Rob Shaw: Another setback in court casts a long shadow over the NDP’s plans to transform auto insurance in BC.
The B.C. government’s attempt to overhaul the troubled Insurance Corporation of B.C. suffered its second defeat in court this week, raising questions about whether its larger vision for the Crown auto insurer can survive future legal challenges.
Supreme Court Chief Justice Christopher Hinkson ruled it unconstitutional for the province to shift minor injury claims away from the courts and into the independent Civil Resolution Tribunal.
Specifically, he struck down the tribunal’s authority to determine if an injury is “minor,” its ability to set damages, and government legislation that explicitly requires the court to dismiss motor vehicle accident cases if they fall squarely under the purview of the tribunal.
The ruling was a victory for the Trial Lawyers Association of B.C., and a legal gut punch to the government’s attempts to reform ICBC.
It has cast a shadow over B.C.’s shift to a no-fault insurance system on May 1, which will be challenged by the same lawyers, likely under the same chief justice.
“I never pretended, and I don’t pretend, that this would be a walk in the park,” said Attorney General David Eby.
“This is a multibillion dollar personal industry that we are clipping the wings of, frankly, to provide lower rates to drivers. So it is a challenge. We are going to lose some decisions and we are going to win some too.”
B.C. is the last in Canada to have a fully tort-based auto insurance system, meaning you have to go to court to sue for damages. The NDP government is moving away from that in an attempt to address more than $2.5 billion in losses at ICBC, due to rising legal and claims costs.
Its first step was to limit the number of expert reports lawyers could commission in an accident case, to prevent enormous fees being racked up which are then deducted from the money the injured person wins and is supposed to use for treating their injuries.
That was slapped down by Chief Justice Hinkson in late 2019 for infringing on the exclusive powers of the court.
The loss meant almost $400 million in potential savings for ICBC was set to vanish. Eby scrambled and reintroduced legislation that reimposed the limits but allowed for “judicial discretion.” So far, they’ve survived.
Then, the government introduced a cap of $5,500 on pain and suffering for minor crashes – defined as sprains, bruises, whiplash and mild concussions – and directed those cases to be settled out of court at the civil resolution tribunal.
Chief Justice Hinkson partially slapped this down in this week’s ruling. The decision will cost ICBC $390 million in savings.
What will B.C. do?
It could appeal. Or, like it did on expert reports, head back to the legislature and introduce a new bill that resurrects the changes but with tweaks to address the court’s concerns and make them constitutional.
“It’s a very lengthy decision,” Eby told media. “Our team is studying it in detail. My personal inclination was of course we’re going to appeal right away. But the team rightly recommended to me we should take the time and have a look.”
Of greater concern is what those two court losses mean for B.C.’s switch to no-fault on May 1 – the largest reform for ICBC since the corporation was created in 1973.
No-fault will mean lawsuits for damages will be forbidden in most cases, cutting personal injury lawyers out entirely and awarding injured motorists access to a lifetime set of medical benefits to pay for care, rehabilitation and therapy.
It will, overnight, virtually eliminate B.C.’s multi-billion-dollar personal injury law sector. And apparently, save ICBC more than $1 billion.
You can bet those lawyers about to see their livelihoods evaporate will toss every possible legal challenge they can at the reforms.
Working in the government’s favour is the fact that other provinces like Manitoba and Saskatchewan successfully launched no-fault insurance systems years ago – and they proved constitutional when tested in court.
But that doesn’t mean individual pieces of B.C.’s legislation won’t fall and have to be appealed or rewritten on the fly.
For most motorists, their only concern will be whether ICBC reforms and the resulting legal bun fight impact their insurance rates.
Government has promised an average 20 per cent reduction after the switch to no-fault, and is also sending out rebate cheques for COVID-19 and the partial mid-year transition to the new no-fault system.
None of that will be disrupted with the most recent court loss, insisted Eby.
Maybe not. But government’s record in court so far on ICBC reforms is looking shaky.
It could be a messy next few months.
Rob Shaw has spent more than 13 years covering BC politics, now reporting for CHEK News and writing for The Orca. He is the co-author of the national best-selling book A Matter of Confidence, and a regular guest on CBC Radio.
- Rob Shaw last wrote about a debate about renting and landlords in the legislature, which highlighted a growing demographic and increasingly important issue.
- Mark Milke believes ICBC has never been a good deal.
- ICBC’s old model (well, soon to be old model) was fundamentally flawed, argued Geoff Costeloe, putting BC’s insurance monopoly in a perpetual conflict of interest.