Duty to mitigate – implied term

This issue is well within the control of the insured. There should be no need to show vulnerability on this question. Essentially it reduces to a matter of common sense to follow the recommendations of the treating physician.

The law is clear that the insured has a duty to take reasonable steps to mitigate the claim as in the case of a tort claim or breach of contract. The extent of this duty at common law is set out in the leading case in 1985 of the Supreme Court of Canada. ¹

It is well accepted that a plaintiff must take reasonable steps to minimize his loss, independent of specific policy language which may stipulate certain mandatory steps to rehabilitate or retrain.

This case was not a claim under a disability policy, but rather an action in tort. The plaintiff was unable to return to work due to injuries suffered in a car accident. The recommended surgery provided a 70% chance of success and if so, 100% full recovery was expected. The plaintiff refused the surgery on the basis that he would accept such intervention only if there was a 100% chance of success.

At trial, the court found the plaintiff in violation of his mitigation obligation and reduced his claim for pain and suffering, loss of enjoyment of life and lost earnings. The damage claim was assessed based on the expected date when he could reasonably have expected to return to work had the operation proceeded.

The Court of Appeal agreed in principle with the analysis, but adjusted the award to reflect that the operation contained a contingency and hence the damage award was increased to reflect the 70% likelihood of success.

The Supreme Court upheld the Court of Appeal, but did offer general principles to be considered in reflecting on a mitigation obligation, set out as follows:

1. Where there are conflicting medical opinions and the plaintiff follows one of them, there can be no adverse determination against him.
2. The issue is in essence one of precise facts before the court in each instance. That being said, the considerations to be weighed will be (1) the degree of risk to the plaintiff from the surgery, (2) the gravity of the consequences of refusing it, (3) and the potential benefits to be derived from it.
3. The burden of proof rests upon the defendant.
4. That burden includes not only showing a failure to mitigate, but also the extent to which the loss may have been reduced had those steps been taken.

Two appellate decisions of the Nova Scotia Supreme Court were released in 1996 dealing with the mitigation obligation of the plaintiff in tort claims dealing with chronic pain.

The first was released in March of 1996.²The trial judge had found that the plaintiff had not complied with medical recommendations and directions to participate in rehabilitative activities, yet refused to make a finding of failure to mitigate.

As the Court of Appeal later put it, “the trial judge found, but excused, a failure to mitigate damages”. This, the appellate court concluded, was an error of law, barring a psychological infirmity making the plaintiff unable to make rational choices.

This court concluded that had the plaintiff been compliant, his condition would have improved ³

A further decision of the Court of Appeal of Nova Scotia followed in 1996, which reviewed the trial decision ⁴ in which it was found that the plaintiff had failed to mitigate her damage claim.⁵

The Court of Appeal concluded that by (1) failing to reduce her smoking and caffeine consumption, (2) delaying her admission to the rehabilitation provider by three months and (3) by obtaining an early discharge from the six month chronic pain management program by two months, she had breached her mitigation obligation. The Court of Appeal saw the first two of these factors to be of little relevance.

The appellate court agreed that the defence had satisfied its onus of proving a failure to mitigate.

The court then posed the question of what followed from that, namely, did the defence have to prove what the likely success the plaintiff would have achieved, had she been compliant with this obligation.

The appellate court looked to Janiak for guidance which spoke to the test as twofold.

The Court of Appeal apparently was prepared to refuse to follow this direction and stated that to do so would impose “an unfair, if not impossible, burden on Mr. Kelly” ⁶due to his alleged disability based on chronic pain.

However, the Court found that even though there was no evidence to show how these additional two months would have improved the plaintiff’s recovery, the defence had failed to satisfy the onus of proof.⁷

The court referred to the above decision of Freeman J.A.⁸ to distinguish Janiak’s direction that the defendant must not only prove a failure to mitigate, but also that such mitigation would have led to positive consequences in cases involving symptoms of chronic pain.

It is unfair that the plaintiff should be penalized without affirmative evidence to support the likely advantage to be obtained, particularly given “a likelihood well short of certainty”.

These two cases stand apart. The accepted onus is to show a failure to mitigate and that had mitigation been observed, there would have followed positive consequences. Any reduction in the damage claim should reflect that contingent risk

This issue of conflicting medical opinions was reviewed by Mr. Justice Jenkins ⁹stating that a person acting on the advice of his physician should not be held to an “overly critical standard of review”.

This issue was raised again a 2001 decision of the B.C. Supreme Court of Madam Justice Dillon¹¹the plaintiff sued for disability benefits due to a diagnosis of Chronic Fatigue Syndrome. The issue arose as to whether the plaintiff had taken proper medical advice in the currency of her disability.

One physician had advised the plaintiff not to exercise, a view which the trial judge found was contrary to medical authorities and to the evidence of a defence expert.

The defence had raised this as a mitigation issue. The court restated the question not as a mitigation issue but rather as “what is the proximate cause of Mrs. Gerber’s continuing disability?” The court questioned this approach.

In the end result, it did not impact the decision as the court found the plaintiff did take moderate exercise in any event and hence the issue was moot.

The rationale, nonetheless, as to whether the issue was stated as mitigation or an intervening cause “sufficient to negate the proximity of the originating cause” really is one and the same. The plaintiff’s conduct, even when in theory following what may have been good faith, yet incorrect, medical advice, may interfere with her claim in proper circumstances.

“Mitigation” is required as an implied term or by policy. It is clear that there is indeed such an obligation. In a disability claim, the “originating cause” is irrelevant. What is important is only whether the insured is medically disabled, however this was caused, and the obligation to take reasonable steps to address this issue by recovery. ¹²

A similar argument was advanced by the defence in a 2003 Alberta case, Byron v. Larsen.¹³The Plaintiff’s general practitioner and other specialists had recommended that she commence an exercise program. Instead she followed the advice of another physician to do the converse.

The decisions in prior “surgery or no surgery” cases were distinguished as in this instance, and there was no adverse risk to be encountered.

Apart from the issue of conflicting medical advices, the court also considered that the physician in question lacked objectivity and that she did not read peer-reviewed articles on the condition. The court concluded that she lacked an objective view and was offering treatment which did not meet accepted medical standards of practice.

A reasonable patient, the court concluded, as time progressed without results, must also question the effectiveness of the treatment being followed, particularly where there were conflicting views. The loss was discounted on this basis.

This put the plaintiff in the difficult position of questioning her own medical advice which would  represent an undue burden. Does this then mean that the insured plaintiff seeking recovery against an LTD provider must third party her own physician when this defence is raised? It makes no sense.

In March of 1999, the Alberta Queen’s Bench ¹⁴found that the plaintiff’s refusal to follow the recommendations of her physician to take psychotherapy was a breach of the obligation to mitigate her damages in her disability claim and assessed her damage claim on the likely recovery date, had she done so.

A similar conclusion was reached by the Ontario Superior Court in 2003. ¹⁵The court found that the plaintiff had failed to follow the advice of her family physician to seek psychiatric attention and also neglected to consult a neurologist. The damage claim was reduced by the judge’s assessment of a probable recovery date, had she done so.¹⁶

The Supreme Court of Canada in its 1993 decision ¹⁷considered the issue of medical testing. It determined that the test to be applied on such an issue was the same as expressed by the Supreme Court in Janiak. Gonthier, J. repeated the three factors of (1) degree of risk, (2) the gravity of the consequences of refusing the suggested treatment and (3) the potential benefits to be derived.

The Court of Appeal reversed the trial judge on this issue and had reduced the damage award accordingly.

The Supreme Court agreed with the trial judge’s view that the testing was not required, noting that the plaintiff’s own physician was “not…… terribly enthusiastic about disc surgery”, a view also shared by the defence expert. The Court also noted that no evidence of the lack of risk in the proposed testing was presented, nor was the gravity of the consequences of refusing the test established.

The Supreme Court did speak generally on the onus of proof and the presumptive view that the patient had the right to decline testing.