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IBC wants regulation for personal injury lawyers

Auto insurance debate
|Written By Yamri Taddese

The Insurance Bureau of Canada says it would like to see regulatory oversight of how personal injury lawyers structure their contingency fees due to what it calls a major gap in transparency in the auto insurance system.

“We need to at least review this issue. Why aren’t we talking about this?” says Ralph Palumbo, Ontario vice president for the Insurance Bureau of Canada.

All key players in the auto insurance system, including insurance companies and rehabilitation providers, must adhere to regulations around their fee structures, says Palumbo, who notes additional players like tow-truck drivers are now subject to regulation thanks to changes under Bill 15.

“It appears that the only major stakeholders in the system that really [aren’t] regulated are personal injury lawyers,” he says.

Palumbo says trial lawyers should file their fee arrangements with the office of the superintendent of insurance or another body that will review the financial impact these fees may or may not have on insurance costs and premiums.

“There is a sense that often providers, whether they’re lawyers or rehab providers, push claims to a higher level so that the awards are higher. That’s the sort of thing that we need to guard against,” says Palumbo.

“No one is saying the claimant shouldn’t get what is reasonable in the circumstances, but we want to make sure there aren’t outside financial pressures that will drive up those costs.”

Barbara Taylor, director of policy at Insurance Bureau of Canada, says the change will protect consumers while allowing the government to track the impact of lawyers’ fees on the auto insurance system.

“First off, we’re asking for a consumer-friendly fee disclosure statement,” she says.

“So that’s something where we want to make sure the consumer has clear transparency on that arrangement that they have with the lawyer. Then we’re asking that that information also be shared with someone like the [Financial Services Commission of Ontario] superintendent, who can then use that information to assess the impact on auto insurance as well as perhaps issue an annual report.”

Ontario Trial Lawyers Association president Steve Rastin says the Insurance Bureau of Canada is suggesting lawyers work harder in order to maximize the value of the case if they have a stake in it.

“You know what, that’s an insult to lawyers,” says Rastin.

“It implies that I won’t do my utmost for my client unless I have a piece in the action. You know what, I think lawyers everywhere should be insulted by the allegation that we’ll work harder for our clients when we have a stake in it.”

He adds: “I work to the best of my ability for every client whether I’m doing the file on a pro bono basis or an hourly rate or contingency rate. To argue that I work harder for somebody because I have a contingency fee, it would be a fundamental violation of the professional code of conduct, our ethical obligations, and I think there are right-thinking lawyers everywhere who put their best effort in for the client no matter how they’re going to be paid.”

Rastin also says there are already sufficient oversight mechanisms in place to guard against improper conduct by lawyers. He calls the Insurance Bureau of Canada’s call for more regulation “a smokescreen” to mask the hefty profits earned by insurance companies.

“I can tell you that what I bill my clients is absolutely transparent,” says Rastin.

“My client knows in the beginning what I’m going to bill them and at the end. For people that are under disability, minors or people in vulnerable situations, we have to get court approval for our accounts. There is already an oversight body in place.

There are lawyers [who] are disciplined for not billing according to proper practices. I don’t want the insurance industry, which meddles in every private area of our lives already, I don’t want them meddling in my personal relationship with my clients.”

Contingency-fee arrangements between lawyers and their clients aren’t to blame for insurance companies’ costs, he adds, noting there are caps in place for the damages plaintiffs can collect for several types of injuries.

Plaintiffs often opt to settle for fear of cost orders that would mean losing their life savings, Rastin adds.

To Rastin, the noise around the issue is a distraction from what he calls “way more serious” concerns with the auto insurance system. “For instance, why are there government-mandated returns on capital for the insurance industry that are something like 11 per cent?” he asks.

Palumbo, however, says it’s only “natural” that lawyers are resistant to regulatory oversight around their fees.

“It’s pretty natural. They have a vested interest in making sure there is no regulatory oversight on their pricing schemes,” he says.

“We don’t think that’s appropriate,” he adds.

Part of the issue, he says, is transparency. “At the end of the day, if the government decides not to impose a cap [on contingency fees], that’s fair enough. But why is this a problem to talk about transparency? I don’t quite understand that.”

The issue isn’t contingency fees themselves, according to Palumbo, but whether those arrangements are always appropriate. “We’re not suggesting for a moment that any of this shouldn’t happen; we’re not against contingency fees. All we’re saying is that the last piece of the [transparency] puzzle is personal injury lawyers, really. No one is reviewing that aspect of the auto insurance system.”

For related content, see "Red flags raised over insurer financial data."

  • N. Lloyd
    Just what the IBC wants. Make sure lawyers can't be paid while they charge us $1,000.00 a year for $3,500.00 worth of insurance. 11% return? I bet if we could really look at their books we'd find it was much higher while the rest of us scrounge around for 2 or 3% Just proves, the best defense is a good offense.
  • Charles Ball
    Lawyers fees are already regulated and subject to court review.

    We don't need any more comments from the used car salesman/insurance peanut gallery of the IBC.
  • Tammy Kirkwood
    "IBC wants regulation for personal injury lawyers" of course they do. They successfully bend the ear of THEIR government friends to decrease the much need accessibility to resources and funding needed for an survivor of an MVA to recover. WHY? The IBC and insurers have called us fraudsters, and malingerers. They have said the therapy world is making money by blowing up the claim to get us more money so first they take away the access to funded taxi services to get to appointments and then they took away the mileage to have the therapists come to us. The list goes on. The IBC and it's members are so busy blaming everyone else because in the end, it saves them money. Good legal representatives are needed to help a survivor maneuver their way through the dysfunctional claims process. It's the insurance industry driving the costs up with their delay and deny tactics.
    I agree with regulations, but is it another way for insurers to financially limit victims access to justice?
  • FAIR Association
    The LSUC often handles complaints with a ‘cure’ of bill assessment. Rinse and hope not to repeat. See Law Society of Upper Canada v. Khan. Something needs to be done about self-awarded ‘premiums’ paid for a job well done. Wilson v Edward and St. Jean v. Armstrong reveals the need for transparency when hourly rates are increased without the knowledge of clients. Lawyers taking premiums/bonuses out of settlements affects recovery and that isn’t acceptable. A consumer-friendly fee disclosure statement is one way to put some transparency and accountability into the lawyer/client relationship whether it be done through LSUC or FSCO. As for assessing the impact of plaintiff legal fees on auto insurance – let’s look at the root causes – insurers rampant and inappropriate claim denials and delays, poor claims handling practices, substandard medical evidence, profits made by insurers on investing funds that should be going to victims, defence legal costs, well, the list goes on. Start there.
  • Derek K. Miura
    I always find it amazing how the insurance industry and their pundits use the most superficial of analyses to posit untenable positions. As one example, I recall an insurance industry representative once suggesting at a conference that there was rampant fraud in personal injury claims. However, when pressed for one single piece of authoritative literature to support this or even that there is any significant fraud, he sheepishly concluded his presentation. The fact of the matter there is that personal injury lawyers themselves are just one of the many roadblocks to fraudulent claims. None of us have the time or resources to waste on fraudulent claims. The fact of the matter is that contingency agreement fees (at least here in British Columbia) are indeed already regulated, both by the Law Society of British Columbia as well as by the Courts. If it ain't broke then don't try to fix it. Every time the insurance industry tries to "fix" something, everybody else pays . . .
  • Ben Falkenberg
    In BC Lawyers are highly regulated. The LSBC regulates Fees charged and the content and amount of CFA's. CFA's and Fees are always reviewable by the Court. This is merely an attempt by the insurance industry to limit victims access to counsel by limiting fees to Plaintiff lawyers. This has been tried in the US. it is not new and is not meant to assist tort victims. It is just another play by the insurance industry to hamper victims access to good counsel to fight them. This has nothing to do with assisting consumers, and everything to do with helping the insurance industry.
  • Bob Munroe
    In response to Mr. Boyle: Brian Francis, in my view, is one of the most knowledgeable, fearless and independant observers of the insurer/ personal injury industry in Ontario. He has personal experience fighting succesfully for his rights and shines a light on the faults of all players in this industry. While his style or tactics may not appeal to everyone, his observations should be taken seriously.
  • Moira Gracey
    is the IBC suggesting that injured people who have been thrown out of work and are subsisting on the much-reduced accident benefits available be required to pay lawyers up front by the hour? How can the IBC suggest - or the Law Times uncritically report - that lawyers' contingency fees are not regulated? Does Ontario Regulation 195/04 (appropriately entitled "Contingency Fee Arrangements") not count as regulation? Until the insurance industry agrees to a specific tax to fund enough legal aid clinic with enough salaried lawyers to represent all the customers from whom the insurance companies are inappropriately denying benefits, there isn't much alternative to contingency fee arrangements that won't leave injured people high and dry - and insurers laughing all the way to the bank.
    Insurers should try spending less money fighting claims than they do paying them - that might be a more effective way to lower premiums!
  • brian francis
    It's worse than just being denied income replacement. Far too many injured claimants are also denied timely treatment on the basis of shoddy insurer medical assessments. One of Ontario's most prolific "preferred vendor" of "independent" assessments once told the CPSO (during a complaint-driven investigation into to one of his IMEs) that "all" Ontario injured claimants are "fakers"! Imagine that? Imagine an "independent" medical expert/assessor whose point of departure for his "objective" opinion evidence is that "all patients are fakers". So why doesn't OTLA lobby for an end to CPSO "secret cautions" to IME vendors? Why doesn't OTLA lobby to purge the IME/IE system of rogue assessors - in the way they were challenged to in the Toronto Sun. Brain inured claimants who need
    (non-OHIP) cognitive retraining are denied for months - even years - based on bogus accusations of malingering. This is about more than money/CFAs.
  • Peter Cozzi
    I have advocated at FSCO for a Consumer Bureau mirroring the Insurance Bureau of Canada to advance the interests of consumers to Government funded by a levy per insurance policy paid for by the same consumers who pay their insurance premiums to Insurance companies every day which in part are used by those insurance companies to fund the IBC. Such a consumer body, properly funded, like the IBC, will be able to inform Government concerning insurance issues from the consumers perspective and thereby provide Government with a balanced view when considering legislative and regulatory changes such as the IBC proposal concerning contingency fees and more.
  • Rhona DesRoches
    FAIR has been speaking out about the issues as they affect MVA victims. There is a real need for consumer input but government has to be willing to listen and at this point we have been unable to even get a help desk set up at FSCO to answer simple questions. Obviously the government has no interest in the 9 million drivers, just in ensuring that the billions that insurers make continue to flow. PI lawyers are in a unique (and well-funded) position to lobby to make the system honest through regulation of the expert witnesses/reports that have made a joke of justice for MVA victims. And yet we still wait for the legal community to step up to the plate and demand that regulations/standards be put in place to protect vulnerable victims from predatory medical opinion vendors. Why? Because partisan medical reports are the fuel that feeds litigation and it makes the lawyers and doctors (and not victims) wealthy. Doing nothing is undermining justice and reflects badly on the legal community.
  • Stew Daroux
    It just amazes me that someone can hold such a lofty position in the insurance industry and really not have a clue regarding the degree to which lawyers are regulated and fee arrangements are scrutinized. In British Columbia there is legislating specifying the maximum percentage fee a lawyer can charge without prior court approval. In addition, clients are notified as part of any Contingency Fee Agreement that they have the right to have the fee ultimately charged reviewed by the Court. They also have recourse to the Law Society of any Province which overseas the practice of lawyers in that jurisdiction. Where is the lack of "regulation" that Mr. Palumbo refers to?
  • brian francis
    I'd be surprised if Mr. Palumbo is referring to BC lawyers or the ICBC. I doubt the IBC has the slightest interest in BC's public auto insurance system - except to do everything it can to prevent the adoption of a similar public system here. I understand that in BC doctors who sell IMEs to the ICBC are required to disclose, annually, their ICBC earnings. Contrast that to Ontario where the entire IME system is opaque. No oversight of insurer assessment mills - no requirement to disclose assessment income - secret College cautions to IME vendors kept out of sight of the public - anonymized HPARB rebukes of some of the most prolific insurer assessors/experts. Injured auto accident victims in BC are treated far better than they are here in Ontario. That's why some consumer advocates have argued for the adoption of system like BC's here in Ontario. Both the IBC and OTLA oppose a public system in Ontario. It's obvious why Ontario's private insurers oppose public auto. But why does OTLA?
  • Devils Trumpet
    it's a stew man argument,they know exactly how things work right now,this is just a way for the industry to run to the present government with bogus unsupported claims against personal injury lawyers and force more changes that benefit only the industry and the players involved.Legislated changes will further neuter the lawyer and client from ever receiving a fair,just and timely resolution allowing for more profits for the insurance company's stockholders while adding many more names to the welfare rolls,more ODSP claims and requiring publicly funded healthcare.Instead for the insurer paying its obligations,the taxpayer will pick up the tab.
  • Devils a Trumpet
    Another attempt to control every aspect of a claim,the insurance industry once again portrays everyone but themselves as theives while they defraud rate payers and the public.Of course lawyers rip off clients,just not as bad as the government sanctioned theft by the insurance companies.
    Not one participant other than the claimant has one scintilla of integrity,their just a bunch of criminals running the system.
    Wait till insurance insider documents begin to surface soon.
  • Curious Cat
    [quote name="Devils a Trumpet"]
    Wait till insurance insider documents begin to surface soon.[/quote]

    What kinds of documents are you alluding to?
  • Devils Trumpet
    Sorry to get you excited,the comments were intended for another post that had nothing to do with regulation of lawyers or insurance.My post here was copy and paste,it included a line from a seperate post entirely.
    I have no knowledge of any insider information regarding Ontario auto insurance.If I did,I doubt very much that I would announce it in this forum.
    I apologize for my inadvertent mistake,I will double check before I post in the future.
  • Darryl Singer
    The entire personal injury system is stacked against plaintiffs. The statutory threshold, $30,000 deductible, powerful insurers who sit on AB money for years before they pay it out for necessary treatment. Plaintiff lawyers are the only ones fighting for the clients' rights and attempting to level the playing field. Certainly the insurers do not care. And the provincial government has continually made changes that benefit only the insurers and make it more difficult for the victims to collect.
  • Brian Francis
    RE: "Plaintiff lawyers are the only ones fighting for the clients' rights...
    Plaintiff lawyers (OTLA) advocate for their own interests - not the interests of injured claimants. They aren't always the same. If that weren't true OTLA would long ago have fought against the proliferation of rogue experts who inhabit the system - rather than happily profit from shoddy assessments and endless assessment battles. The only people buying OTLA's "fearless champions of the injured" rhetoric are the plaintiff lawyers.Maybe if OTLA revoked the membership of lawyers who over-bill so badly they are written up in even the mainstream press - and revoked the membership of lawyers who blame dead students for the firm's failings - these indignant protestations wouldn't ring so hollow.
  • Darryl Singer
    Lawyers are already regulated by the Law Society and in many cases the Superior Court. The insurance industry has no place in the lawyer-client relationship. If the insurers actually paid what they were supposed to pay to accident victims, when they were supposed to pay, then there would be no need for personal injury lawyers in the first place. Lawyer's fees have no bearing on insurance rates. And the marketplace dictates. If my fees are patently unfair then I will not have any clients.
  • Brian Francis
    How ironic. This column (Court rejects attempt to blame articling student for delay) in today's Law Times offers even more reasons why Ontario personal injury plaintiff lawyers need oversight. OTLA talks about oversight as an "insult". It is insulting to consumers (injured auto accident victims) to hear plaintiff lawyers trying to download their failings on to students.
  • Brian Francis
    Raston characterizes oversight of personal injury plaintiff OTLA lawyers as an "insult". What is an insult is systemic over-billing - staggering unreglated, self-awarded premiums - and unfair CFAs. A glance at the FAIR website offers ample illustration of endless plaintiff lawyer over- billing problems. Added to the over-billing problem is another "insult" to clients in the form of OTLA's stubborn, obstructionist stance toward cleaning up the IME/IE system (proliferated with rogue "experts") which is driving up Ontario's auto insurance litigation costs by causing endless assessment battles. But what,exactly, is wrong with a"a consumer-friendly fee disclosure statement". How is that an "insult"? And what do accident victims think? Why not ask FAIR? Perhaps on this issue (if no other) the IBC and FAIR can find common ground?
  • Emily Casey
    So-called "assessment battles" are not a creation of the plaintiff bar, but of the SABs. Insurers will deny a plaintiff treatment, and pay an expert of their own to author a report to back up that denial. Plaintiff's counsel will often then be forced to have a different expert provide an opinion. Some of these experts work for both sides of the bar.
    I can't speak to other firms' arrangements, but our contingency remains the same regardless of how many assessments are done. The litigation costs you refer to, then, are those born by the insurer and are a creation of their unreasonable denials of benefits owing to a claimant and their approach to litigation of these claims generally.
  • Tim Boyle
    That Mr. Francis is a shill for the insurance industry is obvious, the only thing unclear is how much he is being paid for being so.
  • Devils Trumpet
    Mr. Boyle,thanks for the humor.You could not be more wrong about Brian.His absolute disdain for personal injury lawyers far eclipses his distaste for the insurance industry.
    He has less use for the OTLA than he does the IBC that's all.
  • brian francis
    Here is a statement from FAIR (a consumer organization funded predominantly by donations from personal injury lawyers)regarding the need for fee clarity. I am not a member of this organization. Read their "lawyer" page. Look at their sponsor page. Are these people "shills for the insurance industry too?
    FAIR Association of Victims for Accident Insurance Reform
    What’s in YOUR Legal Bill???
    You may not be paying what you think you are for your legal representation. By the time the costs of holding our insurer accountable come due and payable many auto accident victims are on their second or even third lawyer. Often the invoices for legal services are without detail and we are simply told what we are supposed to pay without adequate explanation... more….

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