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Statutory Subrogation and Cost Awards
Published in the November 2006 issue of Transportation Notes - View Article
In virtually every claim for personal injury advanced in Ontario is included the subrogated interest of the Ontario Health Insurance Plan (“the Plan”) for the cost of health care services provided to the injured party. An interesting issue arises when such a claim is advanced and the plaintiff’s action is dismissed: if costs are to be awarded against the individual plaintiff, should the Ministry of Health, which is responsible for the Plan, also be subject to a costs award?
The issue is addressed by Regulations passed under the Health Insurance Act. Regulation 552 stipulates that where a person insured under the Plan obtains a judgment in an action in which he has included a subrogated claim on behalf of the Plan, certain cost consequences follow. In particular, section 39(6) states that “the Plan shall bear the same proportion of the taxable costs otherwise payable by the insured person . . . as the recovery made on behalf of the Plan bears to the total recovery of the injured person . . . or where no recovery is made, as the assessed claim of the Plan bears to the total damages of the injured person assessed by the court.”
There is precedent for imposing an obligation to pay costs upon the Ministry. In 1997, the Ontario Superior Court of Justice decided the case of Marchand v. Public General Hospital of Chatham. In Marchand, the plaintiff’s personal injury action was dismissed, but the trial judge did assess damages at approximately $1.1M. He also assessed the Plan’s interest at approximately $150,000, or 12% of the total assessment. The Plan had discontinued its action about midway through a very lengthy trial. The trial judge found the Ministry was responsible for 12% of the costs incurred up to the date of the discontinuance.
A similar claim was considered by the Ontario Court of Appeal in the case of DiBattista v. Wawanesa, decided on October 5, 2006. However, the Ministry was able to escape a costs order in this case.
The dispute began with a fire which occurred some nine years ago. The plaintiffs’ home was severely damaged. Their insurer, Wawanesa Mutual, resolved the property claims through a statutory appraisal process and retained contractors to effect repairs. The plaintiffs were not satisfied and brought an action alleging a wide range of wrongful conduct, including unfair and deceptive acts along with shoddy repair work. They alleged mental stress and emotional injury and sought damages. A minor subrogated claim was advanced on behalf of the Plan. After a 70 day trial, a jury found the defendants to be without fault and assessed the plaintiffs’ damages at zero. The defendants had incurred total costs in excess of $1M and sought recovery against both the adult plaintiffs and the Ministry.
The trial judge awarded costs against the adult plaintiffs only. The Court of Appeal has upheld this decision. The key elements which distinguish the case from Marchand appear to be the very limited participation of the Ministry in the trial and the fact that the Ministry did not ask the jury to assess its damages. As a matter of black letter law, this last consideration would appear to be key to avoiding the application of the cost rule set out in Regulation 552.
Ontario C.A. Docket C44912