Avoiding Legal Malpractice Claims in Canadian P.I. Cases

Ten-Minute Course
Avoiding Legal Malpractice Claims in Canadian P.I. Cases
(or Can You find the Missing $865,000?)

By Greg Samuels*

The Fact Pattern:
John Smith is a Washington resident, insured by GEICO, who was catastrophically injured as a passenger in a motor vehicle accident in Vancouver, B.C. The Defendant, Jane Doe, also a Washington resident and determined to be 100% responsible for the accident, is insured by Farmers’ with a minimum $25,000 third party liability policy. Mr. Smith has PIP coverage of $10,000 and UIM of $100,000 with GEICO. His future medical expenses alone will exceed $2 million. You have determined that Ms. Doe is insolvent, and you are now in a position to settle Mr. Smith’s case with the various insurance companies. How much do you settle for? Disregarding exchange rates, if you said $135,000, do yourself a favor and buy more malpractice insurance.

The Proper Analysis:
The Insurance Corporation of British Columbia (“ICBC”) provides minimum third party liability coverage to every B.C. driver of $200,000. ICBC also grants $150,000 in no-fault medical and rehabilitation benefits (“Part 7 Benefits”), as well as $1 million in UIM or “UMP” coverage, subject to certain deductions. Owing to a certain Power of Attorney and Undertaking (“PAU”) which Farmers’ filed with the Canadian Council of Insurance Regulators (“CCIR”) on September 26, 2002, Farmers’ is obligated to increase the minimum limits offered to its policyholders for all classes and kinds of coverage, whenever one of its policyholders is involved in an accident in British Columbia. These classes and kinds of coverage include tort, PIP and UIM.

In other words, you can disregard Mr. Smith’s and Ms. Doe’s limits of coverage and look instead to ICBC’s minimum limits. You should settle Mr. Smith’s tort claim with Farmers’ for $200,000 plus an additional $150,000 for PIP or “Part 7 benefits”. You should then settle Mr. Smith’s UIM claim with Farmers’ (and possibly GEICO) for $650,000 ($1 million less amounts received in tort and Part 7, as well as any other applicable deductions).

But Farmers’ is Ms. Doe’s insurer, you say. How can Farmers’ be held liable to top up Mr. Smith’s UIM coverage? In B.C., Mr. Smith is also considered a Farmers’ insured for UMP purposes, since he was a passenger in the vehicle. Moreover, an “owner’s certificate” like that held by Ms. Doe is considered primary coverage for purposes of sorting out UMP priority issues. Farmers’ may nevertheless have a subrogation claim against GEICO, Mr. Smith’s own UIM carrier.

There’s a beautiful arrow in the plaintiff attorney’s quiver known as Mulcahy v. Farmers’ Insurance, 152 Wash.2d 92, 95 P.3d 313 (2004), that allows such a coverage case to be tried in Washington. Proof of British Columbia law would be established in such a case through affidavit of a B.C. attorney qualified on the topic. B.C. counsel should also be consulted for conduct of the UIM arbitration, should damages disputes arise, since such a case must proceed pursuant to statute by way of arbitration through the BC International Commercial Arbitration Centre “BCICAC”.

To check whether your client’s or defendant’s insurer has filed a PAU in BC, that subjects them to BC’s limits, you should consult the CCIR website, www.ccir-ccrra.org/en/pau/.

* WSAJ Eagle Greg Samuels, of Cross Border Law Corporation, is a lawyer in both British Columbia and Washington State who commonly assists both Americans and Canadians in navigating personal injury claims on both sides of the border. He is available for association or consultation at 1-(800) 222-6332 or gls@crossborderlaw.com.