October 2012

A "catastrophic impairment" requires only one (out of four) functions at the marked impairment (class 4) level

Michael Kennedy
Associate Lawyer

By Michael Kennedy, Partner
Published in McCague Borlack's Accident Benefits Newsletter

Overview

It is now easier for injured claimants with psychological impairments to qualify as "catastrophically impaired" and consequently be entitled to enhanced statutory accident benefits. The Court of Appeal in Pastore v. Aviva Canada Inc., 2012 ONCA 642, has held that a "catastrophic impairment" requires only one (out of four) functions at the marked impairment (class 4) level.

Legislation

As accident benefits insurers are aware, paragraph (g) of subsection 2(1.1) of the Statutory Accident Benefits Schedule—Accidents on or after November 1, 1996 defines "catastrophic impairment" to include the following:

an impairment that, in accordance with the American Medical Association’s Guides to the Evaluating 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 AMA Guides indicate a person can suffer an impairment in four different categories:

• activities of daily living;
• social functioning;
• concentration, persistence and pace; and
• deterioration or decompensation in work or work-like settings.

As such, an injured claimant could suffer varied classes of psychological impairment (e.g. a claimant could be markedly impaired from completing his/her activities of daily living, but only moderately impaired from functioning socially or working).

Facts and adjudicative history

In Pastore, an injured claimant was moderately impaired in all four AMA categories except for her activities of daily living, for which she was markedly impaired. Arbitrator Nastasi held that a claimant need only sustain a marked or extreme impairment in one of the four categories described by the AMA Guides in order to be considered catastrophically impaired. As such, Pastore was considered catastrophically impaired. This decision was upheld by Director’s Delegate Blackman.

Aviva appealed to the Divisional Court, which applied the standard of review of "correctness" and therefore set aside Delegate Blackman’s decision in favour of its own. The Divisional Court held that paragraph (g) of subsection 2(1.1) of the Schedule required an injured party to sustain an overall marked or extreme impairment, considering all four categories together.

Ms. Pastore appealed and, on September 27, 2012, the Court of Appeal restored the Director’s Delegate ruling. The court held that the proper standard of review was "reasonableness", meaning that the Director Delegate’s decision should have been afforded greater deference than was given by the Divisional Court.

Conclusions

For obvious reasons, this decision (if not appealed to the Supreme Court of Canada) could prove quite costly to insurers, as it will grant more people access to the enhanced benefits reserved for claimants who suffer catastrophic impairments. Considering the somewhat subjective nature of psychological injuries and reduction of benefits post-September 1, 2010, it is possible that more and more claimants will use this decision to qualify as "catastrophically impaired".

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