Drowsiness, Remorse and Vicarious Liability: Emerging Issues In Insurance

Van Krkachovski & Tim McKeon

McCague Peacock Borlack McInnis & Lloyd LLP

ISSUE 1

Sleep Apnea and Transportation Insurance

OSA and the Trucking Industry

A recent study conducted by the US Federal Motor Carrier Safety Administration ("FMCSA") at the University of Pennsylvania targeted the condition of Obstructive Sleep Apnea ("OSA") within the commercial driver population. Of 406 participating drivers, 6.9% were diagnosed with severe OSA, 7.9% with moderate OSA and 21.2% with mild OSA. [1]

A recent questionnaire distributed to a random sample of commercial drivers in Australia suggested that approximately 15.8% of respondents suffered from OSA, more than three times the normal level in the population.[2] The statistics of OSA are not yet conclusive because the study of OSA is a relatively new field; however, various reports suggest that drivers suffering from OSA are anywhere between 2-7 times more likely to be involved in motor vehicle accidents.[3]

The FMCSA study found the link between OSA and motor vehicle accidents to be largely inconclusive, but the study did show definitively that drivers suffering from severe OSA were 4.6 times more likely to be involved in a severe motor vehicle accident.[4] Additionally, the authors of the study noted significant limitations that may have affected the likelihood of identifying causal connections between accidents and mild or moderate OSA.

Tip of the Iceberg?

According to statistics provided by the National Highway Traffic Safety Administration ("NHTSA"), approximately 100,000 drowsy driving related accidents are reported to police every year in the United States. These incidents account for 1,500 deaths, 71,000 injuries and over $12.5 billion in cumulative property damage and lost productivity.[5] However, these statistics only account for accidents where drowsy driving is considered to be the primary cause of the collision. The NHTSA also suggests that over a million vehicle accidents per year are caused by driver inattention. Sleep-related issues are a likely cause of the momentary periods of inattention that contribute to these accidents. Additionally, the most well-publicized and researched area of motor vehicle accidents is where alcohol consumption plays a role in the accident. Alcohol is a depressant and its effects may well be magnified by pre-existing conditions that cause drowsiness.[6]

Alistair MacLean, head of the Psychology Department at Queen's University, estimates that approximately 35,000 accidents per year in Canada are caused by sleepiness. MacLean, a leading researcher on the effects of sleep deprivation on driving published a study in November, 2000 that found the level of impairment of sleep-deprived drivers is directly comparable to the level of impairment of intoxicated drivers.[7]

Sleep Apnea: What Is It?

OSA is a condition in which a narrowing or closure of the upper airway occurs during sleep. This causes sleep disturbance, profound drops in blood oxygen levels and, in some cases, awakenings too brief to be registered consciously. This, in turn, leads to poor sleep quality and daytime drowsiness. If untreated over time, OSA also becomes a contributing factor to medical conditions such as memory loss, high blood pressure, heart attacks and strokes. Prior to diagnosis and treatment, OSA sufferers require 2.5 times more health care money than the general population.[8]

Perhaps the most insidious fact is that most OSA sufferers are completely unaware of their condition. As Justice Ayotte explained, "It is apparently typical that those who suffer from sleep apnea are unaware of their condition until it is diagnosed by a doctor. Dr. Cridland explained that this occurs precisely because the brain awakenings are so brief, too brief to register in the brain, and that accordingly there is no memory of having been awakened so many times during the night. Over time then the patient either accepts his tired state as normal, not realizing that he has never experienced what it feels like to have had a really restful sleep, or attributes the fatigue to some other source".[9]

Who is at Risk?

OSA occurs in approximately five percent of the adult population in the United States.[10] In Canada, OSA is estimated to occur in approximately 4% of the adult male population and 2% of the adult female population. OSA is partially attributed to genetic factors which result in certain types of susceptible bone structures. It has also been found to be linked to the factors of age and obesity; OSA is most prevalent in middle-aged overweight men.[11]

Treatment

There are several forms of treatment that have shown positive results. By far, the most common and successful treatment is a machine that delivers a constant flow of pressurized air through the nose called continuous positive airway pressure or a CPAP device.

A recent ongoing study of a large U.S. carrier that instituted a screening and treatment program reported a 73% reduction in preventable driving accidents in a subgroup of 225 CPAP treated drivers. The study also reported a 47.8% reduction in health care spending per month averaged among 348 OSA drivers receiving CPAP treatment. Surprisingly, the study also showed a driver retention rate in CPAP treated individuals that was 2.29 times greater than the 2004 global corporate driver retention rate.[12] This unexpected finding suggests that the drivers receiving treatment were grateful that their employer was showing interest in their health and well-being.

Moving Forward

It is imperative that commercial trucking companies take action to address the risks of OSA related accidents. Comprehensive programs may include both fitness for duty testing and compliance with treatment monitoring. For example, "OSA testing and treatment programs instituted by Schneider National, Jet Express, Inc. and Suttles Truck Leasing, Inc., all test and treat current drivers, as well as use pre-employment testing. These companies modified their medical interview for employees and used additional techniques to identify likely undiagnosed OSA drivers. Each program description suggested use of education and support of the OSA drivers as an important part of the prevention strategy."[13] With the rapidly emerging body of knowledge on the subject of OSA, the only truly inappropriate reaction would be inaction by employers.

ISSUE 2

The Ontario Apology Act, 2008

Archie: All right, all right. I apologize.

Otto: You're really sorry!

Archie: I'm really, really sorry. I apologize unreservedly.

Otto: You take it back!

Archie: I do, I offer a complete and utter retraction. The imputation was totally without basis in fact, and was in no way fair comment, and was motivated purely by malice, and I deeply regret any distress that my comments may have caused you, or your family, and I hereby undertake not to repeat any such slander at any time in the future.

Otto: OK.

- John Cleese & Kevin Kline, A Fish Called Wanda

On October 7, 2008, Ontario's Attorney General Chris Bentley joined Sault Ste. Marie MPP David Orazietti to announce that the Provincial government was adopting apology legislation. The proposed Apology Act, 2008  (the "bill") began as a private member's bill introduced by Orazietti, who described a need, "for taking action to reduce pressures on our civil courts as well as reduce costs to public institutions, such as hospitals."[14]

Ontario is the latest jurisdiction to adopt apology-oriented legislative reform. It follows British Columbia, Saskatchewan and Manitoba, all of which have passed similar legislation since 2006. In addition, legislation reducing the impact of apologies on civil litigation has recently been passed in 35 U.S. states as well as all jurisdictions of Australia.[15] The Bill received first reading on October 7, 2008 and will come into force once it has received Royal Assent.

The bill aims to render apologies and similar expressions of sympathy or regret inadmissible for the purposes of determining fault or liability in civil matters.[16] While this bill will apply equally to all citizens of Ontario, it has particular significance for those in the health care industry. In the health care context, apologies for errors are widely warned against by lawyers and insurers as potential admissions of liability. There is evidence to suggest that a significant amount of litigation results from circumstances where an apology is desired, but not forthcoming. A 1994 study showed that 37% of the patients and families who filed medical malpractice suits might not have done so if they had been given a complete explanation and apology, factors they considered to be more important than monetary compensation.[17] Dr. Ken Arnold, President of the Ontario Medical Association believes the act, "will enhance the ability of doctors and nurses to focus on patient needs during difficult times."[18]

In 2002, hospitals in the University of Michigan's health system began to encourage doctors to apologize for mistakes with strikingly positive results. Since then, it is reported that malpractice suits and notices of intent have fallen from 262 in 2001 to an average of 130 per year. During the same time period, annual attorney fees have dropped from $3 million per year to approximately $1 million.[19] These statistics would seem to support the assertion of Doris Grinspun, Executive director of the Registered Nurses Association of Ontario: "As nurses, we know that an apology can be central to the healing process and, in health care, essential to promoting accountability and open communication."[20]

In Lexington, Kentucky, the Veteran Affairs Medical Centre adopted a policy of full disclosure and apology for medical errors in 1987, well before the current trend across North American jurisdictions. The policy has since been credited: "with reducing litigation and lowering settlement and defence costs: only three cases have gone to trial in 17 years; the average settlement rate is US $16,000 compared to the U.S. average for veterans' hospitals of $98,000; and cases close in an average of two to four months, well below the U.S. national average of two to four years."[21]

We cannot draw definitive conclusions based on the current statistical data because so many jurisdictions have only recently adopted apology legislation. However, the early results are encouraging and suggest that Ontario's legislative initiative in this area, "has the potential to revive the civil in "civil society," to render our justice system more responsive to ordinary needs and instincts, and to bring more humanity to the practice of law."[22]

ISSUE 3

Motor Vehicles in Ontario: Limiting the Vicarious Liability of Lessors

In the 2005 pre-Budget submissions of the Canadian Vehicle Manufacturer's Association, it was estimated that there are currently more than a million vehicles leased in Ontario. The report further noted that approximately 40% of all new passenger and light truck vehicle sales are financed by non-bank financing companies through conditional sale or lease.

In this type of financing arrangement, the lessor remains the owner of the vehicle during the lease. This arrangement can leave the lessor/owner facing unlimited exposure for damages where negligence is found in respect of a motor vehicle accident pursuant to the Highway Traffic Act, R.S.O. 1990, c. H.8 ("HTA").

This limitless exposure to liability for vehicle owners that have no control over the use or operation of the vehicle was addressed with the December 15, 2005 coming into force of the Budget Measures Act, 2005 (No. 2), S.O. 2005, c. 31 ("BMA"). This omnibus bill introduced significant amendments to the Insurance Act, R.S.O. 1990, c. I.8 (the "Act"). The relevant amendments included expanding the definition of "owner" to include "lessee" for the purposes of section 192 of the HTA by amending subsection 265(2) and repealing section 267.3. However, the most fundamental changes occurred with the amendment of sections 267 and 277.

Section 267.12 has been amended to create a statutory cap to limit the potential liability of vehicle lessors. As a result, any proceeding commenced in Ontario on or after March 1, 2006 for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of a leased vehicle is subject to a maximum amount of liability for the vehicle lessor. The maximum amount will be the greater of (a) $1,000,000, (b) the amount of third party liability insurance required by law to be carried, and (c) the amount determined in the manner set out by regulations, if such regulations are made. It is important to note that the cap does not apply to vehicles used as limousines, taxicabs or livery vehicles. The cap is also inapplicable to any amounts payable for reasons other than vicarious liability imposed under section 192 of the HTA.

Under the new amendments, section 277 sets out the order in which the third party liability provisions of any available motor vehicle policy shall respond to liability arising in connection to ownership, direct or indirect, of an automobile. The order of response is: (1) available insurance under a motor vehicle liability policy in which the lessee of the automobile is the named insured;

(2) the available insurance under a motor vehicle liability policy under which the driver of the automobile is entitled to indemnity, either as named insured, spouse of named insured or named driver, is excess to (1); and

(3) the available insurance under a motor vehicle liability policy under which the owner of the automobile is entitled to indemnity as named insured is excess to (1) and (2).

If more than one insurance policy is required to respond, each will only be liable for their rateable portion.

Although the amendments to the Act do not mean the end to vicarious liability of vehicle lessors in Ontario, they limit liability as well as providing an order of response where the lessor's policy responds after and in excess to the driver and lessee's policies. These amendments apply to proceedings commenced on or after March 1, 2006.

Van Krkachovski

Tim McKeon

Appendix A: Bill 108

(note: text of Bill 108 is as it appeared on the website of the Legislative Assembly of Ontario as of October 22, 2008. <http://www.ontla.on.ca/web/bills/bills_detail.do?locale=en&BillID=2065>)

Bill 108 2008

An Act respecting apologies

Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

Definition

1. In this Act, "apology" means an expression of sympathy or regret, a statement that a person is sorry or any other words or actions indicating contrition or commiseration, whether or not the words or actions admit fault or liability or imply an admission of fault or liability in connection with the matter to which the words or actions relate.

Effect of apology on liability

2. (1) An apology made by or on behalf of a person in connection with any matter,

(a) does not, in law, constitute an express or implied admission of fault or liability by the person in connection with that matter;

(b) does not, despite any wording to the contrary in any contract of insurance or indemnity and despite any other Act or law, void, impair or otherwise affect any insurance or indemnity coverage for any person in connection with that matter; and

(c) shall not be taken into account in any determination of fault or liability in connection with that matter.

Exception

(2) Clauses (1) (a) and (c) do not apply for the purposes of proceedings under the Provincial Offences Act .

Evidence of apology not admissible

(3) Despite any other Act or law, evidence of an apology made by or on behalf of a person in connection with any matter is not admissible in any civil proceeding, administrative proceeding or arbitration as evidence of the fault or liability of any person in connection with that matter.

Criminal or provincial offence proceeding or conviction

3. Nothing in this Act affects,

(a) the admissibility of any evidence in,

(i) a criminal proceeding, including a prosecution for perjury, or

(ii) a proceeding under the Provincial Offences Act ; or

(b) the use that may be made in the proceedings referred to in subsection 2 (3) of a conviction for a criminal or provincial offence.

Commencement

4. This Act comes into force on the day it receives Royal Assent.

Short title

5. The short title of this Act is the Apology Act, 2008 .

Explanatory Note

The Bill provides that an apology made by or on behalf of a person in relation to any matter does not constitute an admission of fault or liability by the person, except for the purposes of a proceeding under the Provincial Offences Act, and does not affect the insurance coverage available to any person in relation to that matter. The Bill also provides that an apology is not admissible in any civil proceeding, administrative proceeding or arbitration as evidence of the fault or liability of any person in relation to that matter. The Bill does not affect the admissibility of any evidence in a criminal proceeding or in a proceeding under the Provincial Offences Act, or the use that may be made of a conviction for a criminal or provincial offence.

[1] Federal Motor Carrier Safety Administration, Tech Brief, "Sleep Apnea Crash Risk Study" (September 2004).

[2] Supra, note 3.

[3] Ibid.

[4] Supra, note 5.

[5] Darrel Drobrich and John Rancourt "Dealing With Drowsy Driving" Sleep Review (October 2007) online: <http://www.sleepreviewmag.com/issues/articles/2007-10_03.asp>.

[6] Ibid.

[7] Irek Kusmierczyk "Sleepy Drivers are a Highway Nightmare" Capital News Online (23 March 2001) online: <http://www.carleton.ca/jmc/cnews/23032001/feature.htm>.

[8] Canadian Lung Association Sleep Apnea Working Group "Sleep Apnea Action Handbook," online: The Lung Association <http://www.lung.ca/diseases-maladies/apnea-apnee_e.php>.

[9] R. v. Rockwell, 355 A.R. 126 at para. 15 (Prov. Ct.) (QL).

[10] Henry Goldberg & Mark Berger "Driver Sleep Apnea: a Hidden Crisis" Transport Topics (2 January, 2006).

[11] Supra, note 1.

[12] Donald L. Carper and Daniel J. Levendowski, "Assessment of Obstructive Sleep Apnea Risk and Severity in Truck Drivers: Commentary on the Legal Implications for Ignoring a National Safety Concern" (2007) 2 Sleep Diagnosis and Therapy (No. 2 April-May) 27.

[13] Ibid. at p. 29.

[14] "The Apology Act" SooNews Wire (7 October 2008) online: SooNews.ca <http://www.soonews.ca/viewarticle.php?id=19288>.

[15] "Apology Act would reduce lawsuits: MPP" The Canadian Press (16 April, 2008) online: thestar.com <http://www.thestar.com/News/Canada/article/414992>; see also Ministry of the Attorney General  of British Columbia, News Release, "Apology Act Promotes Dispute Resolution" (28 March, 2006) online: <http://www2.news.gov.bc.ca/news_releases_2005-2009/2006AG0011-000281.htm>.

[16] Bill 108, An Act respecting apologies, 1st Sess., 39th Leg., Ontario, 2008, s.2.

[17] J.R. Cohen, "Advising clients to apologize" (1999) 72. S Cal L Rev. 1009 at 1069.

[18] Ministry of the Attorney General of Ontario, News Release Backgrounder, "Introduction Of The Apology Act: What People Are Saying" (7 October, 2008).

[19] Ibid.

[20] Supra, note 5.

[21] John C. Kleefeld, "Thinking Like a Human: British Columbia's Apology Act" (2007) 40 U.B.C.L. Rev. 769 at para. 20 (QL).

[22] Ibid. at para. 1.