Fair Settlement of ICBC Claims

Back to Blog

How much is fair? To understand whether a settlement offer is fair or not, you must first keep in mind two important contextual matters:

first thing

second thing

While money can’t buy happiness, it can replace actual dollar amounts you have lost. It can also give you the power to buy things or create opportunities in life that may balance the negatives caused by the accident injury.

So, if monetary resolution, while imperfect, is the only available option for restitution, how do we know what specific amount of money fully acknowledges the personal loss incurred in any given situation, that is when and how much is a fair settlement for you?

Some terms require definition at this point, particularly “fair settlement”.

Throughout this article I will use “settlement” as opposed to “judgment” most of the time. This is because most cases are resolved short of trial, and all settlements short of trial are negotiated against the possibilities of how a trial in a particular situation might play out. For these reasons I will stick with the practical term for conclusion of an insurance claim — settlement —- and keep the term judgment for when I am referring exclusively to a trial outcome.

Fair is a word I define as an actual number that “a person” who has no personal interest in the outcome of a dispute but who has experience and knowledge in personal injury claims and whom is apprised of all the material facts regarding same (namely a judge) acting impartially might assign to your loss. Impartially here means presented in compliance with the Rules of Court.

First off, the process of assigning a number at a trial, call it adjudication, is one of making a decision not a choice. Judges don’t just choose between the plaintiff’s number and the defendant’s number. Nor is their decision restricted to the range of numbers that fall within the numbers presented by plaintiffs and defendants or their lawyers. In other words, there is no guaranteed high or low to the number a judge will decide upon, and any certainty that YOUR number going into trial will be selected by the judge is next to zero. When the dust settles, everyone in a trial ends up having to live with the judge’s view of the matter. Sometimes this is a long way from a compromised view that the parties had within their grasp during the negotiations leading up to the trial.

Also while there is some science to an adjudication, there is also a component that I can only describe as a judge’s gut feeling for the truth of the matter. The involvement of this gut feeling factor is why the judicial process is referred to as an assessment as opposed to a calculation. While a judge will consider the math presented by each side, the judgment is never strictly a mathematical computation.

The only stricture placed on a judge’s discretion at trial is the potential for appeal. Appeals courts do not retry cases. They review the trial process looking for one or both of two potential problems. An appeal court will only interfere with a trial judgment if it is wrong in law or markedly, obviously, inordinately high or low. The default in an appeal is to uphold the trial judge’s decision.

So trials are not dry runs, they are the real thing and in most instances the result is one that neither side has suggested and both sides are stuck with.

So now that we have some context on the nature of an adjudication let’s explore another term: “trial risk”. You will often hear the words trial risk used in discussions around settlement. It is an important idea to get your head around ahead of the actual point where you have to make real decisions about options. As each number is proposed by one side and then considered by the other in a settlement negotiation, there is a risk incurred by each party in the act of accepting or rejecting that particular number.

By accepting a proposed number the down side to the plaintiff could be that if they had gone to trial the judge would have awarded more. The upside is that the judge would have awarded less.

But it goes deeper than that. There is also a risk that the trial judgment would have come in reasonably close to what is proposed. In that case the parties have gone through the anguish, the cost/expense, the making public details of your experience, and the delay created by deciding to try their case for very little more or less than could have been achieved through the negotiated certainty of an offer up for acceptance.

These two possibilities then, both the win/loss and the near win/loss, are what lawyers and adjusters are referring to when they use the term trial risk.

Having said that, I don’t want you to think I have lost track of the importance of fairness.

Fairness also is a double barreled concept. It is important, both in terms of pure compensation and in the equally significant consideration of being the essential ingredient for a physically and/or emotionally traumatized individual to be able to psychologically let go of the victim state and move forward into recovery and adjustment — physically, emotionally, financially. In my experience, any accident victim’s chances of releasing the experience in a healthy manner is determined by how well they understand a recommended settlement offer and how comfortable they are with it being described as fair — both by their own lawyer as well as by the other side!

This is why I have invested in these articles on my web page, so that you have a chance to read and digest the concepts at your own pace, ahead of making the decision to conclude your claim. You and I will of course discuss how these general concepts apply to your particular situation as we progress through the settlement process but there will come a day when we will have done with it, either by trial or by settlement, and I want you fully prepared for that day.

That ends the conceptual discussion on how fair can be defined in a way acceptable to opposing parties and the practical one on how considering trial risk is important to a successful settlement negotiation. I now turn to a technical analysis of the settlement amounts.

When an offer of settlement is made to you the defendant(s), the tendency is to think of the offer as a single dollar amount.

The first step in understanding the offer is to realize that the single dollar amount is a sum of parts. As a personal injury affects many different areas of your life, so then are there many different parts to a personal injury settlement. At some point, each part is examined as an individual component before being lumped together into a bottom line amount.

Civil litigators therefore assign different categories of loss to each area of your life affected and think of them in terms of individual legal analysis. These are referred to as Heads of Damages. The most common heads of damages are:

Let’s deal with them in order of presentation in the list.

Pecuniary is an old word for monetary, or measured in money.

Non-pecuniary damages, that is non-monetary damages then, are an attempt to deal with that part of your loss that isn’t readily measurable in dollars and cents. It is an acknowledgement that in addition to, and apart from lost wages, out of pocket expenses, an impairment of the body and/or mind in terms of earning income or taking care of your home, there is a diminishment of the quality of your life that you have suffered and may continue to suffer because of the injury effects. Other terms that are attached to this category of damages are pain and suffering, loss of enjoyment of life and disfigurement to name a few.

Let’s use an example, much more minor in comparison to a personal injury claim, but on point nevertheless.

Let’s say you planned a special holiday weekend to commemorate an important event for those close to you, such as a birthday or a wedding anniversary. You arranged to fly to Haida Gwaii and stay at a cozy bed and breakfast. The plane gets diverted and you wind up in the airport, in Prince Rupert, in the rain, for 8 hours and are then flown back to Vancouver, without your luggage. The weekend is ruined. Even if the airline were to reimburse you your full expenditure, including air fare, taxi rides back and forth to Vancouver airport and even the cost of your dog sitter, I am sure you will agree that although you are no longer out of pocket, you have still lost something. That something is a non-pecuniary loss.

Something that intangible does not lend itself to calculation and thus perfect restitution and so can therefore only be acknowledged. Inevitably, as a matter of public policy, that immeasurable acknowledgement is capped.

In 1978 the Supreme Court of Canada decided three cases. In so doing they set down guidelines for how all the other Canadian courts should handle the assessment of many aspects of personal injury claims. These cases are known as the Trilogy. They involved young people with severe injuries including severed spinal cords and significant, organic brain damage. One of the issues they addressed was non-pecuniary damages both in the theory of assessment and in the limit that could be awarded.

The Supreme Court of Canada, in 1978 set the maximum award a court can make for non-pecuniary damages at $100,000. A subsequent case established that the $100,000 figure should be adjusted for inflation. At the time of this writing, 36 years later, the upper limit, adjusted for inflation, is now about $345,000.

While technically each case is decided on its own merit, for the purposes of a negotiated settlement, non-pecuniary amounts in personal injury cases are arrived at by comparison to others that have gone to trial in the past where similar effects on the quality of life of similar plaintiffs have been considered.

Typically, both myself and the insurance company will rely on various cases previously gone to trial to support a starting point for negotiations. This collection of cases, similar in terms of plaintiff profile and injury effect, will provide a range of possible settlement outcomes that we will negotiate within.

So where do the million dollar judgments come from?

In Canada they arise out of provision for future care costs and future income loss claims. Also laid out in the trilogy by the Supreme Court of Canada was that in matters of concrete, economic loss, restitutio in integrum is the standard. The Latin term refers to the adjudicated outcome being sufficient to put an injured person back to where they were before the injury, as far as dollars can accomplish that. Where a loss can be measured and demonstrated, victims will be compensated with no monetary limits applying.

Claims for future losses, like any matter that extends into the future, requires a certain amount of guess work, so I will introduce this new area of discussion, income loss claims, in terms of the past where usually a bit more certainty can be achieved.

Past Income Loss claims are those claims related to the amount of money a person, but for the accident, would likely have earned from the date of the accident/loss to the date of trial (or settlement) and can be put into two categories: (1) Loss of past earnings calculated upon patterns of historical or established earnings; and (2) Past loss of opportunity to earn income.

The first category involves the case where an injured person was employed at the time of the loss on a fixed rate and the medical evidence defines a clear disability period. It is then simple math to arrive at a gross wage loss amount.

In the case of motor vehicle accidents, this amount is then netted down to account for income tax and employment insurance premiums the injured person would normally have deducted from their paycheque, to obtain a net past wage loss figure. Generally, unless the period of time off work is extensive, this is a number that can actually be calculated and accepted as such by both sides without a lot of discussion.

If the disability is for an extended period of time then contingencies arise. Even in the past, there can be a certain amount of speculation creeping into what would have, could have happened but for the accident injuries.

Contingencies is a term that refers to possibilities that may influence a projected outcome. The theory is that the longer something goes on for the more likely it is that something new will come into play that will affect the status quo. Life happens.

A past wage loss claim could be adjusted up for the contingency of pay increases. It could be adjusted down for the contingency of lay off. There could be a difference in medical opinion on the length of disability. Whether light duties or alternate employment could have been explored to reduce the amount of income lost may also be explored in settlement discussions.

These contingency arguments would be presented to a judge in a trial, along with supporting evidence to adjust the math up or down. Again, this adjustment engaged in by the judge will consider all realistic possibilities in terms of rough math only, and will lead to a non-mathematical assessment of income loss.

The exercise of a judge’s discretion in the midst of contradictory arguments comes into play to an even greater extent when considering the second category of past income loss claim which is commonly referred to as past loss of opportunity to earn income.

This kind of situation arises where the injured person was employed at a variable rate at the time of the injury. People who are self-employed and/or working on a commission, such as a small business owner or realtor or other sales person are common examples. There are situations where even though the earnings post accident are greater than pre-accident, an argument can be made for the fact that, but for the accident injury, even greater earning levels would have been achieved.

These cases are often supported by evidence from potential customers, business plans that may have been in existence prior to the loss, past performance, accounting analysis of business records, variation in demand for services, etc. By their very nature they are more speculative and require careful support and preparation, usually by a legal professional.

Future loss of earnings/ loss of future capacity to earn income:
Staying with the income loss theme, lets move from the past and talk about Future Income Loss. Future income loss (or los of future earning capacity) relates to the monetary value of “earnings” that, but for the interceding accident, a person might have earned from the date of the trial/settlement until the date of retirement or death.

Future claims of any sort are speculative. No one knows what tomorrow will hold let alone next year or twenty years from now, however, your claim settlement is for the future as well as the past — ALL of it — so where it can be established that the effects of the accident injury vocationally will continue into the future, the parties are forced into a certain amount of speculation about future income loss.

That sort of open ended, uncapped loss involving our most money-oriented life activity, earning income, depending on the evidence available, may create a potential for very large numbers. The combination of speculation and large numbers causes insurers to resist most vigorously claims for future income loss.

Where the evidence exists and is properly presented however, courts routinely award damages for future earning loss claims. The result is that this is the sort of claim where negotiations need to be carefully framed. In addition, it is important to make clear to the insurer involved that trial is an option if a reasonable settlement cannot be obtained in negotiation.

There are two approaches to Future Income Loss claims. A quote from a recent case dealing with this issue, Perren v Lalari, a 2010 decision from the BC Court of Appeal says it succinctly as follows:

“[The plaintiff] may prove the quantification of that loss of earning capacity, either on an earnings approach, as in Steenblok, or a capital asset approach, as in Brown. The former approach will be more useful when the loss is more easily measurable, as it was in Steenblok. The latter approach will be more useful when the loss is not as easily measurable, as in Pallos and Romanchych.”

If the plaintiff has a long standing, well supported earnings history and a clearly defined future disability period, such as a 20 year BC Hydro Line Man with a severed spinal cord, then economists are hired and math is front and centre on the earnings based approach.

There will always be contingency arguments coming into play, which will provide for the unavoidable difference in perspective between the defendant and the plaintiff. Resolution of this difference inevitably comes in the form of an assessment, which can be made by either a judge at trial, or by the parties in a negotiation. Math is more important in these earnings approach based assessments.

There are situations where a plaintiff may have actually returned to work and be earning income at the same rate as they did before the accident but still be suffering from the effects of the accident injury.

These effects could manifest themselves in terms of endurance or efficiency. They may have been given the opportunity to return to a full time position simply because they have worked reliably for the same employer in the past and because of this positive work history, the employer is willing to accommodate them. They may have returned to work when they did out of economic necessity rather than as a function of full recovery and the question of how long they can continue could very well be an open one.

Even though back at work, that person may be missing out on overtime or pay increases due to that lack of endurance or efficiency. There may be alternate positions that that person can’t apply for because they are no longer as physically strong perhaps because of the accident injury. There may be days taken off for respite from time to time in order to maintain employment generally.

Additionally, if in the future, for some reason the employer has to cut back on staffing, the accommodated employee may be the first one to be let go. If so, getting re-employed with a new employer, who has no past, positive experience with that person could be difficult and lead to an extended period of unemployment between jobs.

In these cases that person may have a continuing reduction in their ability to earn income, a diminution of their capital asset which may not be immediately evident in terms of return to work earnings occurring in the time frame close to the settlement or trial.

Capital asset means your ability to earn income is considered by a court as an asset, like your house or any other item that can be established beyond speculation. This is where the term capital asset comes from in the preceding legal quote. Where lingering injury effects diminish that capital asset, the injured person has a loss of capacity claim assessed on a capital asset approach.

The problem for the negotiators is that the actual loss has not become a reality at the time of settlement discussions. So how does one assess how likely this type of event is to actually occur. And if it does, what specific dollar loss will it lead to?

There is a two step process to the establishment of this type of claim at trial, and thus in a settlement negotiation.

First the plaintiff has the responsibility to prove, on a balance of probabilities, that there is a loss of capacity. Then secondly the plaintiff has to prove the extent of that loss.

Establishing a fact on a balance of probabilities, such as the eventual occurrence of a loss of earnings in the future due to the accident injury effect, requires the party advancing the proposition to convince a judge that there is a better than even chance it will occur. Once the party has established this 51% likelihood the judge will treat that proposition as 100% certain. This decision by the judge is called making a finding of fact.

Once this is accomplished, if it is accomplished, the plaintiff may then present mere possibilities for consideration by the judge in establishing the amount to be awarded. However, the judge will only be influenced by possibilities that are “real and substantial”.

If a realtor who has been working at this profession for 25 years advances a claim for the loss of ability to dig ditches, the judge will likely not make an award for that possible loss of income.

However if the same realtor proves on a balance of probabilities that a loss of ability to move into a more lucrative application of their realtor skills due to the ongoing effects of the accident injury will occur, the judge may consider that possibility when arriving at an amount to award. The more consistent with the work history an employment possibility is, and the better supported the disability is medically, the more likely the judge is to make and award and therefore the more likely an insurance company is to concede an amount in a negotiation for this category of damages.

Judges in the past, when making capital asset approach awards for proven loss of capacity claims, often pick a lump sum which ranges from 6 months to 3 years of typical gross earnings for the injured person.

Remember it’s the plaintiff’s obligation to establish a convincing argument. The defendant at trial simply has to convince the judge that there’s not enough evidence to support the idea.

That is why such claims often, but not necessarily always, require certain forms of support.

A functional capacity evaluation and a report from a vocational expert may be commissioned to get a clear and thorough picture of your future needs. A report from a Physiatrist may also be of use. These can all be commissioned by your legal counsel. The defense can also require your attendance for the preparation of similar reports from their perspective. (See my article on Independent Medical Assessments to get a better idea of what this entails).

So to summarize, in the event of more severe injuries where disability is obvious, a judge may accept a Steenblok type of earnings based approach where math is more important. Where the loss is less obvious but still can be proven on a balance of probabilities, the Brown (or capital asset approach) is more likely to be adopted.

Generally injury claims don’t get settled until you and your treators have had enough experience with the injury and recovery process to be able to get a reasonable idea, both in terms of degree and permanence, on the extent of both recovery and the actual residual effects.

Past care costs are the amount or monies that have been extended on medical and rehabilitational care, that are either directly (ie. medication) or indirectly (ie. renovations to a house owing to physical disability) attributable to an accident measured from the date of the accident/loss until the date of trial/resolution.

Future care costs are the amount of money that must be put aside to pay for all likely future medical and rehabilitational care costs that may be medically necessary and which are attributable to an accident measured from the date of the trial/resolution until the age of death.

Most of the treatment you engage in during this time is paid for either by accident benefits coverage in the case of a motor vehicle accident, extended health care coverage, the Medical Services Plan or the BC Hospital Insurance Program. (That means that there is very little to be claimed in the way of past medical expenses. User fees for physiotherapy and the like or other uninsured medical expenses are covered under the title of Special Damages discussed later in this article).

There can however be substantial consideration for future medical expenses. There are also specialized medical treatments and aids to housekeeping activities that would not normally be insured and therefore form part of your claim against the tortfeasor (see my article Who’s Who on discussion of tortfeasors). These fall under the heading of Future Care Costs.

In the event that these are substantial, legal counsel can arrange for a series of assessments with various professionals to form a basis for this sort of claim. A Physiatrist may be employed as an independent medical advisor to coordinate the various treatment recommendations made by treating specialists already on file. A future care report from an Occupational Therapist may be of help.

In any claim that projects into the future, be it for care or income loss, experts for projecting the lump sum necessary to receive now to provide a stream of income into the future can be useful. They usually come in the form of economists or actuaries. Selecting and instructing and paying in advance of the settlement of your claim these experts is the role of your legal counsel.

As anyone knows when they pull out the vacuum cleaner or Comet for the tub after they come home from a hard days work there is a certain value to the ability to do household tasks (Gloria Steinem take a bow). If the effects of the injury have taken some or all of that capacity away from you then you have a claim for Loss of Housekeeping Capacity that we can work together on to develop and present in a negotiation.

Doctors refer to the most painful and immediate time in the recovery process as the acute recovery stage. This is when you sleep sitting up because you can’t lie in bed in any position and be comfortable enough to actually fall asleep; or the hip to knee cast prevents you from going up stairs; or preparing meals or properly bathing. In these situations, a parent or sibling or offspring sometimes takes time off work or comes in after work, and goes beyond what would normally be expected, even of a family member, to help you through that acute phase.

They have obviously suffered a loss, either directly in terms of wage loss, or indirectly in cooking your meals when they could be at their regular soccer game or golfing event or just chilling out at home (remember non-pecuniary damages?).

But because they weren’t the one actually injured, they have no claim. You however may feel indebted to them. The law allows for an In Trust claim to give you a nominal sum of money that you can then use to buy some flowers or treat them out for dinner or other such thing to kind of balance the family books.
Special damages:

Special Damages are the “out of pocket” expenses that you have incurred as an injured party that are attributable to the accident/injuries suffered. They include the user fees not covered by medical insurance for physiotherapy, chiropractic treatment, massage therapy etc. treatments. They also cover a certain amount for mileage and parking incurred in attending medical appointments for accident related treatment. They cover incidental, concrete items such as a pair of sunglasses lost in the accident.

Anything that actually cost you money that would not have happened had the accident injury not happened can be claimed within reason. You must have receipts to support expenses such as parking and user fees. Keep track of your mileage for potential reimbursement.

Some things like a new expensive mattress may or may not be covered but again you will need both a receipt and support generally from your family physician that the item was medically required as a direct result of the injury you sustained. Get me these expenses to me as they are incurred. (This prevents you losing them and is a good way for me to be kept posted on your recovery). I can then see if I can get some of them paid in advance of final settlement. Make sure that they are related to the accident. You will rapidly lose credibility with the insurer on all of your claim if for example, you start including prescriptions for medication that were filled before the accident occurred.

WHAT IS FAIR SETTLEMENT?

I began this article discussing the topic of “fair settlement” and so it only seems appropriate to end it the same way. When you or your lawyer are determining what is a FAIR SETTLEMENT for your ICBC or other injury claim then all of the above MUST be taken into consideration. It is NOT until you have both a firm grasp about the concepts discussed above and you have assessed all of your real and potential losses under the various heads of damages outlined above that a FAIR SETTLEMENT should be considered. Remember a fair settlement is based upon facts, likelihoods, probabilities of outcomes that all relate back to your prognosis for recovery for an accident. Each case will be considered separately and fair settlements will be achieved only after careful assessment of possible outcomes.

Your legal butler will do his very best to help you achieve the fairest of possible settlements. Remember this: You can ONLY obtain your fair settlement ONCE! You cannot go back to ICBC after your settle and tell them years later that you got ripped off and didn’t count on “x” happening or “y” happening. Once you settle the file is generally closed. Lawyer Jamie Butler will NOT sell you out and will only be happy when you receive your fair settlement.
So it this article interess you or if you want to discuss your settlement options or concepts outlines in this article feel free to call me ANYTIME at 604-318-3838.

Back to Blog

Written by Jamie Butler