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SCC’s approach to viral disease: COVID-19

Wednesday, May 27, 2020 @ 2:50 PM | By Helen D.K. Friedman

Helen D.K. Friedman %>
Helen D.K. Friedman
Part one of this series looked at the Supreme Court of Canada’s (SCC) approach to determining insurance coverage for infectious disease in its decision in Gibbens v. Co-operators Life Insurance Company 2009 SCC 59. In part two, we continue to examine the SCC’s reasoning in Gibbens.

The SCC noted the British Columbia Court of Appeal’s approach would have considerable impact on liability for infectious diseases spread “in the usual course of events,” prophetically referencing viruses and bacteria passed from person to person, whether sneezing in a bus, an unprotected cough in a crowded elevator or a simple handshake. In light of this, the SCC found the policy excluded from bodily injury processes which occur naturally within the body in the ordinary course of events and from diseases that are transmitted “in an ordinary way” without any associated mishap or trauma.

The SCC acknowledged that the distinction between “accidents” and “diseases contracted in the ordinary course of events” may not be an easy one to make in practice. The acquisition of a disease is often considered “an unlooked for mishap.” In a prescient comment, Justice Ian Binnie noted:

“Viruses and bacteria pass, directly or indirectly, from person-to-person, and occasionally across species. In the ‘ordinary language of the people’, an individual would not say on coming down with influenza that ‘I had an accident’. We come down with the flu ‘in the ordinary course of events.’ ”

While acknowledging viruses transmitted by such natural processes as coughing or sneezing “in the ordinary course of events” may in some situations result in “calamitous and unexpected consequences,” to classify these transmissions under the term “accident” would transform the policy into a comprehensive health policy, rather than an accident policy.

Charles Gibbens’ argument for coverage was grounded in precedent. In Brintons, Ltd. v. Turvey [1905] A.C. 230, the House of Lords, finding in favour of a factory worker who died when bacteria from infected wool entered his eye causing anthrax, held that “[t]he fact that an accident causes an injury in the shape of disease does not render the cause not an accident.”

The SCC, however, preferred the dissent which found the accident was simply the inception of the disease. In Kolbuc v. ACE INA Insurance 2007 ONCA 364, coverage under an accident policy was found for a plasterer bitten by a mosquito carrying the West Nile virus and rendered a paraplegic. Justice Binnie, speaking for the SCC, withheld comment on the finding in Kolbuc but noted the British Columbia Court of Appeal in Gibbens acknowledged, “The world is populated with pathogens which constantly make their way into our bodies, which in turn are spread to others.”

Justice Binnie noted the bubonic plague was transmitted by fleas and malaria is transmitted by mosquitoes. Regardless, we would not describe the bubonic plague as a pandemic of accidents or say that the inhabitants of warm climates are particularly “accident-prone” to contracting malaria.

In applying these concepts, Justice Binnie provided guidance for determination of coverage in the COVID-19 era:

“It cannot be correct that passengers sitting in an airliner who catch the SARS virus through the externality of the plane’s air circulation system, or riders on a bus who catch ‘swine flu’ from an infected fellow passenger, or people who contract any number of infectious diseases because of the failure to wash hands in disinfectant, or to smack a circulating mosquito, have valid claims under an accident policy.”

To arrive at such a conclusion would convert an accident policy into a comprehensive policy for infectious diseases, contrary to the intent of the parties and their reasonable expectations. For Gibbens, the “accident” was simply the inception of a disease in the ordinary course of events.

Given this precedent, the likelihood of a fatal case of COVID-19, no matter how unexpected, unforeseen or unintentionally acquired, giving rise to coverage within the parameters of an accidental death policy is limited. Gibbens was coloured by specific coverage for listed critical illnesses under that policy, the impact of those provisions on the reasonable expectations of the parties and a desire by the SCC to limit coverages to those within the common understanding of “accidents.” Separate considerations would apply to coverage under a “life policy.”

Similarly, separate considerations would apply to those who contract a fatal case of COVID-19 in the course of their employment and who are covered under a workplace insurance regime. According to Justice Binnie:

“Such schemes are, as they ought to be, generously interpreted in favour of injured workers.”

The meaning of “accident” under workplace legislative schemes often turns on the particular statutory text, purpose and legislative history. The SCC referenced Toronto Professional Firefighters' Assn. v. Toronto (City) [2007] O.J. No. 1209, regarding coverage in favour of a firefighter who died of renal failure caused by his contact with toxic substances over his 20-year firefighting career. The Divisional Court overturned the arbitrator’s decision, establishing that the firefighter’s renal cancer was caused by exposures to toxic substances when the dangers were unknown and the safety equipment was unsafe. The SCC noted this was a case where the legislative context grounded “an unlooked for mishap or occurrence” causing a disease. 

Insurers will be addressing coverages and compensation for the COVID-19 pandemic (and its inevitable successors) for years to come. As it relates to unintended and unexpected acquisition of the virus and its unfortunate and sometimes fatal consequences, the SCC in Gibbens has provided a prescient analysis to guide coverage interpretations under accidental death provisions.

This is part two of a two-part series. Part one: Accidental death benefits and virus transmission

Helen D.K. Friedman is a partner at Miller Thomson LLP in a focused practice on the defence of first-party insurance claims. She provides strategic advice in statutory accident benefits, coverage disputes, litigation, and life and disability claims. Friedman speaks and writes on legal developments in insurance regulation.

Photo credit / Panorama Images ISTOCKPHOTO.COM

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