Minor injury caps for motor vehicle injury claims across Canada

The BC Provincial government recently put forward legislation to implement minor injury caps for ICBC claims arising out of motor vehicle accidents from April 1, 2019 onward. This article is prepared by the ICBC claims lawyers at Simpson Thomas to explain how the minor injury cap legislation may not be what the typical British Columbian expects when they think of a “minor injury”. If you want to review the ICBC claims process before reading the article below, please consult our articles outlining the ICBC claims process.

Across Canada, there are two systems for compensating victims: an administrative system, often referred to as “no fault”, or a tort system, which is a fault-based system.

Manitoba and Quebec have administrative/no fault systems, Saskatchewan has an administrative system with the option to purchase tort-based insurance, and the remaining provinces have a tort-based system.

Newfoundland/Labrador and Saskatchewan use a deductible system, where they reduce damages by $2,500 and $5,000 respectively. The BC government has not discussed this alternative, instead they have decided that ICBC claims should be reformed by introducing a minor injury cap.

What constitutes a “minor injury” in other provinces?

Alberta, New Brunswick, Nova Scotia and PEI all limit the damages for “minor injuries”. Ontario has a very complicated system for limiting damages, but they have recently introduced a minor injury cap for treatment of victims with minor injuries, which is the source of the definition below. The definition of “minor injury” enacted in those provinces is as follows:

Alberta: “minor injury”, in respect of an accident, means (i) a sprain, (ii) a strain, or (iii) a WAD (Whiplash Associated Disorder) injury caused by that accident that does not result in a serious impairment:　Minor Injury Regulation, AR 123/2004,　s. 1(h).

New Brunswick: “minor personal injury” means any of the following injuries, including any clinically associated sequelae, that do not result in serious impairment or in permanent serious disfigurement: (a) a contusion; (b) an abrasion; (c) a laceration; (d) a sprain; (e) a strain; and (f) a whiplash associated disorder:　Injury Regulation, 2003-20, s. 4.2(1).

Nova Scotia: “minor injury”, with respect to an accident, means (i) a sprain, (ii) a strain, or (iii) a whiplash-associated disorder injury, caused by that accident that does not result in a serious impairment:　Insurance Act, RSNS 1989, c. 231, s. 113E(1).

Ontario:　”minor injury” means one or more of a sprain, strain, whiplash associated disorder, contusion, abrasion, laceration or subluxation and includes any clinically associated sequelae to such an injury:　Statutory Accident Benefits Schedule, O. Reg. 34/10,　s. 3

PEI:  “minor personal injury” means any of the following injuries, including any clinically associated sequelae, that do not result in serious impairment: (i) sprain, (ii) strain, or (iii) whiplash-associated disorder injury:　Insurance Act, RSPEI 1988, c. I-4, s. 254.2.

How does the BC government define “minor injury”?

BC legislation introduced by the Attorney General, Mr. David Eby, on April 23, 2018 includes the following definition:

“minor injury” means a physical or mental injury, whether or not chronic, that:

(a) subject to subsection (2), does not result in a serious impairment or a permanent serious disfigurement of the claimant, and

(b) is one of the following:

(i) an abrasion, a contusion, a laceration, a sprain or a strain;

(ii) a pain syndrome;

(iii) a psychological or psychiatric condition; and

(iv) a prescribed injury or an injury in a prescribed type or class of injury: Insurance (Vehicle) Amendment Act, 2018, s 29.

How does BC’s definition of “minor injury” compare to other provinces?

You don’t need to be an ICBC claims lawyer to see that BC’s definition of “minor injury” is much broader and much more complex than any other minor injury definition in Canada. Specifically, BC is the only province where:

• Chronic pain syndrome is considered a minor injury.
• Chronic psychological or psychiatric conditions are considered minor injuries.
• The act specifically allows the government without legislation to add (but not remove) injuries to this list.

Since Alberta enacted their minor injury cap 15 years ago, half of the provinces in Canada have agreed that a minor injury is essentially: a cut, a bruise, a sprain, a strain or a whiplash injury. In fact, Alberta has now reviewed their definition three times (most recently in 2016), and has not seen any need to revise it.

Why is the BC definition of “minor injury” different from every other province?

It is unclear why the BC government has decided to deviate from this approach, especially given that they have repeatedly emphasized the need to follow the lead of the rest of the provinces in Canada. Unlike other proposed reforms, there were no public consultations and the legislation was not revealed until the legislation was tabled on April 23rd. Mr. Eby has expressed concern that lawyers may thwart this legislation, but has failed to explain why BC is not following the well-established (and thoroughly litigated) definition being used by every other province with a minor injury cap.

It is also important to note that while many provinces have introduced minor injury caps, BC is the only province with a government-controlled insurance provider that has proposed minor injury caps. When the tort system was modified in Alberta, New Brunswick, Nova Scotia, Ontario and PEI, the government was certainly lobbied by private insurance companies (and trial lawyers), but the government was not also an active participant in the same sector where they were modifying the rules, nor did they have a financial stake in any of the participants in the tort system.

BC tort reform is complicated by the fact that the government is altering the rules of the tort system while at the same time they are in charge of the largest litigant in the tort system. For that reason, any change to the rules should be assessed carefully to ensure fairness, and there should be particular concern about enacting legislation that makes it easier for the government to change the rules further without legislative oversight.

Are dramatic changes required in response to the “dumpster fire” of ICBC’s finances?

Mr. Eby famously described ICBC as a financial “dumpster fire” when he initially proposed tort reform. He noted that ICBC was projected to have a $1.3 billion loss in the fiscal year ending March 31, 2018, posting a loss for the second consecutive year. This is certainly a dramatic reversal of fortune from the previous 15 years, when ICBC regularly posted large profits. During that time, ICBC was able to increase their investment portfolio by $8 billion and pay the government a dividend of over $1 billion. Even in the three years immediately preceding the recent losses, ICBC reported net income totaling $1.2 billion.

A review of ICBC’s financial statements show that it has built up a large investment portfolio, over years (even decades) of profitable operation. By January 1, 2016, ICBC’s portfolio was $14 billion. However, in the 15 month period that followed, ICBC’s investment portfolio had unusually poor returns: just over 3% annually. This was ICBC’s worst investment performance since 2008. However, unlike 2008, the investment environment was quite profitable in 2016. From January 1, 2016 to March 31, 2017, the TSX index increased 20% while the S&P 500 grew by 23%. If ICBC’s investment portfolio had matched the lower of these benchmarks, they would have realized an additional $2.17 billion in income.

If ICBC’s investments had at least matched market benchmarks, the investment revenue would offset the $1.3 billion loss, and still left ICBC almost $900 million in profit. It is unclear why ICBC’s investments performed so much worse than market benchmarks during this period, but that is unlikely to be aided by tort reform. Indeed, ICBC has operated profitably under the same tort system for several decades. Because of its role as a monopoly insurer, every vehicle owner in BC has to pay premiums to ICBC. If ICBC has excess premiums it can investment them and even a dividend to the government, but when it mismanages those premiums, it is the ratepayers that have to make up the loss.

While it is true that claims have increased, that would be expected with a growing population and economy. BC in general, and the lower mainland in particular, have seen steady population growth and with it an increase in the number of vehicles on the road. Many more of those vehicles are high end models that are sometimes driven at very high speed. Unfortunately, the proposed legislation is silent on how to deal with reckless drivers. This legislation would, if anything, decrease the costs that reckless drivers have to pay if they injure other drivers or pedestrians.

Are there any other major changes in the BC legislation?

The BC legislation imposes at least four other requirements/conditions on accident victims:

1. It defines “serious impairment” as an impairment that is not resolved within 12 months, but it explicitly enables the government to extend this period, and to add other criteria. So the government could, without legislation, extend the cap to cover injuries that continue past 12 months but do not preclude the injured person from working.
2. If the injured person fails to seek a diagnosis or comply with the prescribed “treatment protocol”, then their injury is deemed to be a minor injury even if it does not resolve within 12 months, unless they can prove that they would not have recovered even if they followed the protocol. The word ‘prescribed’ here does not mean prescribed by your doctor, it means prescribed by the government. The legislation empowers the government to draft regulatory “treatment protocols” for minor injuries. However, because the definition of minor injury is so much broader than anywhere else in Canada, the government would effectively have the power to overrule injured individuals (and their doctors) regarding the treatments to be followed for almost anyone with an ICBC claim. If an injured person chooses to follow the medical advice of their doctor instead of the government, even a serious or permanent injury could be deemed to be a “minor injury”.
3. Even if a “symptom or condition associated with the injury” does not resolve within 12 months, that does not change the status of the underlying injury.
4. The cap amount must be reduced if the injured party contributed to the accident (liability split) or their injuries (e.g. failed to wear a seatbelt).

Finally, the legislation leaves a lot of issues open to future regulation, including:

• Formal examination and assessment to determine whether an injury is a minor injury.
• Onus of proof for a minor injury.
• What role, if any, doctors and other medication practitioners can have in the “treatment protocol”.
• Creating a registry of government-recognized experts to whom injured individuals can be referred.
• Compelling injured individuals to be assessed by the government’s preferred experts regarding their injuries.
• The maximum amount payable for a minor injury, which can be shifted up or down and may or may not be indexed to inflation.

The proposed changes have caused considerable debate and the Road BC Petition is currently circulating among those who have concerns about the proposed legislation.

If you or a loved one has been hurt in a motor vehicle accident, it’s advisable to consult with an ICBC claims lawyer who can help navigate the complex legislation around personal injury claims. With 13 lawyers and 44 staff members, Simpson, Thomas & Associates has been helping car accident victims since 1970.

Set up a free consultation with an experienced injury lawyer today. You may call 604-689 8888 or book online.