Daily News – Ontario anti-fraud task force calls for licensing clinics, greater power for FSCO in final report

By: Harmeet Singh, Online Editor

The Ontario Automobile Insurance Anti-Fraud Task Force has released its final report outlining nearly 40 recommendations, chief among them expanding the power of the province’s industry regulator, greater public disclosure on the part of insurers and licensing certain health clinics.
Sixteen months after its inception, the task force steering committee has recommended the Ontario government amend the Insurance Act to allow the Financial Services Commission of Ontario (FSCO) greater power in investigating and enforcing fraud.

Among other changes, the government could update the Insurance Act to allow FSCO to investigate and sanction “unfair or deceptive acts or practices” within organizations that might not currently be considered part of the insurance business under the Act, such as some healthcare providers, the report said.

FSCO should also be given authority to oversee and audit the business and billing practices of health clinics or other individual practitioners who invoice auto insurers, according to the report.

The Ontario government should consider changing FSCO’s mandate to reflect the new responsibilities, and commission an independent review of the updated regulator’s function within three years of changing its scope, the task force said. “FSCO will have to recognize that it will no longer be ‘business as usual,’” the report noted.

The committee has also recommended implementing licensing for health clinics that treat patients injured in auto accidents. The ownership, costs of services and potential for conflicts from such clinics should also be reported through a licensing process, the task force noted.

The committee has also recommended the government require insurers themselves to disclose publicly how they choose and assess certain service providers they send claimants to see, such as independent medical examiners, towing services and vehicle repair services.

Other recommendations include improved consumer education, including the creation of a new multi-lingual educational website and a fraud tip hotline run by FSCO.

Greater information-sharing among organizations such as the Workplace Safety and Insurance Board (WSIB), and the Ontario Health Insurance Plan (OHIP). The task force also called upon other regulators and industry groups, such as medical colleges, to become more aware of auto fraud and do their own investigations.

In a statement following the release of the report, the Insurance Bureau of Canada said it is optimistic that the recommendations from the report will be implemented in the coming weeks and months.

“We are committed to working with government and all stakeholders to develop solutions to the many issues inherent in the current auto product,” it noted.

Toronto Sun – Ontario Auto Insurance Anti-Fraud Task Force findings mildly surprising

By Alan Shanoff ,Toronto Sun
Thursday, November 22, 2012

TORONTO – The final report by the Ontario Auto Insurance Anti-Fraud Task Force was released Thursday and I have to say I’m mildly surprised by the recommendations.

While the Task Force has focused on reduction of insurance fraud, they have also made some consumer oriented recommendations to curtail insurers’ abuses. Rather than denying claims or portions of claims with little or no reasons, it’s recommended insurers be required to provide “a full explanation when refusing to pay for treatment, assessment or other benefits.”

It’s also recommended that the government reduce uncertainty and delay for legitimate claimants by addressing the huge backlog of mediations and introducing appropriate protocols for treatment of minor injuries.

Unfortunately the consumer-oriented suggestions fail to combat perhaps the worst insurer impropriety: the use of so-called independent medical examiners or experts who provide insurer-friendly reports used to deny legitimate claims.

The report mentions that independent examinations are “often regarded with suspicion” — a gross understatement — but there are limited recommendations aimed at curbing abuses. True, it’s recommended a process be established for reviewing complaints, but there’s nothing to stop insurers from continuing to send lucrative work to preferred examiners who know what they should do to retain the insurer’s business.

There’s no recommendation in favour of licensing and regulating the medical assessment firms that provide independent medical examinations or evaluations. But the report does mention the sad fact that in 2010 the cost of medical examinations and assessments was $187 per insured vehicle, not far off the $221 incurred as the cost of medical and therapeutic treatments per insured vehicle. Amazingly, in 2010 insurers were paying almost as much to assess injuries as they were treating them. That is something deserving of investigation.

The focus of the report, of course, is on how to detect and prevent fraud committed against insurers by every possible miscreant: claimants, rehabilitation clinics, tow truck operators, body shops, paralegals, lawyers, even physicians.

Implementation of some of the recommendations can’t come soon enough, including the regulation and licensing of health clinics and the towing industry.

Other recommendations concerning the ability of insurers to pool and analyze claims data may make it easier to detect fraud are welcome.
The report emphasizes that its recommendations are targeted at reducing fraudulent behaviour rather than disadvantaging legitimate claimants. That’s a good principle to follow especially since the previous efforts to target fraud consisted of reducing accident benefits to the point that most Ontario accident victims have the worst no fault accident benefits in the country.

As the Ontario Trial Lawyers Association has pointed out “fighting insurance fraud by broadly cutting coverage makes a mockery out of insurance as ‘promise to pay’ in the event of a loss.”

But the recommendation that claimants who fail to appear at a scheduled medical examination without reasonable notice or explanation be charged a cancellation fee of $500 is punitive and will do little to combat fraud.

The report is to be applauded for the most part, but there’s much work to be done, both to combat fraud and protect the rights of legitimate accident victims.

Updated: It?s time to revisit no-fault insurance


The Toronto Star

November 2, 2012



In 1990, the Ontario government introduced the no-fault insurance system to replace the old tort system. No-fault insurance was meant to expedite the processing of claims, to combat fraud and to prevent injured parties from suing those who caused the accidents (except in rare circumstances).

The term “no-fault” implies that no single person is at fault when an accident occurs. But that’s not entirely true. It simply means that when an accident occurs, each party involved reports the accident to his/her own insurance company, regardless of who is at fault.

Under the no-fault system, an accident victim can still take legal action against the driver who causes an accident. This is known as a “tort” action, and in certain situations accident victims could sue for non-economic losses, in addition to any damages or benefits that their insurance provider paid out.

No-fault insurance has helped to reduce the administration costs and the number of lawsuits arising from auto accidents and made it easier for injured parties to receive prompt medical treatment and to be compensated for any loss as a result of an accident.

One of the intended goals of the no-fault system was to keep auto insurance costs down. Instead, insurance rates in Ontario have continued to rise. The Financial Services Commission of Ontario has reported that auto insurance premiums increased by 5.6 per cent in 2008, 8.8 per cent in 2009 and 6.2 per cent in 2010. According to the Fraser Institute (2011), Ontario has the highest auto insurance rates in Canada.

One of the reasons Ontarians pay higher auto insurance premiums is due to the systemic fraud within the system. Rehabilitation clinics, lawyers, repair shops, tow truck operators and accident victims who submit exaggerated claims are all complicit in driving costs up.

On the benefits side of things, the Insurance Bureau of Canada recently stated in a media release that benefits for accident victims in Ontario were among the most generous in Canada. A close inspection of the facts reveals that this simply is not true.

For accident victims who suffer minor injuries (60 per cent of all accident victims), rehabilitation benefits are capped at $3,500. To my knowledge, nowhere else in Canada is there a cap on minor injuries.

For moderate injuries, victims are entitled to $50,000 in medical rehabilitation benefits (prior to 2010, it was $100,000). That $100,000 coverage is still available to anyone who pays a premium.

For injuries deemed catastrophic (representing one per cent of accident victims), the cap for medical rehabilitation is $1 million. No other province provides a cap for catastrophic injuries, although some provinces allow for more than $1 million in coverage, if warranted.

One nagging issue that consumers and dealers have with the no-fault system is the inherent loss of value of vehicles involved in accidents and an inability to recoup those lost values.

With vehicles involved in an accident, insurance will cover the cost of the repairs, but not the cost of lost value to that vehicle. Dealers are obliged by law to disclose the accident status (if applicable) on all vehicles offered for sale.

While such disclosure and transparency are good for consumers, it still means that accident “status vehicles” command a lower price and neither consumers nor dealers are compensated for the dollar value difference.

Over the past 22 years, the no-fault insurance legislation has been modified several times in order to make the system work more efficiently and equitably for consumers, and there has been considerable debate about the real benefit for Ontarians.

I think now is a good time for the province and all interested parties to revisit this topic with a fresh perspective.