because the plaintiff can’t afford the increased premium, Trimble said. An increased premium is easy to establish: the plaintiff simply presents the policy premium to the court as it was before the accident and as it is after the accident.

A claim for benefits not now available is trickier, Trimble added, citing the 1999 case of Nichols v. B.C. Cancer Agency in the B.C. Court of Justice.

In Nichols, a plaintiff brought a medical malpractice action against a clinic that did not read her test results in time to prevent the spread of cervical cancer. The plaintiff had long-term disability (LTD) benefits at her work, but she argued that if she ever left her employer to become an entrepreneur, and subsequently attempted to get LTD benefits, her insurance would be at a substantially increased risk rating and corresponding premium cost.

The court was not wholly persuaded by the argument, asking what might prompt such a shift in employment pattern under the circumstances. The court also questioned her assumption about the limited availability and increased costs of LTD in the future. In the end, the court awarded her Cdn$5,000.

“The reality is, most people will find an insurance policy somewhere for something,” Trimble said. “And the way I deal with it is to go to the broker and say: ‘Here’s the medical situation: find me the costs from an underwriter for the disability policy, net accident-related injuries.’ Usually you can get a quote and that becomes the amount of money awarded.”

But again, Trimble described the claim as “squishy.” He observed the courts are suspicions of it, and awards are usually
in the ballpark of between Cdn$5,000 and Cdn$10,000.

LITIGATION: THE MOTHER OF INVENTION

Of course, if plaintiff lawyers can’t find a new head of damage, they can always invent one by expanding on an existing one, Trimble said in jest. “Just take something, call it something else, and hope that nobody notices,” he laughed.

He pointed to reflex sympathetic dystrophy (RSD) as an example. RSD is a neurological phenomenon in which the pain resulting from an injury will spread to the surrounding area of the body. “It’s recognized, but no one really knows [what causes the symptoms]. But it has a number attached to it in a court’s mind. So, let’s now call it complex regional pain syndrome, because pain syndrome sounds good to a jury,” he noted.

As a plaintiff lawyer, “what you’re trying to do is rename it and perhaps get more money for it.”

Sometimes an existing diagnosis is expanded to new areas. Post-traumatic stress disorder, for example, was originally reserved for those returning from war or for people who had experienced intense, traumatic events. Nowadays, “it has become a regular diagnosis in even the most minor cases,” said Trimble.

In the courts’ eyes, these claims are also difficult to prove. The claims are “incapable of being proved except by the subjective evidence of the plaintiff who says, ‘I hurt.'” Trimble said. But on the flip side, they can be equally difficult to defend. “If the plaintiff is credible, and the experts she retains reliable, there is a significant risk to the defendant,” said Trimble, who noted that serious chronic pain cases have received awards between Cdn$100,000 and Cdn$150,000.

“The sky is the limit for these sorts of ‘new’ claims, and are only limited by the imagination of the plaintiff lawyer,” Trimble said.