Pizza delivery risk on Superbowl Sunday: http://goo.gl/WFgQj The things that keep insurers up at night.

Very interesting take on the implications of insurance fraud: http://goo.gl/19Pqe

Fracking as an environmental risk: http://goo.gl/Mz1Og

The Alberta Court of Appeal has upheld Alberta’s Minor Injury Regulations, capping general damages in motor vehicle accident litigation at $4,000.  The Court released its decision in Morrow v. Zhang, the litigation challenging Alberta’s Minor Injury Regulations, on June 12, 2009.

In the meantime, the ruling by the Nova Scotia Supreme Court in Hartling et al v. Nova Scotia is expected to be heard in the  Nova Scotia Court of Appeal in October 2009.

An interesting take on Alberta’s decision can be found here.

This is a potentially troubling development for volunteer rescue operations, particularly where they operate in  backcountry ski operations.

Where an insured receives a demand that specific action be taken, failing which remedies will be pursued in court, this is sufficient notice of a potential claim, within the terms of an errors and omissions policy, such that if the claim is ultimately pursued in court, no duty to defend will be triggered.

In Trisura Gurarantee Insurance Co. v. Belmont, 2008 NSCA 87, the insured was the administrator of pension plan.  A pension plan member requested information concerning the transfer of the commuted value of his pension to an RRSP.  The administrator provided information that proved incorrect.

The pension plan member retained counsel, who wrote to the insured demanding transfer of the commuted value of the pension to the RRSP, failing which the member would pursue his remedies in court.

The insured pension plan administrator had previously purchased a policy of errors and omissions insurance.  In the course of applying for the policy, the insured replied “no” to a question inquiring whether he had knowledge of any circumstance that could reasonably give rise to a claim covered by the proposed insurance.

The insurer declined to respond to the claim on the basis that the letter from the member’s lawyer was sufficient notice of a possible claim, and was thus excluded.

The Nova Scotia Court of Appeal applied the rulings of the Supreme Court of Canada in Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., [1993] 1 S.C.R. 252 and Jesuit Fathers
of Upper Canada v. Guardian Insurance Co. of Canada, [2006] 1 S.C.R. 744, in finding that a “claim” requires only that a third party communicate an intention to hold the insured responsible for damages.  No formal notice is required, and the test is simply what the reasonable insured would conclude.

In this case, the reasonable insured would have consulted counsel upon receipt of the pension member’s demand, and accordingly, the insurer was not required to respond to the claim.

Hemeon v. District of West Hants, 2008 NSSC 234 examines the interplay between section 69.4 of Canada’s Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”), and section 28 of Nova Scotia’s Insurance Act, R.S.N.S. 1989, c. 231.

The BIA provides for an automatic stay of proceedings in all litigation against a person who makes an assignment in bankruptcy, but then permits that stay to be lifted if the applicant can demonstrate that it will be “materially prejudiced” by the stay, or that lifting the is “equitable on other grounds”.

The Insurance Act provides that if a person obtains judgment against another for which there is insurance, and execution against the judgment debtor is returned unsatisfied, then the judgment creditor can bring the same action against the insurer, and the insurer will be liable up to the face value of the policy.

Although the case is based on Nova Scotia legislation, most provincial insurance legislation contains provisions similar to those interpreted in this case.

In Hemeon, the plaintiff applied to have the stay in her action against the insured lifted, so that she could proceed against the insurer, since there would not be any recovery against the insured, given that he had made an assignment in bankruptcy.

The bankrupt insured conceded that the case law supported a lifting of the stay where the applicant can recover against the insurer under the relevant Insurance Act provisions, since an absolute discharge order only relieves a bankrupt from the obligation to satisfy his debt – it does not erase the underlying obligation.

He opposed the application, however, stating the cases do not apply where the insurer has denied liability under the policy. Instead, the plaintiff must establish insurance coverage as a pre-condition to lifting the stay.

R.W. Cregan, sitting as a Registrar in Bankruptcy for the Nova Scotia Supreme Court, found that lack of coverage is simply a defence that an insurer may raise against the plaintiff’s action. Therefore, the appropriate time to raise that defence is in the context of the litigation, and not during the stay application.

Registrar Cregan reviewed the relevant case law, and noted that the applicant is not required to demonstrate a prima facie case against the bankrupt insured. Section 69.4 of the BIA provides only that the applicant must demonstrate “material prejudice” or that there are other good reasons that weigh in favour of lifting the stay.

There is sufficient “material prejudice” where the plaintiff might be entitled to recover against the insurer, and is being prevented from doing so by the BIA’s stay of proceedings.

The case is consistent with Canadian decisions concerning when the stay of proceedings should be listed, and indeed, relies upon the leading decision on that point, namely Re Advocate Mines, [1984] O.J. No. 2330 (Ont. S.C.).

There does not appear to be any good policy reason to prevent a plaintiff from proceeding in the face of a denial of insurance coverage, since recovery will not come from the bankrupt’s estate if the plaintiff is successful.

Instead, the insurer is best advised to proceed to have the coverage issue determined as quickly as possible, whether by way of summary judgment or bifurcation of the trial.

Legal Ethics Forum questions whether it would work in the United States.

Legal Ethics Forum’s Rob Vischer refers to a New York Times article published August 11, 2008. That, in turn, refers to a speech by Justice Peter McClellan of the Land and Environmental Court of New South Wales, Australia.

Canadian lawyers should find the Australian approach particularly intriguing. Several jurisdictions are in the process of revising their civil procedure rules. The treatment of expert evidence figures largely in those efforts.

In Alberta, the approach to expert evidence appears to be more traditional. Although Ontario is not presently in a formal revision process, their approach is likewise more traditional.

Under Nova Scotia’s proposed new Civil Procedure Rule 55, experts’ written reports will have to contain statements to the effect that:

(a) the expert is providing an objective opinion for the assistance of the court, even if the expert is retained by a party;

(b) the expert is prepared to apply independent judgment when assisting the court;

(c) the report includes everything the expert regards as relevant to the expressed opinion and it draws attention to anything that could reasonably lead to a different conclusion;

(d) the expert will notify each party in writing of a change in the opinion, or of a material fact that was not considered when the report was prepared and could reasonably affect the opinion.

In British Columbia, the approach to expert evidence under the proposed new rules is similar, in some ways, to Australia’s approach. While there would not be concurrent evidence at the trial, experts will have a duty to assist the court and not act as an advocate for any party. They will be required to certify that they are aware of this duty, that they have prepared their report in conformity with that duty, and that their testimony in court will also be in conformity with that duty.

While the parties will still be free to appoint their own experts, if 2 or more experts are to give evidence on the same question during the trial, they must confer and set out in a report the points upon which they disagree.

The Nova Scotia approach seems somewhat naïve. Whether an expert will, in any meaningful way, draw attention to the weaknesses of his or her own opinion seems unlikely. The problem is compounded by the fact that Nova Scotia’s new Rules do away with any oral pre-trial examination of witnesses. One hopes that this will be corrected prior to implementation.

British Columbia’s new Rules appear to do outside the courtroom what New South Wales tries to accomplish at trial.

I am interested in hearing from members of the Bar in New South Wales, Australia as to how the process of concurrent expert evidence has been received, and what the experience has been from the Bar’s point of view.

I am cross-posting this article to my insurance law blog, The Insurance Lawyer, since this is obviously something of interest to insurance lawyers, who are often called upon to deal with expert witnesses.

All (reasonable) comments will be posted.

This article was also published on my legal ethics blog, The Ethical Lawyer, and speaks to a topic of interest to most insurance lawyers; namely, rules of civil procedure.

In Fleet v. Federated Life and Bellefontaine, 2008 NSSC 231 (CanLII), an insurance broker was found liable to re-imburse the insurer for payments made on a life insurance policy, where the broker inserted misleading answers about the insured’s health in an application for life insurance, and then forged the insured’s signature.

At trial, counsel for the plaintiff entered the broker’s entire transcript from the examination for discovery.  The broker chose not to take the stand as a result, arguing that the plaintiff was bound by the evidence tendered, which denied that the broker forged the insured’s signature.

Justice G. Moir found that entering an adverse party’s discovery evidence does not make the adverse party a witness in the tendering party’s case, and therefore the tendering party is not bound by the adverse party’s discovery evidence.

His Lordship also found that the broker breached his contractual and fiduciary duties to the insurer, and was liable to reimburse the insurer for the amounts owed to the insured under the policy.

In a decision handed down February 1, 2008, the Federal Court of Appeal ruled that an insured sent for an independent medical examination by his long-term disability benefits insurer is entitled to access the medical examiner’s handwritten notes in a dispute as to the insured’s continued eligibility to receive benefits.

In Rousseau v. Canada (Privacy Commissioner), 2008 FCA 39 , the insured, Jacques Rousseau, had been receiving long-term disability benefits from Maritime Life.  A dispute arose as to his continued eligibility, and Maritime Life subjected Mr. Rousseau to an independent medical examination (IME) in accordance with the terms of its policy.  Dr. Jeffrey Wyndowe performed the IME.  The purpose and nature of the IME was explained to Mr. Rousseau, and he signed a consent form permitting disclosure of the doctor’s report to Manulife.

Based on the report, Manulife terminated Mr. Rousseau’s long-term disability benefits.

Manulife provided Mr. Rousseau with a copy of the report at Mr. Rousseau’s request, however it did not have access to the doctor’s notes.  Dr. Wyndowe refused to provide a copy of the notes to Mr. Rousseau.

Mr. Rousseau eventually applied to the federal Office of the Privacy Commissioner with respect to the doctor’s refusal, and the complaint was allowed, with the Commissioner recommending the release of the notes.  Dr. Wyndowe refused.

Mr. Rousseau applied further to the Federal Court Trial Division pursuant to s. 14 of the Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5.  Mr. Justice Teitelbaum granted Mr. Rousseau’s application, and Dr. Wyndowe appealed to the Federal Court of Appeal.

Decary, J.A. reasoned that notes made by a doctor in the course of an IME made at the request of an insurance company falls within the purview of “commercial activity” by the insurance company and is therefore subject to the Act.   In addition, personal health information is a subset of “personal information”.  Notes taken by a doctor in the course of an IME are clearly personal health information, and therefore subject to disclosure upon application by the person about whom they pertain.