Law Times

Law Times • May 6, 2013 Branco should force insurance companies to rethink tactics BY ANNA SZCZURKO For Law Times J ustice Murray Acton of the Saskatchewan Court of Queen's Bench has released his decision that provides for the highest-ever punitive and aggravated damages award in Canadian history at a record $4.95 million. Acton awarded $150,000 in aggravated damages and $1.5 million in punitive damages against AIG as well as $300,000 in aggravated damages and $3 million in punitive damages against Zurich Life Insurance Co. Ltd. Acton's scathing comments in Branco v. American Home Assurance Co. regarding the tactics employed by the insurance companies ought to draw the attention of the insurance industry. The decision and amount of damages awarded should compel the insurance industry to recognize the devastation their actions cause in failing to honour their contractual policy commitments to those they insure. Plaintiff Luciano Branco isn't unique in his struggle, although the facts of his case are particularly compelling. The decision will hopefully provide the motivation for the insurance industry to reconsider some of its practices and tactics. By way of background, Branco was a welder working for a mining company high in the mountains of Kyrgyzstan and thousands of kilometres from his family. On Christmas Day in 1999, Branco dropped a steel plate on his foot during the course of his 12-hour shift. Although his foot swelled, Branco wanted to maintain his perfect attendance record and continued to work. At the end of his shift, he washed the blood off, found that his foot was still intact, and packed it in snow. He managed to complete his 28-day work rotation. Branco returned for his next 28-day shift in February of 2000. Two days before the end of that rotation, he stepped on a piece of steel and reinjured his foot. As before, he managed to finish his rotation and return home. However, once home he learned his cumulative injury was very serious. He wouldn't be able to return for his next shift or, as it turned out, work again. American Home Assurance (AIG) initially provided income replacement coverage to Branco. As is standard practice, it required Branco to attend an assessment by its appointed physician. As a result of this examination, the AIG doctor recommended surgery to attempt to repair the damaged foot. Despite the surgeon's best efforts, Branco did not have a good result. AIG's doctor concluded Branco had a permanent disability from working. Despite AIG's own medical assessor's conclusion that Branco was unable to return to work, the adjuster for AIG suspended payment of income benefits to Branco in May 2001 because  its own doctor failed to provide the information in a timely manner. In September 2001, specialists in Saskatchewan conducted further examinations and assessments at AIG's request. These medical examinations again confirmed Branco's disability and the conclusion that he was unable to return to work. Despite these second confirming medical opinions, AIG continued to deny income benefits to Branco. Zurich, meanwhile, was to provide benefits for the mining employees in the Page 7 COMMENT event of a long-term disability. The Zurich policy was to assume responsibility at the two-year mark. Despite medical documentation confirming Branco's condition, Zurich did not make any long-term disability benefit payments to him. He then commenced a claim against both of his insurance companies. On March 21, 2013, Acton confirmed that the policies provided by AIG and Zurich were "peace of mind contracts," the object of which was to secure a psychological benefit for Branco. The intangible benefit of such contracts is the prospect of continued financial security when a person's disability makes working, and therefore receiving an income, no longer possible. CIC a tribunal, paralegals argue BY ANDREA SESUM For Law Times L ast week, the Licenced Paralegals Association of Ontario and the Paralegal Society of Ontario addressed the question of the scope of paralegal practice in immigration matters at the Law Society of Upper Canada ahead of a motion considering the issue at its annual general meeting this week. Gerri Camus, chairman of the association's governance committee, and I presented submissions along with the research and case law regarding the current scope of paralegal immigration practice. We were asking the law society to clarify Bylaw 4 in relation to the limitations on the scope of practice to work before the Immigration and Refugee Board only. The limitation on the scope of practice, however, does not derive from the bylaw itself that states paralegals can engage in work "before a tribunal established under an act of the legislature of Ontario or under an act of Parliament." Instead, the restrictions on practice before Citizenship and Immigration Canada stem from the frequently asked questions section on the law society's web site that state: "Paralegals who are licensed by the law society can appear before the Immigration and Refugee Board (IRB) to represent a client or clients in an IRB hearing, and can provide legal services to clients for matters relating to an IRB hearing. Drafting of documents or other legal services practices that are not related to an IRB hearing remain outside of a paralegal's scope of practice." Our submission included a book of authorities inclusive of case law supporting the fact that Citizenship and Immigration Canada is in fact a tribunal. At the same time, the LSUC's guidance on its web site on what to u SPEAKER'S CORNER Acton confirmed that the failure to pay benefits can result in mental distress of the type suffered by Branco. Acton cited evidence of persistent tactical disregard by AIG towards the plaintiff. In May 2003, the Saskatchewan Court awarded $60,000 in punitive damages against AIG due to the actions of adjuster Patti Schibler. Despite the award of punitive damages, mere months later the very same Schibler applied the same techniques of aggressive non-activity on Branco's claim. The close time frame between the payment of the previous punitive damage award and the same adjuster continuing to employ the same tactic against Branco indicated that the prior decision had done little to deter insurance companies from such conduct. The actions of AIG and Zurich were "cruel and malicious acts" that are "evidence of how calculated and abhorrent the actions of AIG were in dealing with Branco," wrote Acton. Acton found the failure to make any payments to Branco even after admitting liability to be particularly disturbing. He held that these actions established a pattern of abuse of an individual suffering from financial and emotional vulnerability. Acton reviewed previous Supreme Court of Canada decisions in his calculation of the record aggravated and punitive damages awarded. He noted that while a punitive damages award of $3 million may not be "particularly significant to the financial bottom line of a successful worldwide insurance company," he hoped the decision would attract the attention of the insurance industry. In awarding Branco a record $4.95 million in punitive and aggravated damages, the Saskatchewan Court of Queen's Bench sent a strong message in terms of the expectation of ethical behaviour by insurance companies. This decision is now the high watermark for punitive damages in Canada as they significantly exceed the $1 million awarded in Whiten v. Pilot Insurance Co. While I strongly suspect an appeal is pending, Acton's strong remarks will hopefully resonate with insurance companies and provide an extra factor for them to consider while conducting their cost-benefit risk analysis LT uAnna Szczurko in an associate in the personal injury group at Siskinds LLP in London, Ont. CDLPA OPPOSES PARALEGAL MOTION The completed five-year reviews on paralegal regulation by the Law Society of Upper Canada and David Morris have served to inspire a conversation within the justice system about the scope of practice of the paralegal profession that's now focusing on a motion put forward by representatives of the paralegal community for debate at the upcoming LSUC annual general meeting (see "Time to expand paralegal rights?" on April 29). The County and District Law Presidents' Association will be speaking against this motion as drafted. We insist that there remains the need and opportunity to further improve the regulatory environment for the paralegal profession to better protect the public and improve access to justice before matters related to scope of practice can be considered. Specific to this motion, we hold the strong opinion that the Morris report and its  recommendations were not designed to be accomplished or considered www.lawtimesnews.com consider before seeking judicial review provides some fodder as well: "Examples of federal decision-makers include the Canadian Human Rights Tribunal, the Canadian International Trade Tribunal, a federal government official (such as a visa officer) or a minister." Therefore, if we consider the Supreme Court of Canada decision recognizing Citizenship and Immigration Canada as a "specialized tribunal," our practice in immigration law should go beyond the Immigration and Refugee Board. Additional submissions and case law will consider the doctrine of paramountcy. On Nov. 1, 2010, former LSUC treasurer Laurie Pawlitza made submissions to the standing committee on citizenship and immigration. Pawlitza told the committee the LSUC could effectively regulate paralegals who work in immigration matters and immigration consulting. Among other things, she said: "At present, they are required to be members of both the law society and [the Canadian Society of Immigration Consultants], which is unnecessary. A number of our licensees have raised this duplication with us. We accordingly respectfully submit that Bill C-35 should be amended to permit the provision of immigration consulting services by paralegals licensed by the Law Society of Upper Canada, as is already the case for lawyers. We respectfully suggest that it would be in the public interest that paralegals, licensed by the Law Society of Upper Canada, be provided with the support of the law society to provide immigration services, pursuant to federal legislation contained in the Immigration and Refugee Protection Act." In my view, then, it is time to take a closer look at the issue of what paralegals can do in immigration law. LT uAndrea Sesum is a paralegal and immigration consultant at Legal Solutions Group. u Letter to the editor in isolation. It is neither possible nor appropriate to establish a task force designed to focus on three of 11 recommendations, as the motion suggests, especially when they are intertwined  and the success of each may depend on the implementation of others. We believe  the independent review by Morris provided a reasonable and fair assessment of the paralegal profession in  Ontario  and offers a measured approach through which expansion may  ultimately be considered. CDLPA supports the continued evolution of the profession as contemplated by the entirety of the report and therefore cannot support the expansion of the scope of practice independent of the other challenges still to be addressed. Janet Whitehead, chairwoman, CDLPA

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