The Floating Summit of Future Care Costs

Has the bar for tort catastrophic bodily injury claims in Canada taken a significant leap higher, or does it just seem that way? Certainly the trend over the past 18 months in the Ontario judiciary might lead one to believe the bar is higher.

During that period, the courts granted a cluster of four unusually large bodily injury awards. Very recently, one of the seminal cases, Sandu v. Wellington Place Apartments, received a resounding stamp of approval from the Court of Appeal.

Since the awards in these cases are largely fact-driven, the appeal process is difficult and uncertain. In light of the Sandu decision, should any of the other cluster cases be appealed, it seems unlikely appeal courts will radically change the landscape.

The cluster has certainly convinced Ontario plaintiff lawyers the bar has been raised on all similar claims. In the wake of these decisions, we have seen claimants in Ontario amend pleadings to increase damages to the $15-million to 20-mil- lion range. Settlement expectations likewise have dramatically increased.

Whether or not higher catastrophic injury awards are necessarily a trend, time will tell. In the interim, insurers will have to consider seriously whether they are now facing substantially higher damage exposures for catastrophic injuries and whether their pricing is adequate for these risks.

THE “CLUSTER”

These cases involve three claimants with brain injuries (Sandu v. Wellington Place Apartments, Gordon v. Greig, Marcoccia v. Gilt) and one claimant with quadriplegia (Morrison v. Greig). In each case, the plaintiff’s award was in the double-digit, million-dollar range.

The true driver behind the increase in these awards is the cost of future care — in particular, the cost of 24/7, life-long attendant care.

Significantly, these cases came in quick succession. They involved four different trial judges (including one in front of a jury) and, most recently, a full panel of three appeal court judges. An appearance of consistency in the judiciary’s handling of these cases will certainly make the defence of these cases even more challenging in the future.

If there is a trend towards higher damages arising from the cluster cases, it will likely apply for the most part, if not exclusively, to claims involving catastrophic brain injury or quadriplegia in children and young adults with long life expectancy.

CONVERGENCE OF FACTORS

Any trend towards much higher catastrophic injury awards might just be the inevitable outcome of a convergence of numerous factors that have been developing in Ontario for some time. These factors include:

• The substantial expansion of ‘no-fault’ automobile accident benefits in Ontario. Such an expansion has contributed to very large future care cost demands in tort catastrophic bodily injury cases due to the development of a broad range of treatments, therapies, services and equipment related to quality of life issues.

• Ontario’s long accident benefits history has permitted development of a broad range of expertise in all areas of health care services, giving the plaintiff bar access to a wide range of and choice in experts.

• The rate of inflation for health care services under Ontario’s automobile accident benefits coverage dramatically surpasses the rate of inflation for the same health care services covered by Ontario’s public health care system. This affects the cost of care under accident benefits claims; it also influences the costs associated with tort injury litigation.

• Advances in and accessibility to medical care and treatment continue to extend/improve the lives of catastrophically injured claimants, making the cost of daily living more expensive for a longer time.

• Ontario’s plaintiff bar, more organized and skilled today, is increasingly net-worked. Knowledge and case-building strategies of leading plaintiff counsel are more readily available to the plaintiff bar generally. The defence bar has been slower to respond in kind; some argue that by imposing very onerous cost controls on defence counsel, insurers may not be helping here.

• Quality-of-life expectations of catastrophically injured claimants and society in general have grown in terms of independence, mobility, social interaction, self-expression, education and careers.

• Sympathy and compassion are factors requiring little comment. Courts are concerned that a trial may be a claimant’s best and only opportunity to obtain adequate compensation to pay for needed medical care and to maintain quality of life for many years. Based on projections, future care costs and the money required to pay them are subject to tremendous uncertainty.

If there is concern as to whether a claimant will have access to enough money, a bias towards erring on the side of caution is natural and readily understood. One result of such ‘erring’ can be inflationary pressures on future care cost awards and settlements.

SELF-LIMITING OR FAR REACHING IMPLICATIONS

Historically, there have been large catastrophic injury awards in Canada. These have tended to be case-specific, with limited implications for bodily injury costs generally.

Two of these earlier cases– Crawford v. Penney (2003) and New v. City of Moose Jaw (2004) — yielded awards in excess of $10 million, but appear to have had limited implications for subsequent catastrophic injury cases. In Crawford, the court was very critical of the actions of the defendants both prior to and during trial. In Moose Jaw, the defence faced a self-accomplished and compelling claimant.

By comparison, the cluster cases do not demonstrate any particularly egregious conduct by the defendants or involve unusually sympathetic claimants. There are no obvious characteristics that suggest anything exceptional. Yet, both jury and non-jury trials produced damage awards similar to these ‘exceptional’ earlier awards.

A critical factor in the cluster awards may be changing societal expectations related to the quality of life for catastrophically injured parties. Do the cluster cases represent a ‘best-care’ model, to be awarded only in exceptional cases, or do they represent a minimum standard of care for all catastrophic injuries?

Consider the settlement of Browne v. Lavery in 2004. At the time, this was described as one of the largest personal injury settlements in Canada. Plaintiff’s counsel later commented that his client would receive the best care available for the remainder of her life. Two years later, in the Gordon and Morrison cases, the court noted the awards would permit the claimants to live with dignity.

The distinction here, if there is one, is interesting. In Lavery, the “best care available” appears to be the basis for an exceptional settlement quantum. The quantum of the Gordon-Morrison, “living- with-dignity” awards, on the other hand, suggests a new minimum standard for similar catastrophic injuries. Either way, the costs in all of these cases might very well be the same.

The courts in such catastrophic injury cases frequently express concern about ensuring the scope and level of future care is appropriate and that adequate funding is in place. If the appropriate scope and level for “best care” is today “living with dignity,” it may very well be that the amounts awarded in the cluster cases are no more than “adequate.”

CLUSTER LEGACY

What will be the long-term affect of the cluster cases on catastrophic bodily injury claims in Canada? And what does it mean for insurers?

First, all four cluster cases were decided in Ontari. At least theoretically, courts in other provinces are free to set a different, perhaps less-costly outcome in similar circumstances. We would expect, however, the plaintiff bar to advocate strongly for a cluster standard.

In addition, although the implications of these cases are significant, the bar for tort bodily injury claims has technically only been addressed in very specific situations — i. e. catastrophic injuries to parties expected to live a long time. It would be far more dramatic and far-reaching were, for example, the cap for non-pecuniary general damages to be removed.

Nevertheless, at a minimum, it will be extremely difficult to argue in the future that such awards can be dismissed as ‘exceptional’ and ‘extraordinary.’ On the one hand, these developments will require insurers to step up defence efforts. That means using high levels of expertise, skill and experience and spending more money. On the other hand, and more importantly in the aftermath of these cases, insurers should be taking a long, hard look at their pricing to ensure they are charging adequate premiums for this risk.

It is nothing less than astonishing that these cluster cases have had little or no impact on the insurance market place. Only about 20 years ago, one Ontario “quantum leap” case, McErlean v. Sarel (also known as the City of Brampton case), generated a frenzy. Liability insurance costs shot through the roof and capacity was scarce. Little changed when that case was later reversed on appeal (albeit on liability). Here we have four cases, one of which has received unanimous approval from the Ontario Court of Appeal, yet the liability market continues its pricing free-fall. Who will be the first to restore sanity?

Bodily Injury Awards: The Cluster Cases

Date of Loss: 1997

Trial: 2005

Decision: 2006

Award: Cdn$18-million range

Court: Court of Appeal for Ontario

Case Citation: Sandu v. Wellington Place Apartments

Summary: A 26-month old male claimant fell from a fifth-floor apartment building window, sustaining a closed head injury, fractures and internal injuries. The resultant bodily injury claim and derivative Family Law Act (FLA) claims were brought against the apartment building complex and its owners. The case was tried by an Ontari jury, which awarded damages of approximately Cdn$12.9 million. Inclusive of pre-judgment interest, costs and disbursements, management fees, coguardianship fees and post-judgement interest, the total claim could reach the $18-million range. The insured was held 90% liable but, under joint and several liability, the plaintiff has the prerogative of seeking all damages from the building owners. The Court of Appeal in March 2008 upheld the damages awarded at trial.

Date of Loss: 2000

Trial: 2006

Decision: 2007

Award: Cdn$15.5-million range

Court: Ontario Superior Court of Justice

Case Citation: Marcoccia v. Gill

Summary: A 20-year-old male claimant was injured in an Ontario automobile collision. He sustained injury to his frontal and temporal lobes and exhibits left side hemi-paresis. Claimant’s counsel argued that prominent disinhibition, lack of insight, irritability and cognitive impairment leave him ill-suited for a group home or assisted living conditions. Plaintiff’s lawyer argued that he required 24/7 attendant care for the duration of his life, and that the claimant would never be capable of meaningful employment. These are fundamentally the same arguments used in the Sandu case; the same plaintiff counsel acted in both actions. Following a jury trial, damages were awarded in the Cdn$15.5-million range.

Date of Loss: 2003

Trial: 2006

Decision: 2006 and 2007

Award: Cdn$11.5 million and Cdn$12.6 million

Court: Ontario Superior Court of Justice

Case Citation: (1) Gordon v. C. Greig;(2) Morrison v. Greig

Summary: The claimants were passengers in an Ontari automobile. The alcohol-impaired driver lost control and the vehicle rolled over. Neither claimant was using seatbelts. Both were thrown from the vehicle. Both male claimants were about 22 years of age. Claimant 1 was rendered quadriplegic. Claimant 2 sustained a catastrophic brain injury. Both sued the driver and the company from which the vehicle was leased. The damage award for Claimant 1 was about $12.6 million, inclusive of FLAclaims. The court award for Claimant 2 and his family was about Cdn$11.5 million. Claimants’ costs are in addition to these awards. At press time, the status of any appeal was unknown. The awards will be reduced by the percentage of contributory negligence on the part of each respective claimant. The reduction in either case likely will not exceed 25%. The driver’s automobile tort policy limit was exhausted. The bulk of this exposure fell to the leasing company.

A critical factor in the cluster awards may be changing societal expectations related to the quality of life for catastrophically injured parties.