The Goudge Report Pt. 2 – The Medical Liability Review

Introduction

In our last blog post, we discussed the report of Mr. Justice Gouge on the physician complaint process. The second referral to Mr. Justice Stephen Goudge in March of 2016 by the Ministry of Health and Long Tem Care (the Ministry) was to conduct a review of the civil justice system concerning the management and handling of medical malpractice actions. The Ministry's concern was the ever increasing cost of such litigation and the length of time it was taking to achieve a resolution. Although the delay in receiving compensation was the Ministry's main concern, this delay before closure issue also encompassed actions that were dismissed without compensation being received again after considerable delay.

The Numbers

The report was released just over one year ago. It found that the total number of malpractice actions in Ontario had remained relatively constant since 1990. However, the costs associated with those actions over the years had increased by four to five times what they were in 1990. This increase in cost was related to the defence costs for lawyers and the damage awards paid to resolve the cases. This analysis did not account for inflation. The report was also limited based on the reliance on anecdotal evidence and the absence of any empirical data.

The Recommendations

1. Future Care Costs: These are ongoing costs and expenses which will be incurred by injured plaintiffs for their treatment and recovery after their trial is won or settled. The recommendations were that such costs should be defined by set legislative criteria, should be assessed and valued by a Ministry-created and funded university-based hospital centre; should make the Ministry the stakeholder of the "in trust" funds for structured settlements, and finally, that there should be a fixed method of costing any lost years;
2. Discount Rate:This is the rate chosen to apply to a future stream of lost income and costs in such actions to determine the proper present value of the funds needed to meet those costs in the future assuming a reasonable rate of return offset by inflation. The recommendation was that a single rate be used over the current two rate system to keep the costs of structured settlements in check;
3. Gross-Up:In cases where a structured settlement is not used, and a lump sum is paid for future care, the amount of the award must be increased or grossed-up to pay the income taxes that the award will attract in the future. This sum can be a very significant number. As a result, structured settlements are to be preferred;
4. Management Fees:These are fees awarded to the plaintiffs who do not have the skills to manage the settlement money on their own. The recommendation was that such fees be regulated and set by the government;
5. Subrogation:The plaintiff is required to seek on behalf of the Ontario Health Insurance Plan (OHIP) the expenditures for past and future care, which has or will be paid by OHIP for the plaintiffs care. This money does not directly benefit the plaintiff. It is fought over by lawyers who are eventually paid by the Ministry. It should be eliminated;
6. Pre-Judgment Interest:Interest is paid in Ontario from the date the cause of action arose until the trial. The rates for such interest are different for pain and suffering or general damages (at 5%) and by formulae for all other prejudgement losses. The rate of 5% is higher than the current rate of inflation. It should be changed, and both rates should be the same and based on economic trends;
7. Guardianship Fees: These are fees paid to someone to manage the plaintiff’s money where they are a child or an incapable adult. The recommendation was that they be regulated and controlled by the government;
8. Derivative Claims:Family members of the injured plaintiff are allowed at law to make claims for any pecuniary losses they suffered, but as well for the loss of care, guidance and companionship from the injured family member. The recommendation is that the list of potential family members should be shortened and a cap should be placed on the non-pecuniary awards;
9. Collateral Benefits:Plaintiffs are often able to access benefits from third-party sources such as private insurance, work benefits etc. The rule is that such benefits are to be deducted from the damage award to avoid double recovery unless the plaintiff can show that they paid for the benefit in which case they can receive both. The recommendation was that the rule be legislatively enacted to ensure consistent application in all cases.

Takeaways:

Despite the passage of one year, none of the recommendations have been acted upon by the government. Whether they will be in the future is anyone's guess. However, the present government appears bound to reducing costs wherever it can. The recommendations may appeal to the Ministry shortly or least during their mandate. We will keep following any developments that occur.

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