Alberta Courts Uphold Minor Injury Cap in Morrow v. Zhang
On June 12, 2009, the Alberta Court of Appeal released its much-awaited insurance cap decision in Morrow v. Zhang, 2009 ABCA 215. In 2004, the province of Alberta passed legislation, the Minor Injury Regulation, AR 123/2004 (MIR), which imposed a $4,000 cap on non-pecuniary damages for “minor injuries” as defined under the MIR. The Alberta Court of Appeal overturned the lower court decision concluding that when the MIR was assessed in light of the entire minor injury legislative scheme, it held up to constitutional scrutiny. This decision has long-term consequences for insurers and claimants in Alberta.
Peari Morrow and Brea Pedersen, the respondents, were injured in two separate automobile accidents. Morrow suffered soft tissue injuries to her neck and upper back, which was diagnosed as a grade two whiplash associated disorder (WAD II). Pederson also suffered soft tissue injuries to her neck, shoulders, back and wrists. Despite treatments and medication, both respondents continued to suffer pain and discomfort in their everyday life and household chores.
During the trial, the judge noted that the respondents would have received non-pecuniary damages in excess of $4,000, if the legislation did not stipulate the $4,000 cap. The respondents challenged the constitutionality of the cap stating that it violated section 7 and section 15 of the Charter.
Lower Court Decision: Minor Injury Legislation Struck Down
Beginning with a section 7 of the Charter analysis, the trial judge concluded that the cap on non-pecuniary damages did not interfere with the physical or psychological integrity of the respondents. He also noted that the right to sue for damages for personal injury is not protected under section 7 of the Charter.
Moving to an analysis based on section 15 of the Charter, the trial judge followed the 3-part test enumerated in Law v. Canada (Minister of Employment and Immigration), (1999) 1 S.C.R. 497. Associate Chief Justice Witmann concluded that the MIR violated Ms. Morrow and Ms. Pedersen’s right to equality under Section 15 of the Charter.
Associate Chief Justice Witmann held that the relevant comparator group was motor vehicle accident victims who suffer injuries other than those set out in the MIR. The distinction of “minor injuries” was based on a personal characteristic. He concluded that the differential treatment was based on physical disability, which is an enumerated ground. The trial judge held that limiting non-pecuniary damages for minor soft tissue injuries reinforces stereotyping and prejudice that minor injury suffers are generally “malingerers”, that is, slackers or shirkers. He further concluded that the cap placed less value on the pain suffered by minor injury sufferers rather than other injury sufferers.
Having found a violation of section 15 of the Charter, the trial judge moved on to a section 1 analysis to determine whether the violation was reasonable and demonstrably justified. He determined that the objective of the legislation is to reduce insurance premiums. He held that the prejudice to minor injury sufferers resulting from the violation of the section 15 of the Charter outweighed the objective of the legislation. He struck down the MIR legislation as being unconstitutional.
The Alberta Court of Appeal Decision: Minor Injury Legislation Upheld
The 3-judge panel overturned the trial judge decision and concluded that the Alberta’s $4,000 cap on “minor injuries” did not violate the respondent’s constitutional rights. Writing for the unanimous court, Justice Rowbotham held that when viewed in the context of the overall scheme of insurance changes, the cap did not violate section 15 of the Charter. She concluded that “[t]he Supreme Court of Canada jurisprudence mandates that in analyzing impugned legislation under section 15 or the Charter, the court must assess the entire legislative scheme….[T]he trial judge failed to do so, and that when the entire scheme of the legislation is assessed, it does not infringe section 15 of the Charter.”
In response to the violation of section 7 of the Charter argument, Justice Rowbotham concurred with the trial judge, stating that the MIR did not violate the physical or psychological security of the respondents. On the issue of the violation of section 15 of the Charter, Justice Rowbotham agreed with the trial judge to the extent that the distinction based on extent of injuries was enumerated grounds. However, she held that the trial judge erred in concluding that the distinction was discriminatory. When analyzing the situation as a whole, the legislation meets the needs and circumstances of the respondents without discrimination. Justice Rowbotham also noted that the trial judge overlooked the increased medical benefits available to the respondents due to the legislation. These medical benefits outweigh the damages for pain and suffering. Furthermore, Justice Rowbotham determined that the trial judge erred in examining the MIR legislation in isolation, without taking into consideration the accompanying Diagnostic and Treatment Protocols Regulation (DTPR).
The Next Step for Insurers and Claimants
The fundamental crux of this case is that the cap on general damages for minor soft tissue injuries in Alberta still remains $4,000. This decision has lasting repercussion on insurers and claimants in Alberta. The decision will not affect cases that have already been settled. Insurers would be smart to consider withdrawing offers that are currently open for acceptance on minor injury claims where the offer exceeds the cap amount to keep from incurring superfluous losses.
However, this decision is not settled as of yet. It is anticipated that the respondents will attempt to appeal to the Supreme Court of Canada. An application for leave to appeal must be filed within 60 days of the decision being pronounced. The respondents have until September 11, 2009 to file for appeal. The SCC will consider whether the case is of national importance when determining whether to grant leave – but given the SCC’s recent track record for releasing judgments in a timely manner, we will be potentially waiting a long while before we achieve any closure in the matter.