Many in the Quebec legal community risk facing an unwelcome surprise when settling personal injury claims thanks to a series of little-known dispositions that grant the provincial government the power to recover indemnities from tortfeasors.
The Quebec Health Insurance Board (RAMQ) is the main culprit, but other provincial bodies such as the province's workers' compensation board and the automobile insurance corporation can - and do - assert their right to subrogation claims against persons responsible for bodily injuries.
"Some lawyers, particularly those who do not often deal with insurance matters, face the risk of closing a file over a personal injury claim prematurely because RAMQ can eventually submit a claim against their client even though a deal has been struck with the victim," observed Suzanne Courchesne, the regional leader of the Health Law Group in Montreal at Borden Ladner Gervais LLP.
Under s. 18 of the Quebec Health Insurance Act, RAMQ has the power to recover all medical expenses incurred to treat the victim from the party who committed the tort, as does the government of Quebec under s. 10 of the Hospital Insurance Act to recover hospital expenses.
Under both Acts, RAMQ, who acts also on behalf of the government, must be notified by the liability insurer of the tortfeasor - and not the person responsible for the injury - as soon as negotiations to settle a claim for compensatory damages begin, in cases where the victim suffered injury that necessitated medical or hospital care.
The liability of the person responsible for a bodily injury who is the subject of a subrogation claim is established in accordance with traditional civil liability rules and takes into consideration any contributory negligence on the part of the victim, notes Martin Sheehan, co-president of the commercial litigation section at Fasken Martineau Dumoulin LLP in Montreal.
"RAMQ usually settles according to the same parameters that governed the out-of-court settlement or decision handed down by the court in cases where the victim won or partially won the case," said Sheehan, who represents businesses and their insurers in the areas of commercial, professional and product liability. "If there is any disagreement with RAMQ, it takes place with out-of-court settlements and usually centers around determining the proportion of contributory negligence on the part of the victim."
Another sticky point is that while RAMQ usually seeks recovery for medical and hospital expenses that it already incurred, it has in the past sought and demanded payment to cover expenses for future treatment in cases where the injuries were severe.
"Generally RAMQ seeks payment for past medical treatment, and that is rarely the source of disputes," said Éric Hardy of Ogilvy Renault LLP in Quebec City. "But in cases where RAMQ is demanding expenses for future treatment, that can be a source of discussion, and steps are taken to consult experts to determine whether the victim will need future treatment and whether RAMQ's calculations are correct."
While both RAMQ and the government have three years to assert their subrogation claims, in practice RAMQ is rather aggressive in asserting the claims. Although the health insurance board has a right to obtain information from victims requiring medical or hospital care to determine the circumstances surrounding their injuries, RAMQ normally waits to see if an action has been launched by the victim against the person allegedly responsible for the injury. That's why RAMQ routinely examines court dockets of civil cases involving individuals who required medical or hospital care, said Hardy.
In the months following the victim's suit, RAMQ customarily sends a formal demand letter to assert its subrogation claim, calling for payment of medical and hospital expenses expended to care for the victim.
But RAMQ is patient. It normally reaches an agreement with lawyers mandated by liability insurers to defer its claim until an out-of-court settlement is negotiated or a court reaches a decision on the victim's legal action. Rarely, if ever, has a RAMQ subrogation claim reached trial or been the subject of a lawsuit.
"In all of the cases I have dealt with RAMQ, there has always been an out-of-court settlement," adds Hardy, whose practice focuses principally on insurance, civil liability, manufacturer's liability and commercial and corporate litigation, echoing observations made by legal insurance experts. "More than that, the majority of RAMQ's claims have been settled out of court without RAMQ having to launch any legal procedures whatsoever, except for its formal demand letter."
There's a solid reason behind RAMQ's motivation to settle out-of-court. The overwhelming majority of subrogation claims range between $1,000 and $10,000, with the highest claim ever seen by Hardy reaching $500,000. But with RAMQ always, or almost always, settling out-of-court, the courts have yet to provide guidance on a number of questions surrounding the interpretation of sections that touch on subrogation claims in both the Health Insurance Act and the Hospital Insurance Act.
Sometimes years can go by before RAMQ asserts its claim for reimbursement of medical and hospital expenses incurred while treating the victim, points out Hardy. Both Acts provide that RAMQ's claim must be brought within three years "from the date on which the Board became aware of the facts."
But in a case where the victim's action was settled out-of-court without RAMQ having been informed of the settlement, Hardy wonders whether the health insurance board would have grounds to justify a delay in asserting its claim, even though it is up to the liability insurer of the tortfeasor to inform RAMQ as soon as negotiations to settle a claim for compensatory damages have been set in motion.
"The question that arises out of such a situation is whether RAMQ took reasonable measures to identify the tortfeasor and determine the circumstances surrounding the accident when it was obvious that medical and hospital care provided to the victim were the result of an accident," said Hardy. "In other words, does RAMQ have an obligation to at least conduct due diligence and ask the victim under what circumstances the accident took place? This is an issue that has never been interpreted by the courts."
Hardy believes that the courts will also eventually be compelled to provide guidance on the nature of RAMQ's subrogation claims. Are they based on subrogation under the Civil Code of Quebec or are they sui generis - independent claims that obey their own rules separately from the Civil Code? Hardy argues that the distinction will have a practical impact, which is why the issue will eventually arise before the courts.
"The answer could have an impact on the time limitation RAMQ has on its subrogation claim in cases where the victim took legal action prior to the assertion of the subrogation claim," said Hardy. "If RAMQ's subrogation claim is sui generis, the victim's action will not interrupt the prescription in favour of RAMQ. But that, too, has never been debated before the courts."
Be that as it may, Pierre Boyer of Gowling Lafleur Henderson LLP points out that subrogation claims can also be asserted by the province's workers' compensation board and the automobile insurance corporation.
But while the Quebec Automobile Insurance Act grants the automobile insurance corporation three years to assert its claim, it does not have subrogation rights against a Quebec resident insured in Quebec when the automobile accidents takes place in Quebec, said Boyer, a senior partner at Gowling's Montreal office.
The subrogation rights of the workers' compensation board are also limited - the board does not have subrogation rights against an employer governed by Quebec's Act Respecting Industrial Accidents and Occupational Diseases.
Quotes translated from French by the author.