A pedestrian steps off a curb and gets hit by a car. He survives, and while his bones begin to heal and his bruising goes away, he may be left with significant psychological scars from the accident. Accidents often result in more than surface wounds and finally the Ontario Court of Appeal has confirmed that psychological impacts can be considered in combination with physical injuries when determining whether an accident victim has suffered a “catastrophic impairment” pursuant to the whole person impairment (WPI) test under the Ontario Statutory Benefit Schedule (SABS).
It would be “unfair” to deny persons with combined physical and psychiatric impairments the enhanced benefits available to persons with similarly extensive impairments that are exclusively physical or exclusively psychiatric, according to the Ontario Court of Appeal in a decisive decision that clarifies the law on how to properly calculate WPI ratings under the SABS.
With the proper interpretation of the current WPI test now resolved, the “catastrophic impairment” battle shifts back to the continuing demand by the insurance industry to change the definition of “catastrophic impairment” to expressly exclude psychiatric considerations from the WPI test.
In Kusnierz v. Economical Mutual Insurance Co.,  O.J. No. 5908, the Ontario Court of Appeal overturned the October 2010 trial decision by Justice Peter Lauwers,  O.J. No. 4462 (Ont. S.C.J.) and restores the rules for calculating WPI ratings established by Justice Harvey Spiegel back in 2004 in Desbiens v. Mordini  O.J. No. 4735 (Ont. S.C.J.).
The definition of “catastrophic impairment” has remained largely unchanged since 1996. In Kusnierz, as in Desbiens, the focus was on the interpretation of the definition of “catastrophic impairment” as set out in subs. 2(1.1)(f) and (g) of the SABS (now repeated verbatim in subs. 3(2)(e) and (f) of the new SABS effective on or after Sept. 1, 2010).
These provisions state:
(f)…an impairment or combination of impairments that, in accordance with the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in 55 per cent or more impairment of the whole person; or
(g)…an impairment that, in accordance with the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in a class 4 impairment (marked impairment) or class 5 impairment (extreme impairment) due to mental or behavioural disorder.
The question in both Kusnierz and Desbiens was whether the WPI test in subs. 2(1.1)(f) may include psychological elements referred to in subs. 2(1.1)(g), primarily those set out in Ch. 14 of the AMA Guides, 4th edition.
In Desbiens, the court allowed the combination of the two elements while in the Kusnierz trial decision, the court comes to the opposite conclusion and prevents the combination of the elements.
In the unanimous Kusnierz appeal decision, Associate Chief Justice James MacPherson adopts the comments and conclusions by Justice Spiegel in the Desbiens decision and rules that it is in accordance with the AMA Guides to assign percentages to psychological impairments and to combine them with physical impairments in determining whether one meets the definition of catastrophic impairment under the WPI test.
In reviewing and discussing the purpose of the Guides, the Ontario Court of Appeal concludes that their intention is to address psychological impacts as part of the WPI test. Justice MacPherson states: “An objective, standardized system of assessment is only useful to the extent that it can reflect persons’ actual levels of impairment. To disregard the mental and behavioural consequences of a person’s injuries because they are too hard to measure would defeat the purpose of the Guides.”
Justice MacPherson further states that the AMA Guides support “…the principle that a total impairment assessment must take both physical and psychiatric impairments into account.”
The Kusnierz appeal decision is welcome news to accident victims across Ontario whose claims have hinged on the interpretation of the WPI test. These potentially “catastrophic impairment” claims essentially have been put on hold since the release of the 2010 Kusnierz trial decision. While the Financial Services Commission of Ontario (FSCO) continued to follow the now-confirmed Desbiens approach, pending the outcome of the Kusnierz appeal, practically speaking all such FSCO decisions were under appeal and the flow of benefits claimed therein were at a standstill.
The superintendent of financial services at FSCO is in the process of submitting a report to the Minister of Finance on recommended changes to the definition of “catastrophic impairment.” In light of the Kusnierz appeal decision and the clear comments by the Ontario Court of Appeal relating to the issue of fairness, any proposal to expressly prevent combining physical and psychological impairments would be inappropriate.
Darcy Merkur is a partner at Thomson, Rogers in Toronto practising plaintiff’s personal injury litigation, including plaintiff’s motor vehicle litigation.