Understanding Claim Caps

Jan 8, 2018


“Is my claim capped?” is one of the top questions we get at Litco Law, followed by “What is a claim cap?” and “What does it mean if a claim is capped?” In Alberta, the government has limited or “capped” the compensation (money) that an injured car accident victim can receive for certain minor injuries. The legislation outlining the limit is the Alberta Minor Injury Regulation. That law, along with Diagnostic and Treatment Protocols Regulation, is responsible for a great deal of confusion among the public and within the legal community. One of the main issues is the definition of a “minor injury” under the law. The purpose of this article is to clear up confusion, help Albertans understand the current state of the law, and explain how this cap may affect your personal injury claim.

How much is the Cap?

The cap was set at $4000 when the Minor Injury Regulation became law on October 1, 2004. The law adjusts the cap for inflation every year; as of 2019, the cap is $5202. If your injuries fall under the cap, your compensation for the pain and suffering due to those injuries is limited to the amount the cap was set at for the year of your accident.

Here is a handy table outlining cap amounts since 2004:

2004    $4000

2005    $4000

2006    $4000

2007    $4144

2008    $4339

2009    $4505

2010    $4518

2011    $4559

2012    $4641

2013    $4725

2014    $4777

2015    $4892

2016    $4956

2017    $5020

2018    $5080

2019    $5202

2020    $5296

2021    $5365

2022     $5,488

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Why Is There a Cap?

In creating the cap, the Alberta Legislature was trying to balance the rights of injury victims with the increasing costs of providing and purchasing insurance. In the years leading up to 2004, automobile insurance premiums were on the rise, as they often are. Insurance companies, through lobbying and public relations, promoted the story that the rise in premiums was due to an increasing number of personal injury claims and a rise in the cost of processing and paying those claims. The promise was that a cap on the amount of money accident victims could receive for “minor injuries” would reduce costs and therefore premiums for Alberta drivers. The cap may have reduced the number of injury claims in Alberta, but the promise of reduced automobile insurance premiums has proven false for many Albertans and short-lived for the rest. The greatest consequence of the cap is that it has denied many legitimately injured Albertans the compensation they would normally be entitled to, at their own and taxpayers’ expense, while benefiting insurance companies. Unfortunately, most Albertans are unaware of the many other injustices under the cap until they are seeking compensation for accident injuries. For example:

  • In certain circumstances, you are forced to use your own medical benefits to cover the cost of treatment for injuries caused by someone else’s negligence. You cannot claim back those lost benefits from the person who injured you.
  • You can be forced to undergo a Certified Medical Examination by a government-approved doctor, usually of the insurance company’s choosing. Based on the opinion of that doctor, who has never met you before and has no in-depth knowledge of your medical history, you can be denied medical treatment.

In the case of Certified Medical Examinations, the Courts have been harsh in their criticism of the practice and of certain doctors who perform them incorrectly(i). Thankfully, Alberta Courts have been righting many of the wrongs caused by the cap, and this is the first of many examples that follow below.

Money for Injuries

If you were injured in an accident in Alberta that was not your fault, you are entitled to make a claim for compensation against the person who injured you. The money you receive falls into two categories:

  1. General damages; and
  2. Special damages.

Simply put, general damages is the legal term for the money you get for things that do not have a price tag, such as your pain and suffering. Special damages, on the other hand, is the legal term for things that have a price tag such as the cost of medical treatment or the money you lost because of being unable to work; they are easier to calculate.

Misconception #1: The cap covers everything

Many people mistakenly believe that the cap applies to both general and special damages. In other words, they think that the cap amount is the total amount of compensation they can get. That is not true; the cap amount is only for pain and suffering for certain minor soft-tissue injuries and minor psychological issues. Insurance companies do not educate consumers about this fact, as it is not in their interests to do so. We will go into more detail below about which injuries are, and are not, subject to the cap.

What is a “Minor Injury?”

In the Minor Injury Regulation, a minor injury is defined as defined as a sprain, strain, psychological, or WAD injury (whiplash associated disorder) caused by a motor vehicle accident, that does not result in a serious impairment. This definition is complex, broad, and confusing. Let’s unpack it:

Sprains and Strains

The words sprain and strain are familiar to most of us, and therefore more easily understood. Here is a helpful definition of both from the Mayo Clinic(ii):

Sprains and strains are common injuries that share similar signs and symptoms, but involve different parts of your body.

A sprain is a stretching or tearing of ligaments — the tough bands of fibrous tissue that connect two bones together in your joints. The most common location for a sprain is in your ankle.

A strain is a stretching or tearing of muscle or tendon. A tendon is a fibrous cord of tissue that connects muscles to bones. Strains often occur in the lower back and in the hamstring muscle in the back of your thigh.

Severe sprains and strains sometimes require surgery to repair torn ligaments, muscles or tendons.

Alberta law categorizes sprains as first, second, or third degree, according to this table from the legislation(iii):

[table id=2 /]

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The acronym WAD is not familiar to most of us; it stands for Whiplash Associated Disorder. The Quebec Task Force on Whiplash Associated Disorders outlined the WAD system(iv), and medical practitioners (doctors, physiotherapists, chiropractors) use it to classify injuries to the neck caused by rapid acceleration and deceleration. Such injuries, commonly known as whiplash, are typically seen in motor vehicle accident victims. There are five grades of WAD:

  1. WAD 0 – No neck pain, and no physical signs of injury apparent to the medical practitioner.
  2. WAD 1 – Neck pain with normal range of motion and strength, no swelling, and no muscle spasm.
  3. WAD 2 – Neck pain with limited range of motion, spasm or swelling, tenderness in the neck and shoulders, possibly related to sprained ligaments or muscle tears causing internal bleeding and swelling.
  4. WAD 3 – Some or all WAD 2 symptoms with objective neurological symptoms such as decreased or absent reflexes, skin numbness or tingling, and muscle weakness, usually related to nerve pressure or impingement or injuries to neural tissue (brain, spinal cord, and nerves throughout the body).
  5. WAD 4 – Fracture or dislocation.

Alberta’s cap on injury damages applies to WAD 1 and 2 only.

There is disagreement in the medical profession about the clinical usefulness of the WAD-classification or of the suggested follow-up regimen(v). Despite this, medical practitioners across Alberta use it to classify and treat whiplash injuries in patients from motor vehicle accidents. In addition, the law makes it easier for a patient to access treatment if they have WAD 1 or 2.

The Diagnostic and Treatment Protocols Regulation is the law in Alberta that determines how much treatment a motor vehicle accident victim is entitled to when an automobile insurance company is obligated to pay for it. Under the Regulation, it is easy for a medical practitioner such as a chiropractor or physiotherapist to begin treatment immediately for anyone with WAD 1 or 2.

As long as a physician, chiropractor, or physiotherapist deems it necessary, the regulation automatically grants WAD 1 or 2 injury victims up to 21 paid medical treatments. The intention was to allow accident victims with minor injuries to access treatment quickly and easily(vi), which it does, but there is an unintended consequence: WAD 3 injuries are under-diagnosed in Alberta. The regulation creates two incentives, especially for chiropractors or physiotherapists, to diagnose accident injury victims with WAD 1 or 2:

  1. Most medical practitioners really care about patients and want them to have immediate access to treatment. Diagnosing WAD 1 or 2 is the easiest way to get that access.
  2. For the extremely small minority of medical practitioners more concerned about money than patient care, diagnosing WAD 2 is a guarantee of payment for at least 21 treatments.

Misconception #2: I have WAD 1 or 2, so my claim is capped

In Alberta, only WAD 1, and 2 are “minor” and therefore capped; WAD 0 is not considered within the law, and 3 and 4 are outside of the cap. But that is not the end of the story. If you have injuries other than WAD, they may be outside of the cap. For example, if you have an injury to your jaw joint, Alberta Courts have held that it is outside of the cap(vii). Other examples of injuries not covered by the cap include concussions or brain injuries, spinal cord injuries, fractures, depression or other mental injuries, and post-traumatic stress disorder (PTSD).

Furthermore, even if you are initially diagnosed with sprains, strains, or WAD 1 or 2, your claim may still fall outside of the cap. If you develop chronic pain, your claim will likely not be capped. If your WAD 2 causes you to have a serious impairment, your claim will not be capped(ix). The Minor Injury Regulation defines a serious impairment as:

a physical or cognitive function that results in a substantial inability to perform an essential task of the Plaintiff’s employment, or of an education or training program, or of normal activities of daily living, which has been ongoing since the accident, and is not expected to improve substantially.

In other words, if your WAD 2 injury is seriously affecting your work, school, or normal activities of life, and is not expected to get a lot better, you may have a “serious impairment” in which case the claim is not capped. In such a case, the law states that the WAD 2 injury must be the primary factor contributing to the impairment for the injury to fall outside of the cap.

  • Other factors the court will apply when determining if your injuries are outside of the cap: Common sense – Looking at the overall level of injury is it the type of injury that was contemplated by the Alberta Legislature to be a “minor injury” under the Minor Injury Regulation and the Diagnostic and Treatment Protocols Regulation? If not, it will not be capped.
  • Number of treatments – If you have far more than the 21 treatments provided under the regulations, it may not be capped.
  • Length of time injured – Alberta courts have recognized that chronic pain can begin in as little as 3-6 months, and that chronic pain is not capped.(x)

Misconception #3: Insurance companies will be fair to you and tell you the truth

When dealing with your own insurance company, you have a legal relationship; you pay money in return for insurance. That exchange of money for service is part of your contract with your insurance company, and the law in Alberta says that under a contract your insurance company has to “act in good faith.” “Good faith” is a legal concept that essentially means your own insurance company has to be honest with you, treat you fairly, and not try to unfairly take money from you or unfairly deny your claim.

When dealing with someone else’s insurance company, you do not have this protection as you have no legal relationship – you have no contract with them. When you are injured and it is someone else’s fault, your compensation will most often come from his or her insurance company. Here is an example:

Imagine you are waiting at a red light and are hit from behind by another driver.  Your car is damaged and you are injured.  If you have collision coverage, your own insurance company will pay for the damage to your car, but the insurance company for the person that hit you will pay for your injuries, among other things.

In the above example, “good faith” protects you when dealing with your own insurance company for the damage to your car – they must treat you fairly. Nevertheless, when dealing with the other person’s insurance company, “good faith” does not cover you – they have no obligation to treat you fairly.

But what if, in this example, the driver that hit you has insurance through the same company as you? In this case, “good faith” still does not cover you because your contract with your insurance company is for insurance on your car, not for injury compensation. Furthermore, you are not part of the relationship the other driver has with your insurance company so you cannot benefit from any “good faith” under that contract.

Misconception #4: Only the worst injuries get the full cap amount

Under Alberta law, the cap does not create a new scale for injury claim amounts. Here are examples of the wrong and right way to think of the cap:

Wrong: The very worst WAD 2s and grade 3 strains get the full cap amount, and anything less serious gets less money.

Right: Consider what money the court would have given the injury victim before the cap existed, and if it would have been more than the cap, “claw back” that amount to the full cap amount.

Most strains, sprains, and whiplash injuries would have been worth much more money before the cap became law, therefore most strains, sprains, and whiplash injuries that fall within the cap will get the full cap amount.

Clearing Up the Confusion

In the years since the Alberta Legislature introduced the cap, there seems to be no less confusion among everyday Albertans as to what it is, what it does, and how it works. Alberta Courts have done a lot to clear up that confusion, but the information is mostly in the hands of injury lawyers and insurance companies, and not in the hands of the public. Our hope is that this guide will provide clear, useful information to injury victims about the cap.

Since its introduction, we have advocated tirelessly for the abolition of the cap, but we believe it is here to stay. As long as it exists, Litco Law will do everything we can to educate the public about this controversial scheme, but that is not enough. In the interests of fairness and clarity, we call on the Alberta Legislature to take the following steps:

  1. Create and publish a comprehensive guide to the cap for the layperson, to reduce the knowledge and power gap between accident victims and insurance companies;
  2. Create and implement a comprehensive training program for Certified Medical Examiners; and
  3. Allow Albertans to recover lost benefits in injury claims.

We have served hundreds of clients since 2004 who were told by insurance companies that their claims were capped when they were not. We have seen firsthand the toll that injuries take on a person, and that their suffering is worse because of how insurance companies treat them. We aim to ensure that no Albertan has to endure such unfair treatment or settle for less than what they are entitled to, simply because the insurance companies know more about the cap and how it works. That’s an advantage insurance companies cannot be allowed to take. Every Albertan we can educate about the cap is one less Albertan insurance companies can fool. By shining a light on the inner workings of the cap, we can put power back where it belongs: with the people.

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i. Jones v Stepanenko, 2016 ABQB 295 (CanLII)
ii. http://www.mayoclinic.org/diseases-conditions/sprains-and-strains/basics/definition/con-20020958
iii. From Orthopaedic Physical Assessment by David J. Magee, (3rd), (1997), p. 19
iv. Gurumoorthy D, Twomey L (1996). The Quebec Task Force on Whiplash-Associated Disorders. Spine. 21 (7): 897–8.
v. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2443268/
vi. Morrow v. Zhang, 2009 E.V.C.A., 215
vii. Sparrowhawk v. Zaplotinsky 2012 ABQB 34. TMJ injuries are not a sprain, strain or WAD because they involved damage to cartilage, which is not a muscle, tendon, or ligament. Such injuries are therefore not capped.
viii. MacLean v. Parmar [2015], A.J. No. 214, ABQB
ix. Ibid
x. Ibid, and Morrow v. Zhang, 2009 E.V.C.A., 215 referencing Martin v. Nova Scotia WCB, 2003 SCC 54

Fred LitwiniukFredric J.R. Litwiniuk obtained a Bachelor of Laws with Honours in 1998 from Cardiff University in Cardiff, Wales, in the United Kingdom. He is an active member of the Law Society of Alberta, and practices in the area of Civil Litigation. His advocacy experience includes the appearances, mediations, and trials at the Provincial Court (Civil, Criminal, and Family and Youth Divisions) and the Court of Queen’s Bench of Alberta. Fred is part of the Litco Law Leadership Team. He is passionate about ensuring that Litco Law delivers a world-class experience to each and every client. Fred enjoys watching hockey, golfing, learning new languages, cooking, and reading nonfiction – especially business books. He is also an accomplished vocalist, songwriter, recording artist, and music producer.


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