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Social Justice: Recent auto insurance changes make system more complex

|Written By Alan Shanoff

Last July, Law Times published an editorial cartoon depicting three insurance company executives sitting around a table with one suggesting, “Maybe we could sell our customers insurance against future catastrophic accident benefits cuts!”

I laughed at the cartoon, but what’s happening to motor vehicle accident victims who suffer catastrophic impairments is no laughing matter.

In late August, the Ontario government issued a regulation that will revamp statutory accident benefits as of June 1, 2016. Among the many changes is the reduction of medical, rehabilitation, and attendant-care benefits to a maximum of $1 million from an aggregate ceiling of $2 million. Prior to June 1, 2016, victims suffering catastrophic injuries could get up to a maximum of $1 million for medical and rehabilitation benefits and an additional maximum of $1 million for attendant-care benefits. The changes have combined the two and reduced them by 50 per cent.

The reduction can only serve to add additional profits to the bottom line of insurance companies while potentially devastating accident victims.

By cutting these benefits by 50 per cent, the government is effectively shifting the cost of care requirements to victims’ families or taxpayer-funded programs from insurers. The other consequence will be enhanced claims in tort actions.

It isn’t as if insurers had to automatically write a cheque for $2 million to all victims suffering from catastrophic injuries. Payments were only for services that were reasonable and necessary.

And it isn’t as if most accident victims qualify as having suffered catastrophic injuries. Less than one per cent of accident victims suffer catastrophic injuries. Those who suffer lesser injuries could receive a maximum of $50,000 for medical and rehabilitation benefits and up to $36,000 for attendant-care benefits. The changes will also combine those benefits and reduce them to an aggregate of $65,000.

None of these changes is evidence-based. The government hasn’t established that the existing benefits are overly generous or that accident victims don’t require the current limits. There’s no evidence to establish a need for lower benefits. Rather, the reductions appear arbitrary, almost as if the government chose the numbers at random. Anybody with even limited knowledge of the costs of providing attendant care to catastrophically injured victims will know how expensive it is to pay for around-the-clock assistance.

At the same time that the government is reducing benefits, it has also chosen to amend the definition of catastrophic impairment. The government has been under intense pressure by the insurance lobby to amend this definition, so the change isn’t surprising. Evidence supporting a need for the changes is lacking, however.

The changes effectively overrule case law dealing with mental and behavioural disorders and combining physical and mental impairments. At the same time, they replace simple definitions with complex ones. For example, paraplegia or quadriplegia will no longer qualify unless the injuries satisfy certain criteria.

In addition, the changes replace the easy-to-administer Glasgow coma scale with other tests showing intracranial pathology. While the new tests may, in some cases, more accurately designate catastrophic impairment, they will result in more uncertainty and litigation, none of which is in the interests of justice.

The amendments to the catastrophic impairment definition follow a flawed process. The changes flow from a report from the superintendent of financial services that in turn followed recommendations submitted by the catastrophic impairment expert panel appointed by the Financial Services Commission of Ontario.

According to Dr. Harold Becker, the person who chaired an advisory panel that wrote the catastrophic impairment assessment guidelines for designated assessment centres in 2001, “the majority of the panel ‘experts’ were not experts, in fact, in catastrophic impairment.”

In addition, several members of the expert panel had ties to the insurance lobby or industry.

So what we have is a government on summer recess making substantial changes to accident benefits via regulation without the benefit of any debate or any apparent reference to the two sets of public hearings on auto insurance held by standing committees of the legislative assembly of Ontario.

The result of the changes is a diminishment in accident benefits and increased complexity and difficulty in making a finding of catastrophic impairment.

In its decision in Kusnierz v. Economical Mutual Insurance Co., the Ontario Court of Appeal said the purpose of the catastrophic impairment definition is to ensure that “those with the greatest need for health care are able to recover the expenses of that health care.”

Any changes to either benefits or the definition of catastrophic impairment should satisfy that goal. Regrettably, the changes in the recent regulation do not.

Alan Shanoff was counsel to Sun Media Corp. for 16 years. He currently is a freelance writer for Sun Media and teaches media law at Humber College. His e-mail address is ashanoff@gmail.com.

  • Claims $

    FAIR Association
    Ontario does have the highest payout to SABs. Consumers are overcharged, underserviced and MVA victims are the losers without recovery resources. Ontario is where MVA victims are having their charter rights stripped away in the name of insurer profits.
    The industry consistently spends more on medical assessments than they do on treatments. That is included in the pay-out numbers along with an embarrassingly large sum going to cancellation fees for insurer doctors.
    Auto insurers turn down about half of all claims according to the AG 2011 report. Fighting legitimate claims costs money and lots of it. The harm to victims, physically, emotionally and financially is a tool to deny claims and there is little to deter this trend.
    The transfer of funds from insurers to cover Ontario’s health care costs hasn’t been increased since 2006 – before the MIG cap. Insurers are not covering the victim’s costs, nor does the public system provide specialized care that victims need.
  • Systemic bias at FSCO??

    brian francis
    RE: " our tax base covers it through health care"
    How about cognitive retraining in brain injury cases. Our tax based OHIP system doesn't cover that - does it? In brain injury cases - cognitive retraining needs to be timely if it is to be effective. And yet it is commonly denied by insurer defence lawyers as a hardball tactic.

    RE: "catastrophic injuries were found by FSCO - and let us remember, their jobs depend on accident victims choosing them over courts "
    Are you saying that FSCO Arbitrators wrongfully side with catastrophically injured claimants merely because they want more claimants to choose FSCO as the avenue of recourse? It sure sound like it. Did you make such an argument in any of the FSCO cases in which you were involved?
  • solicitor

    Norma Priday
    You fail to mention that Ontario has the highest pay-out SAB type benefits in North America. I believe only Michigan comes close. Of the many states that went this no-fault SABS route, I believe fewer than 10 out of close to 40 or more have maintained it. I personally have worked on cases where catastrophic injuries were found by FSCO - and let us remember, their jobs depend on accident victims choosing them over courts --. If the US could see the obvious problems, why are we criticizing Canadian insurers for learning a lesson? And I do note that as you say, if the person needs more than the insurer provides, our tax base covers it through health care for which the insurer can be liable if it can be shown they were wrong in a tort action. Finally, we now have choices in our system. Why not add to those and let people decide (and pay for) how much coverage they want?

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