Car insurers and lawyers brawl in public

Two sides point to each other as reason for high insurance premiums. The truth is, they’re both responsible

By Alan Shanoff, Toronto Sun

A slugging match recently erupted between car insurance companies and Ontario personal injury lawyers.

The Insurance Bureau of Canada (IBC) opened by claiming the public needs regulatory oversight of contingency fees charged by personal injury lawyers.

The IBC feels a change is necessary to protect consumers and allow the government to evaluate the impact of lawyers’ fees on the auto insurance system.

The Ontario Trial Lawyers Association (OTLA) countered by releasing a study it commissioned concerning auto insurance premiums.

According to the study, prepared by two professors at York University’s Schulich School of Business, “consumers in Ontario may have overpaid for auto insurance by between $3 and $4 billion over the period 2001 to 2013.”

The OTLA urged an independent “thorough and truly transparent” review of auto insurance by Ontario’s Auditor General.

Reacting quickly, the IBC fired back through a press release, pointing the finger back at personal injury lawyers claiming, “lawyers’ fees are simply too high and have a significant impact on the cost of auto insurance.”

The IBC supported its conclusion by claiming some lawyers charge 40%, while others between 25% and 33% of any settlement or judgment.

I doubt many lawyers would dare charge a 40% contingency fee, although even a 25% to 33% fee may be too high in some cases.

But, the IBC forgot to mention clients don’t pay the entire contingency fee as a good part of the fee is paid by the insurance company.

To rub it in further, the IBC stated, “In 2013, lawyers received an estimated $500 million from injury claimants out of their insurance settlements for bodily injury claims. These are real dollars that never make it to the claimant. IBC will continue to fight for increased transparency so that consumers can actually see where their insurance dollars go.”

But I don’t think insurers want to open the transparency can of worms.

If they want to talk about “real dollars” that don’t make it to claimants, check out the vast sums paid by insurers for their so-called independent medical examinations (IMEs), used to belittle or deny claims.

According to the most recent Ontario Health Claims Database, insurance companies paid approximately $372 million for IMEs for accidents taking place in the last four years.

In some years, insurance companies forced almost half of all claimants to attend IMEs and in each year the average amount paid per assessed claimant for these exams exceeded the average amount paid per claimant for all medical and rehabilitation expenses.

Sending claimants for multiple and expensive assessments to pro-insurer experts is a major contributor to insurers’ costs and takes “real dollars” out of the pockets of claimants.

That’s not to say lawyers are free of blame.

There’s a long history of lawyers neglecting to act diligently to expose insurer experts who file partisan reports, sometimes outside their sphere of expertise, used by insurers to delay and deny claims.

As well, quality control at some law firms is substandard.

The FAIR Association of Victims for Accident Insurance Reform has recently posted an announcement stating, “ALERT – we are hearing about more and more cases where time limitations for filing have lapsed due to plaintiff’s legal representatives failing to meet limitation period deadlines.”

Then again, motor vehicle litigation and accident benefits claims are highly complex and insurance company tactics often lead to increased fees.

And if the insurance industry wants to point fingers at personal injury lawyers, perhaps they ought to make complete disclosure of the money they spend on defence lawyers and adjusters to deny, delay and defend claims.

Furthermore, how much do insurers pay to fund their massive public relations campaigns — including political contributions to those in power — which they effectively use to portray accident victims as opportunistic, malingering or just plain fraudulent?

It seems there is a lot of mud that can be thrown at each side in this messy debate.

But while the debate drags on, insurers continue to exact high premiums and lawyers receive handsome payments for their work.

And accident victims? They’re stuck in the middle.

Car crash victims deserve better deal

Ontario’s car insurance system seems to work well except for consumers who need it and accident victims who make legitimate claims under it.

After all, the insurance industry is making good money.

Lawyers are amply rewarded acting for plaintiffs and insurance firms.

Doctors earn significant sums preparing insurer-requested medical reports.

Treatment providers receive good compensation for treating the injured.

Premier Kathleen Wynne received generous financial support from the car insurance industry when she ran for the Liberal leadership.

The Liberal party receives significant campaign donations from it.

But here’s the problem. Two problems, actually.

The first is fraud by people trying to rip off insurance companies with phony claims. We agree it happens and it’s a serious problem.

But what we don’t understand is why the amount of fraud — to hear it from the insurance companies — never, ever, seems to decrease.

Fraud, we’re told, is the main reason auto insurance premiums in Ontario remain stubbornly high, no matter how many times the government cuts back benefits to all accident victims at the behest of the insurance industry, as it did again in its latest budget passed last week.

We also think there’s another kind of fraud in the insurance industry that needs to be addressed by government.

That fraud happens when people who have faithfully paid their auto insurance premiums year after year are hurt in serious accidents and, when they make legitimate claims for the benefits promised in their policies, are denied them.

It happens when car insurers fight against paying genuine claims from accident victims, falsely making them out to be the enemy and going to absurd lengths in and out of court to deny them the benefits to which they are entitled.

Last week, hundreds of demonstrators at Queen’s Park protested this kind of fraud as the Liberals passed yet another piece of legislation favoured by the insurance industry that will cut in half benefits for people who sustain catastrophic, life-changing injuries in car accidents.

Prior to the passage of the budget, Finance Minister Charles Sousa boasted, “Ontario is the most generous in Canada when it comes to providing coverage for auto insurance.”

Last week, Sun legal affairs analyst Alan Shanoff, demonstrated conclusively in his column how this statement was inaccurate.

In fact, Ontario doesn’t provide the most generous benefits for either catastrophic injuries or for so-called “minor” ones, which can include dislocation of joints, partial tears of tendons and ligaments and whiplash not exhibiting neurological symptoms.

As the FAIR Association of Victims for Accident Insurance Reform put it: “The budget does nothing to ensure that insurer claims management practices are fair and there has been no action (to deal with) … the biased and corrupt insurer medical examination reports that are disqualifying innocent and legitimate accident victims.”

We agree. It’s time to end this type of insurance fraud, as well.

Ontario Minor Injury Guideline a limit but not exclusion to Statutory Accident Benefits Schedule: Court

Jun 9, 2015 1:10 PM –

Nothing in Ontario's Statutory Accident Benefits Schedule “expressly incorporates by reference the entirety” of the province's Minor Injury Guideline (MIG) for auto insurance claims, but the “burden of proof” is on claimants “to establish entitlement to the appropriate level” of auto accident benefits, the province's Divisional Court suggested in a recent ruling.

Ontario’s Divisional Court has ruled on how to apply the minor injury guideline in auto insurance, in a dispute between Lenworth Scarlett and Belair Insurance Company Inc.The Divisional Court ruled Friday largely against Lenworth Scarlett, who was injured in September, 2010 when the vehicle in which he was a passenger was rear-ended. The vehicle's insurer, Belair Insurance Company Inc., is essentially disputing Scarlett's contention that his injuries fall outside the MIG, which puts a $3,500 limit on auto insurance claims for a minor injury, which could include a “sprain, strain, whiplash associated disorder, contusion, abrasion, laceration or subluxation and any clinically associated sequelae.”

In March, 2013, an arbitrator with the Financial Services Commission of Ontario (FSCO), John Wilson, ruled that Scarlett was “not precluded” from claiming housekeeping, attendant care and medical and rehabilitation expenses beyond the $3,500 limit of the MIG.

But the following November, FSCO appeals officer David Evans, a director's delegate, determined that Wilson's analysis had several legal errors that “required the matter be returned for a new arbitration hearing,” wrote Mr. Justice Robbie D. Gordon, of the Divisional Court, in its June 5 decision. That was on a judicial review requested by Scarlett, who asked the court to set aside Evans' decision and to reinstate the order that Scarlett is not precluded from claiming benefits above $3,500.

Related: New arbitration hearing ordered in Ontario minor injury guideline dispute

Rather than reinstate Wilson’s decision, the Divisional Court remitted Scarlett's case for a new preliminary issue hearing.

Evans, in 2013, “decided that rather than having only the preliminary issue addressed at the new arbitration, it would be most just and expedient to have all of Mr. Scarlett's issues addressed in one arbitration hearing before a new arbitrator,” Justice Gordon wrote on behalf of himself, Madam Justice Ann Molloy and Mr. Justice David L. Corbett.

The Divisional Court found that most of Evans' findings were reasonable. The court agreed with Evans' finding that Belair was denied procedural fairness when Wilson “raised arguments of his own for the first time, conducted research of his own, and inappropriately applied section 233 of the Insurance Act, all without first raising the matters with counsel and allowing an opportunity for submissions to be made.”

But the court disagreed with Evans’ finding that the MIG is “as binding” as SABS.

The MIG “remains a non-binding interpretative aid in deciding whether Mr. Scarlett comes within the MIG,” Wilson wrote in 2013. “In the absence of clear legislative direction that would override the existing jurisprudence as to burden of proof, it remains the insurer's burden to prove any exception to or limitation of coverage on the civil balance of probabilities. In this case, that burden has not been met.”

At the time, Wilson found it was “not at all clear that (Scarlett) also did not suffer from any other conditions that were neither soft tissue injuries nor the sequelae therefore, or that the sum of his injuries from the accident was minor in nature.”

Justice Gordon noted that there is “no provision in the SABS which expressly incorporates by reference the entirety of the MIG.”

Therefore, “it is necessary to examine each reference to the MIG to determine if it is an express reference thereto, and if so, what part of the MIG is required for the proper interpretation of the SABS provision in question,” the Divisional Court found.

“Although it is fundamental to insurance law that the burden of proof rests on the insured to establish a right to recover under the terms of the policy, so too is it fundamental that when an insurer relies upon an exclusion in the policy to avoid payment, the onus of proving that the loss falls within the exclusion generally lies upon the insurer,” Justice Gordon added. But the court ruled that neither Section 14 or Section 18 of SABS creates such as exclusion.

Related: MIG Schmig

Court records indicate that in his request for judicial review, Scarlett argued that Evans had “erred in finding that the $3,500 limit on medical and rehabilitation expenses,” in section 18 (1) of SABS “was not an exclusion of benefits.”

That section stipulates that “the sum of the medical and rehabilitation benefits payable in respect of an insured person who sustains an impairment that is predominantly a minor injury shall not exceed $3,500 for any one accident, less the sum of all amounts paid in respect of the insured person in accordance with the Minor Injury Guideline.”

Section 18 (1) creates limits but not exclusions on an auto insurer's liability under SABS, the Divisional Court ruled.

Therefore, it “reasonable” for Evans “to find that the effect of sections 14 and 18 is to create three tiers of benefits relating to medical and rehabilitation benefits,” Justice Gordon wrote.

Those tiers are:

-A maximum of $3,500 for an impairment that is predominantly a minor injury;

-A maximum of $50,000 if the impairment is not a minor injury and is not catastrophic; and

-A maximum of $1,000,000 for an impairment that is catastrophic.

“There being no exception, the Director Delegate reasonably and correctly held that the burden remains on the insured throughout to establish entitlement to the appropriate level of benefits,” the Divisional Court found.

The June 5 Divisional Court decision “is helpful in some ways, but not in others,” law firm Dutton Brock LLP commented in a bulletin. “There is no judicial review of whether chronic pain or (temporal madibular joint) impairments can be considered ‘clinically associated sequelae.’ The finding that the Guideline is only binding on the limited basis of ‘specific reference’ in the Regulation makes interpretation more challenging.”

Hundreds rally against cuts to auto insurance benefits

By Maryam Shah, Toronto Sun

First posted: Wednesday, June 03, 2015 08:22 PM EDT

TORONTO – Changes to auto insurance benefits for motor vehicle accident victims passed in the Ontario legislature Wednesday as part of the provincial budget.

“God help us all,” Tammy Kirkwood said upon hearing the news. “We’re getting a lot less coverage for a lot more money and I’m not sure why.”

Kirkwood was one of hundreds of protesters at Queen’s Park rallying against reductions in auto insurance benefits which they say will have the most effect on victims with catastrophic injuries.

The 47-year-old Orillia woman said protesters were “flabbergasted” that the provincial government “was trying to disable our resources and our funding to recover.”

Part of the changes to auto insurance rules under the new budget mean that combined coverage for medical, rehabilitation and attendant care benefits for the catastrophically injured will be cut in half from its current cap of $2 million to $1 million.

Kirkwood survived a 2008 collision when a dump truck hit her car. She had to be pried free from her vehicle by firefighters, and was deemed catastrophically injured.

She says she was only able to move forward because she had access to the services she needed.

Unable to return to work, Kirkwood now volunteers as an advocate with FAIR Association of Victims for Accident Insurance Reform.

New Democratic Party MPP Jagmeet Singh spoke at the rally in support of their cause.

The cuts affect “the most vulnerable people,” such as people with brain and spinal cord injuries, he said.

“They need benefit coverage … to live an at least somewhat decent life,” Singh pointed out.

A spokesman for Finance Minister Charles Sousa said the government is “working hard to create a fair and affordable insurance system” for the province’s 9.4 million drivers.

Ontario is “the only province in Canada to offer exclusive catastrophic coverage,” Kelsey Ingram said in an e-mail.

“Catastrophically impaired claimants will also continue to be able to sue an at-fault party to recover damages for health-care expenses and potentially other claims,” she added.

The provincial government is also committed to making sure any savings from these changes do not result in “excess profits” for insurance companies, Ingram said.

“This is about lowering premiums while providing support and protection for all Ontario drivers,” she said.

maryam.shah@sunmedia.ca

Bad news for crash victims

By Alan Shanoff, Toronto Sun

Finance Minister Charles Sousa’s claim Ontario has the most generous auto insurance benefits is nonsense

TORONTO – Last month’s Ontario budget continued the erosion of accident benefits for victims in motor vehicle accidents.
The reductions are most significant for those suffering from catastrophic injuries.
Since 1996, these victims were entitled to reasonable and necessary medical and rehabilitation services up to $1 million, in addition to up to $1 million in attendant care benefits.
That combined coverage of $2 million will now be cut by 50% to a combined $1 million.
It’s puzzling why the government would want to cut back benefits to those who need it most, especially since only 1% of accident victims suffer catastrophic injuries.
Ontario Finance Minister Charles Sousa stated, “Ontario is the most generous in Canada when it comes to providing coverage for auto insurance.”
I guess he isn’t aware Manitoba, Saskatchewan and Quebec provide medical rehabilitation benefits in excess of Ontario’s $1 million, when medically warranted, for any motor vehicle accident victim.
At the other end of the spectrum, dealing with so-called minor injuries suffered by approximately 80% of accident victims, Ontario’s “generous” limit for medically necessary treatment is $3,500, including the cost of assessments, examinations and reports.
No other province mandates a cap on minor injuries.
Don’t think these “minor” injuries are insignificant.
They include dislocation of joints, partial tears of tendons, ligaments and muscles, contusions, abrasions, lacerations and whiplash not exhibiting neurological symptoms.
For serious injuries — neither minor nor catastrophic — medical and rehabilitation benefits are capped at $50,000 in Ontario. That compares favourably to Nova Scotia, PEI, Nunavut and the NWT, which each have a limit of $25,000, and equals the limit in Alberta and New Brunswick.
But it falls short of the limits in British Columbia, Manitoba and Saskatchewan.
So, the most generous benefits in Canada? Hardly.
The lowering of benefits for catastrophic injuries is only one of many prejudicial changes to auto insurance coverage announced in the budget.
There’s also enhanced barriers imposed on plaintiffs suing for negligence arising out of auto accidents.
Most people are unaware of two barriers on the right to sue for damages resulting from harm suffered in an at fault auto accident.
First, there is a threshold test that must be satisfied before anyone can succeed in winning a lawsuit.
This law, introduced in 1996 and made more stringent in 2003, bars successful lawsuits unless plaintiffs can establish they suffer “from permanent serious impairment of an important physical, mental or psychological function.”
To meet this test, various stringent conditions must be satisfied.
The threshold often prevents injured people from recovering damages for serious injuries that fail to meet its definition.
Second, there is a deductible that applies only to lawsuits against negligent auto drivers. It was increased from $15,000 to $30,000 in 2003 and applies to damages for pain and suffering of $100,000 or less.
The budget would index the deductible to inflation as of 2003.
According to personal injury lawyer Darcy Merkur, that would impose a deductible of about $37,000 on damage awards of about $123,000 or less. As an example, a damage award of $100,000 would be reduced to $63,000!
Having both a threshold and a deductible is redundant and only benefits insurance companies.
And why would the government choose to index amounts that favour insurance companies, while not indexing amounts that favour accident victims?
I didn’t see any proposal to index the minor injury cap of $3,500 or the medical/rehab cap of $50,000.
As FAIR Association of Victims for Accident Insurance Reform says, “The budget does nothing to ensure that insurer claims management practices are fair and there has been no action (to deal with) … the biased and corrupt insurer medical examination reports that are disqualifying innocent and legitimate accident victims.”
The government also announced it intends to amend the catastrophic impairment definition.
Does anyone doubt that these amendments will only serve to benefit insurance companies by restricting the number of victims who would otherwise qualify for the enhanced benefits applicable to the catastrophically impaired?