Auto insurance needs overhaul

By Alan Shanoff ,Toronto Sun

Saturday, September 29, 2012

 Over a period of five days in May and July, Ontario’s Standing Committee on Finance and Economic Affairs held public hearings reviewing the auto insurance industry. Transcripts are available online. A summary of these hearings was released last month.

From that, it seems there are deceptive practices, if not fraud, at every level of the auto insurance system, including medical and rehabilitation clinics, doctors, lawyers, paralegals, tow truck operators, repair shops, insurance company employees, and of course, accident victims who fake or exaggerate injuries.

Some clinic owners pay “large referral fees to family doctors, lawyers, paralegals, body shops and other participants in the auto insurance system who can direct patients their way.” These clinics then contact accident victims claiming to be their “insurer-preferred providers” of accident benefits services, and set up expensive, unwarranted treatment plans.

Tow truck drivers get kickbacks from repair shops. Repair shops inflate their fees.

Insurers charge a “commission” of up to 10% of the price of a repair for sending work to a particular shop.

Of course not everyone in the auto insurance system is dishonest, but the impression left is certainly one of rampant dishonesty.

Experts retained by insurers to provide independent medical exams of accident victims don’t seem shy in hiding their pro-insurer disposition.

One doctor referred to a “culture of entitlement” and said this of accident benefits, “You want aromatherapy? You want to have a colon enema? If you’ve got somebody signing it, you’re a go; it’s good to go.” He sure sounded sympathetic to accident victims.

So who suffers in this quagmire? Legitimate accident victims, for one.

As of 1996, accident benefits covered up to $100,000 in reasonable and necessary medical/rehab expenses. Instead of increasing that cap for inflation, it was reduced to $50,000 in 2010.

A cap of $3,500 was also placed on what are termed “minor injuries” in 2010, not subject to adjustment for inflation. This covers a wide range of injuries from slight neck pain to multiple sprains, contusions, abrasions, lacerations and whiplash soft tissue injuries.

There’s little help for victims who develop complications and require additional treatment once the cap is reached.

Insurers now have a “greater discretion to deny claims for Accident Benefits without medical examinations” to support the denials.

Insurers deny claims without “discussion or explanation,” sometimes simply ignoring claims inquiries.

Adjusters without medical expertise make decisions about entitlement to benefits, without seeking medical exams. Some abuse the right to require victims to undergo independent medical exams.

And, of course, we have the inherent conflict of interest where insurers choose medical examiners from a pool of insurer-friendly experts, paid generously by the insurance companies.

Many accident victims appeared before the committee.

Nadira Kanhai, a registered nurse, explained how she had been labelled as a malingerer by insurer-chosen experts with impressive sounding CVs, some of whom are professors and associate professors at top universities.

It’s hard to see how this woman could be a malingerer with fractures to three ribs, a fractured pelvis and an injured knee.

The same day she was being treated by a physiotherapist for these substantial injuries, an insurer-appointed occupational therapist declared there were no substantial injuries requiring treatment.

She told the committee insurers pay exorbitant fees for excessive assessments to produce bogus reports. It’s a lucrative business for many so-called experts.

This brave woman coined a phrase that made it into the summary of the hearings issued by the Legislative Research Service.

She referred to insurer-friendly assessments as “staged assessments”, comparing them to staged accidents where fraudsters stage an accident to enable car loads of fake victims to defraud insurers.

It’s obvious the auto insurance industry needs a significant overhaul. We need to reduce rampant fraud but in so doing so we must never lose sight of the point of car insurance, which is to protect legitimate accident victims.  

Woman?s win in accident claim will aid future victims of ?catastrophic impairment??

Landmark accident claim case broadens benefits after ‘catastrophic impairment’

Published on Thursday September 27, 2012

 Donovan Vincent

Staff Reporter

 The Ontario Court of Appeal has overturned a lower court ruling that would have severely restricted benefits awarded to victims of serious accidents.

The case centred on an accident claim filed by Anna Pastore, a 60-year-old Toronto woman. She was struck by a car while visiting Montreal for a wedding in November 2002.

Pastore suffered significant pain and impairment as a result of her fractured left ankle, according to her appeal lawyer, Joseph Campisi Jr.

Her injury didn’t heal properly, requiring several surgeries over the next five years, and right knee replacement when the ankle pain led to a change in her gait.

Before the accident she was the primary caregiver to her husband of 38 years, who was receiving chemo-dialysis. She has limited mobility since the accident, and almost completely depends on others for her most basic personal care needs, the Court of Appeal ruling says.

In 2005 she applied to her insurer, Scarborough-based Aviva Canada, for enhanced accident benefits due to “catastrophic impairment.’’

Catastrophic impairment entitles one to benefits of up to $1 million in medical and rehabilitation treatment, while standard benefits only give $100,000.

A medical team concluded Pastore had a catastrophic impairment consisting of a “marked impairment in her activities of daily living.’’

But her insurance company refused to accept this finding.

The two sides fought through mediation, arbitration, Divisional Court and the Court of Appeal.

The appeal court ruled on four issues, including whether someone seriously injured qualifies for a catastrophic impairment if they’re “markedly impaired’’ in all four criteria (daily living, social functioning, concentration, deterioration on the job) — or just one, as in Pastore’s case.

The court determined that one of the four criteria is enough.

“The applicable (guideline) does not state a minimum number of functional domains to be at the marked or extreme level to (qualify as) a catastrophic impairment,’’ the court ruled.

Roger Oatley, senior partner with a Barrie-based law firm acting in the case on behalf of the Ontario Trial Lawyers Association, an intervenor, called the ruling a “big deal for accident victims because considerably more people will be able to access the benefits that they need.’’

“They (accident victims) still have to prove it’s reasonable and necessary they get these benefits, but at least the benefits are available,’’ Oatley added.

The insurance industry has been lobbying the province to amend the definition of catastrophic impairment. This court ruling broadens the definition, which won’t make the industry happy, Oatley says.

Aviva’s lawyer, Robert Rogers, said he can’t comment given he’ll sit down with his client Friday.

FOI materials reveal Expert Panel had serious concerns about insurance coverage ?gaps? and scope of project

OTLA MPP Advisor

Catastrophic Impairment Review

OTLA obtained information this summer that was not

previously made public by the government or FSCO

concerning the review of catastrophic impairment. We think

it reveals serious concerns by the panel itself:

Imposing restrictions without full scientific review

The FOI materials on the discussions of the Expert Panel reveal

for the first time that Members had serious concerns about

imposing punitive restrictions to the definition of catastrophic

impairment. Further, contrary to what MPPs have been

told, the Expert Panel was frustrated in its efforts to examine

relevant science on catastrophic impairment.

It also becomes clear that the Panel Chair was not willing

to undertake a thorough review of the scientific data. Dr.

Pierre Côté, Chair of the Expert Panel, made this comment:

“How things are done in the field is beyond the scope

of this project.”

He further stated:

“A comprehensive review will take two to three years

at least.  We will be using scientific evidence, but in

terms of doing a full and comprehensive review, it

can’t be done.” (emphasis added)

Potential gap in coverage for accident victims

Expert Panel Members were concerned how potential

changes would impact claimants. Dr. Arthur Ameis said:

“As a definition, it is a financial construct, not a

medical one. What is the line from the government’s

perspective? We need to know that, then we can

make the recommendations.”

Panel Member, Dr. Michel Lacerte, said:

“…That’s what the catastrophic definition is all about.

It is used to determine the maximum payout. If the

claimant does not have the money, they are out of

luck. Ethically, if people fall in the gap or they do not

have a claim, they are out of luck.”

Full financial impact not considered

FSCO official Willie Handler even noted that the cost

implications of the Expert Panel’s work was not to be part

of the discussion. He said:

“Note that cost impact is not part of the discussions for

the panel. It will be a discussion that the government

will be undertaking later.”

Essentially, what these FOI materials reveal is that the Expert

Panel’s recommendations were made within a limited

scope, without the benefit of a comprehensive review or

knowledge of financial implications. And that should be of

concern to all of us!

We think writer Alan Shanoff best summarizes the issue, in

this excerpt from his article in Law Times on Sept. 10, 2012:

“The composition of the expert panel was problematic

at the outset. It made a recommendation

without conducting a comprehensive review. The

superintendent has followed that recommendation

and in turn made an ill-informed recommendation that

cloaks a policy issue as a scientific one to the Ontario

government. It’s now up to the government to do the

right thing and reject it.” (emphasis added)

YOU can help the government reject these recommendations.

BEFORE a decision is made, tell the Minister of Finance to

review all the facts and take more time to get it right.

Social Justice: Superintendent cloaks policy issue as science on catastrophic impairment

The superintendent’s report on the definition of catastrophic impairment in the statutory accident benefits schedule may seem like a dry topic, but for those suffering injuries in motor vehicle accidents, the difference between having a catastrophic impairment designation and not getting one can be a life-altering distinction.

http://www.lawtimesnews.com/201209109304/Commentary/Superintendent-cloaks-policy-issue-as-science-on-catastrophic-impairment

It may be time to revisit Bob Rae?s NDP proposal from 1990

By Alan Shanoff ,Toronto Sun

Saturday, September 01, 2012 06:35 PM EDT

 STAN BEHAL/TORONTO SUN

Since Ontario has the highest car insurance premiums in Canada and the worst accident benefits coverage for the majority of accident victims, perhaps it’s time we revisited Bob Rae’s proposal to institute government-owned car insurance in Ontario .

After all, private insurers are forever crying poor over low returns, all the while complaining about fraudulent claims and annually increasing premiums for this mandatory product.

So why not give public auto insurance a try? It’s been done in British Columbia, Saskatchewan, Manitoba and Quebec .

We don’t hear the public clamouring for a return to the good old days of private insurance in those provinces.

Howard Pawley, former premier of Manitoba, made convincing arguments in favour of public auto insurance in his deputation to Ontario’s Standing Committee on Finance and Economic Affairs in July.

He conceded private ownership doesn’t always work better than public, but in the case of car insurance he argues the benefits of public ownership are clearly demonstrable.

Public insurance can prevent costly administrative duplication. Instead of dozens of insurance companies, each with its own bureaucracy, there’d be one public institution.

According to Pawley, “administrative costs of public plans avoids costly administrative duplication and are only one half as much as those incurred by private insurance companies.” There’d be one executive pool and one computer system, not dozens.

Surplus premiums, profits in private industry, would be returned to policyholders rather than paid to insurance company shareholders.

That’s not pie-in-the-sky thinking. According to Pawley, Manitoba’s rates decreased in 2011 — the third time in five years. That reduction was achieved via a dividend directly paid back to policyholders.

It almost sounds too good to be true. There must be a catch.

Is it that accident benefits are substantially lower in Manitoba?

Nope. There’s no cap on so-called minor injuries as there is in Ontario.

Standard medical/rehabilitation medical benefits have a cap of $100,000 for non-catastrophic cases in Manitoba, compared to Ontario’s $50,000 — unless an Ontarian purchases additional coverage, something that rarely occurs.

Further, there’s no limit for catastrophic injuries in Manitoba .

That’s not surprising as, according to Pawley, public plans return about 20% more to policyholders in terms of claims payments and accident benefits.

To add icing on the cake, insurance reserves in Manitoba are invested in public institutions.

According to Pawley, there’s currently $2.2 billion in reserves, invested in schools, hospitals and municipalities.

Interest on the reserves not invested in public institutions serves to reduce premiums.

There are other advantages to public insurance.

Provinces with public insurance have an extra incentive to take active steps to reduce accidents and encourage safe driving.

Manitoba has also done away with discrimination based on age or sex when it comes to setting premiums. Instead, bad drivers are assessed surcharges.

So with lower premiums, stable rates, surpluses going back to the public, and reserves being invested in public institutions, why aren’t we seriously examining the option of public insurance?

It’s not as if we’ll be driving insurance companies out of Ontario.

They’d still have commercial insurance as well as home and property insurance.

True, there’ll be some job losses, but four other provinces seem to have managed them.

True, Manitoba is much smaller than Ontario and has fewer drivers along with fewer accidents.

But all that means is that there’s even more scope for additional savings in Ontario.

If Manitoba has managed to achieve a reserve of $2.2 billion, imagine what sort of reserves we could achieve in Ontario and how that money could be put to use in our schools and hospitals.

Yes, we’d have to be careful the government doesn’t turn public auto insurance into a disaster a la Ornge, but are we so proud of the status quo that public car insurance would be a political minefield?

Remember, Rae won the 1990 provincial election campaigning on a promise of public car insurance.