Finding Clarity in Catastrophe

As Ontario prepares to hash out a new definition of catastrophic impairment, an Ontario court has delivered the clearest expression yet on the issue of combining physical and psychological impairments to reach the 55% threshold for “whole person impairment” (WPI).

In Kusnierz v. The Economical Mutual Insurance Company, the Ontario Superior Court basically sided with insurers, who have long argued that courts and arbitrators should not be combining psychological and physical injuries for the purpose of determining whether an accident victim meets the 55% threshold for a catastrophic injury.

The issue is of critical importance to insurers because a catastrophic impairment designation means auto injury victims are eligible for a significantly higher amount of accident benefits. These impairments can mean the difference between up to $100,000 in medical-rehabilitation benefits and up to $1 million. The impact on insurers’ claims costs is huge.

The legal issue centres on two subsections in the Statutory Accident Benefits Schedule (SABS)– ss. 43.2(1.1) (f) and (g).

Subsection (f) says a catastrophic impairment is “an impairment or combination of impairments that, in accordance with the American Medical Association’s Guides to the Evaluation of Permanent Impairment [The Guides], 4th edition, 1993, results in 55 per cent or more impairment of the whole person.”

Subsection (g) says a catastrophic impairment could be the result of a “class 4 impairment (marked impairment) or class 5 impairment (extreme impairment) due to mental or behavioural disorder.”

Trial lawyers, judges and arbitrators have been having a field day with the reference in Subsection (f) to a “combination of impairments.” Based on this language, decisions abound in which triers of fact have determined percentages of physical and psychological impairments, added them together, and then found a person to have exceeded the 55% threshold.

Insurers have long argued this sort of combination was never intended under the SABS. Finally, insurers have a court authority that agrees with them, although the decision has been appealed.

In Kusnierz, Ontario Superior Court Justice Peter Lauwers wrote: “The Guides deliberately do not provide a mechanism for translating mental and behavioural impairments into percentages that can be used in determining the WPI. The lack of a mechanism is not an oversight.”

Lauwers then cites the Guides, which state: “There is no available empiric evidence to support any method for assigning a percentage of [psychiatric] impairment of the whole person . . . The results of such assessments are inconsistent and therefore unreliable.”

Alas, Kusnierz is but one decision in a cacophony of noise suggesting precisely the opposite view. A clear legal definition is therefore just as elusive to insurers now as it ever was.

Lauwers’ decision does suggest a way out of the dilemma. He notes the Workplace Safety and Insurance Board has bridged the gap between physical and psychological injury determinations, even though it uses the third edition of the very same Guides to which the insurance legislative regime refers.

“Some workers injured in a workplace accident do suffer both physical impairments, and mental and behavioural impairments,” Lauwers wrote, referring to testimony given by Dr. Michel Lacerte. “He [Lacerte] testified that since the Guides do not provide a method for translating medical and behavioural impairments on a percentage basis so that they can be combined with physical impairments, the WSIB has created a policy that sets out a method for translating findings of mental or behavioural impairments into percentage terms that can be combined with physical impairments under the Guides. Dr. Lacerte testified that there is no parallel in the automobile area.”

This is food for thought in upcoming discussions that should have already been underway. Given the absence of clear direction from courts and arbitrators on this issue, it is now more important than ever for industry stakeholders to define catastrophic impairments clearly once and for all.