In a blow to the Alberta government and auto insurance industry, a Calgary judge rejected their request for a stay on a ruling that struck down payout caps on soft-tissue injuries.

A Court of Queen's Bench judge ruled earlier this month that the province's $4,000 cap on insurance awards for injuries such as whiplash and sprains was unconstitutional.

Industry representatives immediately predicted auto insurance rates would jump by about $200 per vehicle as a result of the ruling and the province predicted it had good grounds for an appeal.

They were in court Monday asking for a stay on the original decision until they could launch an appeal. That would, in essence, reinstate the $4,000 limit until an appeal is heard.

But a Calgary judge turned down the application, which means Albertans who suffer soft-tissue injuries in car accidents can now pursue damages over $4,000.

Fred Kozak, the lawyer who represented two accident victims who challenged the regulation, said he believes the judge made the right decision. 

"One of the reasons that the government applied for a stay was that it said it might affect auto insurance premiums and it referred to some numbers but the judge found that wasn't compelling evidence," Kozak said Monday.

"In any event, the government had other alternatives in years of record profits by the insurance industry. If the government is really concerned, it had the option of a rate freeze, which is contemplated by the Insurance Act."

The government introduced the cap in 2004, saying it would keep the cost of insurance down.