Punishing Insurers with Punitive Damages

A Saskatchewan court recently ordered $3 million in punitive damages against Zurich Insurance and also awarded $1.5M in punitives against another insurer, AIG, in same case. The court expressly referred to the Witten v Pilot case in which the Supreme Court of Canada ordered the insurer to pay $1M in punitive damages for deliberately trying to avoid payment on a policy of insurance by alleging fraud against the insured when there was no evidence or reasonable basis for such an allegation.

In the current Saskatchewan case, Branco v American Home Assurance Company, 2013 SKQB 98 (CanLII), the two multinational insurance behemoths were found to have deliberately either delayed or avoided paying benefits to which the insured was entitled through a pattern of delay, deception, unreasonable prerequisites, unreasonable technical interpretations of the contracts of insurance, and a complete lack of good faith in dealing with the terms of insurance policies for disability payments to a worker injured in his welding job in a gold mine.

The court also found as a fact that the insurers had used the delay in payments, which caused deleterious financial and psychological consequences to the employee, to try to coerce him into accepting a low ball settlement offer.

The plaintiff’s personal injury Bar in Ontario needs to be more aggressive in using these precedents to advance claims for punitive damages against Accident Benefit insurers for what now appears to be a routine matter of doing business in soft tissue or WAD cases. The insurers now routinely determine based on one time independent assessments, and often even only with paper review assessments, that the insured falls within the MIG despite reasonable evidence proffered by the applicant’s treatment providers that he or she has soft tissue injuries which fall within the exceptions to the MIG, as set out in the SABs. The first FSCO decision on point, while not determining a special award against the insurer, made it clear that this sort of behaviour was highly inappropriate, prejudicial to claimants, and not in keeping with the aims of the SABs. The Commission, in Scarlett and Belair, found in favour of the applicant and awarded costs against the insurer. Sadly, that case was overturned on appeal to the FSCO Director and will now be pronounced upon by the Divisional Court sometime this year or next. It may be that it is necessary in these types of cases to routinely indicate the seeking of a special award on the Application for Arbitration or Statement of Claim for punitive damages in the based on the insurers conduct.

Unless the plaintiff’s Bar routinely begins to seek punitive damages and special awards against insurers, there will be no incentive on insurers to operate in accordance with either the intentions of the SABs or the public philosophies of their own companies. It will be cheaper for them to continue to use their clout to deny payment of benefits and then force unconscionable settlements when the claimants reach a desperation or frustration point.

The Truth About Auto Insurance

Auto insurers in Ontario would have you believe that your high premiums are as a result of fraudulent claims and claims by individuals who are not seriously enough injured. Now they are again claiming the sky is falling over a recent Court of Appeal decision that took the Financial Services Commission of Ontario (the government tribunal for no-fault claims) to task for not moving cases along fast enough and opening the door for claims to go directly to court instead of through the tribunal’s mediation process. The Court of Appeal decision is based in large measure on the fact that the FSCO mediation process does not do what it is supposed to do in a timely fashion- namely allow injured motorists to be paid rehabilitation benefits. This systemic delay is a windfall for insurers who routinely deny treatment and simply sit on their money, money which is earmarked for benefit payout. The Insurance Bureau of Canada would have you believe that this court decision could cost insurers $300 million and that it will be yet another reason why they will be forced to increase premiums.

Auto insurance companies have a captive market. The law requires insurance for you to drive. A recent spate of mergers and acquisitions means a limited number of for-profit, stakeholder- driven, multi-national corporations from whom you can buy this insurance. The reality is that if there were no fraud and fewer claims, your premiums would not decrease. They never have and they never will. So as policy holders we have a right to demand from our insurers that they fulfill their end of the bargain, namely paying out benefits in a timely fashion.

Under the no fault regime, you have an entitlement to benefits from your own insurer if you are involved in an accident. The details are beyond the scope of this article but the primary purpose of no-fault is arguably to ensure that your rehab costs are covered. Yet insurers routinely deny payment for treatment such that many individuals are left unable to go for the treatment they need, which is usually not covered by OHIP. Your insurance company will typically say that if you have a standard soft tissue injury (whiplash, neck and back pain, headaches- and by far these make up the  majority of accident injury claims in Ontario) since your symptoms are self-described and typically not apparent on any x-ray, ultrasound or MRI,  that there is nothing seriously wrong with you. This is their justification for not paying the no-fault benefits to which you are entitled under your policy. This decision is initially made not by a doctor who meets with you, but rather by an insurance adjuster who has not met with you and has no medical training., and relies usually upon the opinion of a doctor who earns a living not from treating patients but from writing reports for insurance companies, and who will have met with you for no more than an hour. You are simply being lumped into a category.

If you are not at fault for the accident, you also have a right to sue the other driver in a third party claim (whose tab will be paid by her insurance) for pain and suffering, unlike in the no-fault regime. But the insurers here take the same position. If you have soft tissue injuries they will say that your case does not meet the level of seriousness required by law to sue (not all claims are eligible- the injuries must meet a certain level of seriousness but what is serious is the subject of most tort-related litigation). The Court of Appeal says if you can go on with all of your pre-accident activities but now must do so in pain, fatigue, with constant headaches and stress, that this rises to the level of seriousness to be compensated for pain and suffering. Yet insurers routinely deny settling claims on the basis that your injuries are self-reported and not diagnosable on any objective test. These cases at trial come down to credibility, i.e. whether you and your witnesses are believed by the court or not. But the insurance companies should not be forcing these claims to trial, often taking years and tens of thousands of dollars, when the case could have been settled at a very early stage for a reasonable amount of money far less than the cost of litigation. Of course, the law is not so black and white. Nonetheless, the general attitude of insurers results in injured parties not receiving their no-fault benefits, thus forcing them to retain a law firm to sue under the no-fault regime for these as-of-right benefits, while also forcing the third party claimants through the lengthy litigation process, again to obtain benefits for which all policy holders indirectly pay premiums.

As policy holders of these corporate behemoths who make billions a year in profits in part by refusing to honour their contractual obligations, it is time for the public to stop accepting the lies of the insurers regarding the rising cost of the premiums, and demand the benefits to which they are entitled. It is also time for those who diligently pay their premiums on time with the expectation of fairness to demand our provincial government crack down on the unfair corporate policies of the insurers. The government has given free rein to the insurers to protect the public interest and the insurers have squandered the public trust in this regard.

Darryl Singer is a civil litigator in Toronto

An Accident is Not a Lottery Winning

So you’ve been injured in a car accident that wasn’t your fault. Fortunately, you didn’t have any broken bones, traumatic head injuries, or anything so serious. However, you likely continue to suffer from soft tissue pain, which may cause you to have headaches as well as aches and pains in various parts of your body, and you have been encouraged by friends to retain a lawyer to seek compensation for your pain and suffering. The obvious question you will ask your lawyer upon meeting is, How much is my case worth? The truth is,  it is impossible to know right at the outset until your lawyer has received and reviewed all of your medical records.

But what you should know going in to this meeting is that just because you have been injured in an accident that wasn’t your fault, you are not automatically entitled to money for pain and suffering, even if you can prove the two requisite elements of any tort claim: (i) that the other party was at fault; and (ii) that you suffered injuries as a result.

There are two methods enshrined in the law in Ontario which have the effect of limiting the ability for potential accident victims to sue and/or recover damages in Ontario.  These methods are, according the government and the insurance industry, part of an overall scheme to control automobile insurance premiums in Ontario. More accurately, these legal impositions have the effect of chilling the rights of individuals involved in motor vehicle accidents from starting tort actions. These schemes are (a) the statutory threshold; and (b) the statutory deductible. It bears noting that there is no conceivable reason for this threshold or deductible other than at the time, the insurance industry’s lobby was more powerful than the trial lawyers’ lobby.

Statutory Threshold

Pursuant to section 267.5 of the Insurance Act, a person is cannot pursue a tort action against the at fault party of a motor vehicle accident, unless they can meet a threshold test set out  in subsection 5 of that section, which provides that

…as a result of the use or operation of the automobile the injured person has… sustained,

(a) permanent serious disfigurement; or

(b) permanent serious impairment of an important physical, mental or psychological function.


Effectively, this means that in order to meet the threshold, you must prove the existence of a serious impairment, of an important function, that is permanent.

(i)                 A serious impairment

 A serious impairment is one that substantially interferes with your ability to continue in regular or usual employment, despite reasonable accommodations and despite the reasonable efforts to use accommodations to continue employment; or one that substantially interferes with most of the usual activities of daily living, considering your age.


(ii)               Of an important function

You must demonstrate the function impaired is one that is necessary to perform the activities that are essential tasks of your regular or usual employment, taking into account reasonable efforts to accommodate you and your reasonable efforts to use the accommodation; or, is one that is important to the usual activities of a daily living, considering your age.


(iii)             That is permanent

The important function that is seriously impaired must have been one that is continuous since the accident and must be expected not to substantially improve.  This is based on the medical evidence and subject to your reasonable participation in the treatment of the impairment, must continue meeting the criteria of a serious impairment, when compared to the improvement a similar person would expect to experience.

The Evidence

As the plaintiff in the tort action, you will necessarily have to prove this threshold through personal testimony and medical evidence. This puts credibility and reliability squarely at issue. As Justice Boswell of the Ontario Superior Court of Justice stated in a tort case called Antinozzi v Andrews , these are not the same thing:

            Credibility relates to the veracity of a witness. Reliability relates to the accuracy of the witness’s testimony and engages a consideration of the witness’s ability to accurately observe, recall and recount events in issue.

A trier of fact (judge or jury) will measure the evidence submitted, and a credible Plaintiff will help satisfy the threshold is met by a balance of probabilities.  “The real test of an interested witness’s credibility ‘must be its harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions.” (Antinozzi case).

All of these factors will be considered by your lawyer both at the initial consultation, and throughout your case if one is pursued. As facts arise the lawyer’s valuation of your case may change over time.   

Statutory Deductible

A second and possibly more troubling manner in which the Ontario government has attempted to curb an accident victim’s decision to pursue an MVA tort action is the $30,000 statutory deductible.  This deductible is applicable to financial awards for general damages made by a court in all tort cases arising from motor vehicle accidents.  Essentially, this means that the first $30,000 in damages for pain and suffering ordered by the trier of fact in an MVA tort case is not paid by the insurance company of the defendant. An award by the judge or jury of damages for pain and suffering of $30,000 or less means the defendant pays nothing. An award of $50,000 means the insurer pays $20,000, and so on up to awards of $99,999. This deductible only applies to awards of less than $100,000.  The legislature’s decision not to apply this deductible to all accident awards for pain and suffering means that there is differential treatment between accident victims.  An accident victim with whiplash and resulting psychological damages resulting from a rear end collision is arbitrarily prevented from accessing the same justice that a victim with broken bones might receive, even though the damages suffered by the victim with purely soft tissue injuries might be experienced for a longer duration.  Even more upsetting is that the plaintiff’s lawyer is precluded from mentioning this deductible to a jury on top of not being able to mention that a defendant is represented by the insurance company.  Both of these keep the rightful awards from reaching a plaintiff when pursuing a tort action through to a trial. Thus, even if you believe your injuries may exceed the threshold, you must consider by how much they are likely to exceed the threshold in order to ensure the damages have a reasonable chance of being significant enough to offset the deductible.

So should I still see a lawyer?

Yes. Only your lawyer will be in a position to assess the likelihood of recovery of damages for pain and suffering. The purpose of this article is to educate a potential plaintiff on the reality of personal injury awards in Ontario, specifically that while if a lawyer does agree to take on your case you will likely end up with some money in your pocket but you must be conservative in your expectations. That said, your lawyer’s job is to build your file in a manner that your case will meet the threshold and exceed the deductible.  Generally speaking, most personal injury lawyers give a free consultation and get paid only if they are successful in recovering money for you so the lawyer has an incentive to get the possible settlement for you.

The other good news is that both the highest court in Ontario, the Court of Appeal, as well as numerous trial courts, have recently held that even if an injured plaintiff has resumed most or all of their pre-accident activities, if they must now do so in constant pain, with headaches, fatigue and the accompanying depression, what the insurance company will classify as a minor injury actually is serious enough to meet the legal test for recovery of damages.

*Darryl Singer is the principal of SINGER Litigation Counsel Professional Corporation, and has practised civil litigation since 1993