Ontario Auditor General issues warning over unfunded liability for auto insurance claims fund

“The Fund's actuarial report shows that the unfunded liability was about $99 million as of March 31, 2013, or about $10 million less than at March 31, 2011,” according to Auditor General Bonnie Lysyk's report, released Tuesday.

The MVACF, considered the “payer of last resort,” provides compensation or statutory accident benefits to injured persons who either have no recourse to auto insurance or who are involved in accidents with uninsured or unidentified drivers. The fund also, where legally permissible, recovers funds from the drivers or owners of money paid out on their behalf. It earns a fee of $15 from every driver upon issuance or renewal of their licence.

In her 2013 fall report, the Auditor General noted that the consulting actuary for the Financial Services Commission of Ontario (FSCO) “recently estimated” that MVACF “will have sufficient funds to meet its financial obligations through to the 2020/21 fiscal year.”

In 2011, then-Auditor General Jim McCarter had recommended that FSCO “establish a strategy and timetable for eliminating the Fund's growing unfunded liability over a reasonable time period and seek government approval to implement this plan.”

The purpose of that recommendation, according to the 2011 report, was to ensure MVACF “is sustainable over the long term and able to meet its future financial obligations.”

The 2013 fall report included a follow-up section on some of the recommendations from the 2011 report – including a section on auto insurance.

“Many of the recommendations in our 2011 Annual Report were either substantially or partially implemented, although additional work remains to be done in several areas, where we will continue to monitor progress,” according to this year's fall report.

For example, FSCO advised the Office of the Auditor General that “no changes had been made to address the unfunded liability” of MVACF since 2011.

“FSCO continues to formally monitor the status of the Fund, and ongoing Ontario automobile insurance reforms have had a positive impact on the Fund's unfunded liability,” the Auditor General noted. “The updated cash-flow analysis was completed in fall 2013, following a recent legal decision that will affect the collectability of accounts receivable owed by bankrupt debtors.”

That was an apparent reference to an April 12 ruling by the Ontario Superior Court of Justice, against the Minister of Finance, in a case where FSCO had tried to collect money from – and threatened to suspend the licence of – an uninsured driver who had gone through the federal bankruptcy process.

Sandra Clarke had been driving uninsured in 1989 when she got into an accident that injured her passenger, who got paid from MVACF. Clarke had started making payments to MVACF but had also made a consumer proposal under the federal Bankruptcy and Insolvency Act. She had listed MVACF has a creditor but MVACF had not filed a proof of claim.

“The federal BIA takes precedence over the provincial legislation,” Mr. Justice Robert Goldstein wrote in his April 12 decision, adding the Ontario Motor Vehicle Claims Act is in conflict with the federal bankruptcy law “and is inoperative to the extent of the inconsistency.” The federal Superintendent of Bankruptcy had intervener status in Clarke's case and argued there is a conflict between provincial law and the federal bankruptcy law, which stipulates that claims against people making consumer proposals are released upon discharge.

In her fall 2013 report, the Auditor General noted MVACF “had $109 million less in assets as of March 31, 2011, than it needed to satisfy the estimated lifetime costs of all claims currently in the system,” and that this shortfall “was expected to triple” by the 2021/22 fiscal year.

“FSCO noted that any changes to funding would require amendments to regulations and to the existing Motor Vehicle Accident Claims Fund fee on issue or renewal of an Ontario driver's licence, which are the responsibilities of the Ministry of Finance and the Ministry of Transportation.”

The 2013 report also noted that in 2011, the Auditor General had recommended that FSCO “monitor ongoing compliance with the interim Minor Injury Guideline, expedite the work to develop evidence-based treatment protocols for minor injuries, and identify and address any lack of clarity in its definitions of injuries.”

In 2010, the province had put a $3,500 cap on auto accident benefits payments for injuries falling under the MIG, which can include, among other things, sprains, strains, whiplash associated disorders, contusions, abrasions and lacerations.

“In July 2012, FSCO retained the consulting services of medical and scientific experts who have been working to develop an evidence-based treatment protocol for the most common injuries from motor-vehicle accidents,” the Auditor General noted in her 2013 fall report. “The treatment protocol, if approved by government, could be incorporated into a Superintendent's Guideline and used by insurers and health-care providers when treating minor injuries resulting from automobile accidents. The protocol will help to reduce disputes in the auto insurance system and ensure motor-vehicle-accident victims receive effective, scientifically proven treatment.”

2013 Auditor General of Ontario’s Report – Rehabilitation Services at Hospitals

December 10, 2013 – In her first annual report as Auditor General of Ontario, Bonnie Lysyk has called for a better coordinated system for hospital rehabilitation services to ensure patients aren’t treated differently depending on where they live.

Among findings identified in the 2013 Auditor General’s Report:

         ·  There is a wide variation in the supply of short-term rehabilitation inpatient beds across the 
province, which means patients could have to travel outside their areas to get the services they 

         ·  Lack of information on the use or outcomes of long-term inpatient rehabilitation or on 
outpatient rehabilitation means the Ministry does not know if those services are sufficient or 

         ·  Patients who no longer require hospital care may be occupying beds needed by other patients. 
The Ontario Hospital Association reports that as of March 2013, about 2,300 alternative-level- of-care patients who were ready to be discharged were waiting in acute care hospital beds for arrangements to be made. Of these, 25% were waiting for short-term rehabilitation or complex continuing care, which includes longer-term rehabilitation;

         ·  With the exception of stroke, for most conditions requiring rehabilitation, there are few best practice standards in Ontario for such matters as when therapy should start and frequency of treatment. As a result, practices varied at the hospitals visited during the audit. 
The Ministry of Health and Long-Term Care welcomed the advice and recommendations highlighted in the value-for-money audit of hospital-based rehabilitation services. It noted the work of the 14 Local Health Integration Networks (LHINs) in establishing the Rehabilitative Care Alliance in April 2013. The Alliance is a province-wide collaborative providing a support system for improving access, efficiency, effectiveness, quality, integration, value and equity in the delivery of rehabilitative services across the care continuum, including developing best practice guidelines to enhance outcomes and increase community capacity. Secretariat support for the Alliance is provided by the GTA Rehab Network. 
“The findings in the Auditor General’s Report further reinforce that the work of the Alliance is on the right track in addressing the need for provincial standards and best practice guidelines in rehabilitative care,” says Dr. Peter Nord, Alliance Steering Committee co-chair. “We embrace these recommendations which will further inform our work in the coming weeks and months ahead and look forward to working together with the LHINs and Ministry of Health and Long-Term Care to ensure province-wide consistency in the approach to delivery of rehabilitation services.”

The report also acknowledged the work of the GTA Rehab Network in promoting best practices and knowledge exchange on developing measures for service planning and performance improvement.

To read a copy of the Auditor General’s findings on Rehabilitation Services at Hospitals, please click here.


Doctors and other medical professionals play a critical role in an injured person’s insurance and legal cases. For the most part, doctors and medical professionals play a positive and helpful role, treating the injured person’s injuries and disabilities. Doctors and other medical professionals are also called upon to perform examinations that can greatly influence and even determine:

whether an insurer will pay for recommended treatment

payment of income replacement benefits

the quantum and duration of accident benefits

whether an injured person will be compensated for her injuries

The doctors and medical professionals who perform these examinations are supposed to be fair and unbiased. These examinations are commonly referred to as an independent medical examinations, or IMEs. Unfortunately, the more accurate definition for IME is insurer medical examination. Too often doctors and medical professionals performing these examinations are skewed and even biased against the injured victim in favour of the defendant and/or insurance company. The result is that an already vulnerable person is victimized again in her pursuit of justice.

One of the most difficult problems with the current system is that there is usually no way for an injured victim to know the history of the doctor who is performing the examination.  For example, if a particular doctor has been the subject of multiple complaints, the injured victim has no way to know about these previous complaints. All complaints are kept secret by the College of Physicians and Surgeons of Ontario, the body that regulates doctors in Ontario, unless and until there is a formal finding of misconduct by College against the doctor. Increasing transparency will result in greater fairness to all injured victims.

But doctors are fighting to keep all investigations and complaints secret from the public. Alan Shanoff describes the efforts being made by doctors to maintain secrecy in his column in the November 30, 2013 Toronto Sun.

The lack of transparency is not limited to complaints made against doctors to the College. The civil legal system in Ontario also protects doctors and other experts from past judicial findings or commentary that a particular doctor or expert was an advocate for one side, provided misleading evidence or was acting as an independent expert.  For example, there is one particular expert who has had the following written about him by judges and arbitrators in past cases:

“Dr. X went further to suggest that Mr. Gordon was malingering. But when he was challenged on cross-examination, he did not have a foundation for such an opinion.”

“These answers [by Dr. X] appear to me to be given by an expert who has become an advocate for the party calling him as a witness. That is not the role of an expert witness who is allowed to provide expert opinion evidence.”

“I also give little weight to the psychiatric reports of Dr. X who was more concerned with attributing Mr. Rocca’s ongoing symptoms to renewed narcotics abuse, than with addressing the disabling effects of Mr. Rocca’s symptoms.”

“In his testimony, Dr. X downplayed the likelihood of suicide as the result of motor vehicle accidents, stating that he had never seen a similar situation in his examination of some 4,000 motor vehicle accident cases. Dr. X’s observations, while perhaps literally correct, is at the very least, somewhat misleading.”

“Dr. X testified at the hearing that he discounted much of Mr. Sohi’s stated concerns because of perceived inconsistencies in the materials provided to him as well as his presentation during the interview…Indeed, Dr. X presented as a notably partisan witness…Likewise, Dr. X’s partisan approach and his focus on inconsistencies are troubling and seriously weaken the credibility and weight of his testimony.”

All of the above commentary are about one expert retained by insurance companies and defendants in a legal action involving an injured person. Notwithstanding that these judicial findings are public, in any subsequent case, the doctor cannot be confronted with these past judicial findings. These past findings are kept secret from the jury/judge/arbitrator hearing the new case. That is not fair.

To protect injured persons in Ontario, the law should allow an expert to be questioned about College investigations and past negative judicial findings. We agree with Mr. Shanoff that there should be more transparency. Injured victims should know the history of the doctors who are examining them. More transparency will only strengthen the integrity of the insurance and judicial systems in Ontario.

Contributed by Kristian Bonn, an OTLA Director and a lawyer practising with Bonn Law Office in Trenton, Ont.

Scarlett and Belair MIG Decision Overturned in Appeal

Monday, 2 December 2013

In the well known Scarlett and Belair case, the claimant was injured in an accident on September 18, 2010. He took the position that he while he did suffer sprains and strains, he also suffered from pre-existing conditions and subsequent psychological disabilities that took him out of the Minor Injury Guideline. After the accident, he was diagnosed with temporal mandibular joint (TMJ) syndrome.  Later there were additional diagnoses of chronic pain and psychological impairments.


In a preliminary issue hearing, the arbitrator found that the MIG is informational and non-binding that was not altered by its incorporation in the SABS.  He also found that the insurer had the onus of proving that the claimant had sustained a minor and and was subject to the $3,500 minor injury limit. In coming to his conclusion, the arbitrator also relied upon a number of cases, his own arguments, and his own English/French translations – without providing the parties the opportunity to make submissions.


The arbitrator's decision caused considerable angst within the insurance industry and a concern that the introduction of a monetary cap for treating and assessing minor injuries would not hold – a significant change introduced by the government in September 2010. However, the Director’s Delegate has allowed the insurer’s appeal in the Scarlett and Belair decision and more importantly confirms that guidelines incorporated in the SABS are binding.  This is important to establish considering the MIG is not the only guideline incorporated in the SABS.


Some of the key points raised in the Director’s Delegate’s decision: 

The arbitrator failed to address why he found that the claimant’s chronic pain, depressive symptoms and TMJ disorder were separate and distinct from his soft tissue injuries and were not the sequelae thereof.

The arbitrator never addressed the test in the SABS of whether the claimant’s impairment was “predominantly” a minor injury.  The SABS recognizes that a claimant may have mutiple injuries but that does not automatically bring he or she out of the minor injury category.

The arbitrator erred in finding that the burden of proof lay on the insurer to show that the claimant was subject to the MIG. The burden of proof always rests on the insured of proving that he or she fits within a scope of coverage.

The arbitrator was incorrect in implying that $50,000 in medical and rehabilitation expenses was some sort of default coverage.

The arbitrator erred in finding that “compelling evidence” simply means “credible evidence”, finding that the word “compelling” means more than “credible”.  As well, the discussion of “credible evidence” was not relevant to this case.

The arbitrator erred in finding that the MIG was not binding because it was only a Guideline. The Director’s Delegate found that the MIG is binding because it was issued pursuant to section 268.3 of the Insurance Act, the definition of “MIG in the SABS refers to section 268.3, and the MIG is then applied in section 18 of the SABS, thereby incorporating the MIG into the SABS by reference.

The arbitrator should not have been conducting his own research and relying on cases and statutory provisions that he then raised on his own after the hearing, which did not provide the parties the opportunity to respond.

The Director's Delegate remitted the matter to a full hearing before a different arbitrator, on all issues as between the parties.  The new arbitrator may still find that the claimant's impairments fall outside the definition of “minor injury” in the SABS.  It may well be that because of the claimant's other impairments (TMJ syndrome and chronic pain), an arbitrator may find that the claimant's impairment was not predominantly a minor injury.  Should that be the case, hopefully the decision will be based on the policy intent of the 2010 reforms and the SABS.

Cheney: Pirates on the highway are costing Ontario drivers billions


The Globe and Mail

Last updated Friday, Nov. 29 2013                

As rush hour approaches on Canada’s busiest highway, the forces of the towing industry assemble. Customized Vulcan Intruders and V-8-powered Ratlers rumble into position near the on-ramps, taking up their stations like carrion birds circling above the Serengeti during migration season.

These tow trucks are specialized machines, bristling with radio antennas and hydraulic tail stingers that can whisk a car away in minutes. The drivers tune in to the police frequencies and wait, hoping for a payday that could range anywhere from $150 to five figures, depending on their luck and connections.

For drivers who crash or break down on Highway 401 in Ontario, it can go one of two ways. If lucky, their vehicle will be towed away by a reputable operator who will charge a reasonable amount for the service. If not, they may find themselves plunged into a netherworld of extortionate fees, kickback-laden referrals, and barbed-wire impound lots where their car is held hostage until the bill is paid.

Running through the heart of the country’s biggest city, Highway 401 is the Grand Banks of towing – and sometimes, its Somali coast. According to a provincial task force that investigated insurance fraud, unscrupulous tow truck operators are at the front line of a black-market enterprise that costs Ontario drivers $2 billion each year.

“I think the towing industry is worse than those guys in Somalia,” says Doug Nelson, executive director of the Provincial Towing Association of Ontario (PTAO). “At least the pirates let you know what they’re up to. They stick a gun in your face and take your ship and your money. When it comes to towing, you don’t even know you’re getting robbed until you see the bill.”

The provincial task force calculated that fraud adds an estimated $700 to the insurance bill of every driver in the Greater Toronto Area.

“There are responsible companies, and there are flat-out pirates,” says Rick Dubin, vice president, Investigative Services, at the Insurance Bureau of Canada. “It’s luck of the draw.”

Although there are plenty of reputable tow operators, there are also pirates lured to the business by lax regulation and the potential for windfall profits. Drivers can earn commissions of up to 20 per cent on everything from bodywork to legal services to medical care. Some drivers have told the PTAO about doctors offering them a flat fee of $1,000 for bringing in a new patient after an accident.

“There are guys who make $10,000 a call,” says Nelson. “They work the system.”

My first glimpse into the darker recesses of the towing industry came while researching a story on insurance fraud. Among the people I met was a tattooed, 385-pound tow truck driver who showed me the workings of an ugly roadside game that included padded bills, under-the-table payments from paralegals, rehab clinics and body shops.

One trick: Drivers sometimes cross city borders to evade the rules that exist in certain jurisdictions.

“You might get towed out of Toronto by a truck from Richmond Hill, and he takes you to Markham,” says David Zimmer, Ontario Minister of Aboriginal Affairs, who has worked on province-wide legislation that would regulate the towing industry. “So whose rules apply?”

In many cases, the answer is: no one’s. There are 444 municipalities in Ontario, and only a few have rules covering the towing industry. “Anyone can buy a tow truck and start hauling away cars,” says Zimmer. “It’s not a good situation.”

Zimmer introduced two private members bills that would have created standardized province-wide regulations for tow operators. One bill fell by the wayside when the legislature was prorogued, and the other was derailed by an election.

Depending on where they are, a motorist involved in a crash or breakdown may encounter entirely different circumstances. In downtown Toronto, police have contracts with five established towing companies that follow posted rates, with the average cost of a tow and impound about $165. But in a municipality with no rules, all bets are off — and on the 401, which runs through multiple regions, you are in a legislative no-mans-land.