Courts shifted to impact over diagnosis but insurers remain slow to adjust, says Shane Katz
This article was produced in partnership with Singer Kwinter
Psychological injuries are receiving increasing recognition within Canada’s personal injury landscape, yet they continue to present distinct legal and practical challenges for plaintiffs and their counsel.
According to Shane Katz, personal injury lawyer with Singer Kwinter, the key to advancing these claims lies in shifting the focus from the nature of the injury to its real-world impact.
“Psychological injuries should be considered the same way as any other type of injury,” Katz says. “The focus needs to be on how the injury is affecting the client’s quality of life, not solely on whether a formal diagnosis exists.”
Courts evolve on psychological harm
Personal injury lawyers have been historically wary of taking on cases involving purely psychological injuries, given that courts had long refused to award damages without an official diagnosis. That reluctance began to shift with the Supreme Court of Canada’s decision in Saadati v. Moorhead, which played a pivotal role in reshaping how psychological harm is treated.
In Saadati, the court held that a plaintiff need not establish a recognized psychiatric illness to recover damages for mental injury. The court moved away from requiring a formal psychiatric diagnosis, focusing instead on the real-world effects of the symptoms.
What matters, the decision emphasized, is whether the claimant can demonstrate that “the disturbance is serious and prolonged and rises above the ordinary annoyances, anxieties and fears that come with living in civil society” and whether that disturbance has impaired their ability to function or diminished their quality of life.
“The law of negligence accords identical treatment to mental and physical injury,” Justice Brown wrote for the unanimous court. “Distinct rules which operate to preclude liability in cases of mental injury, but not in cases of physical injury, should not be erected.”
That said, the path to success in these claims is not without obstacles. In Saadati, the court reaffirmed the threshold established in the earlier decision of Mustapha v. Culligan of Canada Ltd. In Mustapha, the court determined that psychological injuries arising from the discovery of a dead fly in bottled water were too remote, denying compensation.
“The Supreme Court of Canada has said that the injuries themselves have to be reasonably foreseeable,” Katz explains. But he adds that in the vast majority of cases where an individual has suffered severe physical injuries from a traumatic accident, “suffering psychologically would be reasonably foreseeable” and this requirement would likely be met.
That said, establishing a formal diagnosis where possible remains prudent for plaintiff counsel, Katz notes.
“Despite the courts moving off the position that you need an actual diagnosis for psychological symptoms, you want to make sure that there has been a diagnosis made for the symptoms and that the cause of that diagnosis is the accident at issue in the claim,” he explains.
“Maybe the symptoms themselves don't fall under any specific psychiatric diagnosis, but if the symptoms can be proven to be caused by the accident and are affecting the person's quality of life, they should be compensable injuries.”
Subjectivity makes psychological injury claims vulnerable to challenge
Another persistent challenge is that these claims lack objective imaging or diagnostic tools that can visually substantiate the injury. While expert assessments by psychologists, psychiatrists, or neuropsychologists are essential, their evaluations often rely on the plaintiff’s own responses to standardized testing. These subjective findings are therefore more open to scrutiny or dispute by opposing experts — and that can limit their weight in court or settlement discussions.
“You could see them being more susceptible to challenge,” Katz notes. “There’s no X-ray of a broken bone to hold up.”
Katz adds that in his experience, insurers reserve less money for a claim that’s psychological-only as opposed to one that also includes physical symptoms and this impacts settlement discussions. Psychological injuries often remain typecast and, in the hierarchy created by the insurers, “they’re considered worth less despite often having a similar effect on somebody’s quality of life as an objective injury.”
Katz stresses the importance of presenting compelling evidence of the latter. Medical documentation, corroborative witness accounts from colleagues or family members, and the absence of surveillance contradicting the claim all play a crucial role. Regardless of the specific facts of a case — though more critically if it’s psychological injury alone — Katz emphasizes that the plaintiff’s credibility becomes central.
“If they're very likeable, sincere people, it's more likely they'll be believed in terms of their suffering.”
‘I don’t approach psychological injury any differently’
The central task for personal injury lawyers handling these claims is to shift attention from labels to lived impact. What has it done to the client’s ability to live, work, and function?
“I don't approach these claims any differently,” Katz says, reiterating that it's about how the injury has affected their quality of life.
“As long as it's from the accident and it's reasonably foreseeable, that's all that matters.”
Katz believes that sustained, informed advocacy can help close the gap between physical and psychological injuries, not just in principle but in practice.
“That’s what will force change in the industry,” Katz predicts.
