The British Columbia Supreme
Court recently released a decision
that puts limitations on the provincial government’s ability to
recover health care costs from
tortfeasors in personal injury
claims. This is the first decision
interpreting provisions of the
recently enacted Health Care
Costs Recovery Act, and estab-lishes the limits of the government’s reach under the Act.
The object of the Act is to permit the government to recover
health care services costs from
persons whose wrongful acts have
caused those costs. The statute
came into force on April 1, 2009,
and Gosselin v. Shepherd, [2010]
B.C.J. No. 1014 represents the
first judicial comment on the
scope of the legislation.
Justice Robert Sewell heard
two simultaneous applications
brought by the plaintiffs in two
actions: Gosselin, and Fong v.
Deglan, [2010] B.C.J. No.
1015. The order sought in each
was to allow the plaintiff to
amend her pleadings to include a
claim pursuant to the Act, to
recover the costs of health care
services provided to her by the
government.
In each case, the plaintiff’s
injuries had occurred from an
accident in 2005 and an action
commenced in 2007. The Attorney General of British Columbia
RICHARD
LINDSAY
&CHRISTINE
STEWART
intervened in the Gosselin application solely for the purpose of
statutory interpretation, taking
no position on the substantive
outcome of the application.
The applications were dismissed on the basis that the
amendments sought did not disclose a reasonable cause of
action. The result came down to
an issue of the interpretation of
various sections of the Act, to
determine whether s. 2 is meant
to have full retrospective affect.
The interpretation sought by the
plaintiffs and the Attorney General would have meant that the
Act would permit amendments
to add a claim for health care
costs in any existing action,
regardless of when the personal
injuries were suffered.
The Act provides several
means by which the government
can pursue recovery of the cost of
health care services. It was
accepted by all parties that
because the accidents occurred in
2005, any direct or subrogated
action by the government was out
of time. Further, the government
could not compel the plaintiffs to
bring the claim because the action
was commenced well before the
coming into force of the Act.
Instead, the plaintiffs were volun-
tarily making the application to
recover those costs for the gov-
ernment. In Gosselin’s case, for
example, she felt she had a moral
obligation to make the claim.
Richard Lindsay is a founding
partner of Lindsay Kenney LLP
in Vancouver, practising in the
insurance department. Christine
Stewart is an associate of the
same firm, also practising in the
insurance department. They were
counsel for the defendants on the
application in Fong v. Deglan,
which was heard concurrently
with Gosselin v. Shepherd.
Why formation matters as much as language in insurance contracts
Most insurance coverage disputes involve policy language
that fails to define clearly the
respective rights and obligations
of the parties. In a recent case,
however, the British Columbia
Supreme Court needed to take
an additional step—it first had
to determine which documents
comprised the insuring agreement before it could interpret
the policy’s language. This decision highlights the importance
of establishing that the policy
wording is clear and the insurance contract is properly formed
at the outset.
In Sunburst Skylights Ltd. v.
Lloyd’s Underwriters, [2010]
B.C.J. No. 963, the court heard
that the plaintiff insured three
separate business locations
under one property insurance
policy. The cost of the premium
was based on the aggregate or
combined value of those three
locations. The broker and the
insured jointly established values for each of the three locations of insured property.
Once these were set, and
after the one-year term of the
policy started, a previously
issued “Confirmation of Insurance” or cover note was replaced
by conventional policy wording.
STEVE
BEREZOWSKYJ
&SCOTT
BREARLEY
The policy was accompanied by
a statement of values certifying
the value of each insured property. This was signed and
returned by the insured.
After a fire at one of the locations, the adjuster determined
that the property was underinsured. The insurer, Lloyd’s,
applied a coinsurance penalty
and made a reduced indemnity
payment. In response, the insured
demanded indemnity for the
actual amount of its loss up to the
aggregate value of all three
insured locations. But Lloyd’s
insisted that it only had to indemnify the insured to the amount
certified in the statement of values for that particular location.
To determine if the insured
had maintained the level of insur-
ance demanded by the coinsur-
ance clause, the court closely
examined the circumstances
around the statement of values. If
that document formed part of the
policy, or could be used to inter-
pret it, the insured’s recovery
could properly be limited to the
certified value of the single loca-
tion. Conversely, if the court
found that the statement of val-
ues was irrelevant to its inter-
pretative task, it could require
Lloyd’s to indemnify its insured
up to the policy’s aggregate limits
for all three locations.
Steve Berezowskyj and Scott
Brearley both practise insurance
law at Singleton Urquhart in
Vancouver. Their firm acted as
counsel for the defendant, Lloyd’s
Underwriters, in Sunburst.
