Cost Considerations in Medical Malpractice Cases

Cost Considerations in Medical Malpractice Cases

The Ontario Superior Court of Justice recently released a decision which highlights some of the cost considerations involved in medical malpractice cases. The parties in Manary v. Dr. Martin Strban, et al had agreed to a quantum of damages of $430,000 in the event of a finding of liability.  At trial, the plaintiffs were successful against one of the physicians,  Dr. Steven D. Halmo, but not against the other physicians, Dr. Nasr Hanna and Dr. Martin Strban.

The plaintiffs sought costs of  $421,574.48 for fees and $108,074.75 for disbursements, but unsuccessful defendant claimed the appropriate costs should be closer to $170,000. The factors a court considers when assessing costs under the Rules of Civil Procedure include

58.06  (1)  In assessing costs the assessment officer may consider,

(a) the amount involved in the proceeding;
(b) the complexity of the proceeding;
(c) the importance of the issues;
(d) the duration of the hearing;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted; and
(h) any other matter relevant to the assessment of costs.

[emphasis added]

Although the costs sought by the plaintiffs exceeded the damages at trial, and the trial length was 19 days, Justice Kent cited Dybongco-Rimando Est. v. Jackiewicz,  [2003], O.J. No. 534 and Hassen v. Anvari to indicate that costs in complicated medical malpractices can and do equal or exceed damages. The court noted that the defendants were represented by Sarit Batner and Eli Mogil, both of McCarthy Tetrault, and would have known through their work with the Canadian Medical Protective Association the amount of time and preparation would be requiremed by the plaintiffs for trial.

The defendants claimed that the trial could have been shorter if the plaintiffs agreed to a without-cost dismissal against the other defendants, but the court noted that no Rule 49 offer was made.  The plaintiffs did offer five days before trial to dismiss the claim against the other defendants if the defendants agreed to concede a failure to meet the standard of care and try the causation issue alone. Consequently, they sought costs on a substial indemnity basis from this point on. Although Rule 49.13 provides judicial discretion for costs, Justice Kent held that the plaintiffs’ offer did not entitle them to substantial indemnity.

Justice Kent slightly reduced the plaintiffs’ cost submission and awarded $400,000 inclusive of disbursements and exclusive of appropriate taxes, noting that a party who is not successful against all defendants does not necessarily obtain a costs award against them all.

In Van Dyke v. Grey-Bruce Regional Health Centre, [2004] O.J. No. 413; [2003] O.T.C. 692, the court considered a global offer to settle up until 5 minutes before trial. When the plaintiff exceeded their offer at trial, Justice Van Melle stated,

16     The fact that the offer to settle was a global offer made to all the defendants does not affect my decision in this regard. The offer could have been accepted by any one defendant or the defendants could have apportioned liability amongst themselves. See Rooney (Litigation Guardian of) v. Graham, 53 O.R. (3d) 685 (C.A.) 699 and Waxman v. Waxman (Trustee of), [2003] O.J. No. 87, (2003-01-10) ONSC 33234-88.

In Rooney, the Ontario Court of Appeal described Bulllock orders and Sanderson orders,

[6] A Bullock order directs an unsuccessful defendant to reimburse the plaintiff for the recovered costs of a successful defendant. A Sanderson order directs that the payment go directly to the successful defendant. The [rationale] behind both orders is the same. Where the allocation of responsibility is uncertain, usually because of interwoven facts, it is often reasonable to proceed through trial against more than one defendant. In these cases, a Bullock or Sanderson order provides a plaintiff with an appropriate form of relief.

The court also emphasized the important role of Rule 49 offers in litigation,

  [32] Rule 49 has been, perhaps, the most successful innovation of the 1984 amendments. It is the one rule that clients are attuned to. Lawyers deal with the other rules regulating the progress of litigation largely on their own judgment. The offer to settle and its implications come straight home to the client for a decision. It should remain easy to understand and respond to without doubt as to its effect.

[33] I am not unmindful of the fact that the underlying purpose of Rule 49 is to encourage imaginative approaches to offers to settle and induce settlement. An escalating or declining offer is an effective means of attracting the serious attention of the opposite party. Arguably, these offers should be encouraged. However, the tactical purpose of such an offer can be accomplished without undermining the Rules, simply by withdrawing an offer and serving it afresh from time to time. A demand for additional amounts in each successive offer will compensate for any decrease in the ultimate recovery of solicitor and client costs, while maintaining the integrity of the offer to settle machinery.

Rooney was also considered in Waxman, where the court examined the plaintiffs’ several offers to settle, including two global offers and separate offers to settle seperate actions. Justice Sanderson cited Rooney and explained its significance for interpreting cost consequences of Rule 49 offers in global settlements,

80     A global offer may be capable of attracting the cost consequences of rule 49.10. In Rooney (Litigation Guardian of) v. Graham (2001), 53 O.R. (3d) 685 (C.A.), the plaintiff who was involved in two separate motor vehicle accidents and commenced five separate actions that were tried together, made a global offer to all the defendants in the various actions. The trial judge ordered the unsuccessful defendants to pay the plaintiff’s solicitor and client costs from the date of the offer. On appeal, the defendants submitted that the offer could not have been accepted by any one defendant. Laskin J.A. concurring in the result with Carthy J.A. but for different reasons, said at para. 53-54:

[53] … This contention is effectively answered by Justice Rutherford’s comments in Carleton Condominium Corp. No. 97 v. Costcan Development Corp., [1996] O.J. No. 4091 (Gen. Div.):

I think Rule 49 permits a plaintiff to make a global offer to multiple defendants putting the onus on them to come up with a method of sharing the burden of accepting the offer or risking the burden of solicitor-client costs if the offer is not accepted and, overall, the trial result is more favourable to the plaintiff.

This approach creates a considerable incentive for multiple defendants to try to find a formula for acceptance of an offer to settle. Such global offer does not prejudice individual defendants, all of whom can deal with such a global offer in concert with the other defendants or as individuals by offering an amount to settle just as against it. In this case, while the global offer by the plaintiff was not accepted by the defendants, each of them submitted a subsequent offer to the plaintiff, in an amount significantly less than each was adjudged liable to pay in the trial judgment.

I therefore conclude that Rooney’s offer to settle, which includes provisions for ongoing solicitor-and-client costs and prejudgment interest after the date of the offer is a Rule 49 offer, and attracts the cost consequences of rule 49.10.

Omar Ha-Redeye is the Principal of Fleet Street Law, a full-service law chambers in Toronto.