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ATE insurance allows plaintiffs to continue to trial, resist lowball offers

By Kirsten McMahon, Managing Editor

After-the-Event (ATE) insurance gives personal injury plaintiffs access to justice by allowing them to file a legal claim and keep an action going without fear of adverse costs, say Dominique Zipper and Joanna Milnes, both with legal expense insurance company DAS.

"One of the main obstacles that plaintiffs face is that many motor vehicle injuries tend to be musculoskeletal, soft tissue injuries,” says Milnes, ATE Business Development Specialist with DAS. “Because there's no objective injury like a broken bone, it's a challenging impairment to prove when it comes to passing the permanent and serious threshold in Ontario.”

She tells it can take a plaintiff years to build up a case. If they are unable to work due to their injury, while having to attend physiotherapy and undergo costly assessments, the pressure of mounting disbursements may weaken their resolve to continue pursuing their case.

“They are often faced with defendant insurers offering them zero dollars as settlement throughout the process,” Milnes says. “It can be a challenging experience to continue to push forward. When plaintiffs have cost insurance, they can feel confident to proceed all the way to trial and have their day in court with the assurance that their lawyer's disbursements and potential adverse costs are insured.”

Plaintiff Cost Insurance is an ATE policy that fully protects a client against their opponent’s adverse costs and their own disbursements, should the case fail or be abandoned.

Zipper, the Director of ATE insurance with DAS, says that if a defendant insurer makes an offer after initially refusing to offer any settlement money, it can bait a plaintiff into accepting a settlement that is much lower than it should be.

“I think after a plaintiff has been looking at zero dollar offers for a long time, once a bit of money gets pushed across the table at mediation, it's very tempting to accept that low settlement,” she says. “Having a Plaintiff Cost Insurance policy can give them the strength to resist that temptation and keep going.”

If a plaintiff is successful at trial in obtaining a judgment, but it doesn’t beat the defendant’s last formal offer to settle, Milnes says there can be financial consequences. She says Rule 49 of the Rules of Civil Procedure encourages settlement by imposing costs consequences on a party who fails to accept a reasonable offer.

“This is where having an experienced lawyer is important,” she says. “They will tell you — if the case is strong enough — to wait for a better offer. Before ATE insurance existed, it was a tough decision for a plaintiff to make, especially if their case involves a soft tissue injury.

“Juries find it difficult to believe that a plaintiff can't perform their housework when they don't have a broken leg. Often the plaintiff will accept a low offer because there's a risk of costs if they don't beat that last offer,” Milnes adds.

Zipper says it’s not only difficult for a plaintiff to determine whether a case will be successful at trial, but it's equally hard for lawyers who work in the field every single day.

“Most of these cases are jury trials, meaning it's up to the jury to decide how much the plaintiff receives,” she says. “Juries aren't told that there's a $40,000 deductible, and you're not guaranteed to get jurors who are invested and engaged in the process. It's anybody's guess when it comes to Rule 49 and costs awards, and that's where our policy shines.

“For all intents and purposes, from the public's point of view, a plaintiff won at trial because they were awarded some money, but in the legal landscape, that same result can be considered a loss,” Zipper adds.

Both Zipper and Milnes — who both bring a civil litigation background to their roles in DAS’s ATE department — say the company has crafted an insured event that deals explicitly with the failure to beat the defendant's last offer.

Zipper says another advantage of Plaintiff Cost Insurance coverage is that it may be accepted as security for costs in several matters.

“When a plaintiff is not a resident of Ontario, the defendant can bring a motion for security for costs, meaning money is paid into the court to protect them in the event they are successful and need their costs paid,” she explains. “If a plaintiff is a non-resident and impecunious, it will likely be awarded, and that's a significant financial burden — especially when these cases are run on contingency.

“Plaintiff Cost Insurance policies have been used as a means to defeat a security-for-costs motion,” Zipper says. “The plaintiff can show that while they reside outside of Ontario and they may not have any assets, they do have an ATE policy backed by an insurance company that's guaranteed to pay out.

She points to one case where the plaintiff defeated such a motion with a DAS policy. In this matter, Ontario Superior Court Justice David Salmers held that plaintiffs’ disbursement for costs insurance was recoverable.

“In this case, the costs of advancing even the claims on which the plaintiffs were successful were substantial. Also, in general, even the strongest claim of a plaintiff may not be successful depending on how the evidence comes out and how it is perceived by a trier of fact,” Salmers wrote.

"Without costs insurance, the fear of a very large adverse costs award would cause many plaintiffs of modest means to be afraid to pursue meritorious claims. It is in the interests of justice that plaintiffs be able to pursue meritorious claims without fear of a potentially devastating adverse costs award," he continued.

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