Legal Update: NB’s Amended Minor Injury Cap Regulation
April 29, 2013
Note: On May 7, 2013 the NB Government formally filed and enacted amendments to NB’s Injury Regulation – Insurance Act (aka the ‘cap’ legislation). The final form of the amended regulation (Final Regulation) mirrors the final draft regulation (Proposed Regulation) in most – but not all – respects. Click here to read McInnes Cooper’s May 16, 2013 Legal Alert, “NB Amended Cap Regulation Effective July 1, 2013”.
The Province of NB is soon expected to enact amendments to the Injury Regulation – Insurance Act – the so-called ‘cap’ on awards of non-pecuniary general damages arising from motor vehicle accidents. The amendments are expected to apply to claims arising from motor vehicle accidents that occur on or after May 1, 2013. Key aspects of the amendments include:
- Higher Cap. The cap increases from $2,500 (with no adjustment for inflation) to $7,500 (annually adjusted for inflation).
- “Minor Injury” Definition. Only six enumerated injuries (plus related medical consequences) are “minor injuries” subject to the cap.
- Test. Supposedly simpler than the current framework, the cap will apply if these six injuries do not cause “serious impairment.”
- “Serious Impairment.” The amendments introduce the notion of “serious impairment,” with a number of conditions and complications.
These and other aspects of the amendments create some uncertainty: Which of the parties now bears the onus of proving the cap applies? What award of non-pecuniary general damages is appropriate even if the cap applies? Which common medical conditions are caught by the new definition of “minor injury?
These uncertainties will likely lead to more litigated claims, increased reliance on expert medical evidence – even where the loss is apparently small – and likely higher costs for insurers.
KEY PROVISIONS OF PROPOSED AMENDED REGULATION
The proposed amended regulation (Proposed Regulation) is the Attorney General’s first review of NB’s cap legislation since it was introduced in 2003 (Current Regulation). The Proposed Regulation differs from the Current Regulation in significant respects:
Higher Cap. Under the Current Regulation, the maximum award for non-pecuniary general damages for minor injuries is $2,500 (not adjusted for inflation). The Proposed Regulation increases the cap to $7,500 (linked to CPI and adjusted annually beginning January 1, 2015).
“Minor Injury” Defined. Under the Current Regulation, potentially any injury could be a “minor injury.” The Proposed Regulation limits a “minor injury” to a class of six injuries (plus their related medical consequences): contusion, abrasion, laceration, sprain, strain and whiplash associated disorder.
Test. Under the Current Regulation, the cap applies if an injury does not result in the “permanent and serious impairment of an important bodily function caused by a continuing injury that is physical in nature.” The Proposed Regulation, arguably simpler, will institute a two-part test to determine whether the cap applies:
- Is the injury one of the six enumerated injuries? If no, the cap will not apply.
- If yes, does the injury result in “serious impairment”? If yes, the cap will not apply; if no, the cap will apply.
This two part test eliminates two key requirements of the Current Regulation:
- Permanence. The Proposed Regulation includes a softer requirement: the cap will apply if the injury is ongoing since the accident and is not expected to improve substantially. This raises an interesting question: will the cap apply if, for instance, an enumerated injury appears well after an accident, or if it heals but is later exacerbated by a subsequent intervening event?
- “Importance of Injury.” The importance of the injury to the claimant is no longer a consideration.
Serious Impairment. The Proposed Regulation introduces the notion of “serious impairment,” defined as an “impairment of a physical or cognitive function” that:
- results in a “substantial inability” to perform essential tasks of “employment, education, training or usual daily activities;”
- is “ongoing since the date of the accident;” and
- is “not be expected to improve substantially.”
These conditions of a “serious impairment” incorporate several significant complications:
- Cognitive Injuries. Under the Current Regulation, insurers have argued the cap automatically applies to cognitive (i.e. purely non-physical) injuries. Under the Proposed Regulation, the cap may not apply to a cognitive injury if one of the three conditions of a serious impairment is not satisfied.
- Essential Tasks of Employment, Education, Training or Normal Daily Activities. Under the Current Regulation, the cap applies if a claimant does not suffer “substantial interference” with either employment or daily activities. Thus, for instance, if there is substantial interference with employment, but no substantial interference with daily activities (or vice-versa) the cap may still apply. The Proposed Regulation inverts this framework: the cap may not apply if a claimant proves “substantial inability” to perform essential tasks of employment, or the essential tasks of education or training, or the normal activities of daily living. The educational and training aspects are new, but “substantial inability” is also keenly different from the current test of “substantial interference” and is, arguably, more claimant-friendly.
- Accommodation. Substantial interference with essential tasks of employment, education, training or normal activities of daily living is subject to a curious requirement of accommodation borrowed from Alberta and NS legislation. To avoid the new cap, the Proposed Regulation requires a claimant to demonstrate substantial inability in these areas “despite reasonable efforts to accommodate the impairment and the plaintiff’s reasonable efforts to use the accommodation to allow the plaintiff to continue” employment, education or training. How NB Courts will treat this wording, and specifically the responsibilities placed on employers and educational institutions, is yet to be seen. Courts may view this requirement as only a statement of a claimant’s duty to mitigate – which is hardly new.
Click here to read the Current Regulation.
Click here to read the Proposed Regulation.
UNCERTAINTY BREEDS LITIGATION
The Proposed Regulation leaves greater room for debate about whether the cap applies in a particular instance:
“Model” legislation. The Current Regulation borrows heavily from Ontario; however, the Proposed Regulation borrows from Alberta and NS. This is likely appropriate, since Ontario’s general damages regime concerns catastrophic injuries and barring suits; the Current Regulation concerns minor personal injuries and claims for one specific head of damage. Insurers, counsel and NB courts will need to look to other jurisdictions for guidance as interpretation and application of the Proposed Regulation unfolds.
Onus. In Ontario, the claimant must prove the cap does not apply. However, defendants in NB must prove the cap applies as a result of the NB Court of Appeal’s 2008 decision in Fraser v. Haines. Many considered the Court’s decision not to follow Ontario’s lead to be unworkable and, perhaps, unfair. Whether the Proposed Regulation requires a claimant to prove the cap does not apply or requires a defendant to prove that it does is yet to be determined. The onus issue may finally be revisited. Click here to read the NB Court of Appeal’s decision in Fraser v. Haines.
Range of non-pecuniary general damages. The Current Regulation’s cap of $2,500 is a maximum award but, practically, was the minimum awarded. With a higher cap on damages of $7,500, to be adjusted for inflation, there is likely to be greater dispute – and litigation – over the non-pecuniary general damages to which a claimant may be entitled even if the claim is capped.
List of “minor injuries.” It’s not clear why the Proposed Regulation lists some injuries as potentially “minor injuries” but not others. An objectively minor injury – such as a non-displaced fracture of a finger or toe – is likely to have minimal effect on employment, education or usual daily activities. However, litigation concerning these types of injuries may become more common given the cap will not apply in such cases.
Expert medical evidence. The Proposed Regulation raises questions about how common medical conditions are characterized, for example: Is temproromandibular joint disorder (TMD) or bursitis a sprain or strain? Did a claimant’s TMD arise from another injury like whiplash or is it a distinct complaint? Insurers may wish to retain expert medical advice and ask these individuals very specific questions closely based on the Proposed Regulation’s wording.
As insurers know, uncertainty tends to breed litigation and increase costs. NB is entering a new era of insurance regulation and there are questions to be answered and arguments to be made. This will likely result in more claims moving to litigation, an increased reliance on expert medical evidence, and of course, increases in awards of non-pecuniary general damages actually paid to claimants.
Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Insurance Team to discuss this topic or any other legal issue.
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