What Is “Absolute Liability”? Absolute liability is the obligation of an insurer to indemnify an innocent third party who was injured by an insured, while the insured was in violation of the insurance policy. Under the absolute liability provision of the Insurance Act, RSNB 1973, c I-12, [the ‘Act’], the insurer may deny coverage to […]read more
CMPA Not an Insurer
The plaintiff, Shirley Shannon, had been sexually assaulted by her psychiatrist Dr. Akoto. Shannon suffered emotional and mental distress as a result of the sexual assaults and attempted suicide resulting in extensive physical injuries. Dr. Akoto fled the jurisdiction. Shannon obtained a default judgment against Dr. Akoto which remained unsatisfied. Dr. Akoto had been a member of the Canadian Medical Protective Association (CMPA) at the time of the sexual assault and for a period of time thereafter.
Shannon filed an action against the CMPA seeking to recover the damages and costs awarded by the court in the initial action against Dr. Akoto. Shannon maintained that Dr. Akoto was insured by the CMPA and that the CMPA was liable to indemnify Shannon for the injuries and resulting damages arising out of Dr. Akoto’s breaches of fiduciary duty, malpractice and negligence.
The CMPA disputed the allegations submitting that it was not an insurer nor did it provide contracts of insurance for physicians. The CMPA maintained that it was a mutual defence association for physicians which provides assistance to physicians in regard to potential liability arising out of the practice of medicine on a purely discretionary basis.
The court held that the CMPA was not an insurer and did not owe Dr. Akoto a contractual right to indemnification as a member of the CMPA. The assistance offered by the CMPA to its members was found to be discretionary. The court was of the view that the key components which are essential to establish the existence of an insurance contract, such as a specific undertaking to indemnify against any particular loss, risk or peril, were not present in the relationship which existed between the CMPA and its members.
As the CMPA was not an insurer, the court held that subsection 104(1) of the New Brunswick Insurance Act did not apply and Shannon could not recover the damages awarded to her in the initial action against Dr. Akoto by way of the statutory right of action against an insurer provided for in subsection 104(1) of the Insurance Act.
Shannon’s action was dismissed. As Dr. Akoto has fled the jurisdiction, her substantial judgment for damages resulting from the sexual assaults remains unsatisfied.
This case dispels the widely held belief that the CMPA is the provider of medical malpractice insurance for Canadian physicians.