Ontario Ministry of Health and Long-Term Care/Ontario Health Insurance Plan v. Georgiou et al.; Corporation of the City of Scarborough, defendant (respondent) [Indexed as: Ontario (Ministry of Health and Long-Term Care) v. Georgiou]

61 O.R. (3d) 285

[2002] O.J. No. 3335

Docket No. C37160

Court of Appeal for Ontario

Laskin, Goudge and Armstrong JJ.A.

September 4, 2002

*Application for extension of time granted and application for leave to appeal to the Supreme Court of Canada dismissed with costs October 2, 2003 (McLachlin C.J.C., Bastarache and Deschamps JJ.).

Insurance -- Subrogation -- Plaintiff sued City for damages suffered when she lost control of her car on icy roads -- Plaintiff claimed that City failed to keep streets in reasonable state of repair -- OHIP seeking to recover from City cost of insured medical services provided to plaintiff -- Subrogated claim against City barred by s. 30(5) of Health Insurance Act and s. 267.8(18) of Insurance Act -- Those provisions applied as City was insured under motor vehicle liability policy and plaintiff's injuries arose directly or indirectly from use or operation of automobile -- That City was sued as entity responsible for road safety and not as owner and operator of car was irrelevant to bar on subrogation -- Health Insurance Act, R.S.O. 1990, c. H.6, s. 30(5) -- Insurance Act, R.S.O. 1990, c. I.8, s. 267.8(18).

The plaintiff claimed that icy roads in the defendant City caused her to lose control of her car and collide with an oncoming vehicle, and that she suffered catastrophic injuries in the collision. Her claim was resolved. The Ontario Health Insurance Plan ("OHIP") sought to recover from the City the amount of money it had paid and would pay in future for medical services for the plaintiff. The City took the position that OHIP was precluded from advancing a subrogated claim because s. 30(5) of the Health Insurance Act and s. 267.8(18) of the Insurance Act prohibit a subrogated claim against a defendant insured under a motor vehicle liability policy. Although the City was insured under a motor vehicle liability policy, OHIP contended that the statutory prohibition only applied to claims against the City as owner and operator of a car, not as an entity responsible for safe roads. The motions judge rejected this contention and granted summary judgment dismissing OHIP's subrogated claim. OHIP appealed.

Held, the appeal should be dismissed.

OHIP's argument flew in the face of the plain wording of s. 30(5) of the Health Insurance Act and s. 267.8(18) of the Insurance Act. Under each section, the City either was or was not insured under a motor vehicle liability policy issued in Ontario. If the City was insured under a motor vehicle liability policy and the plaintiff's injuries arose directly or indirectly from the use or operation of an automobile (which OHIP accepted), the statutes barred OHIP's subrogated claim. Nothing in the purpose or scheme of the legislation suggested that these statutory provisions should be qualified by limiting the City's right to rely on them to claims where it is sued as an owner and operator of an automobile.

APPEAL from a decision granting a motion for summary judgment dismissing a subrogated claim.

Derksen v. 539938 Ontario Ltd., 2001 SCC 72, 205 D.L.R. (4th) 1, 273 N.R. 356, [2001] I.L.R. 1-4029, 15 M.V.R. (4th) 1, distd Other cases referred to Antonio v. Santos, 2002 79671 (ON SC), [2002] O.J. No. 540 (S.C.J.); Harroun (Litigation Guardian of) v. Turriff (2000), 2000 16810 (ON CA), 50 O.R. (3d) 634, 190 D.L.R. (4th) 39, 5 M.V.R. (4th) 263 (C.A.); [page286] Wawanesa Mutual Insurance Co. v. Ontario Provincial Police (Commissioner) (2002), 2002 53215 (ON CA), 212 D.L.R. (4th) 191 (Ont. C.A.), affg (2001), 2001 38746 (ON SCDC), 54 O.R. (3d) 112, 199 D.L.R. (4th) 532, 11 M.V.R. (4th) 74 (Div. Ct.), revg (2000), 2000 22335 (ON SC), 47 O.R. (3d) 332, 1 M.V.R. (4th) 246 (S.C.J.) (sub nom. Wawanesa Mutual Insurance Co. v. Ontario Provincial Police Force Commissioner) Statutes referred to Automobile Insurance Rate Stability Act, 1996, S.O. 1996, c. 21 Health Insurance Act, R.S.O. 1990, c. H.6, s. 30 Insurance Act, R.S.O. 1990, c. I.8, ss. 14.1, 267.8 Rules and regulations referred to Assessment of Health System Costs, O. Reg. 401/96, s. 2 Authorities referred to Sullivan, R., Driedger on the Construction of Statutes, 3rd ed. (Toronto: Butterworths, 1994)

Derek L. Smith, for appellant. Edward A. Ayers, Q.C., and Michael C. Smith, for respondent.

The judgment of the court was delivered by

LASKIN J.A.: --

A. Introduction

[1] The issue on this appeal is whether the Ontario Health Insurance Plan ("OHIP") can maintain a subrogated claim against the Corporation of the City of Scarborough ("Scarborough") for the cost of insured medical services provided to a car accident victim. Both the Health Insurance Act, R.S.O. 1990, c. H.6 and the Insurance Act, R.S.O. 1990, c. I.8 prohibit OHIP from advancing a subrogated claim against a defendant insured under a motor vehicle liability policy. Although Scarborough was insured under a motor vehicle liability policy, OHIP contends that the statutory prohibition only applies to claims against the City as owner and operator of a car, not as an entity responsible for safe roads. The motions judge, Backhouse J., rejected this contention and granted summary judgment dismissing OHIP's claim. OHIP appeals. For the reasons that follow, I would dismiss the appeal.

B. The Accident

[2] This litigation arises from a car accident, which occurred on February 11, 1997 in the former City of Scarborough (now a part [page287] of the City of Toronto). The plaintiff Zoe Georgiou claimed that icy roads in Scarborough caused her to lose control of her car and collide with an oncoming car. She said that she suffered catastrophic injuries because of the collision. She sued Scarborough for failing to keep its streets in a reasonable state of repair. Her claim and those of the other plaintiffs have been resolved. Only OHIP's subrogated claim against Scarborough remains to be decided.

[3] OHIP seeks to recover the amount of money it has paid and will pay for medical services for Zoe Georgiou. Scarborough takes the position that OHIP is precluded from advancing a subrogated claim because of s. 30(5) of the Health Insurance Act and s. 267.8(18) of the Insurance Act.

C. The Statutory Limitation Against Subrogation

[4] Section 30(1) of the Health Insurance Act gives OHIP a statutory right of subrogation to recover the costs of past or future insured services paid to an insured person injured because of the negligence or wrongdoing of another:

30(1) Where, as the result of the negligence or other wrongful act or omission of another, an insured person suffers personal injuries for which he or she receives insured services under this Act, the Plan is subrogated to any right of the insured person to recover the cost incurred for past insured services and the cost that will probably be incurred for future insured services, and the General Manager may bring action in the name of the Plan or in the name of that person for the recovery of such costs.

[5] But s. 30(5) -- one of the provisions relied on by Scarborough -- qualifies OHIP's right of subrogation. OHIP cannot advance a subrogated claim against a person insured under a motor vehicle liability policy issued in Ontario in respect of injuries arising directly or indirectly from the use or operation of an automobile:

30(5) Despite subsection (1), the Plan is not subrogated to the rights of the insured person, as against a person who is insured under a motor vehicle liability policy issued in Ontario, in respect of personal injuries arising directly or indirectly from the use or operation, after section 29 of the Automobile Insurance Rate Stability Act, 1996 comes into force, of an automobile in Ontario or in any other jurisdiction designated in the Statutory Accident Benefits Schedule under the Insurance Act.

[6] The provisions of s. 267.8 of the Insurance Act have the same effect. Section 267.8(17) precludes a subrogated claim for the recovery of health care expenses paid to a person whose "loss or damage from bodily injury or death" arose "directly or indirectly from the use or operation of an automobile". But s. 267.8(18) gives OHIP a limited exception to this general bar against subrogation [page288] in terms that parallel s. 30(5) of the Health Insurance Act. Section 267.8(18) of the Insurance Act provides:

267.8(18) Subsection (17) does not apply if,

(a) the Ministry of Health made the payment; and

(b) the right of recovery is against a person other than a person insured under a motor vehicle liability policy issued in Ontario.

[7] Section 30(5) of the Health Insurance Act and s. 267.8(18) of the Insurance Act were added to their respective statutes in 1996 by the Automobile Insurance Rate Stability Act, 1996, S.O. 1996, c. 21. Previously, OHIP had been subject to the general bar against subrogation for health care expenses paid to car accident victims. In 1996, however, the legislature gave OHIP a limited right to advance a subrogated claim for these expenses. It could do so if the person from whom it sought to recover these expenses was not insured under an Ontario motor vehicle liability policy.

[8] The reason for s. 30(5) of the Health Insurance Act and s. 267.8(18) of the Insurance Act is that the car insurance industry in Ontario pays an annual $80 million levy to OHIP. See the Insurance Act, s. 14.1, and Assessment of Health System Costs, O. Reg. 401/96, s. 2. Thus, car insurers effectively pay OHIP's subrogated claims up front. In Wawanesa Mutual Insurance Co. v. Ontario Provincial Police (Commissioner) (2001), 2001 38746 (ON SCDC), 54 O.R. (3d) 112, 199 D.L.R. (4th) 532, Ferguson J., writing for the majority in the Divisional Court, explained the levy and its relationship to the statutory limitation on OHIP's right to subrogate at p. 122 O.R.:

The reason for this exemption is simple: insurers who issue motor vehicle liability policies pay a levy to the Ministry of Health pursuant to s. 14.1 of the Insurance Act and Assessment of Health System Costs, O. Reg. 401/96. This meshes perfectly with the amendment to s. 30 of the Health Insurance Act enacted simultaneously with the disputed section of the Insurance Act. As explained in the legislature's Explanatory Note, the amendment clarifies that the Ministry's right of subrogation is restricted to persons who are not insured under motor vehicle liability policies issued in Ontario. The disputed provisions of s. 267.8(18) of the Insurance Act say the same thing.

D. Discussion

[9] On this appeal, OHIP accepted that Zoe Georgiou's injuries arose directly or indirectly from the use or operation of an automobile, and that Scarborough was insured under a motor vehicle liability policy issued in Ontario. It made two submissions to avoid the application of s. 30(5) of the Health Insurance Act and s. 267.8(18) of the Insurance Act.

[10] OHIP's main submission is that Scarborough can rely on these provisions for claims against it as owner or operator of a [page289] car, but not for claims that it failed to keep the roads safe. OHIP's secondary submission concerns the procedure followed by the motions judge. She permitted Scarborough to amend its statement of defence to plead these provisions at the same time as she heard the City's motion for summary judgment. OHIP submits that it was deprived of the right to reply and possibly of the right to hold examinations for discovery on the amendment. I see little merit in this submission. Backhouse J. exercised her discretion in granting the amendment and proceeding with the motion for summary judgment. OHIP was not prejudiced by the procedure she followed because the amendment raised a straight question of statutory interpretation, which OHIP fully argued and for which neither a reply nor a discovery was needed.

[11] I return to OHIP's main submission, which at bottom is a dual capacity argument. OHIP says that though it cannot maintain a subrogated claim against Scarborough in its capacity as owner and operator of a car, it can do so against Scarborough in its capacity as a road authority. The submission has two branches: one based on policy, the other on case law.

[12] OHIP points out that the plaintiff Georgiou's claim against Scarborough was defended not by the City's motor vehicle liability insurer but by its commercial general liability insurer. OHIP argues that to preclude a subrogated claim amounts to a windfall for the City and its commercial general liability insurer. The motions judge found this policy argument attractive, though she felt bound by authority not to give effect to it. She held:

This result seems wrong, given that it is not the municipality's motor vehicle policy which responded to this claim. Why this insurer should benefit from the payment by the motor vehicle insurer to avoid subrogated claims is not apparent to me. Nevertheless, these decisions are binding on me and, therefore, I order that the subrogated claim is dismissed.

[13] I am not persuaded that the application of s. 30(5) of the Health Insurance Act or s. 267.8(18) of the Insurance Act produces an unfair result. Scarborough indirectly contributes to the "up front" payment of OHIP's costs by the premium it pays to its car insurer.

[14] More important, OHIP's argument flies in the face of the plain wording of each of the two statutory provisions. These provisions invite a single question: Is Scarborough "a person who is insured under a motor vehicle liability policy issued in Ontario"? If the answer is yes, OHIP cannot subrogate. If the answer is no, it can. Moreover, not only is the meaning of these provisions plain, the plain meaning is the most appropriate meaning. Nothing in the purpose or scheme of the legislation suggests that these statutory provisions should be qualified by [page290] limiting Scarborough's right to rely on them to claims where it is sued as an owner and operator of an automobile.

[15] Indeed, what shows the fallacy of OHIP's position is what would be required to give effect to it. In substance, OHIP seeks to insert a capacity requirement into the plain language of s. 30(5) of the Health Insurance Act. As it acknowledged in its factum, to succeed on this appeal, s. 30(5) would have to read ". . . the Plan is not subrogated to the rights of an insured person, as against a person who in its capacity as owner and operator of an automobile is defended by an insurer under a motor vehicle liability policy issued in Ontario". These [emphasized] words do not appear in either s. 30(5) of the Health Insurance Act or s. 267.8(18) of the Insurance Act. Had the legislature wanted to qualify the bar against subrogation in this way it could have said so.

[16] Nor can the wording be considered a legislative oversight or error. In general, the court must assume that the legislature says what it means and means what it says. See R. Sullivan, Driedger on the Construction of Statutes, 3rd ed. (Toronto: Butterworths, 1994) at p. 105. Moreover, in this case, the legislative history -- the 1996 amendments in exchange for the $80 million levy -- shows that the wording was intended. As Brockenshire J. said in Antonio v. Santos, 2002 79671 (ON SC), [2002] O.J. No. 540 (S.C.J.) at para. 29:

The general legislative scheme and purposes reveal perfectly plausible reasons for the choice of the particular wording used re O.H.I.P. -- The general desire to remove O.H.I.P. from motor vehicle litigation, and the payment by automobile insurers of some 80 million a year, in exchange for relief for them and their insureds from subrogated claims by O.H.I.P.

[17] In addition to its policy argument, OHIP says that cases like Derksen v. 539938 Ontario Ltd., 2001 SCC 72, 205 D.L.R. (4th) 1 support its position. In Derksen, during the clean- up of a work site, one of the contractor's employees left a steel plate unsecured at the rear of a supply truck. As the employee drove the truck onto the highway, the steel plate flew off it and through the window of an oncoming school bus, killing one child and seriously injuring three others. In the ensuing action, the court had to sort out the contractor's insurance coverage. The truck was insured under an automobile insurance policy. The contractor also held a commercial general liability policy and an excess coverage policy. Coverage depended on the terms of the policies and the cause of the accident.

[18] The trial judge held and the Supreme Court of Canada affirmed that the accident resulted from two concurrent causes: the failure to safely clean up the work site and the failure to ensure the safe operation of the truck. Thus, the Supreme Court agreed with the trial judge that though s. 267.1 of the Ontario Insurance Act "protects the contractor in its capacity as owner of the automobile from liability for pecuniary losses, the contractor was not protected in its capacity as employer". Thus, the contractor was vicariously liable for its employee's negligence at the work site. These findings and the provisions of the insurance policies determined coverage. See also Haroun (Litigation Guardian of) v. Turriff (2000), 2000 16810 (ON CA), 50 O.R. (3d) 634, 190 D.L.R. (4th) 39 (C.A.).

[19] Derksen does not assist OHIP. In Derksen, the contractor was wearing two hats: it owned the truck and it controlled the work site. There were also two separate causes of the accident. As owner of the truck, the contractor could not be sued because of the employee's negligence on the highway. The statute would bar the claim. But the contractor could be sued for the damages caused by its workplace negligence. No statute barred that claim.

[20] Neither s. 30(5) of the Health Insurance Act nor s. 267.8(18) of the Insurance Act leaves room for Scarborough to wear two hats. Under each section, Scarborough either is or is not insured under a motor vehicle liability policy issued in Ontario. If Scarborough is insured under a motor vehicle liability policy and the plaintiff's injuries arise directly or indirectly from the use or operation of an automobile, the statutes bar OHIP's subrogated claim. In such a case, whether Scarborough is sued as owner and operator of a car or as the entity responsible for the safety of its roads is irrelevant to the bar on subrogation. By contrast, if a plaintiff slips on an icy road, for which Scarborough is responsible, and is injured in the fall, nothing in either statute would bar a subrogated claim by OHIP.

[21] I would dismiss the appeal. The parties requested the opportunity to make written submissions on costs. They may do so within 15 days of the release of the court's judgment.

Appeal dismissed.