ICBC Law

I’ve previously discussed the deductibility of Part 7 Benefits in Tort Claims.  These benefits are also deductible in ICBC UMP (Underinsured Motorist Protection) Claims.  This was demonstrated in CD v. ICBC which I summarize below in my effort to create a searchable UMP judgement database.

In CD v. ICBC the Claimant was injured in a 2003 Collision in California.  The at fault motorist only had $25,000 in Third Party Liability coverage.  The Claimant was insured with ICBC applied to ICBC pursuant to UMP.  The value of the Claimant’s claim was decided via arbitration.  Arbitrator Yule quantified the claim at $27,500 less the $25,000 USD payment that was made by the at fault party’s insurer.  When converted to Canadian funds the payment exceeded the value of the claim leaving ICBC with no responsibility to pay under UMP.

Prior to reaching this conclusion the Arbitrator addressed the deductibility of Part 7 Benefits.  The Claimant claimed special damages of $1,445.  ICBC argued that all of this could have been claimed as a Part 7 Benefit and ICBC was under no obligation to cover these expenses under the provisions of UMP.  Arbitrator Yule agreed and in doing so provided the following reasons:

[ICBC] takes the position that nothing is recoverable for physiotherapy or massage therapy because these expenses are payable as no-fault benefits under Part 7 and, as such, are a “deductible amount” from UMP compensation.  There is no evidence that ICBC refused to pay these expenses under Part 7…I agree that the physiotherapy and massage therapy expenses are not recoverable in these circumstances as part of UMP compensation.  The vehicle repair deductible is not compensible because it is a claim relating to property damage, and UMP compensation is restricted to damages for injury or death.

This is the second in my series of UMP Case Summaries.  In today’s case (LD v. ICBC) the arbitrator had to address whether legal fees can be taken into account when considering the deductibility of past tort payments.

In LD the Claimant was involved in as 2003 collision in California.  The Claimant was insured with ICBC and had UMP coverage.  The at fault motorist only had $25,000 in Third Party Liability coverage and ICBC agreed that the Claimant’s claim exceeded this amount.

The parties agreed to have the value of the claim determined via UMP Arbitration.  Total damages of $86,608.31 were assessed.  Prior to this the Claimant already settled with the Defendant’s insurer for the policy limits of $25,000.  She had to hire counsel to achieve this result and after legal fees she received $16,054.

The Claimant argued that only the $16,054 should be deducted from the UMP damage assessment.   The arbitrator (Donald Yule) disagreed and deducted the full $25,000.  In doing so he provided the following reasons:

ICBC, however, submits that the correct deductible amount is what the M’s liability insurer was obliged to pay, namely $25,000.   (This position) is supported by the decision of Arbitrator Paul Fraser, Q.C. in Cederberg v. ICBC (May 18, 1995)….As Mr. Fraser concluded, the obligation to pay attorney’s fees arose out of a separate and independent contract with the attorney which, in no way, reduce the amount paid by the tortfeasor or payable by the tortfeasor’s insurer.  I agree with his analysis.  The full amount of the settlemetn of the M’s liability insurer is therefore a deductible amount.

This decision is also worth reviewing for the non-pecuniary damage assessment.  The Plaintiff suffered various soft tissue injuries.  Non-pecuniary damages were assessed at $55,000.  In doing so Arbitrator Yule made the following findings:

I find that in the accident Mrs. D suffered a Grade III whiplash associated disorder injury, bilateral thoracic outlet syndrome and right ulnar neuropathy, a Grade II lumbosacral spinal strain injury and myofascial pain in her shoulder ridge areas, and bruising to the knee.  These injuries caused headaches, interference with sleep, fatigue, irritability and anxiety.  The bruising resolved in short order.  The low back symptoms resolved within 2 years.  Headaches, and neck pain extending into the shoulders, while significantly inmproved by September, 2005, have nevertheless persisted to the date of hearing…

…I assess Mrs. D’s non-pecuniary damages at $55,000.

I should note that, adjusting for inflation, this assessment is closer to $58,000 in today’s dollars.

As previously discussed, when catastrophic injuries are sustained through the fault of an under-insured motorist most British Columbians enjoy Underinsured Motorist Protection “UMP”.

Sections 148.1 - 148.4 of the Insurance (Vehicle) Regulation deal with UMP Claims.  When disputes arise as to the availability or the amount of UMP coverage the matter needs to be resolved through private arbitration as opposed to a public lawsuit.   The law requires all UMP decisions from 2007 onward to be published on ICBC’s website.  These cases, unfortunately, are published in PDF Format and they are not search friendly.  To remedy this I’ve decided to include UMP case summaries on this blog.  With that in mind here is the first in a series of UMP cases summaries.

The first UMP judgement published was RAH v. ICBC.  In RAH the Claimant was injured in a 2002 motor vehicle collision.   Fault was admitted.  It was agreed that the value of the claim would exceed the Defendant’s insurance limits and the parties agreed to have the value of the claim adjudicated by way of UMP Arbitration.

The Claimant suffered a comminuted fracture of the left medial and tibial plateaus.  These required surgical correction.   Unfortunately, even with surgical correction, the injury was so severe that the Claimant was left with “a marked disruption of the articular surface which accounted for on-going pain and inability to regain full movement of the left knee“.   The prognosis was for gradual worsening with a likelihood of a total knee replacement.   It was accepted that this injury would seriously impede the Claimant’s ability to earn a living and total damages of $681,000 were awarded.  In assessing non-pecuniary damages (money for pain and suffering and loss of enjoyment of life) at $95,000 the arbitrator (Donald Yule) provided the following reasons:

The Claimant sustained severely comminuted medial and lateral tibial plateau fractures of the left knee.  He has undergone two surgeries, one to reduce the fractures with two plates and 10 screws and a second procedure to remove the hardware.  He faces the prospect of further surgery for a total knee joint replacement with a possible further revision 15 years later.  He has permanent on-going pain which will inevitably worsen over time until the first knee joint replacement surgery is done.  He has permanent loss of flexion of the left knee and knee joint replacement surgery will likely increase the loss of flexion.   He cannot return to his former occupation as industrial nurse/medic.  He cannot walk or sit for prolonged periods of time without causing an increase in left knee pain.   He takes non-morphine analgesics on a daily basis and occasionally Percocet for break-through pain.   He continues to use a cane.  Prolonged standing, walking on uneven surfaces, and going up and down stairs all aggravate his symptoms and will hasten the time when knee joint replacement surgery is required.  The claimant was physically active outdoors, apart from his work, before the Accident, both in the Scouting and Fourth Ranger groups and for recreational hiking, hunting, fishing and camping.  These activities except in a most limited and superficial manner, are now foreclosed to him…

…I assess the non-pecuniary damages at $95,000.

I should point out that this case was decided in 2008 and adjusting for inflation the assessment would be approximately $100,000.

Most people that are injured in BC motor vehicle collisions have access to “Underinsured Motorist Protection Coverage” (”UMP” for short).   Vehicles licensed in BC must carry a minimum of $1 million in UMP coverage.   Some vehicles carry more UMP coverage than this.

In catastrophic injury claims it’s important to determine how much UMP Coverage is available as these claims can often exceed a Defendant’s policy limits.

Sections 148.1 - 148.4 of the Insurance (Vehicle) Regulation deal with UMP Claims.  When disputes arise as to the availability or the amount of UMP coverage the matter needs to be resolved through private arbitration as opposed to a public lawsuit.   One of the difficulties with arbitrations is that they result in private reasons for judgement making it difficult to access precedents.

This difficulty was addressed by a 2007 amendment which requires “An arbitrator who adjudicates a dispute under this section must publish the reasons for the decision by forwarding a copy of the reasons, with personal information that would identify the parties deleted, to the corporation for publication on its website”

If you’re looking for UMP Arbitration Decisions ICBC has been posting these online since 2007.  It would be useful if this database was expanded to include decisions from prior to 2007 as UMP cases do not arise frequently compared to judicially decided personal injury claims and many useful precedents exist that are not publicly available.  However, this database is a useful starting point when researching UMP related issues and I thought I would point out this resource for those who were unaware of it.

Reasons for judgement were released today dealing with the issue of whether a defendant ordered to pay a plaintiff money for future wage loss as a result of a BC motor vehicle accident can deduct from such an award disability benefits the Plaintiff will receive from the Canada Pension Plan (CPP).

The Plaintiff was injured in a 2005 motor vehicle collision.  Liability was not seriously contested and the Defendant was found 100% at fault at trial.  The Plaintiff suffered serious injuries including a

1. Fractured sternum; and

2. Head injury with probable significant cerebral concussion; and

3. Contused lower thoracic spine and upper lumbar spine; and

4. Multiple rib contusions.

The most contested injury was whether the Plaintiff suffered from on-going problems as a result of a brain injury allegedly sustained in the collision.  The court found for the Plaintiff noting that 

[71]            On balance I conclude that I accept the expert evidence to the effect that it is more likely than not that there are persisting, but very mild, sequelae from the mild traumatic brain injury affecting cognition.  The effects on Mr. Kean’s cognition are so subtle as to be virtually indistinguishable from the concurrent effects from the other operating causes, namely pain, pain medication, and depressed mood. 

The Court assessed damages as follows:

ICBC argued that money the plaintiff has/will receive from CPP should be deducted from his awards for past wage loss and future wage loss awards.  The court dismissed this argument concluding that  ”the law in this jurisdiction is settled to the effect that CPP disability benefits fall within the insurance exception to the rule against double recovery and should not be deducted from tort awards for past or future wage loss”

The key discussion took place at paragraphs 102 - 111 which I reproduce below:

[102]        Counsel for the defendant and the third party argued that CPP disability benefits received by Mr. Kean should be deducted from his award for past wage loss, and the present value of future CPP disability benefits should be deducted from his future income award.  The thrust of their argument is that this is necessary to prevent double recovery.  The defendant argues that CPP disability benefits are a form of mandatory social insurance that workers cannot negotiate out of, and the scheme is a form of income replacement.

[103]        The defendant’s argument is essentially the same argument that these same counsel made unsuccessfully in the case of Maillet v. Rosenau 2006 BCSC 10.  In Maillet, the plaintiff had received social assistance payments which were deducted from the past wage loss, but Powers J. did not accede to the defendant’s argument that future CPP disability benefits should be deducted from the award for losses of future earnings.  As here, the defendants relied on the case of M.B v. British Columbia, 2003 SCC 53, suggesting that the rationale applied in that case to conclude that social assistance payments were deductible from a future wage loss award, was equally applicable to CPP disability benefits and that the decision represented a change in the law.

[104]        In Maillet, Powers J. followed a line of authority which had held that the CPP disability pension scheme was essentially an insurance scheme and covered by the insurance exception to the rule against double recovery.  This line of authority includes Canadian Pacific v. Gill,[1973] S.C.R. 654, Hayre v. Walz (1992), 67 B.C.L.R. (2d) 296 (BCCA) and Cugliari v. White, (1998) 159 D.L.R. 4^th 254 (Ont.C.A.).

[105]        Like Powers J, I do not see the reasoning in M.B. as effecting a change in the law as it applies to CPP disability payments.  The analysis undertaken in that case was outlined in ¶24 of the decision:

The first question is whether social assistance is a form of income replacement.  If it is not, no duplication arises.  If it is, the further question arises of whether social assistance can be excluded from the non-duplication rule under an existing or new exception.

[106]        The court determined that social assistance was a form of income replacement and then stated in ¶28:

It follows that the only way in which they can be non-deductible at common law is if they fit within the charitable benefits exception, or if this court carves out a new exception. Otherwise, retention of them would amount to double recovery.

[107]        After holding that social assistance payments did not fit the charitable benefits exception (because the rationale for that exception did not concern the purpose of charitable donations, but its effect on the owners and the difficulties of valuation), the court discussed whether it should carve out a new policy- based exception.  The court decided that it should not do so.  Clearly there was no viable argument that the insurance exception might be applicable to social assistance and that was not considered.

[108]        The defendant wishes to characterize the CPP disability payments as a form of social security because it is a legislative creature and contributions are mandatory. But, unlike social assistance, it is funded by contributions and only those who have contributed can benefit.  There is an overlap of recovery, but that is inherent in the insurance exception to the rule against double recovery.  The other side of the coin is that to deduct the CPP benefits from a tort award is to force the injured contributor to share the benefits of his contributions, (which represent deductions from his former earnings), with the tortfeasor.

[109]        The defendant’s book of authorities included, in fairness, the case of Sulz v. Minister of Public Safety and Solicitor General 2006 BCCA 582, which was decided shortly after theMaillet decision.  In Sulz, the British Columbia Court of Appeal quotes from Mr, Justice Iacobucci in Sarvanis v. Canada 2002 SCC 28 at ¶33:

….it has already been held by this court that CPP disability payments are not to be considered indemnity payments, and therefore that they are not to be deducted from tort damages compensating injuries that actually caused or contributed to the relevant disability.  See Canadian Pacific Ltd. v. Gill; Cugliari, supra.  This rule is passed on the contractual or contradictory nature of the CPP.  Only contributors are eligible, at the outset received benefits, provided that they then meet the requisite further conditions.

[110]        The issue in Sulz was the deduction of superannuation pension from a tort award.  The British Columbia Court of Appeal, in a decision written by Madam Justice Levine, (who was the trial judge in M.B. whose deduction of social assistance payments was upheld by the Supreme Court of Canada) said, at ¶65:

The superannuation pension received by the respondent is of the same character as CPP disability benefits and other pension payments, which have consistently held to be non-deductible from tort damages.

[111]        I conclude, as did the court in Maillet, that the law in this jurisdiction is settled to the effect that CPP disability benefits fall within the insurance exception to the rule against double recovery and should not be deducted from tort awards for past or future wage loss.

NOTE - the reasoning of this case may not apply to all ICBC claims.  For example in ICBC UMP Claims where ICBC is entitled to certain statutory deductions from the damages they need to pay to an insured.