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Focus: Insurer rebuffed on attendant-care benefits

 

Monday, 14 October 2013  By Michael McKiernan

 

The Ontario Court of Appeal has shot down an insurer’s attempt to tie attendant-care benefits to the lost wages of family members acting as caregivers in a move one personal injury lawyer says would have set accident benefits claims back two decades.

 

In Henry v. Gore Mutual Insurance Co., Tyrone Henry’s mother took an unpaid leave of absence from her $2,100-per-month job in order to look after her son, who became paraplegic following a vehicle accident in September 2010.

 

A Form 1 assessment of Henry’s attendant-care needs came in at $9,500 per month, well above the legislated $6,000 maximum. But Gore Mutual claimed it should only have to pay a pro-rated amount of $2,100, based on his mother’s eight-hour workday, rather than the 24-hour care she was providing as assessed in the Form 1.

 

In the early 1990s, Ontario’s first statutory accident benefits schedule required insurers to reimburse family members for lost income up to a maximum of $3,000 per month. In 1994, a change to the schedule tied the payable benefits to the Form 1 and removed the need for family members to prove a loss of income.

 

That changed again in the most recent version of the schedule introduced in 2010 that requires family members to show an economic loss before insurers will pay attendant-care benefits.

 

Last year, a Superior Court judge sided with Henry and ordered Gore Mutual to pay the full $6,000 benefit per month. Then on July 16, the Ontario Court of Appeal dismissed the insurer’s appeal, ruling economic loss “serves as a threshold for entitlement” to attendant-care costs and “not as a measure or factor in quantifying the amount.”

 

“I conclude this based on the language used, the scheme and logic of SABS-2010, and the fact that the legislature could have, but did not, include a provision in SABS-2010 for calculating the amount payable where a family caregiver sustains an economic loss as a result of providing required care to an insured,” wrote appeal court Associate Chief Justice Alexandra Hoy on behalf of a unanimous three-judge panel.

 

“In this case, the appellant does not challenge the Form 1, assessment of attendant care needs prepared in respect of the insured. That form established the need for 24-hour care and the amount payable for that care. As long as the care was provided and the family member who provided the care sustained an economic loss in so doing, the amount payable is not reduced only because the number of hours of paid employment forgone by the family member was fewer than the number of hours of care provided pursuant to the Form 1.”

 

Joseph Obagi of Ottawa’s Connolly Obagi LLP acted for Henry in the appeal. He says the family was “ecstatic” about the court’s decision.

 

“They saw it as an attempt by the industry to make the amount of attendant-care benefits dependent on the income ability of the person who provides the care, not the need of the injuries, which is where the focus should be,” says Obagi.

 

“It was almost as if the insurance industry was attempting to do a full circle and go back to how things were 20 years ago. It was quite unfair then because if you happened to be a large-income earner, the injured plaintiff would get more money. But if you happened to be in a family where your mother or whoever was a lower-income earner, you got a lower benefit.”

 

Despite the victory, Obagi says the economic loss threshold still creates unfairness for caregivers who can’t trigger the attendant-care benefits, such as stay-at-home or retired parents, because they forfeited no income to care for the family member.

 

“When you decide to stay at home, you’re signing on for certain responsibilities. But if your child gets a catastrophic injury requiring 24/7 care, that’s a lot different than what you signed up for,” says Obagi.

 

It wouldn’t be such an issue, he says, if Form 1 rates were closer to the real market value for attendant care. According to Obagi, the shortfall in payable benefits effectively forces many family members into playing a role in care themselves at below market rates.

 

“If you ever have a catastrophic claimant with no family, they’re in trouble. Because with $6,000 a month for 24-hour care, you’re not going to find anyone who can provide that,” says Obagi.

 

Daniel Strigberger, a partner in the insurance litigation group at Miller Thomson LLP, says the next step for insurers is to get a more specific idea of what constitutes an economic loss in these types of cases since the regulations are completely devoid of guidance.

 

“What the industry really needs is an answer to that bigger question. If I take the bus to go to the house to take care of a relative, is that an economic loss?” he asks.

 

Gore Mutual had asked the appeal court to define the term in order to head off claims based on broad interpretations encompassing minimal monetary loss such as travel costs, something it argued would defeat the whole point of the 2010 amendments. The judges refused to do so, noting the economic loss was clear on the facts of the case before them.

 

Strigberger says insurers have now pinned their hopes on a Financial Services Commission of Ontario arbitration case involving Kevin Simser and Aviva Canada Inc. that’s currently going through its appeal system.

 

Earlier this year, arbitrator Edward Lee rejected an expert opinion introduced by Simser’s counsel that would have broadened the concept of economic loss beyond monetary loss to include opportunity costs as well as loss of time devoted to labour or leisure.

 

If the expert’s definition prevailed, “every service provider will incur an economic loss in every instance. This would render the distinction between professional and lay service providers meaningless,” Lee wrote in the Jan. 16 decision. “Rather I find that ‘economic loss,’ as applied in the schedule, must relate to some form of financial or monetary loss.”

 

Lee heard two of Simser’s relatives produced minimal documentary evidence of their economic loss incurred in caring for him but claimed the work interfered with their jobs and studies. In addition, Simser claimed Aviva’s reimbursement of a caregiver’s out-of-pocket expenses was a tacit acknowledgment she had suffered an economic loss. But Lee found the $50 payment for gas, parking, and restaurant invoices “insufficient to trigger the full payment” of attendant-care benefits.

 

If the Simser matter or some other case ever does reach the appeal court, Toronto personal injury lawyer Michael Smitiuch is confident any definition of economic loss would keep the threshold low to include people who give up part-time jobs or some of their work hours to provide necessary care for family members.

 

“Although it doesn’t specifically address the issue of economic loss, I believe Henry v. Gore supports the proposition that any time missed from work will constitute an economic loss. That would be consistent with previous case law which says insurance coverage provisions are to be interpreted broadly, not restrictively,” says Smitiuch.

 

But Albert Conforzi, a personal injury lawyer with Toronto’s Pace Law Firm, says insurers may want to turn their attention to the legislature, rather than the courts, if they want to definitively prevent attendant-care benefit claims from relying on broad interpretations of economic loss.

 

“I don’t think the court is going to be particularly interested in making an exhaustive analysis of what constitutes economic loss when it was the legislature that created the mess in its drafting of the legislation. I think they’ll take the view that it’s up to the legislature to clear up what they intended it to mean,” he says.     

Focus: Insurer rebuffed on attendant-care benefits

Monday, 14 October 2013  By Michael McKiernan

 

The Ontario Court of Appeal has shot down an insurer’s attempt to tie attendant-care benefits to the lost wages of family members acting as caregivers in a move one personal injury lawyer says would have set accident benefits claims back two decades.

 

In Henry v. Gore Mutual Insurance Co., Tyrone Henry’s mother took an unpaid leave of absence from her $2,100-per-month job in order to look after her son, who became paraplegic following a vehicle accident in September 2010.

 

A Form 1 assessment of Henry’s attendant-care needs came in at $9,500 per month, well above the legislated $6,000 maximum. But Gore Mutual claimed it should only have to pay a pro-rated amount of $2,100, based on his mother’s eight-hour workday, rather than the 24-hour care she was providing as assessed in the Form 1.

 

In the early 1990s, Ontario’s first statutory accident benefits schedule required insurers to reimburse family members for lost income up to a maximum of $3,000 per month. In 1994, a change to the schedule tied the payable benefits to the Form 1 and removed the need for family members to prove a loss of income.

 

That changed again in the most recent version of the schedule introduced in 2010 that requires family members to show an economic loss before insurers will pay attendant-care benefits.

 

Last year, a Superior Court judge sided with Henry and ordered Gore Mutual to pay the full $6,000 benefit per month. Then on July 16, the Ontario Court of Appeal dismissed the insurer’s appeal, ruling economic loss “serves as a threshold for entitlement” to attendant-care costs and “not as a measure or factor in quantifying the amount.”

 

“I conclude this based on the language used, the scheme and logic of SABS-2010, and the fact that the legislature could have, but did not, include a provision in SABS-2010 for calculating the amount payable where a family caregiver sustains an economic loss as a result of providing required care to an insured,” wrote appeal court Associate Chief Justice Alexandra Hoy on behalf of a unanimous three-judge panel.

 

“In this case, the appellant does not challenge the Form 1, assessment of attendant care needs prepared in respect of the insured. That form established the need for 24-hour care and the amount payable for that care. As long as the care was provided and the family member who provided the care sustained an economic loss in so doing, the amount payable is not reduced only because the number of hours of paid employment forgone by the family member was fewer than the number of hours of care provided pursuant to the Form 1.”

 

Joseph Obagi of Ottawa’s Connolly Obagi LLP acted for Henry in the appeal. He says the family was “ecstatic” about the court’s decision.

 

“They saw it as an attempt by the industry to make the amount of attendant-care benefits dependent on the income ability of the person who provides the care, not the need of the injuries, which is where the focus should be,” says Obagi.

 

“It was almost as if the insurance industry was attempting to do a full circle and go back to how things were 20 years ago. It was quite unfair then because if you happened to be a large-income earner, the injured plaintiff would get more money. But if you happened to be in a family where your mother or whoever was a lower-income earner, you got a lower benefit.”

 

Despite the victory, Obagi says the economic loss threshold still creates unfairness for caregivers who can’t trigger the attendant-care benefits, such as stay-at-home or retired parents, because they forfeited no income to care for the family member.

 

“When you decide to stay at home, you’re signing on for certain responsibilities. But if your child gets a catastrophic injury requiring 24/7 care, that’s a lot different than what you signed up for,” says Obagi.

 

It wouldn’t be such an issue, he says, if Form 1 rates were closer to the real market value for attendant care. According to Obagi, the shortfall in payable benefits effectively forces many family members into playing a role in care themselves at below market rates.

 

“If you ever have a catastrophic claimant with no family, they’re in trouble. Because with $6,000 a month for 24-hour care, you’re not going to find anyone who can provide that,” says Obagi.

 

Daniel Strigberger, a partner in the insurance litigation group at Miller Thomson LLP, says the next step for insurers is to get a more specific idea of what constitutes an economic loss in these types of cases since the regulations are completely devoid of guidance.

 

“What the industry really needs is an answer to that bigger question. If I take the bus to go to the house to take care of a relative, is that an economic loss?” he asks.

 

Gore Mutual had asked the appeal court to define the term in order to head off claims based on broad interpretations encompassing minimal monetary loss such as travel costs, something it argued would defeat the whole point of the 2010 amendments. The judges refused to do so, noting the economic loss was clear on the facts of the case before them.

 

Strigberger says insurers have now pinned their hopes on a Financial Services Commission of Ontario arbitration case involving Kevin Simser and Aviva Canada Inc. that’s currently going through its appeal system.

 

Earlier this year, arbitrator Edward Lee rejected an expert opinion introduced by Simser’s counsel that would have broadened the concept of economic loss beyond monetary loss to include opportunity costs as well as loss of time devoted to labour or leisure.

 

If the expert’s definition prevailed, “every service provider will incur an economic loss in every instance. This would render the distinction between professional and lay service providers meaningless,” Lee wrote in the Jan. 16 decision. “Rather I find that ‘economic loss,’ as applied in the schedule, must relate to some form of financial or monetary loss.”

 

Lee heard two of Simser’s relatives produced minimal documentary evidence of their economic loss incurred in caring for him but claimed the work interfered with their jobs and studies. In addition, Simser claimed Aviva’s reimbursement of a caregiver’s out-of-pocket expenses was a tacit acknowledgment she had suffered an economic loss. But Lee found the $50 payment for gas, parking, and restaurant invoices “insufficient to trigger the full payment” of attendant-care benefits.

 

If the Simser matter or some other case ever does reach the appeal court, Toronto personal injury lawyer Michael Smitiuch is confident any definition of economic loss would keep the threshold low to include people who give up part-time jobs or some of their work hours to provide necessary care for family members.

 

“Although it doesn’t specifically address the issue of economic loss, I believe Henry v. Gore supports the proposition that any time missed from work will constitute an economic loss. That would be consistent with previous case law which says insurance coverage provisions are to be interpreted broadly, not restrictively,” says Smitiuch.

 

But Albert Conforzi, a personal injury lawyer with Toronto’s Pace Law Firm, says insurers may want to turn their attention to the legislature, rather than the courts, if they want to definitively prevent attendant-care benefit claims from relying on broad interpretations of economic loss.

 

“I don’t think the court is going to be particularly interested in making an exhaustive analysis of what constitutes economic loss when it was the legislature that created the mess in its drafting of the legislation. I think they’ll take the view that it’s up to the legislature to clear up what they intended it to mean,” he says.     

Accident victims get break as arbitrator rules against retroactive benefits cuts

Monday, 14 October 2013 By Darcy Merkur

Despite the Sept. 1, 2010 legislative amendments removing the obligation on accident benefit insurers to pay for rebuttal reports, they may still be responsible for the cost in relation to accidents governed by automobile policies predating that time.

 

In the recent case of R.J. v. Dominion of Canada General Insurance Co., Financial Services Commission of Ontario arbitrator John Wilson faced a motion for interim income replacement benefits along with a claim for the funding of a rebuttal report in relation to a catastrophic impairment claim.

 

R.J. had suffered a significant injury on July 23, 2007, when she accidentally accelerated into a concrete wall. Prior to the accident, she owned and ran a restaurant franchise. The accident prevented her from working and ultimately the business went into bankruptcy.

 

In addition to physical injuries, R.J. claimed psychological ones that included addictions to alcohol and OxyContin. Her situation led to multiple suicide attempts along with conflict within her family and the involvement of both the Children’s Aid Society and the police.

 

The insurer paid R.J. income replacement for an extended duration but eventually had her assessed for ongoing entitlement. The insurer assessor’s concluded R.J. was capable of suitable employment and, as a result, the company cut her off income-replacement benefits.

 

R.J. had also requested a designation as having suffered a catastrophic impairment.

 

Due to that request, the insurer arranged catastrophic impairment assessments with the same assessors who had looked into the income-replacement issue.

 

The insurer’s assessment team found R.J. had a zero-per-cent whole-person impairment rating for muscular impairments and a 5-8 whole-person impairment rating relating to a neurological impairment. With respect to behavioural and mental disorders, the assessors claimed there was no impairment on her activities related to daily living and only acknowledged a mild impairment in the spheres of social function and adaptation. Combining the mental and physical injuries, the insurer’s assessment team gave a combined whole-person impairment rating of 13 per cent, a number well below the 55-per-cent requirement.

 

R.J.’s treatment providers took issue with those opinions and conclusions and, as a result, the claimant wanted the company to fund a catastrophic impairment rebuttal report prepared by assessors of her choosing at a total cost of $14,916.

 

With respect to the reasonableness of the claimant’s request, Wilson concluded it was reasonable for her to ask for a rebuttal report. “In short, a rebuttal report in Ms. J.’s case would be not only reasonable but would facilitate the claims process,” he wrote in the Sept. 17 decision. “Consequently, if there is a basis to fund the report, it should be funded.”

 

Later, the arbitrator goes as far as saying: “In this case, a complex rebuttal report is not only reasonable but justified.”

 

Because the request for a rebuttal report dated back to April 19, 2011 — a time well after the Sept. 1, 2010, legislative changes — the arbitrator had to decide whether he could force the insurer to pay for it given the amendments removing insurance companies’ obligation to fund such reports.

 

The arbitrator reviewed the Sept. 1, 2010, amendments and noted they didn’t prohibit rebuttal reports but instead attempted to retroactively remove insurers’ obligation to pay for them.

 

In the end, the arbitrator concluded that the insurance contract in place at the time of the 2007 accident governed the matter and that the 2010 amendments preventing rebuttals at the insurer’s expense couldn’t apply retroactively in those circumstances.

 

The decision goes hand in hand with the reasoning in Federico v. State Farm Mutual Automobile Insurance Co. dealing with the question of retroactive application of the Sept. 1, 2010, legislative amendments that reduced the interest owed on past benefits.

 

The principle of these decisions is that substantive contractual rights crystallize at the time of purchase of the insurance policy. This principle makes absolute sense. Accident victims shouldn’t get less than they paid for simply because the government wants to help insurers.

 

After reviewing a practice direction that was in place at the time of the accident that limited the cost of these reports to $1,500, the arbitrator concluded that ordering the funding of seven different stages at a total cost of $10,500 was the only plausible way of proceeding. The arbitrator also awarded interim income-replacement benefits pending the disposition of the matter.

 

Subject to the R.J. decision withstanding any appeal, plaintiff’s personal injury lawyers will be getting in line to claim reimbursement for rebuttal reports prepared in relation to accidents governed by automobile policies predating the legislative changes.

 

Is there any chance we’ll ever pay less for car insurance?

 

Drive, She Said

Special to The Globe and Mail

Published Wednesday, Oct. 09 2013

While insurance in general is a hot topic these days, car insurance has come into the crosshairs of our politicians. It may be about time, but what do “lowered rates” really mean?

While Ontario’s provincial leaders toss around a magic 15-per-cent drop in rates, who is going to bridge that gap? The provincial government believes that savings can by achieved by attacking insurance fraud, implementing stricter benefit guidelines and investigating the towing industry. The insurance industry, predictably, is defending its turf – and profits – by advising it can’t be accomplished on those revisions alone.

Canadians buy nearly three times more compacts than intermediates and almost four times more compacts than subcompacts. The seven best-selling cars in Canada are all about the same size and shape and wear remarkably similar sticker prices – from about $15,000 to $30,000 or so. Honda

Insurance experts met in Toronto last week, and I spoke with Ryan Michel, chief risk officer at Allstate Canada, about changes taking place within the automotive industry, the way we are insured and the impact developing technologies will have on consumers.

The insurance industry itself is discovering the standard tropes – teenage boys drive like idiots, that’s why their rates are the highest – require more explanation, and more transparency. With technology transforming what we drive – and how we drive – at increasingly faster intervals, how will the insurance industry keep pace? I want what I pay to reflect the actual risk I present, not one based on outdated data.

“New technologies take time to adopt,” says Michel. “We don’t prorate the latest developments, like lane departure warnings and brake assist, but as trends are noted and the data comes in, we move to have the right price and the right risk.” He notes that insurance companies want to reflect price and risk correctly, both to properly provide for the consumer and to remain competitive.

With fatality rates falling, he agreed that many safety features now found in even entry-level cars (airbags, crumple zones, ABS) have played a huge role in saving lives. “While the goal is always saving lives, fewer accidents don’t necessarily mean lower costs,” he says, when asked why safety features that lower injury aren’t reflected in savings to the consumer. “Cars have become more complex. That technology is expensive to repair, and there has been an increase in the cost to replace cars.”

Sound like a watertight way to protect higher rates? Michel offered some interesting math regarding the future of car technology. I asked about the advent of increasingly autonomous cars, and that dreamed-of day when cars will drive themselves. That should leave drivers virtually blameless in the event of a crash, right?

“That would be a Utopia,” he laughs. “But it will also require a partnership of government, infrastructure, manufacturers and insurers. And yes, rates would go down.” The kicker? The cost of all those other things – government to lead the way to build that infrastructure that will be required so manufacturers can build vehicles that work within it – means the consumer is still paying, somewhere, all the time.

Michel says that, for insurance, if drivers are removed from the risk equation, the risk shifts to a commercial one. He likens it to a pie, with the auto portion shrinking. If you tally up the annual cost to your household insurance – auto, property, life and medical – finding a break on personal liability while driving will no doubt disappear into property increases. Those rates are being sent through the roof through a combination of the increasingly expensive recovery from seasonal and natural disasters, and people doing things like setting up house in places they shouldn’t. I can’t blame auto insurance providers for my property rates going up, but it’s also hard to find solace in Michel’s statement that he thinks auto rates will stabilize, and instead of the annual 5-per-cent increases that some have been seeing, it will be closer to 1 or 2 per cent.

The future of car technology, reduced risk, rising repair costs, insurance savings: it all comes back to costs to the consumer, and promises here in Ontario of bringing those costs back to earth.

But what about that 15 per cent? That’s a political hot potato, and one the auto insurance industry apparently believes will have to be handled outside of their court. It doubts it can be done and the cynic in me agrees. Insurance companies are brushing up their reasons why rates can’t be cut while the government hunts for savings elsewhere.

Insurance fraud and misconduct in the towing industry have been ongoing issues for years; does it only matter now as an election looms?

It’s a pie, and we have to pay for the whole thing, regardless of how it’s sliced.

 

Province announces plan to reduce car insurance

Posted By: Katie Franzios [email protected]  8/23/2013

The province has set targets to reduce car insurance rates over the next two years. 

Finance Minister Charles Sousa says he hopes Ontarians can save on average eight per cent by August 2014 and an average of 15 per cent by 2015. 

Sousa underlines the changes need to be approved by the province's auto insurance regular, which he thinks will happen in their January report. 

He says he believes there savings that can be found in the system by cracking down on fraud and tightening provincial oversight in the towing industry and with collision repair practises. 

Savings will likely be spread out across the province – with smaller communities such as Timmins likely to see higher savings, and areas like the GTA, lower ones. However, Sousa says he hopes all regions will benefit fairly from the savings.