Auto insurers routinely deny treatment plans, therapists say

By Ellen Roseman

Suppose you’re driving your car with three passengers and you hit a deer. No one is hurt, except the animal.

Your insurance company quickly pays $24,000 to cover repairs to your damaged car. It’s happy to protect you from financial harm after an accident.

Now suppose you and your passengers are all injured after hitting the deer. This time, the insurance company is slower to respond.

It may turn down your requests to be repaid for rehabilitation treatments not covered by the health care system (such as physiotherapy or psychological counselling). It may treat you as fakers, exaggerating your injuries.

You and your passengers are entitled to maximum benefits of $3,500 each, or $14,000 in total, under Ontario’s minor injury guideline. That’s far less than the $24,000 paid for car repairs. But you may fight for months — perhaps even years — to get the amount owed to you.

I heard this story at the Hamilton Medical-Legal Society Spring Symposium last weekend. The driver who hit the deer and escaped injury is married to an occupational therapist. He knows how tough it is to get accident benefits if you’re hurt in a collision.

In a speech to the group, I said Ontario was protecting insurers’ profits at the expense of accident victims’ rights to timely treatment. Many professionals agreed with me. On Sept. 1, 2010, the Liberal government slashed accident benefits, hoping to stop car insurance rates from rising before the election of October 2011. There used to be a maximum limit for $100,000.

Today, 20 per cent of victims get benefits of up to $50,000 for moderate to major injuries. Meanwhile, 70 to 80 per cent of victims with minor injuries have their medical and rehabilitation benefits capped at $3,500.

Even if you want to buy extra insurance coverage for minor injuries, you can’t. You’re stuck with this bare-bones limit, the lowest in Canada.

The government still has a $1 million limit on treatments for those with “catastrophic impairment.” But it will soon bring in a new definition that is expected to make benefits harder to get. Health professionals talked despairingly about patients losing precious time for recovery when adjusters refused to pay for recommended treatments.

Lawyers talked about the Financial Services Commission of Ontario’s failure to meet a 60-day time limit to mediate disputes between insurers and clients. Injured people can wait a year or more to be heard.

The courts are starting to recognize victims’ rights. In a recent case (McQueen vs. Echelon), a woman was awarded $25,000 for mental stress after her insurer made 21 denials of benefits over a three-year period.

“Routine and rubber-stamp denials are illegal,” said the plaintiff’s lawyer Lou Ferro, “and insurance companies will be penalized by making them pay aggravated damages on top of the cost of the benefit.”

Last week, an Ontario Legislature committee voted to hold public hearings on car insurance. Something is wrong when 42 per cent of treatment plans are rejected, up from 11 per cent before, says NDP MPP Rosario Marchese.

Many people working in the rehabilitation field think Ontario’s recent insurance reforms have veered too far in the wrong direction.

Let’s hope the three parties — after hearing testimony from accident victims — can come up with suggestions on reversing the unfair treatment.

Ellen Roseman writes about personal finance and consumer issues. You can reach her at [email protected] or


Ontario auto insurance premiums fall: Regulator

News Ontario

By Jonathan Jenkins ,Queen’s Park Bureau

First posted: Friday, April 13, 2012 12:00 PM EDT

TORONTO – The average auto insurance premium in Ontario declined slightly last quarter.
The Financial Services Commission of Ontario (FSCO), the body that regulates auto insurance in the province, said the average premium fell 0.18%.

Individual users may see greater decreases or increases depending on their insurer and their driving record.
Auditor General Jim McCarter found Ontario’s insurance rates are the highest In Canada in his annual report last fall.
McCarter said much of the higher premium is because the average insurance claim costs $56,000 in Ontario — five times higher than any other province.

Auto Insurance Rates Stabilizing

By Madhavi Acharya-Tom Yew

The average auto insurance premium in Ontario declined slightly last quarter – a sign that rates may finally be stabilizing after years of sky-high increases.

The Financial Services Commission of Ontario, the body that regulates auto insurance, said the average premium fell 0.18 per cent.

Drivers may see their rates go up or down depending on their insurance company and their driving record – but the overall decline, based on requests from 17 different companies, is a step in the right direction, industry experts say.

“What is significant is that rates are not going up,” said Anne Marie Thomas, manager at

For 2010, the average increase was 12.3 per cent. During the second quarter of 2011, rate increases by individual insurers reached as high as 13 per cent.

“It appears that rate stabilization is starting to occur. That’s my hope,” Thomas said.

Last quarter’s rate changes ranged from an increase of 5.39 per cent by Certas Home and Auto Insurance company to a decrease of 4.46 per cent by Co-operators General Insurance Company.

There were more requests for decreases than increases, the regulator said.

Some of the approved changes have already taken effect, and remaining changes will be implemented by the end of July.

State Farm Mutual Automobile Insurance Company, the biggest player in Ontario’s auto insurance market requested no rate change for the first quarter.

A slate of auto insurance reforms brought in by the Ontario government starting in September, 2010, were designed to stabilize rates.

The changes introduced a cap of $50,000 for medical and rehabilitation benefits for non-catastrophic injuries, half the previous level.

The change also limited medical and rehabilitation benefits for minor injuries to $3,500.

The auto insurance industry argues that the spiraling cost of unnecessary assessments and fraud is raising costs for all drivers.

Insurance company executives say sketchy medical clinics and rehabilitation centres milk the insurance system by sending victims of minor accidents for dozens of questionable medical assessments.

Accident benefits still account for about one-third – the biggest chunk – of overall auto insurance premiums.

The province’s insurers are required to get approval from the Financial Services Commission in order to change their rates.

Similarly, Kanetix, an online auto insurance comparison site, found that rates declined in Ontario, Quebec, and Alberta during the first quarter.

Rates were down by 3.6 per cent in Ontario compared to the year-earlier period, the company said.

“It appears the market is starting to stabilize,” Thomas said. “If you have a good driving record, insurance companies are likely going to want you, so shop round for the best deal.”

Mobilizing Against Fraud

The Ontario Auto Insurance Anti-Fraud Task Force has taken preliminary steps to establish the scope and appropriate response to fraud.
By: Willie Handler, Consultant, Willie Handler and Associates
Recognizing the importance of preventing auto insurance fraud, the Government of Ontario appointed the Auto Insurance Anti-Fraud Task Force on July 29, 2011. Directed by a five-person steering committee, the Task Force is independent of the government. Its mandate is to:
• assess the extent and nature of fraud in the Ontario auto insurance system; and
• recommend actions to reduce the incidence of fraud for the benefit of policyholders.
The Task Force submitted an interim report to the government on Nov. 21, 2011. The interim report describes what the Task Force has learned during the four months since its appointment; outlines actions with short-term benefits that might be taken; and establishes an agenda for the balance of its mandate.
The final report of the Task Force is due by Fall 2012.
Early Observations
For some time, a figure of $1.3 billion has been used to describe the cost of fraud in Ontario, but the Task Force believes this figure is not reliable. The Task Force indicates in its report that a comprehensive research and analysis on the scope of auto insurance fraud in Ontario will be undertaken over the remainder of its mandate.
The Task Force has categorized fraud into “organized,” “premeditated” and “opportunistic.” These defined categories will create some controversy among auto insurance stakeholders, since some groups do not agree they all constitute fraud.
Organized fraud
The Task Force defines “organized” fraud as an organized scheme designed to generate cash flow through either staged accidents or fabricated accidents. Individual claimants are not the organizers of these schemes: they generally rely on white-collar professionals to support the schemes. Stakeholders in the system completely agree that these activities constitute fraud.
Premeditated fraud
Premeditated fraud is defined as continual pattern of charging insurers for goods and services that are not provided or that are unnecessary. A claimant may or may not be complicit in the fraud. As well, in this type of fraud, the participant is not dependent upon a larger organization. Some stakeholders do not consider that claiming for some of these goods and services to be fraud. Rather, they believe these are simply disagreements over what constitutes reasonable and necessary expenses.
Opportunistic fraud
Opportunistic fraud involves an individual claimant who pads the value of his or her auto insurance claim by claiming for goods and services that are unnecessary or unrelated to the accident. Again, some people will see this as a disagreement about what constitutes a reasonable or necessary expense rather than a deliberate, fraudulent “padding” of claims.
Cost Trends
A significant portion of the Task Force’s interim report is dedicated to analyzing the costs structure and trends in the Ontario auto insurance system. Although the Task Force did not make a quantitative estimate of the extent of fraud in the system, it did make a number of interesting observations.
The Task Force identified a large — and as yet unexplained — gap between changes in accident benefits claims costs and changes in factors that are expected to influence those costs. The report notes that theses costs are concentrated in the GTA.
According to Exhibit 3 in the interim report, accident benefits claims costs increased by $2.4 billion or $370 per vehicle between 2006 and 2010. Exhibit 6 shows that $2 billion in accident benefits claims costs or $300 per vehicle is unexplained.
This gap was calculated by comparing actual accident benefits claims costs with projected accident benefits claims costs over that same period had they grown at the same rate as private health expenditures in Ontario.
Another concern for the Task Force was the increased frequency of accident benefits claims. Between 2006 and 2009, 6,400 fewer people were injured in auto accidents, based on Ministry of Transportation statistical reports. And yet, accident benefits claims increased by 14% over the same period.
The Task Force concluded that the fastest-growing categories of auto insurance fraud are premeditated and organized fraud. This is based on the belief that opportunistic fraud through the padding of claims could not have grown so quickly in such a short period of time.
Task Force Analysis
The Task Force spent a considerable amount of time collecting and analyzing available historical data. This gives us a very good perspective of how the Ontario system has gone off the rails over the past few years. However, the historical analysis is based on a system that no longer exists. Ontario’s auto insurance reforms, implemented in September 2010, dramatically changed the landscape of the province’s auto insurance system.
Prior to the reforms, the largest increases in accident benefits costs from 2006 to 2010 were assessments and examinations (228%), caregiver benefits (186%), housekeeping expenses (178%) and medical benefits (105%), according to Exhibit 16 of the interim report. All these benefits were affected by the reforms. Caregiver benefits and housekeeping expenses are now only paid to catastrophic claimants (about 1% of claims) and policyholders who purchased the optional coverage (also about 1% of claims).
Anecdotal feedback from health care professionals conducting medical assessments and examinations indicates business is down 50% since the reforms were introduced. Meanwhile, a number of insurers report that 50% to 70% of their claimants are being treated under the Minor Injury Guideline and are consequently subject to the $3,500 medical and rehabilitation cap.
And so, assuming most claimants no longer claim caregiver benefits and housekeeping expenses, if health professionals are conducting half the number of assessments as they did pre-reforms, and if at least half of insurers’ claimants are subject to the $3,500 cap, one would expect significant claims cost reductions since September 2010. I estimate this should work out to a reduction in costs of roughly $1.3 billion. This leaves about $700 million in current unexplained costs in the system. This is still a significant figure, and it speaks to the need to gain a good understanding of the extent and source of fraud in Ontario, particularly during the post-reform period.
Expected Changes
The Task Force is already working on changes that should have a positive effect on the auto insurance system. These include working on optional e-learning for police officers; changes in Health Claims for Auto Insurance (HCAI), the electronic system health professionals use for transmitting auto insurance claims forms to insurers, that allow health professionals to check for unauthorized use of their identity, FSCO guidelines on health care billing practices; and new anti-fraud brochures and Internet material.
More substantive recommendations are still to come. The interim report highlights some of the possible recommendations including:
• licensing and/or regulation of rehabilitation clinics;
• enhancing regulation of the towing industry;
• establishing a dedicated fraud investigation unit; and
• developing a consumer engagement and education strategy.
Licensing/regulating rehab clinics
The Task Force indicated interest in the licensing requirements introduced by Hillsborough County, Florida in September 2011. Some of those requirements include:
• A physician must be responsible for operating a clinic.
• All persons associated with operating a clinic must submit 1) a copy of their state license; 2) a list of criminal convictions, if any; and 3) a set of fingerprints.
• A clinic must agree to inspections by county code or law enforcement officers.
These changes are new, so there is little experience to date regarding their effectiveness as an anti-fraud measure.
It is also difficult to determine what body in Ontario would take on this regulatory responsibility, which would include licensing, inspection and enforcement activities. Ontario is reportedly facing a $16-billion deficit and has appointed former bank economist Don Drummond to conduct a public service review. Under the current fiscal environment, don’t expect new money and resources from the Ontario government to regulate rehabilitation clinics.
Is there an alternative model? Well, there are the health regulatory colleges. But moving in this direction would require a substantial change in mandate to cover multidisciplinary facilities. In addition, the colleges have their own fiscal and resource restraints.
Regulation of the towing industry
Towing operators and drivers are currently licensed and regulated by a patchwork of municipal bylaws. Some are effective but many are not.
Regulation of the towing industry was proposed in a private members bill (Bill 147) introduced in the Ontario Legislature in April 2011. Bill 147 did not proceed past second reading before the fall Ontario election; therefore, it died on the Order Paper. Had the bill passed, it would have introduced a self-regulatory body, the Towing Industry Council of Ontario.
Don’t expect to see the bill revived under the current session, because the towing industry does not yet have the infrastructure in place for self-regulation. Government expenditure constraints will challenge the Task Force to develop a framework that will require minimal public resources.
Dedicated fraud investigation unit
The Task Force has shown interest in the U.S. National Insurance Crime Bureau (NICB). The NICB partners with insurers and law enforcement to identify, detect and prosecute insurance criminals. Data analytics is a critical tool of the NICB. The mandatory reporting of data by insurers facilitates the data collection. Introducing a similar model in Ontario would likely require legislation and engage some discussions about existing privacy legislation.
Where in Ontario would such a potential fraud investigation body be housed? Again, government financing constraints would likely be a factor. Building in some way on the experience of the IBC’s Investigative Services makes sense and more closely follows the American model.
Consumer education strategy
The Task Force concluded there is little public awareness of Ontario’s auto insurance system and existing types of fraud. Fraud organizers use this lack of public knowledge to their advantage. Some consumers participate in fraud schemes without their knowledge and without understanding the risks.
The Task Force believes fraud prevention includes a better-informed public. The extent of any potential public education campaign is unknown at this time. But if it happens, it will require funding. FSCO and the Ministry of Finance have no history of funding consumer education campaigns dealing with auto insurance, so expect the financial burden to fall on the insurance industry.

The Task Force’s interim report received almost no media coverage, but expect more interest when the final report is completed and released later this year. None of these issues are simple, so the Task Force has its work cut out for itself. 

FSCO in Hot Water Over Mediation Delay

Court, arbitration rulings acknowledge 60-day requirement.

After years of angst over the backlog in mandatory mediations at the Financial Services Commission of Ontario, examinations of the original legislation by both the Superior Court and FSCO’s arbitration arm have led to pronouncements that if the mediation hasn’t taken place within 60 days, it is deemed to have failed and the parties are free to proceed with litigation or arbitration.

‘Clearly, the arbitrator found that FSCO is not in compliance with the legislation,’ says Alexander Voudouris.
In recent times, FSCO has introduced various measures to try to reduce its mediation backlog, including consent failures, settlement blitz days, and the engagement of private dispute resolution companies to provide supplementary mediation and arbitration services. However, several new decisions may have made those measures academic.

On Jan. 16, arbitrator Jeffrey Rogers made a clear and simple decision in the matter of Nicholas Leone v. State Farm Mutual Automobile Insurance Co. in which he found that the “prescribed” time for mediation in s. 10 of Ontario Regulation 664 is 60 days from the date the application for the appointment of a mediator was filed.

Rogers found this interpretation “is consistent with the object of the act and the schedule to promote prompt payment of benefits and speedy resolution of disputes.

To hold otherwise would make it impossible for injured persons to calculate time limits for commencing proceedings and result in differing time limits for injured persons whose circumstances are the same.”

When asked why it has taken so long for a relatively clear piece of legislative interpretation to emerge, Leone’s lawyer, Alexander Voudouris of Lofranco Corriero in Toronto, says it’s a good question.

“I think the answer is that it never occurred to anyone to go back to the original legislation and see if there was a time limit there. We eventually became so frustrated and upset that we went back and did just that.”

Voudouris brought a number of motions and applications early in 2011 that were either knocked out or withdrawn. “Eventually, Leone went forward. Clearly, the arbitrator found that FSCO is not in compliance with the legislation.”

It was the work of Voudouris and other lawyers in raising the interpretation of a 60-day fail that prompted Bruce Kelly of Morell Kelly in Kitchener, Ont., to begin a successful court battle that ended with a similar decision.

“We had 200 cases that we were fighting to get mediation in,” he recalls. “That’s just one firm, so that gives you an idea. We decided to press the issue. We issued 200 statements of claim, many of them in the Small Claims Court, and advised the insurance companies that we were about to litigate.

We enclosed a factum reading the legislation, regulations, and the dispute resolution code. A lot of insurers threatened to bring a motion to stay but when they looked at the legislation, they backed away. They began settling, often on a full and final basis. We were finally advancing our clients’ interests as it is supposed to happen.”

The four cases of Cornie v. Security National, Hurst v. Aviva, Singh v. Aviva, and Clarke v. State Farm went ahead on Jan. 17. The insurers argued there was no real time trigger in the legislation and that the 60 days should commence from the appointment of the mediator.

But Justice James Sloan disagreed. Nowhere in the dispute resolution practice code, he wrote, “does it state that the 60 days referred to in Rule 19.1 does not commence to run until a mediator is appointed.”

He added: “Given the differences in resources between the plaintiffs and the insurance companies, the prejudice to the plaintiffs if they can’t access their accident benefits in a timely manner would far outweigh any prejudice to the insurance companies not being able to force the plaintiffs into mediation after 60 days.

The insurance companies take the position that the accident victims must simply wait. To entertain this argument could mean that an accident victim might have to wait 100, 300 or 500 days for mediation.

I find that submission preposterous. No one wants to go to court for any sum under $10,000 if mediation can resolve the issue, but accident victims should not have to remain in perpetual limbo.”

Shortly after the decision on the matters, lawyer Roman Baber brought an application with similar results in the Superior Court on a matter involving Nebal Younis and State Farm. Justice Guy DiTomaso approved of the reasoning in the Cornie cases and found Rogers’ decision to be highly persuasive.

“We simply can no longer wait for FSCO to resolve its problems,” says Baber.
“There is a legitimate argument that significant prejudice is being caused to accident victims as a result of FSCO’s inability to hold timely mediations.”

In fact, Younis’ condition was deteriorating rapidly as he waited. “His psychological condition had significantly worsened,” says Baber. “It is probably fair to say that the delay in litigation has contributed to that.”

FSCO is appealing to the Court of Appeal and seeking leave to appeal the arbitration order as well. It has also requested a stay of the arbitration order. “Normally, you can only appeal a final order,” says Voudouris.

“We are waiting to see if the director’s delegate will assume jurisdiction over the appeal. If he refuses to accept the appeal, then until the Court of Appeal decides, Leone will be the only law in Ontario on this matter.”

Kelly believes that as the appeal is simply a matter of legal interpretation requiring no evidence, the parties will be arguing it “before school’s out.” If that fails, he has two applications under the Charter of Rights and Freedoms waiting in the wings. “They are being held in abeyance pending the decision of the Court of Appeal.”

At present, FSCO isn’t complying with requests for mediation reports based on the 60-day fail, but it may not actually be necessary to obtain one. Rogers found that it was unreasonable to expect a person applying for arbitration to file a copy of the report of the mediator where mediation is deemed to have failed. He waived compliance with that requirement.

“Everyone seems fixated on getting a failed mediation report,” says Voudouris. “We simply applied for an arbitration. If people do that, they may have a chance of going through as Leone did.”

Despite this shift in the view of mediation, no one is saying FSCO should abandon its efforts to address the backlog or dismantle the mediation system.

“We are of the view that the FSCO mediation framework is conducive to the resolution of matters and oftentimes helpful to accident victims, but in view of the systemic delay currently occurring, FSCO is guilty of the mischief it seeks to prevent,” says Baber.

He hopes this series of cases will prompt the province to act to expedite FSCO’s ability to mediate.

“Something has to give,” says Voudouris. “If the government finds FSCO can’t meet the 60-day time limit, it may appoint more mediators. If it does nothing, that may lead to a backlog at the arbitration stage or they may find that the delays are legally acceptable and that this is the new reality we’re dealing with.”

But he warns that the government should be mindful of the concept that justice delayed is justice denied. “People are waiting a year to have a treatment plan approved. It is supposed to be cheap and quick. They need to fulfil the spirit of the law to mediate.”

Written by Judy Van Rhijn